Madeleine King (Brand, Australian Labor Party, Shadow Minister for Consumer Affairs) Share this | Hansard source

I'm really pleased to rise today to speak on the Australian Business Securitisation Fund Bill 2019. I'm really happy to stand here today and speak on this bill as the shadow minister assisting for small business. We, on this side of the House, can confidently say we have consulted extensively with owners, operators and agencies that assist small and medium businesses about issues that affect them and the obstacles they face in the Australian and international markets. The measures in this bill address access to finance, and I'll turn to that in a moment. What we do know in this country is that small and medium business enterprises face a lot of challenges. One of them is the ability to upgrade and modernise key equipment. This can be in manufacturing or other industries, and, as we know, in this fast-paced economy, consistently modernising your business will differentiate you from your competitors. That is why the instant asset write-off changes made yesterday were so important. Initially introduced by Wayne Swan, they were canned by a Liberal government but, thankfully, were reintroduced, and Labor has always supported them.

Yesterday, in this place, we debated and brought into law an increase in the instant asset write-off to $25,000. It is remarkable that a mere 90 minutes later this government announced budget measures that increased the instant asset write-off, again, to $30,000 for businesses of up to $50 million in turnover. If they really wanted to help small businesses, they could have introduced this yesterday while we were debating that bill in this chamber. It could have been law by the end of the week, but, no. Once again, it's policy on the run; they're just adding a bit of cash here and there without really thinking it through. If they really wanted to help small business they could have legislated for it yesterday. That would have provided a greater good for our small businesses and medium businesses right across this country.

The real challenge for small business in this country is this government and its hopeless policy development and, of course, sad instability. But there are of course other challenges. Whilst the government might be its greatest challenge we know there are many other challenges that SMEs face. Accessibility and the ability to use modern telecommunications systems and infrastructure, making sure SMEs can communicate with their customers and their supply chains, are paramount in the operation of any small business. Connectivity is the key in the digital age, and that is why Labor will introduce an NBN service guarantee should we get elected to government. Another challenge is access to markets, whether that is export markets internationally or navigating across domestic boarders and biosecurity laws. Small businesses need clarity and baseline guidance on how and where they can market their product and services. This is particularly pertinent for newcomers to small business—people who are just starting off as a sole trader or small business for the first time.

Geographic location can be a massive issue, whether it is the distance to a business hub or a place that has an optimal amount of foot traffic or public transport. These locations for accessibility have always been a big issue and a very important concern for those running a small business in any regional or urban setting. Access to affordable spaces for SMEs to operate will always be a key issue. For any industry—and, indeed, any individual—taxation remains a hot-button issue that can make or break a small business, and we are happy to support reducing small business's tax obligations around the country.

Returning to the specifics of this bill, which is about increasing the access to capital for small and medium businesses, we know through all of our consultations with small businesses—and I know that it is the same for the government—that small business often find it very difficult to obtain finance other than on a secured basis. Those loans are usually secured against real estate, and often that is personally held real estate like the family home. On the flipside of the coin, SMEs that are established but wish to expand have often already had their finance secured against those existing homes and they find it difficult to access additional finding for capital works or other projects.

This bill gives effect to the policy to establish the Australian Business Securitisation Fund, which is a $2 billion fund which aims to increase availability while, at the same time, reduce the cost of finance for SMEs by intervening in the SME securitisation market. We on this side of the House support the principle of increasing access to finance for small and medium enterprises. The bill creates a fund and a special account and seeks to credit the special account with $2 billion over the next five years and it provides a framework for fund investment. These credits have no direct impact on the underlying cash balance as they are treated as assets on the government's balance sheet.

The focus of the security fund's activities will be investing in securitised assets backed by SME loans in either the short-term or the long-term markets. This will support the ability of smaller lenders to grow and provide credit to underserviced segments of the SME lending market by improving the ability of these lenders to obtain funding for markets at a competitive price. We have been told by the government that the Australian Office of Financial Management will administer the fund, with Treasury undertaking the initial establishment and committing to an ongoing review of the fund's operation over the term. That is a very good idea which we support.

The explanatory memorandum states:

Unlocking the securitisation market for SME loans, which is underdeveloped in Australia, will allow smaller lenders and non-bank lenders to compete more effectively, and increase the availability of lending and reduce prices in the market.

Labor has always been open-minded with regard to this policy. The member for McMahon, the shadow Treasurer, was asked about this proposal when the government first announced it in November last year, and he said at the time:

If this new arrangement lowers the cost of capital for SMEs without exposing the Commonwealth to undue risk then we're supportive.

The question at the time was about what the detail of this fund would be. Thankfully, the draft legislation was referred for inquiry by the Economics Legislation Committee. That committee supported the bill, but I would like to turn to a couple of observations that that committee raised which do have an effect on small and medium enterprises.

The Productivity Commission, in their submission to this inquiry, noted that in Australia SMEs are successful in raising debt finance loans. Generally they do so by mortgaging real estate—usually a house, as I said before. They said that, while nearly 90 per cent of SMEs that decided to apply for debt finance were successful, home ownership in the key entrepreneurial period of life, ages 25 to 34, was down by one-third over the past 25 years and that the continued emphasis on home ownership in Australia's risk-weighting system will increasingly inhibit SME lending. This is a key issue in Australia, with housing affordability and people being able to buy a house in the first place. So how can they go into small business in those entrepreneurial periods of life when they cannot get to the first stage, which is often purchasing the first family or individual home? This will be an increasing challenge if access to the market by first home buyers is restricted, and it will therefore restrict the development of new small businesses and innovative businesses. I accept that the securitisation fund will assist in some way, but this is a greater issue that governments and alternative governments need to consider over coming years. I thank the Productivity Commission for raising it in this inquiry.

Another very important point raised in that inquiry is the issue of access to financial literacy education by small and medium enterprises around the country. One of the submitters pointed out that many SME owners are not financially trained and require a significant amount of assistance to access appropriate funding. They said that education was 'an important element in ensuring the success and profitability of SMEs in Australia'. The Treasury noted in its submission, together with the Reserve Bank of Australia, that the roundtables they had held with small businesses and small SME funders highlighted the gaps in awareness of alternative lending options to bank loans, so to speak. Mr Tease, from Treasury, said:

Information and the lack of it, on both the lenders' part—the new lenders coming into the market don't necessarily know who their future clients are going to be, so they can't find the SMEs themselves, and, on the other side, the SMEs don't necessarily know who the new lenders are and how they go about raising finance. That's a definite issue in the market.

That was the commentary there.

I think these are important points to remember as we, an alternative government, go about doing our best to support our small and medium enterprises right around this country so that, as markets are disrupted by new technology and lending systems—new financiers all through our system—we can help to educate and provide access to entrepreneurs and new small-business owners to help them provide access to the knowledge to get hold of this finance to either start their business or indeed grow their business without necessarily always relying on the family home, which, because of housing affordability in this country, is not always available. I know this will be a debate that policymakers will have for many years to come and, of course, I look forward to it.

Labor understands that small businesses are prevalent across the Australian economy irrespective of budget, region or economic sector. As of 2016, around nine in 10 Australian businesses are small to medium enterprises. They employ over 40 per cent of the Australian workforce and account for approximately 33 per cent of Australia's GDP. We have announced several policies, and I'm more than happy to explain them. We are explaining our policies on small business to the Australian people right around this country.

The member for Fenner was a great advocate of our Access to Justice policy. The government was under threat from a wavering National Party room.

Mr Robert interjecting—

I'm going to speak for another 18 minutes, Assistant Treasurer, if that's all right with you. Go grab a cup of tea if we are boring you! But I guess that's just parliament for some.

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