Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

I welcome the opportunity to speak on the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015 and cognate bill. I begin by acknowledging the importance of small business to our nation. Small business employs some 47 per cent of private sector employment throughout the country. Small business operators, as other speakers have quite rightly said, risk their own money and often their life savings to set up their businesses. They work long hours, they make huge sacrifices and they provide training and apprenticeship opportunities for young people. It is often small business operators who are the innovators and entrepreneurs in a rapidly-changing economy and, very notably—and I am sure this applies not only in my area but across the country—it is small business operators who are the major sponsors of local community sporting clubs. Indeed, small business contributes some $330 billion annually to Australia's GDP. Can I also take this opportunity to acknowledge the good work of two small business organisations in my electorate—the Business Enterprise Centre Tea Tree Gully and the Salisbury Business and Export Centre, both of which provide training, business advice and guidance to the many small businesses that exist in the region.

This legislation, as the opposition leader made very clear today, has Labor's support. It has Labor's support because we support the reduction of small business tax by 1½ per cent, from 30 per cent to 28½ per cent, and we support the instant asset write-off provisions within this legislation. They are worthwhile policies and, as other speakers on this side have also made very clear, they imitate a policy that had been put in place by Labor in response to the global financial crisis that this country was also confronted with only a few years ago. They are policies that we acknowledge will stimulate the economy and they are policies which, regrettably, the Abbott government stopped once they came to office after the 2013 election. Yet we now have them, some 18 months later, effectively reintroducing policies that are framed on previous Labor government policies. Perhaps a little honesty from members opposite would do them no harm in respect to this matter and it may even help their credibility.

Most importantly, what matters for small business is a strong economy, confidence in the economic outlook and confidence in consumer spending. With respect to those matters the Abbott government has failed. We see this year's deficit being $41 billion; next year's projected deficit $35 billion and we will not see the budget back in the black under the life of this government. Indeed, net debt was 12.8 per cent of GDP in 2013-14 and it will rise to 17.3 per cent of GDP in the 2015-16 budget—that is in the government's own budget papers. In other words, the government is falling further and further behind. Consumer spending is equally falling as a result of that. That is partly because it was this very government that ran the narrative that debt and deficit is bad, that it is terrible for the economy and that it will only make things worse.

They now have to respond to the very things that are happening which have been partly contributed to by their very narrative in the lead-up to the 2013 election.

Last week's reports that capital expenditure will fall by 25 per cent in the 2015-16 budget to what they had previously expected is and should be of real concern to people around Australia. It means that there will be about, perhaps just a little over, $30 billion less expended by private enterprise in capital expenditure across the country—and $30 billion means a lot of work and a lot of jobs. It also means a huge stimulus to the economy. We saw in the March quarter that spending on equipment and buildings fell by 4.4 per cent and I understand that was the steepest fall since the global financial crisis. Capital expenditure by the private sector is a major driver of economic growth and economic activity. Those figures should be, and I am sure are, of concern to people around the country.

Financial analysts have also reported falling consumer confidence, and there are several reports that point to that. I noted that in question time today the government tried to rebut those perceptions with a series of questions. Simultaneously, I also noted that in his budget address the Treasurer said that the measures we are dealing with in this legislation were intended to boost growth and create jobs, in other words to stimulate the economy. Why would you need to do that if the government was not concerned about the state of the economy at the time? My own interaction with small business in my electorate, and in fact outside of my electorate, confirms the reports and perceptions that the small business sector in this country is doing it tough, and that they are very concerned about the future of our economy.

I note that household savings are still at historically high levels. My view is that household savings reflect consumer confidence concerns, because, when people are concerned about the future, they do not spend but put their money away to save or pay off debt. That was understandable during the global financial crisis years, and I do not believe there is anything wrong with doing that, but it is not understandable that it is happening now. Indeed it sends out the wrong message. I suggest to government members that consumer savings are at the levels they are is because the people of Australia continue to have concerns about the future of our economy.

The government has direct responsibility for the loss of consumer confidence. It has responsibility for that because of the actions and the policies it implements each and every year when it hands down its budget. In its first budget we saw $3.8 billion of tax assistance cut from micro and small business. Then we had another $845 million cut in industry assistance programs. These were meaningful programs that were helping businesses across Australia. They were programs like Enterprise Connect and Commercialisation Australia. That is only one part of the picture.

The cuts to social spending equally impact on the economy in Australia. Cuts were either made or proposed in the budgets of both last year and this year that included: $2.5 billion of cuts by changing the assets test threshold and taper rate for pensioners; $48 a week cuts to 22- to 24-year-olds who are unemployed by transferring them from Newstart to Youth Allowance; $21,000 loss to families with two kids on $65,000 a year over four years as a result of other social cuts and tax measures that the government wants to introduce; $11,500 cuts to some 80,000 people across Australia who will lose paid parental leave as a result of proposed changes by the Abbott government. In addition to that we saw the $500 million cuts to Indigenous programs across the country and, worst of all, the $80 billion worth of cuts to health and education spending.

All of those cuts directly translate to job cuts. All of those cuts have an impact on communities right around the country. All of those cuts directly mean cuts to the income of businesses around the country, because that money would have been spent in one way or another, which has a flow-on effect to all of the small businesses in this country. Indeed the cuts not only impact on businesses but also impact on jobs which, in turn, mean that the consumer spending power of people in this country has been diminished. You do not have to be an Einstein and you do not have to be an economist to work out that, when you make those kinds of cuts, you will affect the income of people right across the country. That is exactly what is happening as a result of the policies of this government, which are affecting consumer confidence, which, in turn, means money is not being spent or has been cut by government, and that, in turn, means it does not flow on to the small businesses of this country.

The Abbott government policies go much further than that, and they are also effectively responsible for the collapse of the auto manufacturing industry in this country. The effects of losing car making in this country are already being felt around the nation, and they are particularly being felt in my home state of South Australia where jobs are already being lost. When I went to some of the small businesses in the very precinct of GMH they told me how they are struggling. Many of them are now looking to the next year or two with a view to closing down the business because they believe that they will no longer be able to continue to be viable once GMH closes. These are not auto component companies that I am talking about, these are ordinary small businesses dealing with a whole range of other matters such as in the food industry and so on. They can see that their business will be directly impacted by the collapse of the car industry in South Australia.

We had a debate only yesterday in respect of the renewable energy target. We saw investments in renewable energy in this country dive by 88 per cent. Some 21,000 jobs were in that industry at its peak. When you have that kind of investment slump, that directly means that jobs will be lost. I made reference to that in my contribution to the debate on the renewable energy target when I talked about local businesses in my own electorate that either had to shed jobs, or are likely to, as a result of the uncertainty that this government created with respect to the renewable energy target.

I have not even touched on the naval shipbuilding problems nor on the hundreds of jobs that have already been lost with respect to that sector. In South Australia we also had the uncertainty created by this government by not committing to build the 12 submarines in South Australia, as it promised to do prior to the election, and the uncertainty that that has caused, particularly at the Australian Submarine Corporation and the many support industries that are associated with naval shipbuilding in South Australia. Again, the impacts flow on to not just shipbuilders but all of the other businesses that depend on a strong economy.

There have been huge job losses across all sectors, and we see that unemployment in this country is rising. If unemployment rises again, consumer confidence falls, because if unemployment rises people do not have the spending power. If they cannot spend money because they do not have it that directly impacts on small business across the country. To most small businesses I know of, the most important thing that affects their future and that matters to them is to ensure that we have a strong economy.

The tax cuts and the accelerated depreciation do help support small business, but they only help if a business is making a profit or if a business has money to spend. I note that the accelerated depreciation provisions only apply for two years, unlike Labor's policies, which were ongoing. I hope that this government considers continuing them, but it is clear that in limiting the policy to only two years it is a policy that has been brought in to rebuild the political stocks of the Prime Minister and the Treasurer, and that is its prime purpose. It is little wonder that people do not trust this government. Labor does support these measures, because Labor understands and values the contribution that small business makes to our nation, and we want to provide them with help whenever we can and in any way we can.

See this speech in context