Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

Many members have already spoken in support of elements of this excellent bill, the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016. I want to focus on the impact that the enterprise tax plan will have on Australia's small businesses. I have spent most of my adult life operating my own small businesses. As we all know, the work of a parliamentarian involves long hours and a lot of difficult work, but this is nothing compared to the life of a small-business owner. I remember the nights spent staring at columns of numbers after a full day on site, trying to square my accounts and doing my book work. I remember the constant stress of being so close to the edge in business, where a few hundred dollars here or there often makes a difference between success and failure. It is not a comfortable life, nor is it an easy one, but it is a choice made by thousands of Australians and a choice that this country relies upon.

Small businesses employ 44.8 per cent of working Australians—more than any other type of business. This percentage has been growing every year since 2012. Some 4.8 million people already work in a small business. At a time of challenging economic circumstances for Australia, this already crucial contribution to employment is only going to become more important. Though less talked about, small businesses also contribute nearly 36 per cent of all the industry value-added in Australia—more than $379 billion and growing. The fact is small businesses have been practising innovation and agility since Adam played fullback for Jerusalem. That is how they survive.

Small businesses are the future of Australia and we must now act to support them. Unfortunately, it is tough for many small businesses and in far too many cases they do not survive. In 2014-15, 280,000 new small businesses started up in Australia—280,000 new ideas and fresh visions from bold proprietors willing to take a risk, 280,000 opportunities for growth and new employment for Australians. But, unfortunately, in the same year there were more than 258,000 small businesses that cancelled their registrations or stopped remitting GST. If this country is to go forward, we must do more to help these fledgling employers to grow.

Just last week I had the opportunity to visit the university in my electorate, the University of the Sunshine Coast, where I inspected the university's Innovation Centre, which is a start-up hub. It is a group of great individuals who are looking to start up their own small businesses. It is in this Innovation Centre at the University of the Sunshine Coast that many small businesses have been floated, with some fantastic ideas. I fully support the university in its attempts to help people start up these businesses. It is a great thing for the Sunshine Coast.

But taxes and business rates are a significantly bigger problem for small businesses than they are for larger ones. With comparatively few staff, even fulfilling their taxation reporting obligations can represent a considerable opportunity cost. Studies have suggested that as many as a third of small-business owners do their tax reporting on weekends. When your turnover is modest and every dollar is precious, handing over 28½ per cent of your profit to the taxman does not leave you a great deal to invest in your company. The numbers may be small, but the difference they make is immense.

Under the bill before us today, around 870,000 incorporated small businesses will benefit from an immediate tax cut of 2.5 per cent, rising to five per cent over 10 years. These businesses alone employ more than 3.4 million workers. An additional 2.3 million unincorporated businesses will benefit from a similar decrease to their tax rate. In many cases, for a business in the top half of the eligibility threshold these tax cuts alone will be enough to allow them to take on another full-time member of staff. For others it will provide the capital to invest in new equipment or cost-saving technology to double down on those gains for the future.

It is not, however, only extra investment which will result from this measure. For some companies it is a question of long-term survival. Competition in many sectors is fierce—more fierce than ever, perhaps. Globalisation has brought low-cost products from overseas countries, many of which enjoy considerably lower tax rates than ours. It is already tough for many of our mum-and-dad business owners to compete with these newcomers. For some, a reduction in their tax bill will give them a chance to lower their prices and compete without compromising their family income.

The benefit can go beyond the purely financial. Many business owners would love to invest more in the development of their staff, but we know from ABS statistics that small businesses are half as likely as large companies to provide structured training. They often simply do not have the resources to make investments of that kind. Similarly, others want to lessen their environmental impacts, provide more time for staff volunteering or take part in community initiatives. Being allowed to keep more of their earnings would give many the chance to follow through on these good intentions.

All too often debate over measures like this revolves around statistics and economic modelling. I would like to take a few minutes to tell the House about some of the real impacts that this bill will have on the extraordinary Australians who are building successful businesses in my community. I spoke to Kel McNamara recently at the Glasshouse Mountains RSL AGM. He owns a fantastic business in Glass House Mountains called KLM Energy Services, which he has been operating since 1999. KLM supplies LP gas to homes and businesses within our community.

As Kel says himself, the company is and has always been a family business. Starting with only himself, first Kel's son and later his wife came to help him. Though growing all the time, and employing eight local people today, by any reasonable standard KLM remains a small business. Kel is keen to make clear how important this bill's change to the threshold for what constitutes a 'small business' is. The $2 million definition has been in place for many years no longer reflects the situation on the ground of what it means to be a real small business. If this bill passes and the tax rate paid by his company is lowered, Kel, like many other business owners, intends to use the money to pay for solar panels and batteries to reduce the costs of his business. With lower costs, Kel might be able to strengthen his employment position and even, perhaps, look again at the remuneration he is able to offer his staff.

Husband and wife team, Ian and Pat Humphries, run Humphries and Fisk in the beautiful town of Maleny. They are well-known local names, sharing expert knowledge of that area with people looking to buy or sell property. Pat wants to spend all of her time providing the value-added consultation that she is uniquely able to deliver to her clients. She also wants to be able to offer more opportunities to her part-time support staff to learn about other parts of the business and to develop their careers. A company tax cut for her business would give her the chance to offer more hours to her support staff, give them more space to grow, and give herself more time to value-add for her clients.

In Little Mountain there is another innovative enterprise called Australian Off Road, founded by Steve and Rhonda Budden. It is a 100 per cent locally owned and operated business. Steve knew all about the rough terrain that Australia can throw at camper trailers when they go off the beaten track, and he knew that there was a market for building a much better off-road camper trailer. So, what did Steve do? He set to work in his carport building a better camper trailer. Sixteen years later Steve and Rhonda Budden's business is a sensational Sunshine Coast success story. But Australian Off Road faces tough competition from cheap and cheap-quality products coming into Australia from overseas. Australia's high rate of company tax is a serious burden on Steve and Rhonda Budden's business. Firms in other countries can use more of their profit to invest in their business and can offer lower prices without risking that investment. Labouring under the 30 per cent tax rate, it is harder for Australian Off Road to compete against those offshore companies.

Finally, I want to tell the House about Geoff Lyons Solicitors in Caloundra. His firm is one of the Sunshine Coast's longest standing practices, and Geoff has practiced for almost four decades. He helps a great many people to pass on their estates to the next generation. Geoff employs eight people and recently was able to take on a new member of staff. But, for Geoff, his practice is a vocation. After four decades he knows that his clients want to feel secure in their planning for their family's future. He would love to respond to their needs by taking on another new solicitor. That way, he could offer the reassurance of a more comprehensive, all-round service to his clients in-house. A reduction in the company tax rate that his firm pays could give him the extra resources that he needs to make that happen.

Of course, these examples illustrate only a small selection of the thousands of small businesses in Fisher which would be able to prosper and invest as a result of this bill and only a small part of the benefits that would flow to my community. We know in our area what great things can come from small businesses when they have vision and the right regulatory environment. Demographer Bernard Salt recently called the Sunshine Coast the entrepreneur capital of Australia. How right he was!

As I reported to the House last year, the example of another local icon, Maleny Dairies, shines out—not only in its success in providing employment, but in the benefits that flow from it to others in our community. Maleny Dairies began as a single family farm in our region. Today, operated by Ross and Sally Hopper, the company employs 50 locals and pays farmers in our district higher rates per litre than other companies, allowing them to keep their cattle healthy, their own farms viable and to stay on the land.

As Kel, Pat, Rhonda, Geoff and the Hoppers prove, a successful small business is much more than a generator of wealth. Often close-knit, collaborative and intimately tied to their local community, small businesses have an in-this-together attitude that breeds purpose—it breeds a social conscience. If successful, these enterprises can become a hub for locals, providing economic and social benefits across decades. As we have seen, these benefits include not only new employment opportunities, but improved services, lower prices, training and development schemes and even reduced environmental impacts.

This enterprise tax plan could not have been more central to the mandate given to our government by the people last year. The Prime Minister, the Treasurer and colleagues on this side of the House knew how important it was to Australia's future. That is why, in literally hundreds of speeches, interviews, listening posts and community forums, coalition members and candidates talked about our plans for the future for a strong and vibrant Australia.

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