Tax Laws Amendment (Small Business Measures 1 & 2) Bill 2015


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Ms BIRD: (Cunningham) (18:09): It is a pleasure to speak on these bills and indicate my support for them. It has been amusing to watch the government's contortions in its attempt to create a sense of concern that Labor was ever going to not support the bills given that all the indications we have given since the initiatives were announced on budget night have indicated quite clearly that we were intending to support the bills. As many others, including the Leader of the Opposition, have said, the ALP's position reflected the fact that many of the initiatives were actually ones that we had put in place and that the government actually abolished in the 2014 budget. So, of course, it is a pleasure to be able to support these initiatives. It is a pleasure to be able to welcome a positive backflip by the government and to see the opportunity to support measures that we, when in government, felt were important and useful for the wellbeing of small businesses. We were very disappointed to see the government abolish these measures at the last budget so, of course, we support the bills that are before us.

I want to outline some of the major initiatives under the bills and talk about the implications in my seat of Cunningham. I also want to talk about a less happy side to this story, which is my portfolio area and what is happening with small businesses in the skills space. The first bill before us, the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015, amends the Income Tax Rates Act 1986. Its purpose is to reduce the company tax rate from 30 per cent to 28.5 per cent for companies that are small business entities—that is, those with an aggregated turnover of less than $2 million. For all other companies over that threshold, the company tax rate will remain at 30 per cent. The government's estimate of the financial impact of the bill is approximately $1.45 billion over the forward estimates.

The new tax rate of 28.5 per cent for incorporated small businesses will take effect from 1 July this year, and it commences a two-tier tax system for business in Australia. Labor supports the bill. Schedule 1 of the second bill before us, the Tax Laws Amendment (Small Business Measures No. 2) Bill 2015, amends the accelerated depreciation rules for small businesses 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. The increased threshold of $20,000 applies from 7.30 pm on 12 May 2015—budget night—until 30 June 2017. From 1 July 2017, the threshold reverts to $1,000. The increased threshold is available to all small businesses. Schedule 2 of that 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. The date of effect for that measure also is 12 May 2015.

In relation to the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015, which deals with the tax rate, I want to put on record the fact that Labor has supported, and had a significant commitment to, reducing the tax rate for small businesses. In fact, we had a proposal to do just that when we were in government. For the record, it is interesting that those opposite actually voted down that small business increase at the time. They said it was unaffordable. It is hard to see what the difference is now, given that they are a government that claims there is now a debt and deficit issue that must be handled. Apparently, this is now a positive stimulatory measure. The only difference really is that that was a Labor government proposal and now it is a Liberal-Nationals government proposal. It is interesting to see that what was, when Labor was in government, an unaffordable measure has now become a critically important one. But we welcome that.

I also want to touch on what I believe was an important contribution by the Leader of the Opposition in his budget reply speech. He indicated that we would be keen to talk to the government about the opportunity to make that a more significant, five per cent, decrease. Given that there has been quite a history now, across the Rudd-Gillard governments and the Abbott government, to look at ways to stimulate small business activities in all our communities, that that would be a good opportunity for the government to take up.

I think it is particularly critically important to also acknowledge that the measures in the second bill before us, which introduce accelerated depreciation for small business entities and primary producers, are something that we support. We support them because we actually introduced them, just a few short years ago. We in government increased the instant asset write-off from $1,000 to $5,000 and then further increased it to $6,500. In fact, it was this government, in its first budget, that then wound it right back, to $1,000. It is hard to understand why something they did not like only 12 months ago they now do like, but we can only be grateful that that is the direction they have taken, rather than cutting something again. The instant asset write-off and other tax measures that are designed to help small business and business more broadly are important initiatives, and they are proposals that will make a difference to small businesses in many of our communities. We agree that they are great for small business, and we have done so since budget week.

I also want to talk about the other side of the debate that is occurring around these initiatives. Obviously many members on both sides of the House have talked about the role these initiatives will play in stimulating activity, innovation, business development and the opportunities for improved efficiency and productivity in small businesses across our area. I think that is true, and I certainly hope that that is how it plays out.

The other area that is talked about quite a bit is the capacity to address jobs, and this is what I specifically want to focus on. I have expressed in the parliament my serious concern that there was no vision for jobs in the budget and specifically no articulated vision for how we would ensure that we had the flowthrough of people to take up whatever new jobs the government proposes will flow from these small business initiatives. I have concern about this because there are ongoing and consistent reports from business about a skills mismatch, about their inability to access the skilled people they need for the emerging job opportunities they have. Only today, on the front page of the Daily Telegraph, there was another story about feedback from businesses, about their concern that there has been such a significant drop—over 20 per cent—in commencements of apprenticeships. They are concerned that the ability to find young people who are the right match to undertake an apprenticeship is getting increasingly difficult. And I should point out that there has also been more than a 20 per cent decrease in completions of apprenticeships. So, even those they take on are not actually completing their apprenticeships.

I think that is a major failure of the government, and it has a direct relationship to small business opportunities. When I talk to small businesses in my region—and I know that members across the House would have the same experience—for many of them the No. 1 concern is not just that they get the right skills to match the jobs that they might have available; they are just good people who want to give young people a go. That is the consistent message I hear from so many small business people, particularly as many of them have themselves gone through trade training or some of the paraprofessions that are available in our TAFEs and VET sector, and they have used that qualification, that skill and experience, to set themselves up as small business operators. They have families and nieces and nephews. They are connected into their communities—of course they are, very much so, probably more significantly than is the case in the big businesses that many of us have in our regions. Small businesses are significantly community people, and they really want to give young people a go.

So, it is a particularly important task for government to be supporting the next generation of tradies and small business people, giving them the opportunity to get a leg-up and a start their own small business. That is why I have been particularly critical of a number of cuts the government has made. The first one I want to talk about is the program Labor had, in government, that specifically addressed this. It was called the Apprentice to Business Owner Program. It recognised that many apprentices finish their training period, quite often with a large employer—which, to its credit, has had an ongoing apprenticeship program and puts people through the program—and only a few are kept on at the end, and the others need to go out and either find alternative employment or, as so many do, set themselves up as their own small business. That requires a whole range of additional skills and knowledge quite separate from the sort of training they got in their apprenticeship—business regulation requirements, marketing and promotion, or a range of other skills and knowledge. This program offered training to post-apprentices so that they could actually get that skills and knowledge and get themselves set up and operating as a small business. What happened to that program? It was abolished in the 2014 budget.

The other issue that is raised by small business and reflected in today's Daily Telegraph story is getting young people with the right level of skill to actually undertake an apprenticeship. Employers, people wanting to take on an apprentice—and I am sure all the members here have had similar experience in their areas—will often say that they cannot get someone who really has the ability to undertake the apprenticeship. They need some more language and literacy, numeracy and other forms of job-readiness training for the employer to have the confidence to put them on as an apprentice.

In answer to that, in government we had a program called the Apprenticeship Access Program. This enabled organisations to take on a young person who was really keen to do an apprenticeship but was not quite ready for it. They gave them the training and skills, and it was highly successful in translating those young people into full-time apprenticeships. When I was a minister I met a great example of that, at Parramatta, with the Motor Traders' Association. They were heavily committed to providing this access point—and had a great relationship with a whole lot of traders across Parramatta—to give disadvantaged young people the opportunity to skill up and be ready to undertake an apprenticeship. It showed you how all of those small- to medium-sized businesses across that area were dedicated to giving young people a go. What happened to that program? It was abolished in the 2014 budget.

The last one I want to touch on—although there are many of them in my area that have been cut—is the Joint Group Training Program. Group training organisations have been fantastic for decades in employing apprentices and then having them placed with small- to medium-sized businesses in order to get the training. They were set up because people recognised it was difficult for small- and medium-sized businesses to manage the employment, mentoring, support and all of that administration and additional work that needs to be wrapped around an apprentice to make a successful completion. In big organisations you have HR departments and people who have the capacity to do that, but small businesses were missing out on taking up apprentices or trainees. So the Joint Group Training Program was funded by government to boost training organisations—to ensure and guarantee that small- and medium-sized businesses would be supported to take on apprentices. I am very sad to report to the House that in the MYEFO last year it was cut by 20 per cent, and it has been completely axed this year.

We want to talk about providing opportunities for the next generation of small businesses and meeting the requirements of current small businesses who want to get the right skills-match for emerging jobs or just give young people in the area a go. This government needs to have a really good look at the decimation created in the skills portfolio. There is not a single new initiative in this budget. They are failing the next generation of small businesses, tradies and people who want to give young people a go.