House debates
Monday, 22 February 2016
Bills
Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016; Second Reading
4:56 pm
Fiona Scott (Lindsay, Liberal Party) Share this | Hansard source
I rise today to speak in support of the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016. In my maiden speech, I read a quote from Winston Churchill:
Some see private enterprise as a predatory tiger to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.
Small business is just that: a sturdy horse pulling the wagon. All businesses were once small. If you look back at the history of businesses, you will always find at their heart, once upon a time in the generations that have passed, an entrepreneur with a vision, be it somebody like Steve Jobs, Bill Gates or Richard Branson. That is the thing about small business: they start small. Some will grow into multinational enterprises. Some will be one-man sole traders. But, for businesses to become large, they need to start somewhere.
This bill will enable Australian small businesses to change their legal structure without attracting a capital gains tax liability at that time. If we want a small business to grow into medium businesses or large businesses, if we want it to go from being a sole trader to employing a second, third, fourth or fifth person, at some point in time the structures that were appropriate when it was a sole trader may be inappropriate when there are two, three or four employees or the structure within the family's life changes as things happen. That is why this is a good bill. That is why this is a bill that is good for small business. We need more entrepreneurs—more entrepreneurs who will take risks and innovate.
In Australia, small businesses account for 97 per cent of all businesses. In the electorate of Lindsay, Gai Hawthorn, who runs the CBD Corporation, reports that there are close to 1,100 businesses in Penrith alone—and you can add on top of that the other major centres such as St Marys, Kingswood, Emu Plains and Glenmore Park., According to the Penrith City Council economic profile, there are 12,000 businesses across the Lindsay electorate Businesses currently employ 70,000 people across the Penrith local government area. By 2031, that will grow to 120,000. It is crucial that on the outskirts of Sydney, in places like Western Sydney, we are working with small business not to hinder them but to help them get to their feet. The number of small businesses in the Penrith region is expected to grow to over 120,000 by 2031.
We are attracting small businesses and entrepreneurs through a very modern approach, but we are looking to work with many partners, like Deloitte, like Western Sydney University, in the construction of what will be an innovation corridor. This is a smart high-tech corridor that will include many great organisations and, in particular, some really brilliant ideas—places like the Sydney science park, which will be home to 10,000 research positions and 12,000 jobs in biotech and technology, and of course the Sydney IQ facility at Werrington.
One of the things I find really exciting about the Sydney IQ site is the LaunchPad that Western Sydney University has inside the first building there. What is exciting about LaunchPad is that it is in the vein of your Fishburners—it is the organisation of bringing together young, smart entrepreneurs so that they can work together, feed off each other, come up with new technology and come up with new ideas. In this collaborative space, just like you see in Fishburners, they are coming up with ideas for tomorrow. In the case of some of the biggest entrepreneurs and the biggest businesses of today, like Microsoft, Facebook or any of those organisations, a lot of it started with a young, innovative guy thinking about how they could break the ceilings, break new boundaries. And that is what is really exciting about LaunchPad.
We are also working with Penrith City Council to build a commerce and education precinct, a health precinct and of course a justice precinct. According to the Penrith CBD Corporation, this legislation can represent real cost savings up-front for those small and medium enterprises requiring a change in their business structure. Due diligence and professional advice by the business owner should always be undertaken to ensure that the pathway is suitable. But the CBD Corporation goes further in saying that they are supportive in this case with the positive direction of the federal government in the realm of small business enterprise. This bill will reduce risk and complexity and make it easier for businesses to grow by allowing small businesses to change the legal structure of their business and to have the capital gains liability disregarded and deferred until eventual disposal.
Sometimes a small business will start operating within a legal structure that is not necessarily best suited to the owner's needs. This can occur because they did not receive advice or the advice was inadequate, or because the business has developed beyond the original aspirations of the owners. My grandfather started my own family's business in 1936, and of course as the business passed through the generations the needs also changed. I know that it was quite a challenge for my dad to upgrade or update the legal requirements of the business because of some of these hurdles. That is why this bill is a very good measure.
For small business owners who find that they are running a business through the wrong entity structure there can be additional administrative burdens and cashflow impediments. This bill has a cost to revenue of over $40 million in the forward estimates period and, along with other tax measures announced in last year's budget, will provide over $5 billion of support to Australia's hardworking small business owners. This is another example of the coalition government reducing the burden of unnecessary red tape on small business and aligns with the findings of the board of the tax review of impediments facing small business. The coalition government is creating the right conditions for Australian small businesses to thrive, encouraging employers to create new jobs and to make a continued significant contribution to the economic wellbeing of our nation.
I commend this bill, and I commend the work the government is doing to help small business, to encourage small business, because small business is important particularly in the outskirts and places like Lindsay where two thirds of my workforce have to compete every single day for their jobs. Small business is the key employer in places like Western Sydney. That is why we need small business to be nimble. That is why we need small business to innovate and to create. We need small business owners to not see a ceiling. We need them to blast through that ceiling to create some wonderful businesses.
I look across my area and I look at some of the businesses and entrepreneurs that have been so successful—people like Jim Aitken, who when he was a young man pumped petrol for my grandfather. He then started a business called Jim's Bins, and now he has multiple real estate businesses right across Penrith and the Blue Mountains. These are the sorts of people who are now employing masses of other people and moving our community along. They are people like the Campbells, who created Clarendon Homes. Clarendon Homes has been one of the bigger housing construction businesses across the Sydney basin—once again, started in Penrith from just a family.
Another person who has been quite successful is Tony Ferguson. A lot of people have tried the Tony Ferguson weight loss program. Tony Ferguson started as a small chemist on High Street, Penrith, and from there he had an inspiration through pharmacy and through his knowledge of health that it was not just about putting out some shakes and things like that; Tony wanted to work with people in a holistic sense. He grew far beyond his chemist on High Street. The other great thing about Tony is that he was one of the very first people to bring in late-night trading for his chemist. These are the sorts of things we need to look at.
When I talk to people like Tony Ferguson and different small business owners in my region there are concerns about generational planning—when the generation is taking over and what the ownership structures of that will necessarily be, or when there are divorces in the family. In my own family, both my father and his business partner, my uncle, had divorced, and my grandmother had a one-third share. So, there was a share between my grandmother and my dad and his brother, and when my grandmother passed on obviously that was going to affect the business structure. My dad's and my uncle's divorces were also going to affect the business structure. That is why these measures are so important. The 50 employees my dad had in his business needed to have certainty. They did not need their jobs impinged upon by changes in families; they needed to know that their jobs were secure and the business was going to be able to continue on.
There are a lot of measures in this bill that I think are really good. It is important for small business to have the nimble-footed ability to change their business structure without so many hurdles. Innovative businesses that are starting with products today will change over the future so that their business models can grow. If we want to see small-business incubators—places like Fishburners or the Launch Pad out in Western Sydney—we need to ensure that those small-business entrepreneurs can take their vision, take their dream and get to their feet, and when they get to point of getting own premises or bringing that first employee in we need to ensure that we do not get in their way.
As I said at the beginning when I quoted Sir Winston Churchill: small business is the 'sturdy horse pulling the wagon'. We may see shooting stars of wonderful entrepreneurs with brilliant ideas but, if we try to hold them back, if we try to milk them, if we try to keep them down they will never really reach the stars. If we help them, at the end of the day, it will mean more jobs for more Australians. That is why I support this bill.
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