Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Hansard source

I rise today to speak on behalf of the opposition on the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015, which Labor will be supporting. Labor will support these small business measures, as we have done with other measures for small business announced in the 2015-16 budget, as we recognise the need for assistance to this significant sector of the Australian economy.

The bill has three parts: a tax discount for unincorporated small businesses, immediate deductibility for small business start-up expenses and fringe benefits tax exemptions for portable electronic devices for small businesses. Schedule 1 covers the tax discount for unincorporated small businesses. As we can see from the explanatory memorandum, schedule 1 of the bill amends the Income Tax Assessment Act 1997 to provide a five per cent tax offset—commonly known as the small business tax offset—to individuals who run a small business. Businesses with an aggregate annual turnover of less than $2 million are regarded as small businesses for the purposes of this legislation. The tax offset is five per cent on the income tax payable on the portion of the individual’s income that is small business income. The maximum amount of the tax offset available to an individual in an income year is capped at $1000.

Schedule 2 of the bill amends the Income Tax Assessment Act 1997 to allow small businesses and individuals to immediately deduct certain costs incurred when starting up a business, including government fees and charges as well as costs associated with raising capital, that are presently deducted over five years. Schedules 1 and 2 apply from the income year 2015-16—that is, the current financial year that commenced on 1 July—and later income years.

Schedule 3 of the bill amends the Fringe Benefits Tax Assessment Act 1986 to extend the fringe benefits tax, FBT, exemption that applies to employers that provide employees with work related portable electronic devices such as mobile phones, laptops and tablets. The amendments extend the exemption to small businesses that provide employees with more than one work related portable electronic device, even where the devices have substantially identical functions. Schedule 3 amendments apply for the 2016-17 fringe benefits tax year and later fringe benefits tax years. The 2016-17 fringe benefits tax year commences on 1 April next year.

Let me remind the chamber of the support that Labor provided to the small businesses of Australian when we were in government. These are facts the current government conveniently likes to ignore when it portrays itself as the sole parliamentary champion of small businesses, which is a convenient but incorrect characterisation. Labor increased the tax-free threshold for unincorporated small businesses, such as sole traders and partnerships, from $6,000 to $18,200 in July 2012. Labor also increased the instant asset write-off threshold for small businesses 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 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 assistant 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—one we can be proud of. And we are.

By contrast, the current Prime Minister and the current Treasurer promised before the last election that they would cut not just the Minerals Resource Rent Tax but also those associated measures, including the small business tax assistant measures. These were the instant asset write-off, the tax loss carry-back for companies and the accelerated depreciation for motor vehicles. Then, in 2014, what happened? The Prime Minister cut these small business assistance measures when the Minerals Resource Rent Tax Repeal Bill passed through both houses of parliament. This bill reduced the instant asset write-off threshold to $1,000 and cut the loss carry-back for companies and the accelerated depreciation for motor vehicles. Further, they made the cuts retrospective. How did this help small business? Now, less than 12 months later and in a desperate attempt to save his own political skin, Mr Abbott has brought back Labor's instant asset write-off and has introduced a small tax discount for unincorporated small businesses. We welcome the return of measures that should never have disappeared in the first place, but what we will not hear from the government is how much the withdrawal of these measures cost to the economy, to small businesses and to jobs.

In his remarks on this bill in the other place earlier this week, Labor's shadow minister assisting the leader for small business, Mr Ripoll, outlined some of the challenges that are currently present in the Australian economy. He drew the parliament's attention to sluggish wages growth and a government intent on attacking the wages of some of our lowest paid workers, which is not the answer. If this government were really serious about small business and really honest about jobs and growth, then why is it that the Australian Bureau of Statistics data confirmed that unemployment last month rose to 6.3 per cent? That is a substantial figure. It is a terrible figure because of what it means for ordinary people and their families, as well as what it means for confidence in small business and in our economy. And because of what it means for people's ability to manage their own smaller economies—their household budgets, their household economies.

What we see before us is that, for the first time in 20 years, there are now more than 800,000 Australians who are unemployed—for the first time in two decades. That is 114,000 more people who have joined the jobs queue since the Prime Minister and his government were elected and since Mr Billson was appointed as Minister for Small Business. This is not something that this government ought to be proud of. When you hear the government members talk, they are going to crow about this in some way, but it will be interesting to see how they spin that. The last time the unemployment data was 6.3 per cent was in 2002 when the now Prime Minister, under a previous government, was responsible for employment. The unemployment rate is higher now than it was under Labor during the global financial crisis. Unemployment, believe it or not, is higher today under the supposed genius stewardship of the Liberal government than it was under Labor during the global financial crisis. And last week, while the Prime Minister and his party were fixated on saving the job of the former Speaker of the other place, 40,000 Australians joined the jobless queue in July. The figures also show a disturbing 0.4 per cent spike in youth unemployment, with 13.8 per cent of 15- to 24-year-olds unable to find work. That is almost 300,000 young Australians who are currently unemployed. These are really shocking numbers. These are numbers that the government should be focusing all of its attention on rather than the other things that it is finding itself preoccupied with this week.

Australia needs a plan for jobs and it needs a plan for the future. Sadly, it is not getting either from this government. It is clear that the Liberals do not have a plan. They do not have a plan for jobs, let alone a plan for the jobs of the future. It seems that they can always come up with a plan for their own jobs, but they are not so good at finding a plan for jobs for ordinary Australians. The Minister for Small Business is well known for his enthusiasm and his theatrics, but these performances will not help small business or get people off the unemployment queues. The government has presided over the closure of the car industry and seems intent on exporting our future submarine jobs overseas—they almost seem determined to have that aim. You have to look at this carefully and ask: Why are they so determined, at every turn and at every corner, to give these things away?

Labor believes Australia has an unprecedented opportunity to appropriately manage and encourage a transition from an economy based on resources, primary industries and domestically-focused businesses to one that is based on high growth, on knowledge and on intensive businesses that can compete globally. Why should we not be able to compete like the rest of the world does? There is no point in saying that now wages are too high or something else. That is just not the case, because in comparable economies where wages are just as high and where the competitive environment is just as strong, they do well. We do not do well in those areas. Maybe there are other things in play—and that is what I would like this government to think about.

We also need a government that understands that R&D actually helps our economy—it is not a cost, but an investment. We need a government that understands that the jobs of the future are not about shutting down wind energy; they are about promoting renewable energy. It is about sustainability. It is not about destroying, through one comment, the renewable sector in wind power generation because the Prime Minister does not like the 'awful look' of them, or that perhaps they make a noise. Come and speak about noise to some of my constituents who live next to major roads and highways—they will tell you a thing or two about noise. When it comes to cheaper electricity and making sure in the future that Australia is just keeping up, then let us talk about those things.

This government is not comfortable with these words—mathematics, science, engineering, entrepreneurship, start-ups, crowd-sourced equity funding. They think these are terrible thoughts and concepts from an era they do not understand. They are a government from another era, that is for sure. But Labor does recognise there is much more that governments can do. You can do that through support. You can support small business and encourage those who want to go out and have a go and grow their businesses. That is exactly what Labor did in government; we did not just talk about it. We did it through substantial tax assistance and good measures which supported small business. In fact, as soon as the Liberal government got into power, they completely wiped out these measures. Small business, as I am sure colleagues know, is not happy. Small-business representatives, medium-business representatives and large-business representatives are unhappy about it. The government now, after it has seen the damage it has done, is trying to repair some of this by reintroducing some of those Labor measures, which is, of course, why Labor are supporting them. In effect, they are just a reintroduction of Labor's policies.

Many small businesses are desperately trying right now to find, for example, access to finance because they are constrained by difficulties in the methods that exist in getting traditional funds through banks and through other methods—it is either too expensive, too difficult, they may not have the balance sheet strong enough or they may not be capitalised enough. Again, these are probably all foreign concepts to the Liberals. The Liberals, when it comes to small business, have only two tired old lines—that small business people mortgage their home is one. We know people do that, but it is not the only way. Some do; some cannot get money because they do not have the capital or equity, so they look for other sources of financing. If a government is smart enough, it will put in place schemes to assist them. That is what Labor are proposing to do.

Under Labor's plan, we will work with the banking and financial services industry to develop 'start-up finance', a partial guarantee scheme which will support the development of Australian microbusinesses by improving their access to finance. Currently Australian microbusinesses either struggle to get a loan or may borrow via residential mortgages. There is no great science or analysis in that. They do that in the absence of cheaper, more appropriate financing alternatives.

There are some well-established credit guarantee schemes supporting start-ups, micros and small businesses in the UK, the US, Canada, France and Germany, as well as in 46 other countries around the world that we could compare ourselves to. This is where we should be turning our eyes and looking for some innovation ourselves. Australia is one of the only countries in the developed world without such a scheme and, as a result, we risk being left behind. I would say that we are being left behind.

Labor proposes to create a new $500 million smart investment fund which will back-in great Australian ideas and help convert those ideas into businesses, jobs of the future and a stronger economy and, at the same time, support revenues to government which, in turn, will support ordinary Australians. Our smart investment fund will partner with venture capitalists and licensed fund managers to co-invest in early-stage and high-potential companies, providing a Commonwealth investment of up to 50 per cent of the start-up capital needed to help Australian companies commercialise innovations.

This is part of Labor's plan for the jobs of the future. That has to be the basis from which we start, if we are going to be serious about long-term economic growth. Economic growth is not that great at the moment. We have to realise that the numbers are not just going to magically go up unless government takes a proactive approach to growing the economy and making sure that we transition our economy from old-style manufacturing and resources to the high-skilled jobs of the future. That transition will take a long period of time. We need a government that supports that. You do it through skills and training and a whole range of other methods and investing in the right places.

Another important role for government is in assisting small business to provide certainty on the provision of the relevant skills and training opportunities. That is something Labor put in place and invested money in, including in apprenticeships, in traineeships and in a whole range of other incentives around how that works. Again, sadly, when the Liberals got elected the first thing they did was cut all that—they saw it is a saving. I say it has had a detrimental, negative impact on small business and on the economy.

Labor's policy is to provide guaranteed funding to TAFE so that businesses can get the skills they need. That is what businesses say they want and that is because it works. Our TAFE system is strong. It is proven. The infrastructure is in place. We have the right people as part of our TAFE network, but we have to fund that. It is like anything in life: if you starve something, eventually it will wither. We have known for a long time that the Liberal Party simply hate the TAFE system; they just do not like it. It is ideological hatred.

Over a million Australians every year participate in skills training. Labor are very proudly the party of skills, training and apprenticeships. We are committed to providing a quality TAFE system. I want to take this opportunity to remind the government that it was the Prime Minister and the Treasurer who cut more than $2 billion from skills and training programs just over a year ago in their first budget. That is what they decided to do in an economy that needs to grow and needs skills. If I were to ask ordinary Australians, 'If you were going to grow the economy and develop skills and training, what would you do?', I do not think they would say, 'We'd cut $2 billion from the programs that help provide skills and training.'

Labor has a proud record in providing tax assistance for small business and helping the economy. It was a Labor government that introduced a range of measures to help small business. It was the Liberal Party who cut those assistance measures, only to realise how effective they were. They are now trying to restore them a couple of years later. I reiterate Labor's support for these measures and, most importantly, for the small businesses of Australia.