Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Small Business, Senator Sherry. Can the minister outline to the Senate how the government's tax reform package will improve the cash flow of small businesses? What other initiatives has the government launched to reduce the compliance costs of small businesses?

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

A big new tax has been provided!

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

I thank Senator Thistlethwaite for his question. And, no, Senator Macdonald, tax cuts. Australia's two million small businesses will benefit from a package of effective tax cuts that will improve cash flow and also reduce red-tape compliance costs.

This week the Assistant Treasurer and I released for public consultation the details of these tax changes. From the 2012-13 income year the package will allow small businesses to firstly immediately write off assets valued at under $6,500—that is for each item—and that is an increase in the write-off on those assets from $1,000. It is a very significant increase in write-off. There will be an immediate write-off of up to $5,000 for motor vehicles acquired from the 2012-13 income year, with the remainder to be written off at the rate of 15 per cent in the first year and 30 per cent in following years. There will be a write-off of other assets in a single depreciation pool at a rate of 30 per cent, after 15 per cent in the first year.

The increase in the instant asset write-off threshold from $1,000 to $6,500 is very significant. It allows for small business to claim an immediate deduction for assets costing less than $6,500, rather than having to depreciate them over time. The simplified depreciation pool arrangements will also allow small business to depreciate some assets more quickly, at a rate of 30 per cent instead of five per cent, and help reduce compliance costs. The measures will have a significant impact on improving the cash flow position of small businesses. The total cost of this assistance package in 2013-14 will be over $1 billion. It is a very, very significant improvement in the tax treatment for small business and it builds on this government's commitment to cut the company tax rate for small business from 30 per cent to 29 per cent from the 2012-13 income year. (Time expired)

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister outline how the government will fund its policies to boost cash flow for small businesses and how they will affect the budget?

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

The tax reforms that I have outlined specifically in this case for small business will assist small business and therefore strengthen an otherwise strong economy, in marked contrast to the state of small business and economies in most other developed economies. This $1 billion tax package will be paid for by the mining tax. I noted with interest that the Liberal Party, after having done very little for small business except delivering the GST in their almost 12 years in government, has decided to support the tax package that I have just outlined. At long last the Liberal Party has decided to reduce tax for small business by supporting the measures I have outlined. However, unlike this Labor government, it cannot pay for it. Those opposite are not only going to oppose the mining tax; they have promised to reverse the mining tax. (Time expired)

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Is the minister aware of any alternative policies to the government's tax package? Have these policies been independently costed?

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

As I was saying, this $1 billion tax package for small business, I am pleased to say, is being supported by the Liberal Party. At long last they are supporting tax cuts for small business, but they have no way of paying for it if they are ever elected to government, because these measures are paid for by the mining tax. As has been admitted by the shadow Treasurer, Mr Hockey, the consequence of these measures together with a whole range of other promises they have made—they promise anything to everyone; that is the Liberal Party's approach—and of their position of repealing the mining tax but supporting our $1 billion in tax cuts to small business is that they have a $70 billion black hole. They have to find $70 billion in savings. Mr Hockey has admitted that $70 billion needs to be found to pay for this measure and others. (Time expired)