Jacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Hansard source

Labor supports these bills. We have been saying this since budget night when our Shadow Treasurer said it, but let me say it again: we are supporting these bills. The Tax Laws Amendment (Small Business Measures No.1) Bill 2015 amends the Income Tax Rates Act 1986 to reduce the company tax rate from 30 per cent to 28.5 per cent for companies that are small business entities with an aggregated turnover of less than $2 million. It retains the company tax rate at 30 per cent for all other companies over the threshold.

There are two parts to the Tax Laws Amendment (Small Business Measure No. 2) Bill 2015. Schedule 1 deals with the $20,000 accelerated depreciation for small businesses and schedule 2 allows for accelerated depreciation for primary producers. In the No. 2 bill, schedule 1 amends the accelerated depreciation rules for small businesses—businesses with an aggregate annual turnover of less than $2 million—by temporarily increasing the threshold under which certain depreciating assets, costs incurred in relation to depreciating assets and general small business pools can be written off.

An increased threshold of $20,000 applies from 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015 until 30 June 2017. From 1 July 2017 the threshold reverts to $1,000. The increased threshold is available to all small businesses, including those who previously opted out of the simplified depreciation rules. Schedule 2 to this bill amends the Income Tax Assessment Act 1997 to allow primary producers to claim an immediate deduction for capital expenditure on water facilities and fencing assets and to deduct capital expenditure on fodder storage assets over three years. This will assist primary producers with drought preparedness and cash flow and encourage investment in productivity enhancing assets.

We saw in the other place the embarrassing situation of the government, after saying time and time again that Labor must get out of the road and support the budget's tax measures and small business package, voting against a motion from the Leader of the Opposition to bring the bills to a speedy vote. Repeatedly we hear the government espousing its credentials in this area, saying that it wants to support small business. On our side, we say, 'Let us get on with it.' Instead, in the other place, there was the spectacle of hours and hours of speakers from the government lining up at the same time as the government was criticising Labor and claiming we were creating uncertainty. Our position remains clear. We will support this legislation, because we do support small business. And let us hope that in this place we do not see, as in the House, speaker after speaker from the government delaying progress here.

On the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015, Labor will support the company tax cut of 1.5 per cent for small businesses with an annual turnover of less than $2 million given the serious economic impacts of the government's significant cuts to the sector since the last election. So, what we are doing here is remedial. The impact of this government's overall budgetary position and the loss of confidence for small business is what needs to be repaired.

Let us put on the record that the Prime Minister and the Treasurer cut more than $5 billion of tax assistance for micro and small businesses in last year's budget. They also slashed the instant asset write-off for small businesses—the very measure the government is now bringing back. These cuts have hurt small business's cash flow, and consumer sentiment and small business confidence has crashed because of this government's first budget. When we look at the other dire effects of this government's first budget, people often forget the impact on business confidence, and this has hit small business significantly. Now, in an effort to save their jobs, though, the Prime Minister and the Treasurer are proposing assistance measures for small business. The Australian community rightly marked the government down following last year's disastrous budget, yet the Prime Minister and the Treasurer continue to talk down the economy and blame everyone else for their problems. As a result, there was a direct hit to consumer and business confidence. In addition, this budget has doubled the deficit from $17 billion to just over $35 billion. And, according to the government's own budget papers—budget paper No. 1—under the leadership of the Prime Minister and the Treasurer general government sector net debt has gone from 12.8 per cent of GDP in the 2013-14 year to 17.3 per cent of GDP in 2015-16, and it is climbing, and it is unprecedented.

The Leader of the Opposition, Mr Shorten, and the shadow Treasurer, Mr Bowen, and others made clear from budget night onwards that Labor will support the small business measures in the budget given the urgent need for assistance to this significant sector of the Australian economy. Small business contributes annually in excess of $330 billion to our GDP and it is responsible for around 47 per cent of private sector employment. However, Labor notes the recent comments from respected chief economist for Bank of America Merrill Lynch, Saul Eslake, who points out that almost 63 per cent of small business companies will derive no benefit from a 1.5 per cent company tax rate because they are neither profitable nor taxable. Labor also notes stakeholder concerns such as those of the Australian Chamber of Commerce and Industry regarding the introduction of a two-tier tax system for small business and will monitor the change going forward to see if there are additional complexities and compliance issues arising from these new tax arrangements. I highlight the compliance issue. I have observed significant commentary on this issue since the announcement. It does not appear that the government has seriously thought through these measures, and we will wait, as we monitor those issues, as the arrangements go forward.

Regarding the Tax Laws Amendment (Small Business Measures No. 2) Bill 2015, Labor will support the No. 2 bill to introduce accelerated depreciation for small business entities and primary producers. The $1,000 threshold for the cost of depreciating assets, costs incurred in relation to depreciating assets, and the low pool value deduction under the small business entity capital allowance provisions is temporarily increased to $20,000. As I identified at the outset of my speech on the second reading, the increased threshold applies only to assets that were first acquired at or after 7.30 pm, legal time in the Australian Capital Territory, on 12 May 2015, and first used or installed ready for use on or before 30 June 2017. Assets that do not satisfy these timing requirements will be subject to the $1,000 threshold.

Labor increased the instant asset write-off threshold for small business from $1,000 to $6,500 via the Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011. The number of assets this applied to was unlimited. Labor's bill also introduced accelerated deductions for motor vehicles. This measure allowed small businesses to instantly write-off $5,000 plus 15 per cent of additional costs for new or used vehicles costing more than $6,500 in the income year that it is first used or installed ready for use. This increase in the instant asset write-off represented a boost to small business of $3.55 billion over the forward estimates and a boost from the accelerated depreciation for motor vehicles of $550 million over the same period. In addition, with the introduction of loss carry-back for companies, these three tax assistance measures for small business provided a boost of more than $5 billion to the small business sector.

Labor's record on small business is a good record and one of which we can be proud. This contrasts with the Prime Minister and the Treasurer's appalling record on small business. On coming to government, their first actions were to cut the instant asset write-off, tax loss carry-back for companies and the accelerated depreciation for motor vehicles—measures which were vitally important to the sustainability and success of small business. Further, they made the cuts retrospective. The instant asset write-off threshold reduction was backdated to 1 January 2014, creating a red-tape nightmare for small businesses, many of whom may have already filed their annual tax return. For some, they would have had to file an amended return to the ATO and may even have incurred a tax liability.

Now, less than 12 months later and in a desperate attempt to save his own political skin, Tony Abbott has brought back Labor's instant asset write-off and increased it to $20,000—remedial and, indeed, responding to damage that should never have occurred. Again, Labor made our support for the measures contained in this bill, particularly given the urgent need for assistance to this significant sector of the Australian economy. However, Labor is concerned that the tax assistance measure is for only two years. These concerns have been also noted by stakeholders, who have raised the issue of the impact on the small business sector and broader economy when the threshold reverts back to $1, 000 from 1 July 2017. Labor will monitor the actions of the small business community, including any negative consequences resulting from a sudden drop in the threshold—$20,000 down to $1,000—following 1 July 2017.

In conclusion, Labor believes in small business and has a great record in government on delivering significant tax assistance measures and reducing regulatory burdens for small business. We support small business because they support private sector jobs and because of their overall contribution to the Australian way of life and economy. For these reasons, we support these bills.