Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Hansard source

I, too, rise to speak in this second reading debate on the Tax Laws Amendment (Simplified GST Accounting) Bill 2007. The bill provides much needed relief for small business by simplifying our tax system. The purpose of the bill is to extend simplified GST accounting methods to a larger number of small businesses.

Business regulation in this country has certainly started to spiral a bit out of control. Business regulation is stifling small businesses’ drive to be innovative, to move forward and to grow. Labor supports this bill. We support it because it reduces the red tape for small business. But most importantly we support this bill because it mirrors the principles that Labor attempted to implement at the 2001 and 2004 elections. Labor proposed a simple BAS at these two elections that used a ratio to calculate GST obligations.

It is great to see, once again, that this government is so clearly out of ideas that it has to steal them from Labor! Over the past few weeks we have seen this ageing government playing catch-up on Labor policy. The government has been playing catch-up for a while now. They are playing catch-up on climate change. The Prime Minister just woke up to the problem this year after 10 years in hibernation. Who is leading, and who has led for many years, the policy debate on climate change? Labor has.

Then, only last week, the Treasurer finally decided to take up Labor’s plans to inquire into petrol prices. Motorists in the Ballarat electorate are now paying $700,000 extra per week at the petrol bowser compared to what they paid in January this year. The last thing motorists need is to be getting ripped off at the petrol bowser.

Yesterday we saw the government playing catch-up on broadband policy. After 11 years of waiting for ADSL broadband, communities in my electorate have found out that they will be relegated to a second-class service. What next? We might even hear the government finally start talking a little bit more about fairness within the workplace. I doubt that that is going to occur.

But this bill is a start. This bill will provide all mixed business with an annual turnover of under $2 million the ability to obtain a ratio for calculating GST obligations from the Australian Taxation Office. This is welcome news for the 16,000 businesses in the Ballarat electorate, many of whom continue to tell me that they are burdened by excessive red tape. An example of this excessive red tape was recognised in the Banks task force report on business regulation. The report showed that it costs small retail grocers 28.25 per cent of their GST collections just to cover GST compliance costs. These small businesses pay over one quarter of their GST collections on compliance.

Craig Emerson and Labor released a statement on our BAS Easy option on 19 April this year, and we received strong support for our initiative from the peak body of Australia’s small business, the Council of Small Business Organisations of Australia. The Council of Small Business Organisations recognised that our approach was a simple and practical answer to reducing the current level of red tape. The Council of Small Business Organisations backed Labor’s BAS Easy, and finally the government is also coming up to speed.

Small businesses want a reduction in red tape. Labor wants a reduction in red tape for small business. And this government now, in the shadows of an election, wants to adopt Labor’s small business policies, because it now realises that much of the burden of the GST needed real fixes some time ago. Labor’s BAS Easy proposal would have reduced GST bookkeeping for small business by up to 85 per cent. Had the government acted more quickly on our previous proposals, small business could have saved valuable time—valuable time that has now been wasted on GST bookkeeping.

Small business would have saved time because Labor’s plan let small businesses complete BAS paperwork in only a few minutes, not in the hours that is currently required. At present it can be tough for small businesses to spend so much of their time calculating the GST implications on their total sales or total purchases. This bill will enable small business to use a simplified GST accounting method and apply a single ratio to total sales and purchases. This is a common-sense approach. This is the ratio method. It is, in fact, BAS Easy, and it is good Labor policy.

Interestingly, the Treasurer has not been a strong supporter of Labor’s policy in relation to this area in the past. The Treasurer attacked us on our ratio method in the past two parliamentary terms. The Treasurer condemned this proposal and said that it would not work. Labor welcomes the Treasurer’s backflip, and we are happy that he has decided to support Labor’s ratio method.

At present, the GST act firstly allows the commissioner to determine simplified accounting methods for retailers that sell both taxable and GST-free food and have an annual turnover that is not more than the relevant threshold. Secondly, the act allows the commissioner to determine simplified accounting methods for entities that make supplies that are GST-free under the GST concession for charities. So currently the GST act gives the commissioner powers to determine simplified accounting methods for retailers who sell food. These retailers may include supermarkets, convenience stores, restaurants or cafes.

The changes in this bill now increase the number of businesses eligible to use simplified accounting methods—from food retailers, to all small businesses. All small businesses that have an annual turnover of less than $2 million that have mixed supplies or mixed inputs are now eligible. This is belated but good news for the majority of businesses in my electorate that are currently burdened by this tedious red tape. The reality is that many businesses in the Ballarat electorate and across Australia buy and sell products that are taxable and buy and sell products that are GST free. Some businesses buy both taxable and GST-free products, but only sell taxable products. The problem is that recording GST-free sales separately from taxable sales can be a tough task. GST bookkeeping is time consuming and businesses are wasting their already precious time with GST calculations.

The advantage that small food retailers have when calculating GST, compared to other businesses, is that they have access to five simplified accounting methods issued by the Australian Taxation Office. At this point, I would like to express my support for the second reading amendment moved by the member for Rankin in relation to the Australian Taxation Office not being able to issue unfavourable GST ratios to businesses that apply for them, thereby potentially negating the entire effect of BAS Easy. The Australian Taxation Commissioner determines these five simplified accounting methods and makes GST accounting much easier for food retailers. The five methods developed by the commissioner that these businesses have to choose from depend on annual turnover, the nature of the business and the nature of the point-of-sale equipment. Similar methods will now be able to be applied to many more businesses throughout my district. This bill will result in the commissioner releasing similar simplified accounting methods for all small businesses.

There is of course a lot more that needs to be done to support small business in this country. Small business still faces many challenges. There is still a long way to go before businesses in Australia and in my region are relieved of the current stranglehold of regulation, especially GST compliance. This stranglehold of regulation on business was recently confirmed by a special MYOB survey on the red-tape burden on small business. MYOB found that GST paperwork requirements were the No. 1 red-tape burden for small business.

Australian businesses need a plan to reduce red tape not just for GST requirements but for all business regulations. The Leader of the Opposition and the Australian Labor Party are continuing to set the challenge for this government in relation to regulation and small business. The Leader of the Opposition has outlined a coordinated national strategy to reduce the regulatory burden on productive Australian businesses, and Labor has a plan to further reduce business regulation. Labor will set a national objective in partnership with the states and territories to harmonise key regulations imposed on businesses operating across jurisdictions. This includes OH&S regulation, administration of payroll tax, building codes, and trades and professional body recognition.

Labor will further reduce business regulation by commissioning the Productivity Commission, through the COAG reform council, to be responsible under statute for estimating the costs and benefits of harmonisation in each of these areas. Labor will provide a financial incentive to reward state and territory governments that implement these regulatory-reducing reforms. A federal Labor government will reward results, using a model similar to that which existed under the national competition policy reforms. Labor will put in place a system that will protect small business from any new regulation. Labor will introduce a rigorous regulatory impact statement process. This process will be reviewed through our decision to have a Small Business Advisory Council, and the council’s comments will also be published in the regulatory impact statements.

This bill may reduce regulation, but the Howard government continues to add more regulations than it actually removes. Labor is going to reverse this trend. A Labor federal government will adopt a ‘one in, one out’ approach to all new Commonwealth regulations. Under Labor, if a new regulation is introduced that impacts on small business then an old regulation must go. Labor has already outlined real action to reduce the red-tape burden for Australian businesses, especially small businesses. Labor has other initiatives to reduce red tape and tackle the many problems that Australian small businesses face. For example, Labor proposes to give small businesses the option to make payments into a central superannuation clearing house, free of charge, consequently reducing the form-filling and checking and the costs and legal liability associated with the government’s choice-of-super legislation.

Labor also proposes to cut red tape in financial services by introducing a simple, standard disclosure form for financial service products. Labor’s three- or four-page disclosure forms are in clear contrast with the government’s financial disclosure regime, which has resulted in some consumers being issued with 100-page complex documents that are an administrative nightmare for consumers and businesses.

The concerns of small businesses do not end with red tape. The government still needs to address the national skills shortage, fairness in the workplace, overall economic productivity, cashflow problems from late-paying government departments and, especially, offer real broadband solutions for regional and rural small businesses like those in the electorate of Ballarat.

Labor supports this bill because it reduces red tape for small business. The government must also tackle the other issues that small businesses are faced with. Streamlining GST calculations is a start, but it is now time to tackle the national skills shortage and assist businesses to find skilled labour by introducing trades training schemes into schools. This is just one way that Labor will address the current national skills shortage.

This bill, in the shadows of an election, may reduce red tape, but what about bringing fairness back to our workplaces? Labor has a plan for fairer and more productive workplaces and believes that our economy can go forward with fairness. What about improving innovation, competitiveness and productivity in Australia? Small businesses do not just need a bill on simplifying the GST burden; they need Labor’s plan to meet the huge challenges of overcoming decades of skills shortage as a result of being in a more intense and competitive market—resulting from our regional trading partners like China and India—and the ageing of our population and decline in the size of our workforce. Labor will boost productivity by investing in business, investing in creativity and knowledge generation, investing in new technology, supporting foreign investment in Australian R&D, investing in innovative Australian firms and strengthening the skill base for innovation, including maths, science and engineering.

With GST calculations, many small businesses struggle to find time. But they also struggle with cashflow as a result of late payment by federal government departments. Labor also proposes to tackle the burden on business by paying small businesses on time. Labor will give small business the right to charge Commonwealth government departments and agencies interest on bills not paid within 30 days. Labor understands that late payments result in significant cashflow problems for many small businesses. This problem needs to stop.

Small businesses are struggling to compete in the global market, as their overseas competitors already have access to reliable, fast and affordable broadband. Only Labor’s broadband plan will slash telephone bills for small business as well as provide other opportunities such as more accessible teleconferencing and videoconferencing. The Howard government’s broadband policy is really just a political quick fix. It is not about delivering for regional and rural Australia or for the future of our small business community.

I support this bill because it is important that simplified GST accounting methods are accessible to all small businesses. It is important to reduce the existing regulatory burdens that impact heavily on small business. For small business to prosper, they need support and reform from a federal government—and Labor has plans to achieve this. This bill will reduce the red-tape burden on small business. The bill is much needed, as this government has waited too long to combat the GST’s regulatory burden on small businesses.

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