Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

I am very happy to rise to speak on the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017. This is about supporting small business. This is another key plank, another key part, of this government's plan for jobs and growth, and it sits very comfortably side by side with some of the other key planks of our plan, such as the government's enterprise tax cuts for small and medium businesses. It sits very comfortably side by side with our multinational tax avoidance laws, which, sadly, those opposite opposed, but which, nonetheless, have clawed back almost $3 billion and counting so far in tax from multinationals. Of course, we are talking here about tax which always should have been paid. And this sits very comfortably side by side with our innovation agenda.

I stand here, in this parliament, of and from Australia's small business middle-class. This is, significantly, as a result of the economic plan that this government took to the last election, at which I was elected to ensure this government could pursue this economic plan. When it comes to the government's innovation agenda—and I see these amendments as central to our National Innovation and Science Agenda—the programs it contains, the funds it distributes to help commercialisation and the reforms it has made to turbocharge our start-up sector are all great, but what is especially exciting about this government's innovation agenda is that, for the first time in many years, it puts the concept of innovation, of start-ups, back at the top of the national conversation. It has caused so many Australians to sit up, take notice and think about that little business idea that they have had niggling away in the back of their minds—that great app, that great commercial idea, that interesting thing that they have been sitting on. It has incentivised them to think about it more and, hopefully, to get out and try to make something of it in an enterprising way—to risk their ideas, to risk failure and to take our country into the future.

I will turn now to the specific aspects of this bill. This bill contains two schedules. The first schedule of this bill is about access to company losses. This measure will relax the small-business test for accessing past years' losses as current year tax deductions and introduce a new similar-business test. The new law will allow access to past year losses where a company maintains the same business but also enters into new business or transaction types. Additionally, that similar-business test will be introduced so businesses can access losses where a business conducts similar activities to that operating when the change in ownership occurred.

The second schedule of this bill is about the self-assessment of the effective life of depreciable intangible assets, and this is quite important. This measure provides taxpayers with a new option to self-assess the taxable effective life of intellectual property and other intangible assets with a statutory effective life. While the taxpayer still has the option to depreciate the asset according to the statutory depreciation schedules, self-assessment will better align the depreciation life with the actual number of years that an asset provides an economic benefit to the business. That is going to lead to better economic decision-making.

The new law also allows the taxpayer to recalculate the effective life in the later income years, if that effective life the taxpayer has been using is no longer accurate such as changed circumstances relating to that asset's use. These amendments are necessary, because of changes in the global economy. We are talking globalisation, digitalisation, trends and forces which Australia cannot and should not attempt to hold back. This is about updating our regulatory environment so that our local businesses can remain as competitive and flexible as they need to be. These trends have elevated the importance of intellectual property and other intangible assets. Brands matter. IP matters. The current taxation arrangements for these assets might distort the investment and the holding of intangibles in Australia, and hinder Australia's competitiveness as a place to do business.

Unlike tangible assets, currently, depreciable assets cannot be self-assessed to bring their tax life into line with their economic life. The statutory effective lives of these assets might not reflect the period of time that the asset really is providing use to the taxpayer. One example is that for software, typically covered by copyright, a depreciation life currently applies of 25 years, and so the mismatch of effective and depreciable life can lead to decisions being made for tax purposes rather than for commercial purposes—the sorts of reasons that will lead to more efficient outcomes, if we can allow that to happen.

The current treatment of various intangible assets and complex depreciation rules is discouraging the holding of these sorts of intangible assets in Australia. Not being able to properly depreciate what are potentially very large investments in these assets is a brake on us having a more entrepreneurial business culture in Australia. And so we are trying to provide flexibility to taxpayers in how they can depreciate these sorts of assets. We are encouraging innovation. We are encouraging the expansion of businesses, particularly for start-up enterprises, in line with our National Innovation and Science Agenda.

As I said, this is another key plank of this government's plan for jobs and growth. As I have said, it sits very comfortably side by side with our innovation agenda. It sits very comfortably beside our multinational tax avoidance laws and it certainly sits very comfortably side by side with this government's enterprise tax cuts.

I want to focus on those tax cuts just for a moment while I have the opportunity. We will all remember some of these great quotes. Here is one:

Any student of Australian business and economic history since the mid-80s knows that part of Australia's success was derived through the reduction in the company tax rate.

That is what the Leader of the Opposition, Bill Shorten, said in March 2012 when he was in government.

Here is another quote:

Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages—

another quote from the opposition leader in 2011.

You see, it used to be for a very long time a bipartisan position in this parliament that we all aspired to cut Australia's corporate tax rate. The current shadow Treasurer Chris Bowen knows it. He said:

… Keating knew that the corporate tax rate needed to be cut to make Australia competitive, that capital and investment would flow to tax-competitive nations and that this was an important job-creation move. Today capital is even more mobile than it was then and it is important that our corporate tax rate is competitive.

I could keep throwing quotes out there: Rudd, Gillard, Rudd again, Latham, Crean, Beazley, Keating, Hawke—the list goes on. They all agreed. Even the member for Lilley, who is sadly overseas at the moment, promised to cut the corporate tax rate—although, admittedly, he promised it around the time that he also promised this country four economic surpluses that never quite eventuated either. The point is that some of the most eloquent arguments that have been made in this place for cutting taxes in the way that the government just has were made consistently over all of those years by the Labor Party, but they have now walked away from that consistent legacy spanning decades. I think it is really important for us to reflect not only on the motives of an opposition leader who would say one thing when they were a minister with real responsibility and another thing when they are then in opposition and presumably digging for votes. I think it is important for us to reflect on the significance—what it really means—when one of Australia's major political parties just decide to crab-walk away from what has been a longstanding and bipartisan principle. They are walking away from what has always been a key plank of Australia's economic plan, a bipartisan key plank. They have already walked towards populism and the sort of class warfare politics that was supposed to be eradicated when the Labor Party reformed itself in the eighties and tried to make itself fit for office again.

We all paid close attention, I am sure, to the words and the language used by members opposite when they talked about tax in the debate that this parliament has just had. The catchcry was '$50 billion of handouts to big business and multinationals'. Those were the words they used. Of course, now that the debate has been going on for a little while, they have upped that amount to about $60 billion, counting over the forward 10 years, and they continue to roll that crazy phrase out. I think they even did it in question time today. So I am happy to once again rise and really bust the sensationalist lines that the opposition has been using with respect to tax reform.

I can break the silly phrase down word by word and expose the mistruths behind it. First and foremost let us take that term 'handouts'. As I said, I come from a small-business family. Tax cuts are not handouts. It is not a handout to let hardworking small-business owners out there keep more of their own hard-earned money. It is not a handout; it is their own money. In relation to that $50 billion, or now $60 billion, claim that they are using, as I mentioned, they are using the 10 years of budgetary impacts, but let us talk about what it really means. We are achieving this for small businesses—and small businesses only, I should add, growing to medium businesses and aspirationally, hopefully, to all businesses. But what we have legislated in this parliament is for small and medium businesses only—for them to get to keep about $1.6 billion of their own money in this financial year. We have achieved small businesses keeping $2.3 billion of their own money in 2017-18. That rises to $2½ billion, approximately, in 2018-19 and then to $2.8 billion in 2019-20 and so on.

Just in passing, I might mention—in despair, I suppose—how easily the word 'billion' rolls off the tongues of Labor politicians these days. When I first started paying attention to politics, many, many years ago, there would be an audible hush and amazement if any government programs involved amounts of the magnitude that they talk about. Now—thanks, I suppose, to that terrible legacy that was left behind after those Rudd-Gillard-Rudd years—Labor do not even blink about $1 billion or $1 billion there. I fear that they have even made the punters out there as numb to the significance of $1 billion as they are themselves.

But back to dispelling that line: I mentioned that the tax cuts that this government has managed to achieve are not going to big businesses and multinationals; they are going to small businesses. I am very proud to say that, given my small-business background. They are only going to small businesses this year and next year and for the whole term of this parliament. As I said, we do want to legislate a longer term plan that would let the entire economy benefit from better competitiveness. Over time, we would seek to bring all of the remaining medium and then large businesses into the fold too. That used to be the bipartisan aspiration of this place, after all. I can tell you certainly that the people of Brisbane who work or want to work in medium and big businesses also deserve more hours, more jobs, more opportunities and more opportunities for promotion.

Of course it goes without saying that everybody on this side of the House would love to turn all of our small businesses into big businesses over that sort of time frame. But if Labor does not like that approach, that is really easy. There are going to be two elections between now and when any tax cuts could be achieved for big businesses. If they are so sure of their own position, they can take a policy to either or both of those elections. They can make it their policy position maybe to increase taxes again for small and medium businesses, which I presume is now their position, or they can get in there and make the roll back complete, I suppose. They have been through roll-back policies in the past. It did not work particularly well for them then and I do not think it would work particularly well for them in the future. That, I suppose, would be a contribution that they could make and it would certainly be better than just mouthing repeatedly the words 'trickle-down economics'. It is not trickle-down economics to give assistance directly to small businesses. Small businesses are the backbone of our economy and the base of our economy; it is precisely the opposite of trickle-down.

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