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

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

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

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

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

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

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

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

The explanatory memorandum states:

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

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

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

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

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

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

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

That was the commentary there.

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

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

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

Mr Robert interjecting—

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

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

I think so. While some members in the government might be bored with the processes of parliament, we are not. We respect it.

Mr Robert interjecting—

That's tough! But we do offer leadership and stability and policy, and we will take these policies around the country as we go into an election period shortly. We'll make sure small business confidence is restored through consistent common sense and steady cabinet processes toward policymaking, unlike what we've seen this week with the instant asset write-off just popping up. You had the great opportunity to just legislate that in the budget last night. You could have done that, but you thought you'd wait for 30 minutes and get the pomp and ceremony of a budget.

Mr Robert interjecting—

The more you say that, Assistant Treasurer, the more I'm just going to stand here and talk about policies for small business.

Mr Robert interjecting—

Let's leave that for someone else to explain. What we have are a government that are not really working in the best interests of the Australian people. As you can see today, they're quite bored with these processes and these debates over the importance of small business. They have internal unrest over much of their policy direction. It's not conducive to any progressive policy approach and only hinders the efforts of SMEs to be competitive and viable in a modern Australia.

A tax policy such as Labor's Australian investment guarantee is superior to the government policy as it stands. We understand the importance of measures to assist small and medium business enterprises, and that's exemplified in the investment guarantee policy but equally by the ATO appeals commissioner, in antiphoenixing proposals, in a pledge to make unfair contract terms illegal and in a $1 billion advanced manufacturing fund, which will be available to SMEs around the country to try to help build their capacity in manufacturing. We know that every small and medium business is unique and the diversity of Labor's policies in support of these businesses encompass many different portfolio areas. Like I said before, our pledge to have a service guarantee on the NBN is going to be particularly important to small businesses right around this country. The main point of this is certainty. Businesses around Australia are sick and tired of the lack of certainty and clarity they're getting from this government.

Back to the instant asset write-off: renew it—sure, that's fine; renew it again—sure, that's fine. We'll keep renewing it. We support this. We started it. Bringing it up to $25,000 is, of course, fine. We'll support it. Extend it to businesses with a turnover of $50 million—yes, of course. But why not make it permanent? Why not make the instant asset write-off permanent? You have businesses year-on-year wondering if they are able to claim the write-off between tax years while they go about investing in assets for their business. This government keep dropping it, piecemeal, year in, year out, so why not make it permanent? What's the trouble there? It's certainly something Labor seek to do and will do, and it's why industry groups are supporting our policy to make the instant asset write-off for businesses a permanent fixture in small business and tax reform.

Debating this is a reminder that provides the certainty of replacing an old small-business policy bandaid year in, year out. It's symptomatic of the government's approach to governing over the last two parliamentary terms: lots of flip-flops and not getting much done. These bandaid solutions do nothing to address the real problems facing modern Australia. As we know and as we've seen, many members of this government are stuck in the past and are only keen to look back and never to the future. We see the change in the members opposite, our colleagues on the other side of the House, by them changing their names. The member for Goldstein is now a modern Liberal. The candidate for Wentworth, I think, is also now a modern Liberal. If members opposite want to differentiate themselves in their own party, why don't they just take it a leap further and perhaps do what the member for Chisholm has done, which is just quit the party and have their own voice as these modern Liberals?

The modern Liberal the member for Goldstein has paid increasing attention toward pensioners in this country whilst at the same time this government have sought to cut pensions. I wish he applied as much thought to small businesses in this country. If those opposite, whoever is taking up the modern Liberal title—and I'm sure there are going to be a few in the coming weeks—wanted to fight so hard for small business, why do they initially oppose our access to justice measures?

Why did they do that for so long and then wait until the last minute for their country cousins, the Nationals, to threaten to cross the floor before they helped small businesses in a very practical way and provided them with access to justice? But those measures have come in, and I'm grateful to the member for Fenner for his work in that regard, as I'm sure are all small and medium enterprises across this country.

Obviously, people work for small businesses around this country—

Mr Robert interjecting—

Yes, I know! It might come as a treat for the Assistant Treasurer to know that little gem of information. When the modern Liberals scrap penalty rates, do they forget about the workers that work for small businesses? Small businesses—and I've spoken about this before in Hansardhave pointed out to me that all penalty rates are entirely predictable. We know when public holidays are, we tend to know when Sundays are and we know when different hours of the day are, when penalty rates can be attracted to a person's salary or wage. This is a cost of business; it's not an extra to fund. Good business owners know their obligations. It's the same, for that matter, as paying people's superannuation. I can't tell you the number of complaints I get to my electoral office from people finding they're not being paid superannuation from business owners. That is of course a grave problem for those employees, but moreover it's a problem for other small-business owners who are, quite frankly, being cheated by their competitors who are now creating an unlevel playing field. I know everyone agrees that this is something to be addressed.

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

Absolutely. I agree with the Assistant Treasurer on this. It is theft, and we should do more about it. We should think about the people that work for small businesses. We know that small-business owners work closely with their employees. They're those relationships that are so very close in our society.

Whether it's small-business policy, environment and climate change policy, industrial relations and wages policy, taxation and education, foreign affairs or consumer affairs, Labor believe that fairness must be at the core of policy formulation. That's part of what this bill aims to achieve, and it's why we are very happy to support it. Adequate and good access to finance is important for SMEs around this country. We will do all we can to make that a reality for small businesses far and wide.

I must say the focus on small business in this place today and in the last couple of days is probably a very welcome change for small businesses around the country. It's good that we have agreed on a number of things, but, gee, I really wish we could have agreed yesterday on the increases to the instant asset write-off instead of waiting for the budget last night. Ninety minutes before we probably could have taken some action in this place to help more small businesses around the country.

I want to make one more comment about small businesses. I will then sit down, as the Assistant Treasurer would really like me to. We know that small businesses are the backbone of our economy. They employ so very many people. As I said before, they're not limited by their subject matter. We know that in Western Australia the small businesses that feed into the large resource industries on the north-west coast are of critical importance. I speak of many of the industries in Broome, Karratha, Port Hedland and Kununurra, and, of course, Darwin in the Northern Territory. The more effort these resource companies can apply to make sure their supply chains make use of the small businesses up and down that coast—and inland, for that matter—the better it will be for those growing businesses that support what is our largest export industry, iron ore in Western Australia, but also in the LNG export industry.

I know that when I speak to these very large businesses they are entirely supportive of getting small businesses involved. I know there are many challenges to that, with meeting tender requirement and all sorts of requirements for these large businesses. I congratulate the people I have met from those large mining and resource companies that are applying an extra-special effort to make sure that they seek out more of those small businesses and help them gain the skills and capacities to be able to feed into what is a very important export industry for this country. But, of course, for the towns—and they are small towns; very important, historic towns—across the state of Western Australia it is of critical importance that those small businesses and the local chambers of commerce do all they can to engage with those larger industries that will seek to support and include the small businesses as they develop their export markets and their local working conditions and operations. I thank the House.