Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

Mr Deputy Speaker, you can forget superannuation paperwork, you can forget the payroll tax and you can forget trying to understand the complexities of the government’s handling of the industrial relations debate: the bane of small business people, quite frankly, is without doubt the GST. You know that, Mr Deputy Speaker, I know that and anyone that truly gets around their electorate knows that. Six years after its introduction, the GST remains the biggest headache for many small businesses throughout this country. That is not just me saying that as a Labor member; that is the claim that is being made by small business operators everywhere. In a survey conducted by MYOB, and released in January this year, of some 1,400 businesses, the No. 1 red-tape burden for many businesses was BAS reporting. BAS reporting ranked in the top three of red-tape burdens for 68 per cent of the small businesses surveyed and featured as the No. 1 issue for a third of them.

After six years of reporting drudgery for small businesses, the government has finally decided to act. Mind you, before you get carried away, Mr Deputy Speaker, this government’s action was not the result of a particular concern for the lot of small business operators; the government was not responding to their concerns. This bill before us, the Tax Laws Amendment (Simplified GST Accounting) Bill 2007, is nothing but the manifestation of a government’s poll driven response to the fact that small businesses are concerned about GST reporting, given that this government is very concerned about how it might be travelling in the polls. So, much as with the so-called ‘fairness test’ introduced into Work Choices and the two-tiered broadband approach announced yesterday, this government has rushed to follow Labor’s lead when it comes to reducing the small business GST compliance burden. Sadly for small businesses, the government has once again introduced a poor facsimile of a Labor plan, but I will come back to that a little later.

The bill before us will allow the Commissioner of Taxation to determine simplified accounting methods for certain small businesses and other entities. The bill will allow for simplified accounting methods to be applied to small businesses and other entities, with an annual turnover of less than $2 million, that make a mix of taxable and GST-free supplies or that acquire a mix of supplies that are both taxable and GST-free for suppliers. Currently, the taxation commissioner can only determine simplified accounting methods for retailers who sell food or who make supplies that are GST-free under the GST concessions for charities. This bill extends the range of eligible businesses for whom the commissioner can determine simplified accounting methods to all small businesses, not just retailers, individuals and entities such as partnerships and trusts, the criteria being that the annual turnover of the businesses is less than $2 million.

This constitutes a large broadening of the eligibility for simplified accounting methods for GST to all business entities which deal with mixed supplies and inputs and with an annual turnover of less than $2 million. More importantly, this is long overdue. Quite frankly, it is particularly overdue as a recognition of the burden that the BAS reporting system has placed on small business entities throughout this country. In the MYOB special survey released in January this year the main reason given for ranking BAS reporting as their biggest red-tape burden by the 45 per cent of respondents who did so was the time it took to fill in returns. Completing BAS returns takes time. Certainly the measures introduced in the bill will help alleviate some of that in terms of the reporting of BAS returns. However, there are other opportunities that this government should have taken. As a matter of fact, they should have gone further.

When it comes to red-tape reduction, Labor has led the way and this government have again followed. The bill and the announcement of the changes in the budget were another example of this government playing catch-up. We have seen that in education recently. We have seen it in terms of petrol pricing. Only yesterday we saw it again when the government rolled out its two-tiered broadband policy. When it comes to playing catch-up politics—when it comes to this government trying make up for 11 years of neglect and when it comes to this government yet again adopting versions of Labor policy and trying to pass them off as its own—this government fails to deliver. The member for Macarthur got it right when he was recently quoted in the Australian newspaper. I forget the date of that article, but I am sure it can be accessed. He was reported as bemoaning the fact that the public has given up on listening to this government on the big issues. As the member for Macarthur knows, the people have switched off when it comes to listening to this government. He knows that what has been happening in the last few months is that Labor identifies the issues, Labor comes up with the solutions and the coalition adopts a poor facsimile of those solutions and makes some half-hearted attempt to pass it off as fresh thinking. The member for Macarthur acknowledges the shortcomings of this government. Quite frankly, this has been going on for some time. I have to say that he is right: the people have given up on listening to this government on the big issues confronting society at present. The process of implementing poor facsimiles of Labor policies has not changed when it comes to this bill either.

Labor have consistently supported a simple ratio based method of calculating GST liability. We took a simplified BAS to the 2001 and 2004 elections. At the National Press Club in April this year the Leader of the Opposition, Kevin Rudd, announced that a Labor government would address red-tape compliance burdens associated with BAS reporting. At that stage, he announced BAS Easy. This is a very good policy, I have to say. As someone who has worked in small business, I can see the value of that policy as it would apply to small businesses—particularly those operating in my area. Under BAS Easy all mixed businesses with a turnover of less than $2 million would be given the capacity to use simplified accounting methods. Under a Labor government, small businesses eligible to obtain a ratio from the tax office would be given a ratio for the purposes of calculating their GST obligations. It is a very straightforward approach. I am sure that members opposite would applaud it for its simplicity—and its ability to be easily understood and to make GST reporting one of the least difficult things that a small business operator has to contend with when running a business. BAS Easy would reduce GST bookkeeping by up to 85 per cent. No doubt this would please the 68 per cent of the respondents to the MYOB survey who listed BAS reporting among the top three red-tape burdens for their businesses. In fact, you would probably be safe in saying that there would be very few people who would object to it.

I know that the Council of Small Business Organisations of Australia has said, and I quote, ‘For all small businesses working under a revenue threshold of $2 million a year the BAS Easy system is a simple and practical answer to the current red tape.’ COSBOA went on to say, ‘Taking an opt-in approach will allow those businesses that are working with few or no staff to adopt the new BAS Easy system to save time and effort should they so wish.’ While many agree with that approach—including, as I indicated, many of the businesses operating in my electorate of Werriwa—there are some who do not. While adopting more a position of opposition for the sake of opposition, the Treasurer certainly did not take to the Labor Party’s BAS Easy policy. In fact, in an article in the Australian Financial Review he was described as being very sour on Labor’s plan. I can only think that the primary reason the Treasurer did not like the plan was that he failed to come up with it himself. After six years of living with the GST, having been responsible for its introduction and responsible for making every small business operator in this country an unpaid tax collector for his government, this Treasurer has paid little attention to the problems that BAS reporting has caused small business—so much so that he cannot see that the solution to this problem would be to have a single ratio approach to GST reporting.

Opposing it in the national newspaper is not the only time that the Treasurer has adopted an approach of opposition to BAS Easy for the sake of opposition. The government voted against Labor’s BAS Easy second reading amendment to the Tax Laws Amendment (Small Business) Bill debated in this place recently. Following his strident criticism, instead of accepting Labor’s superior BAS reporting policy and adopting it in full, the Treasurer announced in the budget what I can only describe as the ‘BAS sort of easy’ approach. This ‘BAS sort of easy’, a policy introduced through the bill before us, is the BAS Easy policy that you have when you will not introduce BAS Easy, even though you agree with it. Surely the government cannot be that out of touch that they cannot see that BAS Easy would be of significant assistance to every small business operator in this country. Simply because the government did not come up with it, perhaps by embarrassment they cannot bring themselves to introduce a simple ratio system for small business operators to make it easier and to relieve some of the compliance burdens currently foisted on small business operators in this country. I can only imagine that this ‘BAS sort of easy’ is the policy that stems from the fact that the coalition only sort of cares for small business and is only sort of interested in trying to help them cut their compliance burden.

You would be hard-pressed to find anyone who denies the fact that the impact of red tape is felt most keenly by small business operators. Unlike larger organisations, small businesses do not normally have the resources needed to comply fully with the reporting and paperwork that is necessary, and a lot of their time and effort is taken up in complying with red tape. I know that in my electorate the compliance burden of many of these small or home based businesses falls on the partners, the husbands and wives—the spouses. These business operators try to balance their work and home lives while trying to comply with the reporting responsibilities to the Commonwealth.

Contrary to the feigned protests of the members opposite, Labor does understand the needs of small business. Labor is in touch with small business. Labor understands that small business is the employment generator for this nation. We need to do more to assist small business in what they currently do and also give them the opportunity to expand, grow and employ more people throughout their operations. Unlike members opposite, who see the solution to everything in the business world only through the guise of Work Choices, Labor understands business needs and wants businesses to achieve growth and competitiveness within the economy through means other than simply slashing wages. For this reason, Labor has adopted a sensible ‘one in, one out’ approach to regulations, which means that the red-tape burden will not gradually increase over time.

As the MYOB survey indicated, three-quarters of the respondents considered time saving as the main advantage to their businesses from a reduction in red tape. Additionally, one in 10 businesses that took part in the MYOB survey indicated that solving the red-tape burden would allow them the opportunity to expand and grow. As I indicated, on our side of politics we look to give small businesses the opportunity to grow with a view to employing more Australians. Reducing the time that small business operators spend dealing with red tape—for example, GST compliance—results in more time spent working on their businesses, growing them, planning for the future and generating jobs and in less time filling in paperwork.

Small business operators should be mindful of this government’s record when it comes to implementing real and serious solutions to cutting red tape. Do not forget that, back in 1997, it was this coalition government that gave a commitment to reduce red tape by up to 50 per cent. Yet what we have seen, particularly over recent years, is that the burden of red tape has grown substantially and disproportionately affects the operations of small business operators throughout this country.

For six years, this government has opposed GST simplification through the use of a simple ratio method. Not only has it opposed it in the media; it has opposed it in the parliament and actively campaigned against it during the 2001 and 2004 election campaigns. Small business should not be fooled come the next election; they should see the pattern that has been adopted by this government. Before the next election, unless this government adopts Labor’s ‘one in, one out’ approach, small business operators should know that this government’s pattern of behaviour in looking after the interests of small business and relieving the red-tape burden can only be measured against the commitment that this government made back in 1997 and failed to deliver on. Small business operators, their partners, their families and their friends should remember that this government has had 11 years to take real steps to address the red-tape burden on small business, and yet it has done virtually nothing.

In contrast, Labor has proposed a simple approach—one in and one out. For each new regulation proposed for implementation, another regulation will have to go. The bill before us is poll driven; everyone knows that. It is a reaction to the problems rather than a real attempt to address the real issues confronting small business operators at present.

Labor supports this bill, but I draw the attention of the House to the second reading amendment moved by the member for Rankin. Anyone who supports small business should be supporting that amendment. Labor’s second reading amendment is aimed at addressing the concern that the tax office could be directed to issue unfavourable ratios in the implementation of this plan which would negate any benefit derived from the simplification of BAS reporting. It is important that this government provides that commitment so that small businesses are not deprived of the opportunity.

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