Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The bills we are discussing cognately are the Tax Laws Amendment (2007 Measures No. 3) Bill 2007 and the Tax Laws Amendment (Small Business) Bill 2007. I want to use the opportunity of the committee stage to address the small business bill. This bill implements changes to various tax acts to standardise the primary eligibility criteria for small business tax concessions. These changes will reduce the compliance costs for many Australian small businesses. They substantially simplify the tax law to make it easier for small business to determine eligibility for a number of concessions.

The object of the bill is to implement recommendations of the Taskforce on Reducing the Regulatory Burden on Business to make it simpler for small business to determine eligibility for some 12 small business tax concessions. It does this by establishing a single definition of a small business entity in schedule 1. The bill also implements several budget announcements.

Schedule 2 increases the goods and services tax accounting threshold applicable to small business tax obligations. Schedule 3 redefines the simplified tax system to include small business entities. Schedule 4 increases the capital gains tax asset threshold for small businesses. Schedule 5 extends the fringe benefits tax car parking exemption to small business entities. Schedule 6 extends the base assessment instalment income threshold for full self-assessment STS taxpayers from $1 million to $2 million. Schedule 7 extends the rollover relief available under the uniform capital allowance system.

The cost to revenue over the forward estimates years is $295 million. This bill implements the government’s new small business framework for small business entities, and makes the necessary amendments to various pieces of taxation legislation to implement the policy of the new small business framework. Fundamentally, this bill ensures that small business has one definition that applies across all taxation legislation.

Schedule 1 amends the Income Tax Assessment Act 1997 to provide a more specific definition of small business entities, annual turnover, aggregated turnover and other related concepts. Schedule 2 amends the GST act relating to various GST turnover thresholds to enable a small business entity to access GST concessions of accounting for GST on a cash basis, annual apportionment of input tax credits for acquisitions and importations that are partly creditable, and paying GST by quarterly instalments and making consequential amendments.

Schedule 3 makes amendments to establish the new small business framework, replacing the term ‘STS taxpayers’ with ‘small business entities’. The tax concessions that are available to simplified tax system taxpayers under current law—namely, the simplified depreciation regime, the simplified trading stock regime and the immediate full deduction for prepaid expenses—are retained in the concessions under the small business framework.

Schedule 4 amends the RTAA 1997 to increase from $5 million to $6 million the capital gains maximum net assets threshold for an SBE to access CGT concessions. Schedule 5 amends the Fringe Benefits Tax Assessment Act 1986 to enable an employer to get the FBT car parking exemption if the employer is either an SBE or has ordinary and statutory income of less than $10 million.

Schedule 6 amends the Taxation Administration Act 1953 so that, for full assessment taxpayers, the base assessment income threshold is increased from $1 million to $2 million for entitlements to make quarterly PAYG instalments on the basis of GDP-adjusted notional tax. Schedule 7 extends the rollover relief available under the uniform capital allowance system to small business entities which choose to deduct amounts for depreciating assets under subdivision 328-D, and schedule 8 includes consequential amendments to tax law which arise from changes from the STS system to the small business framework.

This bill, like the taxation laws amendment bill No. 3, was referred to the Senate Standing Committee on Economics, but only one submission was received—from the Small Business Development Corporation of Western Australia. The SBDC is a very able body and it is located in my home state. It is a vibrant organisation which contributes to discussions on areas which impact on small business. It also keeps a watchful eye on newspapers and websites so that it knows when matters relating to small business are being discussed at a federal level. That is just as well, because there was only a five-day window between the advertising of this committee investigation and the closing date for submissions. The government is to be condemned for the consistent shortness of those processes. As I said in relation to the tax laws amendment bill No. 3, that time frame excludes those with limited resources or those with a lot on their plate from examining legislation and making a considered submission on it. The SBDC made it clear that they welcomed the changes proposed by the legislation, as it streamlined the taxation treatment for small business and defined exactly what constituted a small business entity.

The Australian Democrats support this legislation and the speed with which the government has dealt with industry concerns. However, it brings me back to a point I have made several times before: if the government can move swiftly on taxation reform which deals with small business, why can’t it move with just as much haste on reform of the Trade Practices Act for small business? I think it is because big business does not care about the former, but does care about the latter—and you are listening to them far too much on these matters.

It is now more than three years since the then Senate Economics References Committee produced its report entitled The effectiveness of the Trade Practices Act 1974 in protecting small business. In its response, the government did not accept that there was a need to amend section 46 of the Trade Practices Act in the way that small business advocates and as the majority of the committee recommended—and, tellingly, as the minority of Liberal senators themselves recommended. However, the Liberal senators’ minority report showed that there are sections of the coalition which do support amendments to the Trade Practices Act, and a number of those recommendations were accepted in the government’s response. I will point out again, as I have previously pointed out, that the author of the Liberal senators’ minority report is Senator George Brandis, who is an expert in the area of trade practices and who, as a legal practitioner, was heavily engaged in that field.

Over three years later, here we are still waiting—with only Senator Joyce on the coalition side showing any real concern. No wonder people are getting tired of this government’s slow response in this area. The Trade Practices Act should protect all business from anticompetitive conduct. The Democrats have never sought to protect competitors from competitive conduct. The Democrats and the small business sector, however, have been pointing out that anticompetitive conduct requires reforms. This has been a long campaign. Perhaps, at last, the government will follow up and adopt as good policy the recommendations in the report of the Senate economics committee, produced in March 2004, entitled The effectiveness of the Trade Practices Act 1974 in protecting small business. However, I see nothing in the legislation listed for these two weeks that would indicate that the necessary reforms will be brought forward.

In their minority report, the Liberal senators said that they were persuaded of the need for legislative reform of section 46. They pointed out the disproportionately high number of unsuccessful cases that were prosecuted under section 46. And, since then, everyone knows that the ACCC have shown a real reluctance to pursue section 46 litigation because of their lack of success in the past and because of an inadequate law. But the coalition has continued to sit on its hands. Academic and small business experts complain that this section, which relates to predatory pricing, is weak. They are right. In section 46 cases such as Melway, Boral and Rural Press, the courts have made it clear that this key part of competition law is poorly worded, does not achieve its aim and is ineffective.

If the government would implement even the minority recommendations of the Senate economics committee, it would strengthen section 46 by defining what ‘a substantial degree of power in a market’ means and it would also clarify the elements of ‘take advantage’. The courts would then also be able to consider the recoupment of losses in determining whether there has been predatory pricing. This is one key to ensuring that consumers, particularly those in regional and vulnerable communities, are protected from larger corporations pricing themselves to destroy small competitors and then ramping up prices as soon as the competition has been removed or, alternatively, holding a pricing regime which in itself acts as a barrier to the entry of new competitors. In that respect, I was interested to hear Alan Jones, on Channel 9 this morning, again pointing out the dangers of the pricing behaviour of some major retail corporations.

So while the Prime Minister is banging on about giving the ACCC the powers it needs to combat price gouging by petrol companies, he should also turn his mind to this important issue which will have an impact on petrol pricing and which has a broader effect to the advantage of small business. While I am on petrol prices, I point out that the Prime Minister was blindsided by a somewhat headstrong Senator Brandis, who, as the coalition chair of the Senate committee reporting on petrol prices, decided to run the committee rather than chair it. He would not accept the caution that Senator O’Brien and I were urging—that petrol prices deserved a different look and that the ACCC perhaps needed stronger enforcement or investigative powers. Neither would he accept that the ACCC had insufficient means to get behind the corporate veil on petrol pricing. That is a very different tune from the tune the Prime Minister and other members of the coalition are now singing. With respect to competition law and any regulatory powers, it is important to get behind the corporate veil and to examine these matters at the coalface.

The Australian Democrats are supporting the Tax Laws Amendment (Small Business) Bill 2007, which makes tax planning a little easier for small business. But far more important is trade practices reform. The coalition should either get on with it or, instead, let the next government do the job. In conclusion, with those introductory remarks, my question, through the chair, to the parliamentary secretary, who is on duty today, is: when will the government do something about reforming the Trade Practices Act for small business? What is your agenda? What is your timetable and will that timetable be overtaken by an early election?