Luke Howarth (Petrie, Liberal Party) Share this | Hansard source

I rise with pleasure to speak on the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015. We hear again and again in this place that small business is the engine room of the Australian economy. There are literally thousands of small businesses in the Petrie electorate and the value they provide to our local communities is enormous. As the federal member for Petrie I do want to take this opportunity to place on record my thanks to the small businesses, the sole traders, the partnerships and the other individuals who operate businesses within the Petrie electorate for the work they do. Thank you to the people you employ in the business you run, because it creates a big difference to the Australian economy. You are not only providing yourself with a wage or a business income; you are also paying tax, which enables the federal government to invest in defence, health and everything else. However, in many cases you are also providing jobs for local people who live in the Petrie electorate and for that I certainly do thank you. Coming from a small business background myself, I am a huge advocate for them and for the staff who work in those businesses. Any good business owner, whether from a small business or a large business, knows that staff are the backbone of any business. Without good staff, you will not have a great business. I conduct regular small-business breakfasts in my electorate, and the issues that small business owners raise with me again and again are that red tape should be reduced, that productivity, where it can be, should be increased and that taxes should always be kept as low as possible.

The federal coalition government does understand the value of Australian businesses, small and large, but also all private enterprise. Already we have seen the first two bills of our jobs and small business package pass through this parliament, which we are very pleased about. We have ensured that all small businesses have access to the immediate tax deduction for assets costing less than $20,000. I think the small business instant tax write-off is really significant for small business. If they can buy an asset that will be used in their business and it can be instantly written off, that is a great thing. I recently visited a dental surgery in my electorate and they had invested recently in a new microscope which looks for oral cancers and other defects in patients' mouths, so they were able to write that microscope off instantly. I went to another small business where they installed a 10-kilowatt solar system on their roof. They were able to take advantage of solar power in their business, using it daily. That means cheaper power bills, but, because the solar package came to less than $20,000, they were able to write that off instantly and take advantage of the instant asset tax write-off. Yet another business that I visited were able to update their computer systems and put in a new server, which is very important as well, to manage their IT needs. Because that server was under $20,000, they were able to instantly write it off, reinvest back into the business and, hopefully, expand their business to hire more staff, which is always a great opportunity for local people seeking work.

We have legislated as well a 1½ per cent tax cut for small companies with a turnover of less than $2 million. Significantly, that means that, if they have made a $100,000 profit for the year and they are normally paying $30,000 in company tax, which all companies pay to the Australian government, they will be required to pay only $28½ thousand in tax, so they will save $1,500, which they can reinvest back into their business, perhaps to pay off a business loan or some other measure. And we have progressively been cutting red tape, to the tune of something like $2.45 billion as at the end of March this year.

This measure, however—No. 3—adds to this. We know that something like 70 per cent of small businesses are not actually companies. They are not proprietary limited companies and would, therefore, not benefit from the company tax cut. This includes businesses like sole traders, partnerships, family trusts or even subcontractors. All of these set-ups provide an important service to the community. I think of subcontractors in particular. I know that the member for Bendigo does not support subcontractors. I was listening to her maiden speech as she said there should be no subcontractors in Australia. I say to the member for Bendigo that she should get out and actually meet some of the subcontractors in her electorate, because they do provide a valuable service to many industries throughout this country. Yes, they are a more flexible workforce, but, yes, they are also generally rewarded at a much higher rate. Organisations like these—sole traders or partnerships—will be able to take advantage of the $1,000 tax offset which we are introducing here.

Basically, we are providing a tax discount for unincorporated small businesses. It will help improve small businesses' cash flow by reducing the amount of tax payable in the financial year and will help alleviate the problem of higher regulatory costs. This bill will see a tax offset of five per cent of the income tax payable on the portion of an individual's small-business income, capped at $1,000. This will see small business owners having higher after-tax earnings, which they can then, of course, reinvest back into their business. This is so important if we are to give small businesses a foothold in the unpredictable global business environment. It might not even be $1,000; it could be $500 that they save. All of this adds up. Every dollar they can keep in their business and not have to pay to the government can be reinvested—for example, in fuel. Five hundred dollars worth of fuel might see that small business fill up their vehicle for the next five or six weeks. They might want to update their website. If they have saved $700 or $800 that financial year, they could reinvest that into updating their website. Or they might want new public relations merchandise such as new shirts or clothing, or perhaps a pop-up tent or something that they can use at a market, all to promote their small business. It is the little things that count; that is the point that I am making here—and this small initiative will help those businesses that are not incorporated.

The bill has the full support of the Australian Chamber of Commerce and Industry, and I would like to quote some words from CEO Kate Carnell:

It is encouraging that the government is looking after those 1.7 million unincorporated small businesses, including tradies, sole operators and partnerships, with other support. Making it easier for small businesses to claim tax deductions for their expenses will make it easier for small businesses to invest.

Kate continued:

These deductions are particularly powerful when combined with recently announced measures to help new businesses, including allowing new start-ups to immediately deduct professional costs, such as for legal and accounting services, as well as streamlined company registration and removing barriers to crowd-sourced equity funding.

I want to take this opportunity to congratulate one of the cabinet ministers in the coalition government, the Minister for Small Business, the Hon. Bruce Billson, for his dedication and passion for his portfolio. I know from personal experience that he is always keen to hear what is going on in the Petrie electorate and to listen to feedback from my local small business owners. He was in the electorate recently for a small business forum and he chatted to, probably, 30 or 40 small business owners and was very intent in listening to their needs.

I know that both the small business minister and the rest of the cabinet are always looking to the next thing that they can do in this space and how else the government can support small businesses. We know that, while the public service is essential for jobs and for maintaining important services, small businesses are where we want to see more jobs created. I always encourage small businesses in my electorate, which may be sole traders or partnerships, to look at how they can grow their business and at how they can put on more staff that may be able to assist in the business. That is the purpose of any changes like this, to see how we can stimulate more growth for jobs which will, indeed, support local people and help reduce unemployment. We know that small business is the backbone of this, and I certainly do thank them for that.

The government is committed to ensuring Australia is the very best place to maintain, run and invest in a small business. Our Jobs and Small Business package is creating the right conditions for Australian business to thrive and grow. Thank you.

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