Tuesday, 16 October 2018
Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018; Second Reading
I rise to speak in favour of the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 because of its critical nature for the future of our country, our economy and our community. Just prior to this debate being delayed, the member for Fenner was on his feet. He started by quoting from the DC Comics and Bizarro World—and, indeed, his speech was from the very centre of Bizarro World. He told us that in his world the Labor Party is the party of lower debt, the Labor Party is the party of lower taxation, the Labor party is the party that can be trusted on the economy and the Labor Party is the party of responsibility. This would need to be a world so far removed from any world that the rest of Australia lives in that to describe it as bizarre would not just be the case; it would be a very strange world. It would be the strangest of strange worlds, because the fact of the matter is that the Labor Party has always hated business and has always loved taxing them to death. That is why, when it was in government, it took all of three months to undo a $25 billion surplus and billions of dollars that the Howard government left it in surplus in the kitty. It left this country in absolute ruin.
Mr Keogh interjecting—
What's his seat again? Is it in Western Australia? It's so far away. Anyway, I notice the member over there complaining. He claims that somehow they saved us from the global financial crisis, ignoring the massive reduction in interest rates and ignoring the Chinese government's huge and giant stimulus package, the largest in the history of humanity. In fact, the only things they gave us were school halls no-one asked for and pink batts that ended up killing people. That's what the Labor Party gave us. That's their testament to saving us from the global financial crisis. Then they stand up here and say, 'Why is this so urgent?' Let me tell you, Mr Deputy Speaker: there is the urgency of now. They will always find an excuse to keep other people's money. They will always find an excuse to spend money on useless projects. But what they won't ever do is find an excuse to come into this parliament—I love your socks by the way, Matt; they're very good.
I know. I understand, but I can't remember the seat he's got. What they will never find, though, is an excuse to act like a party of responsible economic managers, because they don't have it in themselves to do it. The fact is that they are a party that now say that they will pay for this corporate tax cut. They will pay for it by abolishing the instant asset write-off. That's what the member for Fenner told this House. So, when they take with the left hand, they will take more with the left hand. That's what the Labor Party stand for. They're not going to give small businesses in this country a tax reduction. They're going to create more complexity. They're going to make it harder for people to create jobs, create work, create products and services that consumers want and create competition in our market. They will punish people.
The member for Fenner said that they can be trusted and then read a list of the ways that the Labor Party will intervene in our economy that, frankly, the Venezuelan government would be proud of. There isn't any nook or any cranny left in this economy that apparently the member for Fenner doesn't know how to manage better than the people running the businesses themselves. This bill, Mr Deputy Speaker—
Mr Keogh interjecting—
Oh, well, we've all seen the member for Burt's attempts at the Standing Committee on Economics. No-one does Rumpole of the Bailey better than the member for Burt!
There are 23,687 small and medium businesses within my electorate. Such businesses are predominantly family run and provide jobs for half of Australia's workforce, nearly seven million Australians. We know that, when we make it easier for businesses to invest and reduce red tape, they reinvest in their staff and our economy. Small businesses like Matt and Lisa's Tramshed cafe, in Narrabeen; Ryan's Stay Grounded cafe, in Collaroy; John Beale consulting in Mona Vale; and Becky's Enliven Coaching will benefit from this tax relief that we have brought five years earlier than planned. Not only will they benefit; so will the people who work for them and so will the consumers who use their products and services.
This is good for our community, and this is good for our nation. By fast-tracking this tax relief, we will see a more immediate difference in their cash flow and benefits for everyone in our community. These businesses with a turnover below $50 million will face a tax rate of just 25 per cent in 2021-22. ANT constructions, Alice hairdressing, The Bored Monkey, Incat Crowther and many more local businesses that have cash flows of $500,000 will have an additional $7½ thousand in 2021 and $12½ thousand in 2022 to invest back into business or staff and provide for consumers.
I'm here to tell those opposite that this government and my party will always give a fair go to those who are willing to have a go. There are people right across Australia who make sacrifices to get to work, and what do we give them for all the effort that they put into that? We tax them. We tax them so that they can fund social welfare programs and other such matters. Since this government was elected, 1,100 jobs have been created per day in our economy. That's 1,100 people every day who are better off under this government. The fact is that those opposite can keep taxing those people, or they can start encouraging them to do even more for our community and create a better Australia that all of us can be proud of.
I too rise here today to speak on the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. In essence, this bill accelerates the reduction of the corporate tax rate for small to medium enterprises, which for the purposes of this legislation means businesses with a turnover of less than $50 million. The corporate tax rate will be cut from 27.5 per cent to 26 per cent in 2021, then later to 25 per cent from 2021-22. In addition, this bill increases the current small-business income tax offset rate of an eligible individual's basic income tax liability that relates to their total net small-business income, first to 13 per cent and then later to 16 per cent. This bill seeks to benefit 3.3 million businesses, which employ 6.6 million Australian workers. This tax relief will provide Australian small businesses with confidence to undertake new investments and to deliver more jobs across the country.
Growing up with my mum having run a local drapery store in my hometown of Rockingham, I have experienced and know firsthand the unique challenges facing small business owners across this country. These are the people you will see first thing in the morning; they are opening up a drapery store, a cafe or a hardware store—although, sadly, those are getting fewer and fewer. They are the people who you will see who might be filling in for a worker who has had to call in sick, or they have their unwell younger children in the workplace with them because they are not able to take the day off. Or they have the kids in with them at work because they are not able to pick them up from school, or because they are unwell or for unforeseen circumstances. They help to run our economy and employ by far the majority of employees throughout the country, and they keep the country running—there is no doubt about that.
Since my time of being elected, and in my time assisting in the small business portfolio, I have thoroughly enjoyed meeting with local businesses and conducting round tables in my electorate of Brand—in Rockingham and Kwinana. I am always happy to hear from my local small business community. The Rockingham Kwinana Chamber of Commerce is a remarkable resource for local businesses. They have many members, and I'm always pleased to speak to them whenever they'd like me to. Sometimes I turn up at their fantastic functions unannounced, because they are such fantastic functions.
I have to say that the Rockingham Kwinana Chamber of Commerce has been helpful in facilitating engagement opportunities for and with these businesses. Small businesses are the driving force of our local economy across the communities of Rockingham and Kwinana. I would like to take this opportunity to thank the chamber and its hardworking CEO, Tony Solin—we went to the same school, at Rockingham Beach Primary School—and his hardworking offsider, Diana White; president, Basil Paperone, who runs one of the best grocery stores across the district, down at Malibu Fresh Essentials; and vice-president, Rob McGavin, who of course went to school at Rockingham High School with my brothers.
I look forward very much to working with this community and the Rockingham Kwinana Chamber of Commerce for many years to come. I thank them for their ongoing support and for the work they do in helping small businesses access various bits of advice from the state government and also from the federal government and local government.
Through my engagement with this small business community I have heard their primary concerns. I've heard they have a lack of cashflow at times due to late payments—delayed invoicing and payments of invoices from big business—and also sometimes from the lack of capital from banks. They are simply not able to access that, and this does cause them issues. These small businesses are the bread and butter of this nation. They employ millions of people, and this tax relief package is one that we support. It will help to mitigate some of these challenges. It will drive investment and support new jobs in growing industries for owners and workers alike.
I would like to reflect for a moment on this government's economic plan. As we know, it's the one-point plan for economic growth, and that one-point plan was a big business tax cut, $17 billion of which was going to the big banks and 60 per cent of which would have travelled offshore. Yes, plan A for this government was a big business tax cut, and didn't that go well? The signature single-point plan cost the former Prime Minister his job. Now, with that plan thoroughly off the table, they have another plan, which is to help out small and medium-sized enterprises.
The government has brought these tax cuts forward, and Labor will support the legislation to bring them forward. It's important that we provide small business with certainty. The Australian people need to know, and small businesses across Australia need to know, that it doesn't matter who wins the next election: taxation for small business will remain the same. Labor is a strong supporter of small business and we always have been. With a Shorten Labor government, 99 per cent of businesses will receive a tax cut, no business will have their tax rate increased and all businesses will be able to plan and invest with confidence and certainty.
Labor supports the small business taxation legislation as it provides certainty to small businesses ahead of the next election. However, unlike the coalition, Labor will deliver tax relief for small businesses without cutting funds to schools or hospitals or increasing the national debt. Labor has taken difficult decisions to be able to fund its policy commitments, such as making multinationals pay their fair share of taxation and reforming negative gearing, the capital gains tax discount, the tax treatment of trusts, managing tax affairs and, of course, dividend imputations. The Liberals have not paid for bringing forward these tax cuts to small and medium-sized businesses, but rest assured that Labor will.
The Liberals have abandoned their budget rules and they have no fiscal credibility. They've doubled net debt since coming to office, and the deficit for this year is double the amount compared to what they first forecast in the 2015 budget. As outlined by my colleagues before me, our Labor team will accommodate the cost of this bill in our budget bottom line by delaying the introduction of the Australian Investment Guarantee by 12 months, building on our record of hard and sensible budget decisions to pay for our priorities.
Once implemented—acknowledging a delay of 12 months—Labor's Australian Investment Guarantee will allow all businesses in Australia to immediately deduct 20 per cent of any new eligible asset worth more than $20,000, with the balance depreciated in line with normal depreciation schedules from the first year. Unlike previous asset write-off schemes, the Australian Investment Guarantee as promised by Labor will be permanent. It means businesses can continue to take advantage of the immediate tax deductibility whenever they make a new investment in an eligible asset.
Labor is a great supporter of small business, in contrast with the Liberal government's record—they've delivered five years of chaos and division on energy policy, which has seen Australia's wholesale power prices double. Australian small businesses now pay among the highest electricity prices in the world, reducing their cash flow, productivity, profitability and ability to maintain employment. They dropped the National Energy Guarantee, another signature policy that cost the former Prime Minister, Malcolm Turnbull, his job. Now it's a policy vacuum costing Australian small businesses across the nation.
This is the same Liberal government that has mismanaged the most critical infrastructure project of the 21st century for Australia's small businesses: the National Broadband Network. Despite promising universal access to minimum speeds of 25 megabits per second by 2016, the Turnbull government's technologically inferior NBN will not reach many small businesses until 2019 or later, and then it will deliver speeds that are well behind those of key trading partners and competitors, such as Korea, Japan and New Zealand.
The most fundamental change facing small businesses around the world is the rise of ecommerce. You can and often do compete with businesses around the world, not just those in your neighbourhood. NBN Co recently released its updated pre-election corporate plan containing yet another $2 billion cost blowout to the Liberal's second-rate NBN. In 2018-19, 1.3 million premises will have their connections delayed. The project is now $22 billion over budget and four years behind its promised delivery date.
Thank you, Deputy Speaker. I'm really pleased that you let me know about the bill and brought me back to it. We know the NBN and the internet are essential for the operations of small business. In fact, in my electorate of Rockingham, there is a local pool shop that I struggle to contact because their phone has been down. Their NBN line has been connected improperly, and they continue to pay phone bills to both Optus and Telstra because they are unable to sort through the mess that this government's NBN has introduced. So that's the relevance of what I was saying: if you're going to introduce an inferior national broadband project and introduce it very poorly, small businesses—like the pool shop that I have to go to to help my mum maintain her pool—cannot do business. It's really difficult. They don't have fibre lines. They have to use dongles. They pay extra. Despite trying to help them, they are still working in a maze and a mess of a failed NBN service in Rockingham. I wasn't going to mention it, but thank you very much for reminding me.
The NBN is a critical productivity answer and all businesses rely on it. Ninety-five per cent of businesses have internet access, with internet income estimated to be worth $394 billion annually. As we know, we've been going backwards. Australia now ranks below countries like Kazakhstan when it comes to broadband speed and we're ranked 55th internationally, which is no good for small businesses.
I'm going to talk about the NBN service guarantee. Again, that is really important for small businesses. In addition to a lower tax rate for small business, Labor will deliver a better experience for NBN consumers and small businesses so that they may work within the regulated time frame, and wholesale service standards will be set for the benefit of small businesses for things like fault rectification, installations and missed appointments. Labor will also establish stronger penalties to protect small businesses on the NBN so that they might get a better service more quickly and improve their bottom line and therefore, hopefully, drive further investment in those small businesses and further employment, which is what we want to happen.
Labor does have other small-business policies in addition to supporting the government's current proposal for the taxation reduction for small and medium enterprises. We support and have announced implementing a second commissioner of taxation, which we predict will help service that small-business community and set up an appeals process within the ATO that is separate from the decision-making processes of the ATO, which, as we have seen in some media reports, seems to be targeting sometimes small businesses that don't have quite the financial wherewithal to tackle some of the challenges that the ATO puts out to them.
In other small-business policies, the shadow Assistant Treasurer, the member for Fenner, has recently announced 'Your car, your choice' policy, which will ensure car manufacturers share their technical information to ensure that vehicles can be serviced by any mechanic, creating a level playing field for independent mechanics. As we know, independent mechanics are small businesses all around all electorates across this country. This policy, in addition to lowering taxes for small and medium businesses, will benefit them.
Labor will also improve access to justice for small business and level the playing field in cases of anticompetitive behaviour by big business. We will restore the balance by letting a small business request a no-adverse costs order early in a court case. Similar to the lower taxes for small and medium businesses that we are talking about today, improving access to justice for small business in this manner will be of advantage to small and medium businesses.
We also seek to take action against phoenixing activity, and we hope the government might also take some action to make phoenixing activity more difficult for some corporations. We know that some small businesses don't do the right thing and they create an unlevel playing field by cheating, quite frankly. They dodge their own bills which are the bills that need to go to other small businesses, which, of course, tend to employ people. The problem is that some companies decide to not pay their invoices, not pay their employees, dodge superannuation, dodge penalty rates and then go into a phoenix-like arrangement, which of course is basically cheating on the community as well as on all small businesses in the community which have to participate alongside them.
I would like to reflect on another policy that the government can feel free to take up—that is, to establish an independent Australian skills authority that will advise on skills shortages and prioritise training investment in skills shortages in areas that are identified by the authority. We anticipate this will also be of great benefit to small and medium businesses, in addition to the taxation package we are talking about today. Skills of all sorts and the practical and vocational education that goes through TAFE are essential for small businesses right around this country, whether it be mechanics, carpenters, all sorts of trades—and trades that participate in the mining industry. There are small and medium-sized businesses right across the country that use trade training centres to participate in the defence contracts supply chain—in Henderson, for example, south of Fremantle and north of Kwinana, but also into the mining and resources sector in Western Australia.
All in all, there is no doubt Labor has and always will be a friend of small business. Sometimes misinformation is put around by our parliamentary colleagues on the other side about how we do not know much about small business. I grew up in a small business. I know many colleagues here have run and owned a small business, or their partners have. They have grown up in small businesses. I know there are sons of butchers and sons of newsagents that work in this place as members of parliament on the Labor side. We know small business, we believe in small business and we'll support small business.
I rise to speak in favour of Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill because it is in our DNA to let hardworking small and medium enterprises keep more of the money that they earn. As you can see from the litany of speeches from the other side, they have an attitude problem. Honestly, the concepts of small businesses and large businesses are treated with contempt. All the proposals that I've seen coming out of the other side seem to work on the proviso that they're all operating a tax dodge and that reasonable costs incurred in earning your income in a business is somehow diddling the tax scheme. That is so wrong. It just demonstrates clearly how they misunderstand issues like revenue and turnover, as opposed to profit and tax on profit.
We have delivered many tax deductions already. For individuals, there is our low-income tax offset of $530 for each low-income earner, as a rebate, so that they're paying less tax. There is also our legislated reform to company tax for small and medium businesses with turnover of less than $50 million. They are not promises. They have been delivered from 1 July. Also, we have set in train this bit of legislation to bring forward by five years the proposed reduction in tax from 27.5 per cent down to 25 per cent. We have dragged the opposition kicking and screaming to it. I hear the member for Brand now saying they're going to support this legislation. But it's not what they say they will do; it's what they do. They have a track record of going after small and medium businesses. They have an attitude problem—that the government should keep all the money and then let us as individual taxpayers, and small and large businesses, keep a small bit. It's back to front. Their thinking is so odd.
This legislation will allow small and medium businesses, of which I have about 12,000 in Lyne electorate, to keep more of their profits. In fact, it will be $3.2 billion less tax over the forward estimates. We reduce taxes because we know that by reducing taxes on small businesses they will get a better return on their investment. It allows them to grow and to invest in their business, and growth of business leads to growth in employment. Unincorporated businesses—and I have many of those in Lyne electorate—such as sole traders, tradesmen or just small businesses, get a benefit from this. It brings forward to 2020-21 a 13 per cent reduction in their tax rate, and 16 per cent by 2021-22. It has been brought forward because we realise that a lot of these small businesses have neither the wherewithal nor the need to incorporate themselves. Labor puts tax up, we put tax down. It's a pretty clear delineation. You can rely on the coalition government to reduce the tax burden for small businesses.
Many policies have been announced by the other side. They have given the green light to remove the brakes on growth in taxes. In fact, they have announced policies that will mean $200 billion is raised from individuals and companies, like the small and medium businesses that are the engine room of regional Australian employment. They have ruled out putting limits, or the so-called speed limit, on tax growth. They want to repeal our personal income tax cuts that we've already legislated and delivered. They're on the record saying that they want to repeal that and make it less generous. They want to reintroduce the two per cent budget repair levy, which we said we would repeal when the situation was better, and we did that last year.
So many in parliament have come from family companies. They have left their family businesses and have brought their knowledge and experience down into parliament for the betterment of the nation. They know what small and family businesses are, because it's in their DNA. You only had to see the hands-up situation in the last fortnight of sitting. About 80 or 90 per cent of the people on this side have been involved in small businesses, whereas over the other side there were just three or four. I'm sure that if you go back through the family lineage, somewhere you'll find a parent or grandparent who has been in a small business, but it is in the DNA of the members on this side, because they've run businesses—as did you, Deputy Speaker Howarth, and other members here. They want to attack trusts. They don't understand that trust distributions then get taxed by the individual. It's almost like they need to do a basic 101 tax course. They are proposing a 30 per cent tax on all distributions out of trusts, so are they going to double-tax profits? It's so ridiculous, it's scary. Imagine that: you pay 30 per cent on distribution from the trust to individuals in the trust and then they have to pay tax again. It's crazy stuff, but it's more scary. It is actually scary.
That's where they are going to get the money to pay for all these promises. They are going to do the classic Labor Party phenomenon: tax and then spend it. Redistribute income from hardworking individuals that take a risk with their families' house and mortgage, run a small business, employ people, grow things, and deliver goods and services. And then what do they get for it? They get a proposal from the other side that says, 'No, we're going to get rid of these tax cuts and we're going to make it more difficult for you to keep the profit from your labours.'
There are many proxies that float ideas in the body politic and from which some other scary proposals have come. ALP proxies in GetUp!, Ben Oquist of the Australia Institute and the Grattan Institute are some of the people that float ideas. That gives you the way they're thinking on the other side. The Grattan Institute has proposed that the family home be used in the pension assets test. That would possibly lead to a lot of people being excluded from the pension. It sounds like it's a wealth redistribution tool, and that's probably what it is, but there are many people who've got an asset that they can't sell, because they've lived in it all their life, but, by virtue of population growth in the cities, they are now worth a whole lot more than when they started off in the fifties, sixties and 1970s. But they want to get a slice of that as well.
As I mentioned, a fellow—Ben Oquist from the Australia Institute—in March this year said:
All things being equal, surely people would prefer to be taxed when they were dead than when they're alive.
Connect the dots. What he's referring to is death duties. I fear that the other side want to bring back death duties by stealth.
The other thing is GetUp! and—
Another issue that's been floated by GetUp! is that we should be taxing the business use of fuel. I can only assume they're referring to the fuel excise rebate, which is justified because most of the business use in agriculture, mining and other things isn't on public roads; it's on a mine site or it's on a farm, and that's why the discount or the rebate on the excise is there. If the proposal is to tax petrol and diesel use for small businesses, that would really be a big tax grab, because, again, the principal of costs incurred by a business in earning income is netted off against their income. It is a deductible expense. That would go right to the heart of tax practice since the federation has existed.
But that is all a giant tax grab, and we in this legislation are proposing to bring forward the tax cuts for small and medium businesses that have less than $50 million turnover to 25 per cent by 2021. The reason we've been able to do that is that we have grown the economic pie. The other side seems to look at a fixed pie and they slice up where it all goes, but we have grown the economy. That's why we've got over a million new employment positions out of the economy: we've made the settings right for the economy to grow. We have had increasing company tax receipts because of our anti-avoidance legislation and auditing by the tax office.
We've also empowered small business. We have cut their tax rates. The biggest growth in tax income and the biggest growth in employment have been in the small business space. So it's not like we're going to reduce our income from small business. I think we will get more tax income by cutting the rate, because it empowers business owners to work harder and invest in their business, like the instant asset write-off that we did and the tax treatment changes that we did in agriculture, in the ag white paper. The same principle applies. We understand how tax modifies decisions. Every government needs to raise taxes, but we try to make them as small as possible to let everyone flourish and to let employment grow and business grow.
I am so pleased that it's people on our side who are arguing the case for this and are putting up the legislation for this, and I'm very scared by the $200 billion tax grab, because everyone will suffer under that. There won't be the growth that we've seen. It's like death by a thousand cuts. They're pinching bits from here. Like I said, they want to get rid of capital gains tax. That's a really negative step, a backwards step. You have to allow people to aspire to get ahead. Most people who invest are mum-and-dad investors, perhaps investing in property. Even if they just quarantined people who've already negatively geared, when they sell that property the value of it will be reduced. You can already see the property market reducing—
Thank you, Mr Deputy Speaker. Getting back to the bill, this bill reflects the DNA of the coalition government. It reflects the understanding that, if you punish people with taxes that are too high, their incentive to work harder goes. It's the same in a business. For those on the other side who don't understand the difference between turnover and profit, the profit is what you have left to distribute to your shareholders—and, usually in these small mum-and-dad family businesses, that's their wage. Unless you give them a reward for the risk of the investment, for the responsibility of providing employment for their employees, the whole exercise is negatively affected.
This is a very empowering bit of legislation and it's not going to run the country broke. The income from small and medium businesses will probably grow, which is the phenomenon seen in other decades and generations, both here and overseas. We're bringing taxes down, and those opposite have a track record of putting taxes up. What they're proposing is very, very scary. People out there need to realise what would happen to our booming economy if the other side were given the responsibility of running the Treasury. It would be a different world altogether. I support this bit of legislation 100 per cent because it's good for all of Australia and it's good for small businesses.
I speak in support of the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. Labor are pleased to support lowering tax rates for small to medium enterprises. We've got a good track record of supporting such enterprises throughout the country, and that's why we've offered support to the government to provide certainty in the lead-up to the next election. But the government have been checkmated on this. They tried to use this issue as a political wedge. They tried to use this as something to drive a wedge between the Labor Party and the small business community, but it's backfired. It's backfired tremendously on the government because, in announcing this policy, they failed to find a way to fund it in the budget. They announced these tax cuts for small to medium enterprises, but there's no announcement about how they're actually going to find the money in the budget to fund this type of reform.
When you talk about being fiscally responsible, when you talk about understanding the running of a business, the No. 1 factor in being successful is knowing how to budget, knowing how to make sure that the amount of money that's coming into the budget is more than is going out and that the business remains successful, but they've been unable to do that with respect to this bill.
Labor, on the other hand, have demonstrated that we are fiscally responsible. In supporting this bill, we've found a way to fund this particular tax cut and bring it forward early, and that is to delay, by one year, the Australian Investment Guarantee that Labor proposes—another solid policy that will support small businesses.
This government likes to talk a big game when it comes to the business community. They like to travel around Australia saying—and we've just heard it—'We're the ones who support small business.' They use the words, 'It's in our DNA.' Well, ask the small business community how they're feeling about that DNA at the moment. Ask them: how are they feeling about skyrocketing electricity prices because of this government? How are they feeling about the two-year delay to the banking royal commission because of this government? How are they feeling about the disaster that is the NBN and most small businesses being unable to get high-quality broadband to ensure that they can run an enterprise that has a connected approach to doing business? Ask this government about the delays that they've instituted because of the disaster that is the National Broadband Network. And ask them about the on-off, stop-start approach to asset write-offs that this government has brought about.
When it comes to electricity prices, we all know that this government has been an abject failure. The No. 1 cost impost on small businesses in this country at the moment is skyrocketing electricity prices. You travel anywhere around Australia and ask small businesses what their No. 1 issue is and why they're struggling at the moment. It's because of electricity prices increasing, and that's due to the 5½ years of this government failing to implement a decent policy that provides certainty to ensure that the private sector invests in electricity. We've got the minister sitting here; what has he announced since he has been the minister? Nothing—a big fat zero! But I've got to give it to him—he is not alone in that, because he's following in the tradition of his predecessors who have done exactly the same thing. For five years they've announced nothing—a big doughnut—when it comes to helping small businesses reduce their electricity costs.
First, the government asked the Chief Scientist, Alan Finkel, to come up with a policy that would provide certainty and reduce electricity prices. And he did that. He came up with the clean energy target. He put that to the government. The Prime Minister at the time, Malcolm Turnbull, and the energy minister at the time, Josh Frydenberg, said, 'This is a great policy. This is the right thing to do. It will reduce emissions and cut electricity prices.' They even put a figure on the amount of reductions in electricity prices. Well, that lasted a day. The member for Warringah and those like the minister sitting at the desk here went to work to undermine that policy, and that was off the table. So they asked the Chief Scientist to go away and have another go at it. And he did. He came back with a second version of that policy. Once again, the Prime Minister and the minister for energy said, 'This is fantastic. This is great stuff from the Chief Scientist. We will reduce electricity prices and we'll ensure that we meet our emissions reduction targets.' Well, that one lasted about a week, and then that was off the table.
Then they went into this policy vacuum and argued amongst themselves for a number of months, and then they came up with the National Energy Guarantee. They appointed a board of specialists, the Energy Security Board, to come up with a proposal that would provide a guarantee for a reliability mechanism and, at the same time, hopefully, reduce electricity costs. That body went away and did a fair bit of work—and it cost quite a bit of money, in the nature of $10 million; that is not cheap by anyone's standards—and they came up with a report, and they recommended the National Energy Guarantee. Once again, the Prime Minister said, 'This is fantastic. This is great work,' and the energy minister said, 'This is fantastic. This will ensure that we can reduce electricity prices and meet our emissions targets.' And then those in the right wing of the Liberal Party again went to work, and what did they do? Over a series of months, they undermined that particular policy. It was actually voted up in the party room and became policy.
The Labor Party took the approach of trying to work on a bipartisan basis with the government. It wasn't our ideal policy but we said, in the interests of ending this war around climate change and energy policy in Australia, we would negotiate and look to agree with the government on this issue to try and put this to bed and provide certainty for the private sector. The private sector has been screaming for that certainty for a number of years and welcomed the commitment that Labor gave to working with the government. What happened? Once again, this rabble within the Liberal Party undermined the Prime Minister, took him out and then took out the policy at the same time. The policy lasted about a day after the last Prime Minister was removed from office.
The small business community and the larger business community in Australia are so fed up with this government that they've said, 'You guys can't even work as a government anymore. You're so incompetent that we'll go out on our own. We'll come up with our own energy policy.' These businesses of Australia, the small businesses that are the subject of this particular tax reform that we're negotiating here today, have given up on this government, completely given up on them and said, 'We'll go out on our own'. They announced last week they're going to develop their own energy policy. They're going to do the work that government can't do and announce their own energy policy because they know that this lot are incompetent and can't even agree on a policy to reduce electricity prices. That is the reason why the small-business community are up in arms in Australia about this government's approach to supporting them.
Labor have been listening to the small-business community. For the past few years in opposition, we've been travelling around the country talking to small businesses and listening to them. The message has been very, very clear: they do want some tax relief, and Labor agreed to support tax cuts for small business. But they also wanted the ability to invest in their businesses and government support to grow their businesses to ensure that they could look at buying new capital to expand the opportunities for growth in new markets and look at buying new equipment to ensure that their businesses are more efficient and can operate more effectively.
Labor listened to those pleas and those requests and we instituted a policy that responds to them. The Australian Investment Guarantee will provide businesses with the ability to immediately deduct in the first year particular assets up to a value, to ensure that businesses get that immediate relief and that incentive to invest and grow their businesses. That's the way you listen to the small business community. That's how you make sure that you're listening to their concerns and working in their interests. We've also said, as I mentioned earlier, that we'd be willing, in the interests of small businesses, to look at a National Energy Guarantee and do something about electricity prices.
Labor have been calling for the last three years for a royal commission into banking and financial services. Access to banks and financial services and to credit to grow a business is vitally important. But businesses want to know that, when they access that credit, they're getting a fair deal. And some of the anecdotes that have been coming out of the royal commission don't represent a fair deal at all. This government and Australia have known about this for some time but this government and this Prime Minister voted 26 times against that royal commission, against providing the opportunity to have a look at what was going on in financial services and provide some relief for small businesses and some certainty for them to invest.
It's Labor that have been listening to those small businesses and it's Labor that have been acting fiscally responsibly in supporting this particular amendment because we found a way, in our budget, to fund this particular proposal. Unlike the government, we've done the thing that all small businesses in Australia do—that is, find a way to fund new expenditure, find a way to ensure that your books balance at the end of the day—and that's a far cry from the response that they'll get from this incompetent and out-of-touch government.
While the previous member's still in the chamber, I'd like to point out the best thing he can do for energy in Queensland is ring Annastacia Palaszczuk, the Queensland Labor Premier. There is one owner of the retailers in regional Queensland, there is one owner of the poles and wires, and one owner of 70 per cent of the generators—that is, the Queensland Labor government. It sets the price and is robbing over a billion dollars from consumers. I find it outrageous that, in his contribution on Treasury laws, the member for Kingsford Smith would spend half of it bagging the government out about electricity prices when, where I come from, they are set by the Labor Party—100 per cent. They could do something about that today.
But I turn to the bill in question. Like you, Mr Deputy Speaker Howarth, I am a former small-business owner. I do know your family is still operating your small business, and I'll give a shout-out to your wife, Louise, while I have the opportunity. I know she has taken up the slack while you're in your role as an MP. Congratulations to your family business. It is great news for small business in Australia to have a tax reduction brought forward substantially. The bill means small and medium businesses will have a reduced tax rate of just 25 per cent, and unincorporated businesses will have a 16 per cent tax discount, sooner. As a former small-business operator—for more than a decade—I know that this is about stability, this is about reliability, this is about strength of the bottom line and the capacity to make decisions based on risk. The stronger your business bottom line is, the more likely you are to employ someone else, the more likely you are to borrow money and expand, and the more likely you are to continue to increase your business and its operations. So this is great news for small businesses across Australia. In Queensland, that's some 426,000 small businesses, each employing fewer than 20 people. They represent over 97 per cent of businesses statewide and employ approximately 44 per cent of all private sector workers. This is a substantial change for them. It is a very, very considered move by the government and it will make a real difference to the Australian economy and to the ability of these small businesses to employ.
I do want to speak about some of the small businesses in my electorate while I have the opportunity. Cutting Crew men's hairstylists, a new business, happen to be a group of ladies I have known for a very long time. I congratulate them on taking the risk to open up their own facility. Avenell Bros gift shop has been a local institution in Bundaberg for two generations. J & R McCracken is a family owned irrigation business that continues to employ locally and deliver all of the equipment, particularly around irrigation, needed for our growing agricultural offering, particularly macadamias and avocados. There's a new gourmet kitchen and catering firm, Water Street Kitchen, which we trialled just last week with the British high commissioner, Menna Rawlings, who happened to be in town. I think she enjoyed herself thoroughly and certainly thanked the young team that owns this new business. In Hervey Bay there are a couple of beachfront institutions, Aquavue and Enzo's, where last week we had Minister Fletcher addressing the local Hervey Bay chamber on the cashless debit card. Ulton accountants in Hervey Bay continue to support those local businesses.
I want to mention a couple of special ones. Buck's Butcher Shoppe in Childers is another locally run business that provides fantastic service to the people of Childers, a small community centre. There's the Naughty cafe in Howard, which is a new opportunity. And then there's Billy Beans Coffee in Torbanlea. Torbanlea is a small regional centre between Bundaberg and Hervey Bay. It's about an hour from Bundaberg. As you know, Mr Deputy Speaker, sometimes we have a very early start. If you're passing through the town of Torbanlea and the coffee van is there and open, it's very welcome at half-past five in the morning, after a 4 am kick-off. I'm very pleased that all of these businesses will receive a benefit as a result of the changes from the coalition government.
Can I also say I'm very pleased that the Labor Party has seen sense on this and decided it will take a bipartisan position. I think that is a great indication for our country. And those sorts of things should continue, because it is business, and particularly small business, that is the backbone of this country. Small business drives our regional economies. It is small business that employs Australians. It's not government. Government have a number of public servants, obviously, but we can never employ everyone in Australia. It is business that employs, it is business that takes risks, and the more that we can do to strengthen its bottom line the better it is for our nation and its growing economy.
I congratulate all of our local businesses who are out there working hard. I've got to say that nearly all of them take the same approach that I always did in business—that is, pay your staff first, pay your bills second and pay yourself last. With that, I commend the bill to the House.
I'm pleased to stand to support the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. These amendments to the taxation law will provide small and medium-sized businesses with a turnover of up to $50 million a year with a reduced tax rate of 25 per cent by 2021-22.
I'm also pleased to see the government drop its one-point plan—its plan A, as it was referred to by a number of ministers this week—to give a $60 billion tax cut to big business and delay the tax cuts to small business until seven years down the track, 2025, supposedly committing future governments to delivering a tax in what the previous Treasurer Peter Costello called a weird alternative universe. I'm pleased to see them drop that one-point plan and bring forward these small business tax cuts to 2021-22.
We on this side of the House are pleased to support this bill for a number of reasons, not the least of which is that it provides certainty and avoids an ongoing scare campaign from the government side about what will or won't happen to the tax act or the tax rates over the next seven years. It puts in place a framework that small business can rely on and that's supported by both sides of this House, and that's a very good thing.
It's an interesting strategy that the government has taken up here, to have a plan to grow the economy simply by reducing tax rates. When I talk to small business, I get quite a different story. I get a concern from them about what helps them grow—what helps them increase their size and increase their profit. Many of them have said to me that they would forego a two per cent reduction in the tax on profit if they could grow their profit much more—if they could find a way through the pressures on price, on electricity, on gas or on wages and if there were good access to capital, better competition law, better planning et cetera. There are all sorts of things: better coordination across the states would allow them to move across state borders without additional multilayers of red tape. There are many things that they ask for to get the barriers out of their way so that they can grow and so that they can pay their staff, pay their costs, pay themselves and get a profit.
I take exception to something that one of the earlier speakers said, that a profit is the wage of a business owner. Actually, it's not. If there are businesses out there for whom the profit is actually how the business owner is paid then they should go and talk to their accountants, I think, and check that out, because that should not be the case. It was said in the context that we on this side of the House don't understand business but that speaker does. I would just suggest that that particular speaker on the government side go and talk to a few business owners and accountants, because that's not the case.
We on this side of the House believe that we have a better taxation policy than the government. We support this cut in the tax rate to 25 per cent by 2021-22. This is to provide certainty and because it's within the range of what you'd expect from this government, given what it campaigned on before the election. As a responsible opposition, we don't just oppose everything; we try to find policies in the frame that we can support. But we believe we have a stronger policy because we have an additional policy for small business, which is known as the Australian Investment Guarantee. It's a superior tax policy to what the government is offering because it provides tax concessions when businesses invest in their own growth. It's a 20 per cent tax deduction and accelerated depreciation on all investments and new assets that are over $20,000 in value. That means that, if you buy an asset or build an asset worth a million dollars, you get 20 per cent of that—$200,000—in depreciation in the first year, plus the remaining 80 per cent depreciated in the usual way from the first year. So if you're on a 10-year depreciation schedule then you get another 10 per cent of the remaining 80 per cent in the first year, and if you're on a three-year depreciation schedule then you get one-third of that remaining 80 per cent in the first year.
It's a policy that rewards and assists investment that small businesses make in their own growth. It dramatically improves cashflow at a time when businesses are investing. If you talk to businesses out there, they're incredibly appreciative of this and they've been calling for this sort of support for quite some time. It's also been well received by the peak bodies across the accounting sector and most of the peak organisations around the country. So we're really proud of the Australian Investment Guarantee, which will sit in conjunction with the tax cut down to 25 per cent as a strong support for small business.
We will delay the introduction of the Australian Investment Guarantee by a year. That's our method of paying for the tax cuts that we're supporting today. The government, of course, hasn't stated how it's paying for them, but we have. We will delay the Australian Investment Guarantee by 12 months in order to pay for our support for the cut in tax today.
We've also announced an additional second commissioner of taxation to assist small businesses that have been struggling in their relationship with the ATO. We've had many businesses tell us that they've complied with the rules as they understood them but have found themselves in dispute with the ATO. We know that not everything's perfect—we've heard some dreadful stories lately—and we believe that there's a fundamental principle that those considering the appeal should not be the same people from the same business unit as those who made the original decision which is being appealed. This will provide separation and change the power relationship, and we believe this will be very good for small business.
But there are also a number of other policies that have been called for by small business, and I want to talk about some of those. Changing the rate of tax on profit doesn't necessarily grow a business. There will be some businesses that will reinvest it; there will be many others that will just take it, bank it and use it to buy another investment property or whatever. There will be some that will reinvest, but there will be many others that won't. So cutting the tax rate for small business does not necessarily provide the bang for the buck that our small-business community needs.
Previous speakers have talked about energy policy, and I will move through it very quickly. Investment in new sources of energy took a nosedive when the current government came to power, essentially because of uncertainty, and we need certainty. The only way to reduce power prices in the long run is to have certain policies that encourage investment in new power and the replacement of old assets, some of which are well past their use-by date but are still in operation simply because new sources of power haven't come online. As we see those older assets becoming more and more expensive to run and as we see the older power plants crashing in heatwaves—the very time we need them to be operating at their full capacity—we will see prices continue to rise. We need certainty and we need it now, and, quite frankly, the government has let down business seriously in that field.
We also have a plan to revitalise and refresh vocational education and training, with 100,000 TAFE places to be provided free of charge. Small business is telling us every day—and they must be telling people on the government side as well—of their difficulties in finding and attracting appropriately trained staff.
We announced, quite a few years ago now, an access-to-justice policy. It's all very well to have unfair contract provisions. It's all very well to have effects tests. It's all very well to have the laws. But if small business can't afford to take on a big business because of the legal costs then you don't have anything that's worth having. You have a law which cannot be used. We've heard over and over and over again for many, many years the problems that small business have in taking on big business, because big business can just wait them out and appeal—and the small business will go broke while the court case is underway.
We know that access to justice matters. I would encourage the government that's introduced the effects test and has made the adjustments to consumer law to allow unfair contract provisions to apply to small business to consider what small business needs to make use of those laws, because without access to justice the laws are not viable. The review on unfair contract provisions is due in November, and I know there will be many people saying exactly what I'm saying—without access to justice, without the money or the process that allows small business, if they're being treated unfairly, to take on big business, the law is just law. It's just paper.
We have a very strong phoenixing policy. It's good to see the government starting to respond to that, but we've been talking for years now about unique identifiers for directors. We've been talking about cracking down on the dodgy fly-by-night businesses that fold up one day, palm their employer entitlements off to government, re-emerge the next day in a flash of flame, and then they're in business again. We know it's not just the employees of that business that are damaged but all the people down the chain. When a business doesn't pay its suppliers then that business can't pay its suppliers and then that business can't pay its suppliers, and so we get this domino effect down the supply chain, one small business after another.
Anyone who has been in small business knows how fragile your cash flow can be. If you have a large contract that is not paid for several months, that can kill you. Cash flow kills you. Viable businesses can disappear simply because the cash flow is not there because another business did the wrong thing. We need to address that, and I urge the government to do so. I know they're starting to move on phoenixing and move on all that sort of stuff—quite a few years after we did. But, please, take this seriously. The government must act. It's incredibly damaging for small business. Again, I would urge the government to look at Labor's policy on sham contracting and wage theft as well. And Labor has offered a service guarantee for the NBN that offers financial penalties if the NBN does not meet its service obligations. We have set those penalties and we will expect them to be met.
In summary, I support this tax cut. It's a good move by the government to walk away from the big business tax cuts at this stage. I hope the government is serious and I hope it doesn't return at some point in the future. I know the government has been committed to it for a long time but it will be good to see small business receive this tax cut in 2021.
It's always a pleasure to rise in this House and speak about the terrific things that a coalition government, once again, is doing for small business. And it's interesting to listen to the contribution from the member opposite. As much as I like her, and we serve on a number of committees together, she interestingly failed to mention a range of policies that those opposite are proposing that are going to directly impact small business. For example, she forgot to mention the capital gains tax increases or the changes to capital gains tax arrangements. She forgot to mention the changes to dividend imputation rules. For many small-business owners who reinvest their wealth over their lifetime running their small business, when they get to retirement and they generate a tax-free income stream, they'll never be able to use the tax credits they have accumulated. I bet the member hadn't thought of that one. And, in addition to that, the tax on trusts will affect many small businesses that are run through trusts and other unincorporated structures.
The member opposite failed to mention a few of those pertinent facts that are directly going to impact small-business people if those opposite ever have the pleasure of sitting on the government benches again. But on this side of the House, we can stand here safe in the knowledge that the things that we are doing for small to medium business, for the long term, are going to assist them to build and grow their businesses and give them incentives to do so.
We know that many small-business owners, as a number of speakers have touched on, take risks every single day just to open their doors. If their business is supported with finance, if their house is mortgaged for the business, all their finances for their whole family generally come from that business. But not only is it their personal finances that are supported by that business, it's the finances of their employees. And they recognise that as the owners of that business, it is critically important that they run the business well and continue to grow the business so not only can they build wealth for their families but, equally, they can continue to maintain and grow the number of employees they have and, by extension, then help those employees build the wealth of their families. That is what this country is built on.
Small and medium businesses in this country employ the majority of the Australian workforce. In my electorate of Forde, some 15,500 small and medium businesses will directly once again benefit from this tax cut. And we've seen already the benefits they have received not only from the first tax cut but also from things such as the instant asset write-off. I was at Beaurepaires in Beenleigh last week with the Minister for Small and Family Business, Skills and Vocational Education. Ronnie, who runs it with his wife, Karen, told me about how they bought a new air compressor to replace their old compressor and they used the instant asset write-off for that. This new air compressor fits into a third of the space of the old one and it has assisted in reducing their electricity bills by some 25 per cent. That is a clear example of the benefit of the things we are doing for small businesses that will allow them to grow and prosper.
In addition, from 2016 we extended unfair contract terms to small businesses. And, as I've already touched on, we as a government are not changing the dividend imputation rules, which protect the value of the reinvested capital of many small businesses across the country, when they get to retirement. In this debate, the changes that those opposite propose to dividend imputation have not been well ventilated. Many small business people probably don't realise that at this point.
Looking at some of the great small businesses around the electorate of Forde, there is Poppy's Chocolates, which makes a range of wonderful tasty chocolates, enjoyed by our local community and a wide range of clients right around South East Queensland. I have already touched on Beaurepaires at Beenleigh. True Blue Glass, one of our great local businesses that provide services over the greater Brisbane area, is benefitting from the instant asset write-off and also from our over $1 billion investment in upgrades to the M1. It will mean their employees, their trades people who go out on the road to fix the glass on shop fronts and homes, will not be stuck in traffic for as long each day. Look at great businesses like Noonan Race Engineering, which builds and designs engines, predominantly for the drag-racing industry, not only here in Australia but also in the United States. Look at Better Batteries, which is developing a range of batteries to provide storage capacity as we move towards more renewable energy in our energy sector, or Lumineye, which makes and exports nail polish. They have the capacity to make small runs of nail polish for high-class fashion houses around the world. These small runs can't be done by the big companies in China. They can turn those new colours around in some six weeks, so they're exporting around the world. Concept Safety, which saw a gap in the market in the mapping of safety in buildings, has just received a $650,000 grant from the federal government to develop a completely online database map of an entire building with all its safety exits, where its fire extinguishers are and so on. There are many other great businesses like those we all have in our electorates, such as Luv a Coffee, where I regularly go for a coffee, and Mitre 10 Loganholme, which is one of our great local hardware stores. There are other great businesses, like Stellarossa in Park Ridge, and there are our pharmacies, which do a terrific job looking after and supporting those in our community who are struggling with health issues.
All of us in this place can list a great number of businesses that benefit from the fact that we're taking the opportunity to reduce the tax they're paying. Not only are we doing that but, in regard to pharmacies, because we have the budget in order and we have a strong economy, we've taken the opportunity to increase the number of medicines that are on the Pharmaceutical Benefits Scheme. That benefits a wide range of the constituents in our community who have difficult health conditions.
All of this ultimately benefits Australian people. Over the past five or six years we've seen over a million jobs created in our community. Governments don't create jobs. Businesses like those that I've mentioned create jobs. That is what is so valuable and so important about the work that we're doing in this place, because we're creating the incentive and the opportunity for the small to medium businesses across Australia to take the risks and take the opportunity to grow and to employ more Australians. We know that the greatest thing for Australians is to be able to work in satisfying, fulfilling jobs, because that gives them the opportunity to build wealth for themselves and their families. It gives them personal satisfaction, personal wealth and the knowledge that they're contributing.
We also know that, if people are working, they are more likely to have their kids playing in sporting groups and they are more likely to be involved in the community. So there is an enormous number of add-on benefits to the fact that people are working and contributing. It also means that we don't see as many people on welfare, and that is an enormous advantage to our community. When people are working, they're involved in the workforce and they're building skills, developing capability and realising their potential. That's what we want to see. We want to see people build their potential and contribute to our society in a positive way. That is, ultimately, what all these measures that I've spoken about do. They create the opportunity for business owners—but importantly they create the opportunity for Australians—to build their capacity, live their dreams and contribute to our society in the best way they can. It is through that that we build a stronger, more cohesive community for everybody in this country, and that's why I commend this bill to the House.
Opportunity and freedom are fundamental values of the Australian Labor Party. Starting or building a small business grasps these freedoms and the opportunities that this country offers our citizens. I'm proud of the small, medium and family businesses in the electorate of Perth. Equally, I'm proud to be a taxpayer. Paying tax is a symbol of being an advanced economy, and small businesses paying tax is a symbol of their success in our market economy. I would note that the opposition is supporting this bill but also supporting the restoration of penalty rates for some 700,000 working Australians. We believe that you can support small business and working Australians at the same time.
Perth is an entrepreneurial city; equally, I want it to be an international city. Our history is international; it's entrepreneurial. You only need to look at the history of Northbridge and the Italian and Greek migration that powered the businesses in that area to know that Western Australia, and Perth in particular, has a proud entrepreneurial and multicultural history and a proud entrepreneurial and multicultural future. There are some 25,000 small businesses in the electorate of Perth, including 1,700 businesses earning between $2 million and $10 million, who will all benefit from these changes. It's those local small businesses that make Perth, in my opinion, the best place in Australia to live, work and raise a family.
Like many of the other speakers in this debate, I would have to say there are certain small businesses that help you more than others. I'll start by giving some shout-outs to the small businesses that keep me caffeinated on a regular basis: Modus, Bossman, Finlay & Sons, Mary Street Bakery and Wine Rooms by Harvey Leigh's. I also note those businesses that don't just do retail but have a role in education, places like Beaufort Street Books, The Stripey Horse, Planet Books, Luna cinema and early childhood centres owned by small business operators. And, of course, there are those businesses who welcome tourists—The Queens Hotel, The Royal, Fraser's Restaurant at Kings Park—a range of independent hotels based in the CBD, and even places like McDonald's, where I once worked, have an important very important role in tourism and welcoming new visitors to Australia. I think we should also remember, when we talk about small businesses, that often it is those large businesses, particularly in the mining industry in Western Australia, that provide the ballast and the stable regular business that small businesses rely on and enable people to make that first leap out on their own.
I hope that this bill doesn't just drive business owners to deliver more but that it also encourages them to create more and get closer to their dream, whatever their business is aiming to do. Equally, I would say to young people who are possibly listening to this debate or may have me passed on to them at some time in the future: note that this bill is being dealt with in an urgent and bipartisan fashion. I hope this sends a message to young Australians that we are relying on them to start the next generation of small businesses. Many young Australians are currently completing their year 12 exams and having conversations about what they want to do next. The conversation should not be just about university, TAFE or work. The conversation must include: 'What sort of a business would you like to build now or in the future?'
Building new businesses is fundamentally Australian. It's going to be key to our future. It's also a key part of our history. In my family, my late grandfather Alan and my grandmother Joan built a home and then a home business in Gosnells in the foothills of Perth. WA & J King is now a large, successful family business supplying sawdust, woodchips and other supplies to farms and gardens around Perth and the inner regional areas of Western Australia. They also proudly supplied the woodchips for the gardens at the Perth Optus Stadium. It was this small business that allowed Joan and Alan to raise my mother and fund her education. It has provided intergenerational stability and employment for the family. It has given back to the community through employment and philanthropy and by helping build institutions like a local community bank in Gosnells. I'm so proud of what Alan and Joan built and Joan continues to lead, and I'm proud to have such a successful small business as part of my family's story.
In concluding my remarks, I commend the shadow Treasurer for his leadership in supporting small business and family business. Some of the other measures that Labor has introduced will ensure that we provide the skills necessary for those businesses to grow and reach their potential—uncapping university places and investing in research to ensure that we have the intellectual capital so that businesses, small, medium, family and large, can achieve all they want to; providing 100,000 TAFE places with no up-front fees to make sure we have that skilled workforce; investing in the early years of education for three- and four-year-olds; investing in clean renewable energy; and ensuring multinational companies pay their fair share. I commend the bill.
I rise to speak briefly in support of this important bill, the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018, because this bill is going to mean that, for 15,015 small and medium businesses in my electorate of Robertson on the Central Coast, they will pay less tax sooner. With this legislation our government is delivering tax relief for small and medium businesses five years earlier, with fast-tracking of cuts meaning that businesses with a turnover of below $50 million will benefit from a reduced company tax rate of 25 per cent in the financial year of 2021-22 rather than the originally planned 2026-27.
Our businesses are the backbone of our local economy, and the success of small and family businesses in our local community helps to build a strong national economy. This government knows that without a strong economy you cannot guarantee the essential services that Australians rely on. It's why we're so focused on delivering an even stronger economy, because it's a strong economy that guarantees investments in education, health care and the NDIS.
In line with fast-tracking of company tax relief, we're also bringing forward the changes to the unincorporated small business tax discount. This measure is set to benefit around 2.35 million unincorporated businesses across the country, including sole traders with a turnover of up to $5 million.
As the Central Coast Express Advocate reported last week, locally around 2,000 women on the Central Coast are juggling a small unincorporated business with their family life. These 'mumpreneurs' are giving it a go. They're juggling work and family life. And these changes will mean that local unincorporated small businesses will now be able to access the maximum discount of $1,000 five years sooner.
So many families, mums and dads, on the Central Coast operate small businesses or work in a small business, and I'm proud to be part of a government that is delivering tax relief for these businesses and for their workers. I'm proud to be part of a government that's saying to local businesses who are having a go, 'We're on your side.' We're backing businesses that have been giving it a go and getting ahead on the Central Coast. The Prime Minister visited just last week to meet with two of the more than 15,000 small and family businesses on the coast, and it was great to share with the Prime Minister some of our local success stories—businesses having a go and succeeding locally on the Central Coast, like Six String Brewing Company in Erina, a locally owned and operated craft brewery. Six String produces a number of craft beers, as well as cider and lemonade, that are stocked in restaurants, bars and supermarkets across Australia. They employ 15 Central Coast residents and, since opening just five years ago, they have been growing year on year. Six String is already benefiting from the measures that this government has implemented, including the instant asset write-off and changes to the alcohol excise that put brewers and distillers on a level playing field. This bill adds to these measures and will mean that the owners, Chris and Ryan, can continue to grow their business, invest in new equipment and expand their team.
It's the same for Kombucha Zest at West Gosford. It is a business that employs 11 people from the community and distributes fantastic kombucha to cafes and restaurants around the country. Since starting three years ago, Nathan has seen his business grow exponentially and said that, as a new business, profits are always being reinvested back into the business to continue growing. For Kombucha Zest the tax relief delivered sooner means that they'll keep more of what they earn and they can invest even more back into a fantastic local business that really does have an outstanding, fabulous product as well.
For Bambi, a leading bedding manufacturer with a 30-year a history on the Central Coast, the measures in this bill will mean that they can continue to develop into international markets and remain competitive. Bambi is a family business that's got big dreams and aspirations and is working to compete with imported products and champion Australian manufacturing. I look forward to seeing them go from strength to strength as well.
These are just some of the stories of some of the local businesses on the Central Coast, and I'm looking forward to meeting with even more business owners and hearing their stories over the coming weeks.
This bill builds on our already legislated tax plan, and our plan is all about making sure that Australians and businesses that have a go get a fair go. This government's economic plan is working, and I'm proud to be part of a team that's investing in the future growth of the economy by backing small and medium business, the backbone of our economy. I commend this bill to the House.
If you had a spare $2 billion lying around, how would you spend it? Would you spend it in Australia by trying to close the gap between the very wealthy and everyone else and acknowledging that inequality is on the rise and is at a 70-year high? Would you use the $2 billion as a down payment towards lifting Newstart so that everyone who has fallen on tough times is no longer forced to live below the poverty line? Would you put $2 billion, if you had it, into schools—public schools that have struggled under successive underfunding to the point where we've had report after report telling us that, for Australia to join the rest of the pack, we're going to need to massively lift the amount that we spend on our public schools? Would you put $2 billion into renewable energy so that we can avoid the worst of climate change that the scientists have told us is coming as early as 2030 if we don't switch off coal and onto renewables?
I think most people in this country would have some pretty good ideas about how to spend $2 billion. Not that many of them would say, 'Well, if there's a spare $2 billion lying around, let's give it to companies that have got a $50 million turnover.' There aren't that many people in the country who would think that those companies count as a small business. When you are talking about St Kilda Football Club, for example, with a turnover of just under $50 million, not many people would look at that and say, 'There's a small corner store that could do with a handout.' Most people would probably say, like the Greens have been saying, that there's a very strong case for those genuinely small businesses to get some assistance. We can get some assistance, as the Greens have pushed for and we've now seen converted into law, by, for example, stopping the big duopoly supermarkets, Coles and Woolworths, from having such massive market power that they can crush some small businesses.
They might say that there would be some merit in changing the law to ensure small businesses get prompter payment, including from government departments. They might say there's a case even for a tax cut, as the Greens have been arguing for a long time, for those very small businesses. But most people, when they think of a small business, don't think of a company that has a turnover of $50 million. Under the rhetoric of 'We're going to help out small business,' which most people agree with, this government is taking $2 billion from the kitty that could be going to schools or hospitals or to lifting people out of poverty or to renewable energy. Instead it's giving it to corporations that are already doing quite well.
You'd expect that from the Liberals, but what I think would surprise a lot of people is that this trickle-down economic theory, that's straight out of the Ronald Reagan-Margaret Thatcher textbook—this trickle-down theory that says, 'We keep cutting company taxes and all of a sudden wages will grow and employment will grow'—is now getting the full-throated support of the Labor Party. We are here rushing a bill through parliament today that is going to take $2 billion that could be going to reducing inequality or could be going to our public schools. Instead, it's going to be given to companies that have a $50 million turnover, and Labor is asking, 'Where do I sign?'
We expect this from the Liberals, but what we're going to see as the election gets closer and closer is Labor, in trying to curry favour with big business, signing up with the Liberals and big business on a unity ticket to ask, 'How can we implement more trickle-down economics in this country?' For those of us who have been watching this for a while, it probably doesn't come as any surprise. Whilst we know that the government and the Liberals do whatever big business asks them, we also know, as we look back over history, that it was the Labor Party, when they were in government in the eighties and nineties, that brought Reagan and Thatcher to Australia and implemented neoliberalism in Australia.
There's been a brief pause for a couple of months as Labor has looked at what's happened around the world and realised that, actually, maybe people don't like it. But that pause is evaporating the closer we get to the election, with Labor wanting more to go to big business and say, 'Don't worry, we might say lots of bad things about you but we're not going to implement any of them.' Labor then turns around and asks, 'How can we sign up to whatever the government wants?'
We're seeing it now with the TPP. As we know, there's a deal on foot with Jacinda Ardern, over the ditch, who has managed to negotiate some exceptions. But here we're seeing them going with full knowledge that under this Trans-Pacific Partnership there will not have to be local advertising for jobs and that there will be loopholes so big that you could fly planeloads of exploited overseas workers through them. It's just as we found with ChAFTA and just as we found with the other free trade deals. Now we're about to do the same. Why? Because the Labor Party is helping the government get that neoliberal agenda through as quickly as possible. And now we're seeing it with tax cuts, to the point where the opposition is so desperate to say, 'We're on a unity ticket with the government on refugees, we're on a unity ticket with the government on the TPP and now we're on a unity ticket with the government when it comes to corporate tax,' that people will be wondering what, if anything, is actually going to change?
I hope that we see the back of this government at this election, because they've shown that they don't care about the life that is left for our kids. They are quite happy to stand up here and say, 'We have no new renewables policy,' and then boast about it. They are quite happy to stand up and say, 'We think we're doing well,' as pollution goes up and up, and, 'We don't care if kids now, when they're adults, go through every summer wondering where the next bushfire's going to hit.' They don't care, because they're taking their instructions from the coal lobby. So I hope that there's going to be a change of government. But people will be asking that if, in opposition, Labor is signing up to the TPP, signing up to the government's position on corporate tax and signing up to the government's position on refugees then, when there's that change of government, is anything meaningful going to change at all? And they'd be entitled to ask that question.
There is a very real problem facing this country. With a growing population, we are going to need to secure the revenue to fund public schools and public hospitals, and to grow the clean economy. To do that, we're going to need to stand up to corporations in this country and say: 'You have to pay your fair share of tax. You have to pay your fair share of tax so that we can fund the services that people rightly expect and so that we don't go down the road of becoming a US-style unequal society.' But that's the way that we're going at the moment. We seem to be saying, 'Well, if other countries like the US think it's a good idea to cut company tax, let's do the same.' We ignore the fact that the countries where people are the best looked after, the countries where people report that they feel the best because their kids get to go to school and they've got a decent job, are ones where people pay tax because they know it's going to make life better.
We are at a fork in the road in this country at the moment. Do we want to go down the US road and say, 'We'll just keep cutting taxes until there's nothing left in the budget to fund universal services, so, if you get sick, bad luck, just hope you have enough money to look after yourself and, if you want to go to school, to college or to university, your parents had better start saving now'? Do we want to go down that road, or do we want to say, 'Provided that our tax is well spent, we want companies to pay it, because we know that the way of making a more equal society is to provide universal services, universal public health, universal public schools and even universal housing'? Let's start treating housing as a human right instead of an asset class.
If we want to do those things, we need the revenue. We're not going to keep getting the revenue if, every time the Liberals fire the gun and say, 'We want to have a bit more of a cut in income taxes,' the opposition just says, 'Where do I sign?' If we keep going down that road, if that kind of trickle-down economics ends up becoming the norm no matter who is in power, then we are all going to suffer. We are all going to suffer.
It's time for us to have a sensible discussion about tax. Talk about small businesses, and let's have the debate about how we look after small businesses. I think that's going to get near universal support from across the parliament. But don't come in here and pretend that a $50 million company is a small business.
And I plead with the opposition to rethink their willingness to fast-track so much of the government's trickle-down neoliberal agenda, because, at a certain point in time, it's not enough to just say we oppose it and say we don't want our society to become more unequal. At a certain point, it kicks in. It kicks in around the economics, and you have to have an alternative economic vision.
The Greens will say enough is enough. We're sick of this dog-eat-dog society. We want one where everyone at the top pays their fair share of tax, and we want corporations to pay their fair share of tax so that we've all got public schools and we've all got public hospitals that we can be proud of. We say no to going down the US-style route. There are many good things about the United States, but inequality, education and health are not amongst them, because they are one of the most unequal societies in the world.
Let's instead look at those countries that do it well. Let's look at those countries where no-one has to dip into their pocket for so-called voluntary school fees to send their kids to school, because everything is looked after, where no-one has to worry about out-of-pocket expenses when you get sick, because that is looked after. That is where people feel the happiest. How does it happen? It happens because they've had an honest discussion about tax, and they accept that paying a bit more tax, if it comes with the trade-off of knowing that your kids get to go to school and you don't have to dip into your pocket, is a fair trade-off. That's the discussion we should be having, rather than fast-tracking bills through parliament to give tax cuts to big companies that don't need them.
I rise in support of the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018. Before the member for Melbourne walks out of the chamber: he conveniently left out the 'medium businesses' part of the bill. I support it wholeheartedly because I myself and the government that I'm part of believe in lower taxes. Lower taxes are essential to ensuring that Australians get ahead. Lower taxes are essential to ensure that, in our egalitarian society, everyone continues to profit. We've seen that, to date, by the results of the company tax cuts that the government have already legislated. We've already legislated company tax reductions for small and medium businesses—small businesses up to $10 million, medium businesses up to $50 million. It was a plan we took to the last election and what do the results show? In the last 12 months, some 430,000 jobs were created. Where? In businesses up to $50 million. That's where the jobs are being created. The evidence is there.
I remember clearly in the other place, the senators from the Nick Xenophon Team or Central Alliance—whatever they're called—saying, 'Where's the evidence?' The evidence is on the table now. In the last 12 months, from when those company tax cuts were passed, all the jobs have been created there. Do you know what? The Labor Party voted against lower taxes. The Greens voted against lower taxes. No surprise there with the Greens, but yet another backflip from the Labor Party. It was just a few weeks ago that the Labor Party wanted to put small business taxes—small businesses up to $10 million—back up to 30 per cent. They're currently at 27½ per cent and those opposite—the Leader of the Opposition, Mr Shorten, and the Labor Party—wanted to put taxes back up to 30 per cent when we have evidence that in the last 12 months all the jobs have been created in those businesses up to $50 million. Open your eyes, those opposite.
If those opposite are going to support the bill now, then I say, 'Well done, congratulations; that's good.' Those extra jobs created in the last 12 months help provide essential services. As we create more jobs, the government receives more income tax. More income tax means higher school funding—the $24 billion plus that we've increased in the last few years on top of current funding. It means more funding for health care. When the Minister for Health gets up in question time and talks about all the drugs we're listing on the PBS, we're able to do that because of increased jobs and extra people employed mainly, in the last 12 months, in those small and medium businesses. We're able to increase funding for the environment whether it's on the Great Barrier Reef or for a small project like I've just implemented on Moreton Island with a cane toad sniffer dog to keep Moreton Island, in South-East Queensland, free of cane toads.
We've also been able to increase funding for the Australian Defence Force. As a former SAS commander, you would know about that, Mr Deputy Speaker. This is in stark contrast to what those opposite and particularly the member for Melbourne just spoke about. His vision for the country is higher taxes right across the board, when already we see those that earn the most in this country pay by far the most tax. What does concern me most is that we see a little bit of support here from the Labor Party where they're going to support this bill, which is good. But what they don't tell you is their plan, should they win the next election, which is not just higher company taxes across the board but higher income tax.
Do you know that we have legislated that everyone in this country who earns $180,000 or $150,000 or $130,000 or $80,000 pay no more than a third of what they earn in tax? It is very simple. If you earn $200,000, you'll be paying roughly $66,000 in tax. But if you earn $50,000 you'll be paying roughly $15,000, or probably even less, with the first $18,000 tax-free. Those opposite want to whack it up to 45 per cent. For everyone who earns over $180,000, it would be 45 per cent plus the Medicare levy, plus a high-income levy. You'll be looking at 49 per cent under Labor compared to 32½ under us, or 34½ per cent with the Medicare levy. Labor want to whack up for everyone in this building who earns over $90,000 or for everyone in my electorate who earns over $90,000 back up to 39 cents with the Medicare levy. That is what Labor stands for—higher company tax, higher income tax, higher housing tax. For people in my electorate who are renting, their rents will go up. If they cannot negatively gear, investors will have to positively gear, which means rents will go up.
They can't have it both ways. They can't make all those big savings and then talk to people in my electorate and say their rents won't go up, because they will. If people own an investment company and they, for whatever reason, keep rents low, they may think, 'If I make a profit, that's good. If I lose a little bit, I can negatively gear. Interest rates are low.' But if interest rates go up and they're not allowed to negatively gear, they'll have to positively gear, which means people who rent in my electorate, in Deception Bay, Kippa-Ring, Fitzgibbon and Clontarf, where I live, will have their rents go up under a federal Labor government. Let's not muck around on this; that's what they're going to do—not to mention capital gains tax. If someone in Newport, Margate, Aspley or Bracken Ridge wants to make a few dollars, they'll take another 25 per cent. That's the Labor Party.
Then there's the retirees tax. If you've worked hard and you've got a few shares, these guys will tax you more. And if you have a self-managed super fund anywhere and you live in Australia, you will effectively be taxed at 30 per cent. If you invest in Australian companies like Fortescue Metals or something, you will pay 30 per cent tax. It used to be taxed at 15 per cent in your super fund and you would get a 15 per cent return. They will keep it. Thirty per cent tax for you and your self-managed super fund. But if you're in an industry fund, that's cool—no worries. That's where their $200 billion in new taxes is coming from—$20 billion a year. So, Labor Party, don't come in here and tell me you're here for small businesses. Your policies will drive down investment and will see less work and higher taxes.
I support the small and medium business tax cut. If the Senate doesn't want to pass it for big business—banks and all of those—fine; take it off the table. But there are literally thousands of smaller businesses. In the member for Brisbane's electorate, 31,775 businesses will benefit from what we're doing now, which will mean more jobs and then more income tax to fund essential services. In the electorate of my friend the member for Bowman, there are 14,827. Going to Western Australia and the electorate of Canning—Deputy Speaker Hastie's electorate—11½ thousand businesses will benefit from this. In the electorate of Longman, just north of my electorate, at Bribie Island, Caboolture, Wamuran and Ocean View, some 12,201 little businesses will benefit. These aren't global corporations, as the Greens member says. These are family businesses: plumbers, bakeries, barber shops, bull bar manufacturers and small chemical companies. There are businesses all around my electorate as well—some 12,000. There are seven million Australians employed in these small and medium businesses that we're reducing tax for now. This is a good bill. I encourage all members to support it.
I'm very pleased to speak briefly in this debate on the Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 and add my support for lower taxes for small and medium businesses. Small business plays an incredibly important and central role in the life of so many of us around Australia. Having grown up in a small-business family, it was one of the formative experiences that drives my work and my priorities in this place, as it did in my previous work for the National Retail Association, representing the interests of so many small and family businesses in the retail and hospitality sectors. So small business is a very big part of why I'm here. Small business is also a very big part of why the Liberal Party was founded. Coalition governments have the track record and bring the experiences of hardworking small business owners, tradies, contractors and professionals into this parliament and to discussions around the cabinet table. In coalition governments, we understand both the opportunities and the challenges faced by small businesses, many of us having lived those challenges and opportunities.
Small business is collectively the biggest provider of jobs and opportunities right across Australia but also at a micro level in each of the suburbs and the streets in all of our electorates. Last year, small and medium businesses contributed most to all of those new jobs being created faster than jobs have ever been created before in Australia's history: a record of about 1,100 jobs a day on average. That's what happens when those small and medium businesses have the confidence to invest and to grow. I've said in this place before that if we could somehow encourage every small business out there to employ one additional worker our unemployment rate would be effectively zero.
All the jobs, all the opportunities and the prosperity that small businesses create only come about through the commitment, the risks, the sacrifices and the hard work taken by over three million small business owners and operators around Australia. As the member for Petrie just said, there are over 30,000 small and medium businesses in my electorate of Brisbane, and last week we were very lucky to have the Minister for Small and Family Business, Skills and Vocational Education visit Brisbane. We met with local businesses in the Paddington shopping strips. Those businesses in Paddington are a perfect example of what we're talking about here. They are, incidentally, not just a beautiful and unique shopping precinct in inner Brisbane at the very heart of our community; they are the places where the next generation will get their first opportunities, will get their first foot in the door of the workplace and will gain the foundational skills they need in areas like service, sales and whatever it is that they will take with them and further develop into their future careers or wherever their future takes them. These businesses are the biggest source of opportunities for the next generation and they're also, right now, a very big driver of the prosperity that we need to see in the heart of all of our communities. That's the secret power of small businesses if it can be unlocked, and unlocking the secret power of small businesses involves governments trying to make their burdens lighter, not heavier.
With this bill here today, millions of small and medium businesses across Australia will have their burden lightened. They'll get the tax relief this government has been promising them sooner, five years earlier than was first planned. This bill means that businesses with a turnover below that $50 million threshold will face a tax rate of 25 per cent in the year 2021-22 rather than 2026-27, and similar timing changes will be applied to the rollout of the 16 per cent tax discount for unincorporated businesses in that very important unincorporated business sector. What it means is that all of those small businesses in places just like Paddington in the hearts of all our electorates—retail shops, cafes, family owned pubs—will have thousands of extra dollars to invest back in their businesses, to invest in their staff or in new staff or the capital expenditure that helps make their staff and their operations achieve more.
This is the reality that, sadly, too many commentators and decision-makers don't fully understand or appreciate when they talk about tax in Australia, because they don't really understand how it is that small businesses work. Most small businesses want to grow. They invest their profits back into their business, creating more investment, more jobs and higher wages, including through higher productivity.
Today is another very serious day when the political contrast in this country becomes clearer. We can't forget that those opposite do have a history of welching their promises on tax cuts, and even then their formal position right here and now is that they promise $200 billion of additional taxes across our economy. In contrast, this bill reduces the burden on small businesses in our local communities, reinforcing the job creation and the growth we're starting to see re-emerge right across Australia. Our government's economic plan is working, and this bill's fast-tracking of tax relief for small, medium and household businesses right across Australia is the next step to delivering that economic plan.
Let me thank those members who've contributed to the debate. The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 will bring forward the small and medium company tax reduction to 25 per cent, delivering on the government's commitment to reduce taxes for these businesses around five years earlier. In line with the cuts in the company tax rate, the bill will also bring forward the already legislated increase in the unincorporated small business tax discount rate for unincorporated small businesses with an aggregated turnover of below $5 million. Passing the bill will help businesses by providing certainty about the tax consequences of their investment decisions. Over three million small and medium businesses stand to benefit from these tax cuts. These businesses employ around seven million Australians. Companies with a turnover below $50 million will enjoy a company tax rate reduction to 25 per cent on an accelerated time frame, with a 26 per cent rate in 2020-21 and a 25 per cent in 2021-22. For unincorporated small businesses with an aggregated turnover below $5 million, the increase in the unincorporated small business tax discount rate will be brought forward. The unincorporated small business tax discount rate rises from eight per cent to 13 per cent in 2020-21 and then again to 16 per cent from 2021-22. I commend this outstanding bill to the House.
Question agreed to, Mr Wilkie dissenting.
Bill read a second time.