Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

My question is to the Minister for Small Business, Independent Contractors and the Service Economy. Will the minister advise the House of the impacts of yesterday’s decision by the Reserve Bank on small business and independent contractors?

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I thank the member for Chisholm for her question and the good work she does for small business in her area, including the Box Hill Business Enterprise Centre. The Commonwealth, under the Rudd government, has provided funding for the centre for the first time in history. Yesterday’s decision by the Reserve Bank to cut the cash rate by a quarter of a percentage point follows 12 successive interest rate rises, 10 of them under the previous coalition government. It will offer modest but welcome relief for small businesses and independent contractors. It is the first time that interest rates have fallen in seven years. In a small way it will therefore reduce the cost of credit for small businesses and contractors. In a small way it might also increase the availability of credit for small businesses and independent contractors, which is pretty important in the global credit crunch.

At the time of the change of government late last year, underlying inflation was at a 16-year high and we had the second highest interest rates in the developed world. But the good news is that the Rudd government has a plan to steer Australia through these tough global economic times with responsible economic management. We have built a strong surplus and we are cutting government spending growth from five per cent to one per cent. That is giving small businesses a little bit of extra room to grow as government reduces its call on spending. We are making tough decisions in implementing a comprehensive economic reform program. We are doing that through an education revolution to revive productivity growth, we are doing it though nation building out of the national infrastructure fund and we are doing it through a COAG process of cutting red tape in 27 areas of business regulation.

Despite the good news about the interest rate cut yesterday, which will put $600 a year in the pocket of the average mortgage holder in Australia, the Senate is threatening, courtesy of the coalition, to block a tax cut. The first question from the Leader of the Opposition today was about taxes and he is indicating that he likes the idea of reducing taxes. That is what we thought the Liberal Party stood for. He has an opportunity to change the position of the coalition in the Senate because the coalition is threatening tomorrow to block Labor’s reduction in tax by increasing the threshold for the Medicare levy surcharge. If the coalition does stand for lower taxes—there is no evidence of that in the past—then it should pass the legislation and not block it.

As some of my colleagues have pointed out, a family with two income earners both earning about $60,000 a year—about average earnings—on a combined income of $120,000 will save $1,200 a year as a result of the increased threshold for the Medicare levy surcharge. What good news that would be. That is $600 from the mortgage interest rate reduction and a $1,200 saving if the coalition would just change its mind and support our initiative to increase the threshold.

The Rudd government is building a modern economy capable of meeting the challenges of the 21st century. I call on the opposition to get on board with the government’s program of responsible economic management or get out of the way in the Senate. Get out of the way and allow the government to secure a strong surplus and to provide another tax cut to the Australian people tomorrow. Help us get interest rates down and lock in those interest rate reductions for the benefit of the small businesses of Australia and the independent contractors of our country.