Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I seek leave to make a statement for no longer than five minutes.

Leave granted.

I thank the Senate. The coalition has always said that it would not frustrate the passage of the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. Clearly, we did not do that today, because as soon as the message came to the Senate we allowed it to be passed without debate. That was more by accident than design, because I had hoped to make a second reading contribution. I unfortunately was not made aware through mechanisms as to exactly what time I should be present in the chamber. Suffice it to say, the coalition support the legislation that has just been passed, but we do have a few matters that we would seek to raise. Whilst my speech would have been longer and possibly more condemnatory of the government in relation to this particular measure, given the good grace shown to me I will reciprocate by simply putting forward a few policy ideas that I think the government overlooked in their haste to do something for small business—something which we, of course, support and welcome.

Small business is, of course, the engine room of economic activity and job creation, providing work for some 3.8 million of our fellow Australians. We on this side have always been the party for small business; therefore, anything that helps and supports small business is welcome. But the legislation that we had before us has had a number of incarnations. I think we had the third one just going through on Tuesday night. Support for small business by way of tax deductions for assets is something that is welcome. What is not welcome is that the explanatory memorandum is some 33 pages and there is some difficulty in understanding aspects of it. For example, the Australian Information Industry Association, Australia’s peak technology industry body, has indicated that the exclusion of software and related services from the investment allowance effectively nullifies the potential productivity upside impact of the tax break. It decreases its attractiveness to business taxpayers and fails to act as a stimulus for our local ICT software sector, which is increasingly impacted by a slowdown in business procurement.

It also restricts this benefit to brand-new equipment. You would be a big of a mug, wouldn’t you, to go into the second-hand market if you could buy a product at full price and then immediately claim the 50 per cent. This will distort the second-hand market for plant and equipment and capital assets for small business. Those small businesses that are doing it tough at the moment and might want to offload their second-hand equipment to a business that might be doing better will not, in fact, be able to sell their surplus machinery and equipment, because anybody who is in the market for equipment will buy the brand-new stuff.

When you have these ready-made fixes, as the government rushed in and rushed through, what we unfortunately have is a distortion of the market. It is exactly what the government did with the bank guarantee legislation and what they have done in so many other cases. Because they do not understand small business and because they do not understand the economy they have made these decisions—chances are, in good faith—but they are very ill advised decisions and will have unintended flow-on consequences.

There are other matters that I would have sought to canvass. I thank the Senate for this indulgence. I can indicate that we will support anything that supports small business, but we would encourage the government in the future to focus their attention on the detail rather than the news cycle to make sure that they get these important measures correct.