Julie Owens (Parramatta, Australian Labor Party, Shadow Assistant Minister for Citizenship and Multicultural Australia) Share this | Hansard source

I'm pleased to stand to support the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. These amendments to the taxation law will provide small and medium-sized businesses with a turnover of up to $50 million a year with a reduced tax rate of 25 per cent by 2021-22.

I'm also pleased to see the government drop its one-point plan—its plan A, as it was referred to by a number of ministers this week—to give a $60 billion tax cut to big business and delay the tax cuts to small business until seven years down the track, 2025, supposedly committing future governments to delivering a tax in what the previous Treasurer Peter Costello called a weird alternative universe. I'm pleased to see them drop that one-point plan and bring forward these small business tax cuts to 2021-22.

We on this side of the House are pleased to support this bill for a number of reasons, not the least of which is that it provides certainty and avoids an ongoing scare campaign from the government side about what will or won't happen to the tax act or the tax rates over the next seven years. It puts in place a framework that small business can rely on and that's supported by both sides of this House, and that's a very good thing.

It's an interesting strategy that the government has taken up here, to have a plan to grow the economy simply by reducing tax rates. When I talk to small business, I get quite a different story. I get a concern from them about what helps them grow—what helps them increase their size and increase their profit. Many of them have said to me that they would forego a two per cent reduction in the tax on profit if they could grow their profit much more—if they could find a way through the pressures on price, on electricity, on gas or on wages and if there were good access to capital, better competition law, better planning et cetera. There are all sorts of things: better coordination across the states would allow them to move across state borders without additional multilayers of red tape. There are many things that they ask for to get the barriers out of their way so that they can grow and so that they can pay their staff, pay their costs, pay themselves and get a profit.

I take exception to something that one of the earlier speakers said, that a profit is the wage of a business owner. Actually, it's not. If there are businesses out there for whom the profit is actually how the business owner is paid then they should go and talk to their accountants, I think, and check that out, because that should not be the case. It was said in the context that we on this side of the House don't understand business but that speaker does. I would just suggest that that particular speaker on the government side go and talk to a few business owners and accountants, because that's not the case.

We on this side of the House believe that we have a better taxation policy than the government. We support this cut in the tax rate to 25 per cent by 2021-22. This is to provide certainty and because it's within the range of what you'd expect from this government, given what it campaigned on before the election. As a responsible opposition, we don't just oppose everything; we try to find policies in the frame that we can support. But we believe we have a stronger policy because we have an additional policy for small business, which is known as the Australian Investment Guarantee. It's a superior tax policy to what the government is offering because it provides tax concessions when businesses invest in their own growth. It's a 20 per cent tax deduction and accelerated depreciation on all investments and new assets that are over $20,000 in value. That means that, if you buy an asset or build an asset worth a million dollars, you get 20 per cent of that—$200,000—in depreciation in the first year, plus the remaining 80 per cent depreciated in the usual way from the first year. So if you're on a 10-year depreciation schedule then you get another 10 per cent of the remaining 80 per cent in the first year, and if you're on a three-year depreciation schedule then you get one-third of that remaining 80 per cent in the first year.

It's a policy that rewards and assists investment that small businesses make in their own growth. It dramatically improves cashflow at a time when businesses are investing. If you talk to businesses out there, they're incredibly appreciative of this and they've been calling for this sort of support for quite some time. It's also been well received by the peak bodies across the accounting sector and most of the peak organisations around the country. So we're really proud of the Australian Investment Guarantee, which will sit in conjunction with the tax cut down to 25 per cent as a strong support for small business.

We will delay the introduction of the Australian Investment Guarantee by a year. That's our method of paying for the tax cuts that we're supporting today. The government, of course, hasn't stated how it's paying for them, but we have. We will delay the Australian Investment Guarantee by 12 months in order to pay for our support for the cut in tax today.

We've also announced an additional second commissioner of taxation to assist small businesses that have been struggling in their relationship with the ATO. We've had many businesses tell us that they've complied with the rules as they understood them but have found themselves in dispute with the ATO. We know that not everything's perfect—we've heard some dreadful stories lately—and we believe that there's a fundamental principle that those considering the appeal should not be the same people from the same business unit as those who made the original decision which is being appealed. This will provide separation and change the power relationship, and we believe this will be very good for small business.

But there are also a number of other policies that have been called for by small business, and I want to talk about some of those. Changing the rate of tax on profit doesn't necessarily grow a business. There will be some businesses that will reinvest it; there will be many others that will just take it, bank it and use it to buy another investment property or whatever. There will be some that will reinvest, but there will be many others that won't. So cutting the tax rate for small business does not necessarily provide the bang for the buck that our small-business community needs.

Previous speakers have talked about energy policy, and I will move through it very quickly. Investment in new sources of energy took a nosedive when the current government came to power, essentially because of uncertainty, and we need certainty. The only way to reduce power prices in the long run is to have certain policies that encourage investment in new power and the replacement of old assets, some of which are well past their use-by date but are still in operation simply because new sources of power haven't come online. As we see those older assets becoming more and more expensive to run and as we see the older power plants crashing in heatwaves—the very time we need them to be operating at their full capacity—we will see prices continue to rise. We need certainty and we need it now, and, quite frankly, the government has let down business seriously in that field.

We also have a plan to revitalise and refresh vocational education and training, with 100,000 TAFE places to be provided free of charge. Small business is telling us every day—and they must be telling people on the government side as well—of their difficulties in finding and attracting appropriately trained staff.

We announced, quite a few years ago now, an access-to-justice policy. It's all very well to have unfair contract provisions. It's all very well to have effects tests. It's all very well to have the laws. But if small business can't afford to take on a big business because of the legal costs then you don't have anything that's worth having. You have a law which cannot be used. We've heard over and over and over again for many, many years the problems that small business have in taking on big business, because big business can just wait them out and appeal—and the small business will go broke while the court case is underway.

We know that access to justice matters. I would encourage the government that's introduced the effects test and has made the adjustments to consumer law to allow unfair contract provisions to apply to small business to consider what small business needs to make use of those laws, because without access to justice the laws are not viable. The review on unfair contract provisions is due in November, and I know there will be many people saying exactly what I'm saying—without access to justice, without the money or the process that allows small business, if they're being treated unfairly, to take on big business, the law is just law. It's just paper.

We have a very strong phoenixing policy. It's good to see the government starting to respond to that, but we've been talking for years now about unique identifiers for directors. We've been talking about cracking down on the dodgy fly-by-night businesses that fold up one day, palm their employer entitlements off to government, re-emerge the next day in a flash of flame, and then they're in business again. We know it's not just the employees of that business that are damaged but all the people down the chain. When a business doesn't pay its suppliers then that business can't pay its suppliers and then that business can't pay its suppliers, and so we get this domino effect down the supply chain, one small business after another.

Anyone who has been in small business knows how fragile your cash flow can be. If you have a large contract that is not paid for several months, that can kill you. Cash flow kills you. Viable businesses can disappear simply because the cash flow is not there because another business did the wrong thing. We need to address that, and I urge the government to do so. I know they're starting to move on phoenixing and move on all that sort of stuff—quite a few years after we did. But, please, take this seriously. The government must act. It's incredibly damaging for small business. Again, I would urge the government to look at Labor's policy on sham contracting and wage theft as well. And Labor has offered a service guarantee for the NBN that offers financial penalties if the NBN does not meet its service obligations. We have set those penalties and we will expect them to be met.

In summary, I support this tax cut. It's a good move by the government to walk away from the big business tax cuts at this stage. I hope the government is serious and I hope it doesn't return at some point in the future. I know the government has been committed to it for a long time but it will be good to see small business receive this tax cut in 2021.

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