Bruce Billson (Dunkley, Liberal Party) Share this | Hansard source

From another vantage point, I am thrilled to be able to make a contribution to the Omnibus Repeal Day (Autumn 2015) Bill 2015 and support the government's ongoing work in this crucial area of right-sizing the regulatory and compliance impost that government inflicts on our community, whether it be businesses big and small, individual citizens or, as the member for McMillan pointed out, enterprises right across this country just wanting to do the right thing and take advantage of the opportunities that are available in this modern world.

The motive is pretty clear: we want to make it easier for people to meet their requirements by making sure the government thinks harder and more thoughtfully about the impositions that it inflicts on citizens and on businesses. There is good reason for that. You have heard colleagues talk about the compliance cost in the economy—$65 billion in annual costs to meet the Commonwealth's regulatory compliance burden, let alone that imposed by other levels of government and some that industry even inflicts. We did a lot of work in the agricultural industry trying to make it easy for primary producers to meet requirements and found that, in many cases, it was actually industry itself creating compliance burdens. So we have to be alert that these burdens aggregate across all of the demands placed on men and women in going about their private business but also on small businesses and larger businesses. They act as a drag on what people want to achieve and have as their goals for their lives. That is why the government is about getting its act in order, so that it can support and not needlessly make it more difficult for individuals and businesses to achieve their ambitions for the future.

This is another instalment—this is not a single event; this is another instalment in an ongoing conviction that we have to get that compliance and regulatory burden right. There are reasons for that. The World Economic Forum analysed the compliance cost to our economy and compared us to other nations that are also trying to win new market opportunities, for instance, made possible through the North Asian free trade agreements. When the Howard government left office, we were 68th in the world, according to the World Economic Forum. That was mid-table—not that flash; not too shabby; mid-table. Since that time and prior to the election of the coalition government, from 68th in the world we became 128th at the time that Labor was voted out and a new coalition government was elected. That means there are 127 economies less gummed up than ours, as we go out to contest and try to win markets in the international environment, and also as domestic businesses try to meet those challenges of others wanting to be a part of our economy. So the motive is clear: we need to be more agile and more innovative. I have talked about that for years and years. This is one way of getting rid of the entanglement that is excessive compliance costs and regulatory burden.

This bill does that in a number of key areas, as colleagues have talked about, including tidying up institutional structures and organisational arrangements in the Landcare space and getting rid of redundant legislative provisions in the environment sector. This is not about getting rid of regulation just for the heck of it. No; it is about getting rid of what serves no good purpose, has no place and adds nothing to the peace, order and good government of the Commonwealth. We see that right across the range of measures that are in this bill. It recognises that the farming community needs support, not greater burden—not lead in the saddlebag as it tries to compete and win those export markets. It is also about making sure that people know what is required of them. Clarity around those regulatory impositions can very much help in meeting them as seamlessly and as effortlessly as possible. Here we also have some measures looking at how new technology can be better embraced, with the Digital Transformation Office and its work in making sure that new technology can be a part of people's day-to-day interactions with government and that we get our act in order to facilitate that ease of communication.

It was an area that I focused on particularly in my time as the Minister for Small Business, because time-poor small businesses spend most of their weekends meeting compliance burdens if they are not chasing markets or reflecting on what else they can do to support the success of their enterprise. Small businesses spend too much time on paperwork. We made some good progress, and there are further steps in this package that support that ongoing effort.

A particular area we need to focus on is around tax regulation. You talk to small businesses and you share with them, as I did when we owned our small business, the joy of filling out a BAS return. At the time that system was introduced, we had a BAS return with many more fields that needed be completed than the essential ingredients to establish what needed to be advised to the tax office in order to establish tax liabilities. We think there is scope. I am sure the government thinks there is scope. Certainly, I thought there was scope as the small business minister at the time to try and streamline those arrangements. It is interesting when you look across the ditch over at New Zealand. They have about five key fields in order for New Zealand businesses to meet their goods and services tax requirement. We have many more than that, and that adds to the cost and compliance complexity of meeting those obligations.

There is scope, I think to reduce the number of fields that are reported as part of the BAS down to about five key fields—the essential fields. There are fields in there that we ask people to complete—whether things are export and whether they are broadly exempt or partially exempt. These all add great cost and complexity to a small business. I once met with an exercise therapist—I think that was the term—who helped people in a rehabilitation mode. He explained to me that who was paying for his service had an enormous impact on what the tax burden was, and at the end of the month he hoped he got it right. That was interesting to hear a highly skilled, knowledgeable professional in the service economy talking about how one of the greatest challenges he faced was knowing whether he was doing the right thing or not.

What was pointed to by MYOB in a roundtable that I participated in, and reinforced in their submission to the tax white paper process, is that we can do better than reduce the number of fields that are there. When we probe more deeply to find out why the BAS has so many more fields in our economy than in other comparable economies, often the argument that you get is that those extra data fields are actually being harvested to help with compliance and cross-matching so that there is certain material that is available and is sought at the time the BAS is returned, and then you can use that data in other ways just to make sure that there is no noncompliance in other aspects of tax reporting. That is an understandable objective, but the cost of that is very substantial, and I think it is justified for us to call for a benefit-cost analysis as part of the tax white paper process. What risk to revenue is the additional compliance cost of all these extra fields negating? Is it actually a cost-benefit analysis conclusion that we should maintain an ongoing requirement for all these businesses to keep providing all this extra data in extra fields on the off-chance that it might illuminate some bleeding of revenue somewhere else in the system? I think that cost-benefit analysis would probably find that the known cost of the additional burden imposed by these additional fields is in the billions of dollars—and I will not quote MYOB's estimates, but it is very substantial—yet we are not quite sure that that is the amount of revenue we are actually capturing that would otherwise escape the tax system. With digitisation—as I mentioned earlier, the Digital Transformation Office—and what is happening with prepopulated software packages, whether it be MYOB's own products or Xero's product, these are all examples where we are getting prepopulated reports coming into the tax office that can be quite readily verified. In fact, it represents a new order of seamless compliance that we should be embracing as part of our effort to reduce the compliance cost and regulatory burden.

So these days are very important. It is the government making it clear that this is a conviction running through the veins of the coalition: that to get regulatory impositions right you have to be absolutely convinced that it is the best public policy response to whatever the known problem is that you are seeking to address, that you have canvassed other options, that it is proportionate, and above all that it is right-sized.

One of the great concerns I have—and I will continue to focus my energy on it—is just how easy it is for government to consult with big business, big unions and big interest groups, because they are organised and they easy to contact, yet in the area of tax compliance, for instance, there are more than two million respondents to the architecture that is set up, and they are small businesses and their voice needs to be heard. It is not much good coming up with interventions and regulatory requirements in compliance systems that have been workshopped with big businesses with two dozen people in the compliance department but that are absolutely overwhelming for a small business or self-employed or independent contractor, who may find it difficult to navigate what is required of them. So we need to make sure right-sizing is a part of that work.

We have done some good work, and there is more work to be done, even in tax regulation. We are able to relieve around 447,000 small businesses who could benefit from changes to entry thresholds for PAYG instalments, reducing the compliance cost in that one area by $67 million a year. Forty-five thousand small businesses that have no GST reporting requirements are now no longer required to lodge business activity statements where they are not engaged in business activity and the lodgements have been made only to report PAYG instalments. Here again, thinking through what is actually going on in the economy, we can right-size the regulatory intervention that is expected of people, even in important reforms like the Franchising Code reform. Even that measure, designed to improve the effectiveness and give new tools and teeth to that important area of the economy, had a deregulatory disposition and some savings as well.

The area of single-touch payroll is another area of great opportunity that we need to pursue as a nation. I mentioned earlier that Xero and MYOB have functionality—and others do; I am not doing an ad for those two in particular—where you can record transactions and it will prepopulate your P&L and your balance sheet. It is a simple next step to say that while you are doing that as an in-built feature of your software—software that can now be serviced from the cloud, so rather than spend all the money buying the software and the implementation manuals you can essentially rent it now and expense that—that measure should be able to find its way easily over to BAS reporting requirements. That is not everyone's cup of tea. For some people who might have a limited number of transactions, it might not be of great virtue. But, for those that are looking to meet their tax requirements in a seamless way and know that that is something that they can do without great effort, that is something we should be working toward.

Here is an idea: if the tax office has no concerns about a BAS that has been returned or a business's reporting arrangements, why don't we tell them? There is a novel idea! We know we have these algorithms that identify reports that are outside the norm or what is expected, and they are the ones that attract greater eyeball attention from the tax office. But if you are in the zone—if those algorithms say, 'Yep, that return looks about right'—then why not tell the business that, so they can worry about other things and focus their energies elsewhere, and not lie awake at night wondering, 'Am I going to get audited?' 'No, no; here is a receipt saying: "Thank you for your contribution to our economy. We value and welcome your enterprise. And isn't the small business tax package we have introduced spectacularly fantastic? You might want to get a piece of that as well. But, by the way, you are up to date and sweet with your reporting requirements, so go and think about something else; don't worry about that."' These are things that we can do. That is about getting our institutional arrangements right by providing timely, service-orientated information to those people responding to these compliance burdens, and those compliance burdens being thought through carefully to make sure that they are justified, they are the most sensible public-policy intervention, they are right-sized and they do not overreach just because you have got someone's attention.

So I commend these bills to the House, but I urge the whole parliament to realise: this is a journey we have to stay on. Extra compliance costs and regulatory burdens impede our ability as a nation to achieve our full potential. It stands in the road of businesses and individuals achieving their full ambition and all of us being our best selves. Regulation is needed at times. But make the case, and, if it is targeting smaller businesses, make sure it is right-sized, so that any small business, in the ordinary course of their business, can meet those requirements and not need 12 people in a compliance department.

So let us stay focused on this, tidy up the BAS, get rid of the excess fields, meet the challenge—if other jurisdictions are able to do it, why can't we?—and, if there is a need for extra fields where it is not immediately obvious why they need to be there, do a benefit-cost analysis. That will mean an awful lot to the two million small businesses who are the engine room of the economy, who run through the veins of this side of the parliament, and who, I might say, I was extraordinarily honoured to represent and advocate for with great vigour over many years.

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