Wednesday, 3 April 2019
Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019; Second Reading
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
The Government is continuing to back business by helping them invest and grow by increasing and extending the instant asset write-off.
This Bill will increase the instant asset write-off threshold from $20,000 to $25,000 and extend it until 30 June 2020. The increased threshold applies from announcement on 29 January 2019.
Across Australia, there are over 3 million small businesses with an annual turnover of less than $10 million that are eligible to access the $25,000 instant asset write-off. These small businesses employ around 5.7 million employees.
The Government has built on the very successful $20,000 instant asset write-off first introduced by the Government in the 2015-16 Budget.
The Government's $25,000 threshold will improve cash flow by enabling small businesses to immediately deduct purchases of eligible assets each costing less than $25,000. There is no limit on the amount of assets that a business can purchase.
Assets valued at $25,000 or more can be placed into the small business simplified depreciation pool and depreciated at a rate of 15 per cent in the first income year and 30 per cent each income year thereafter.
The pool itself can also be immediately deducted if its value falls below $25,000 at the end of the financial year.
To facilitate access to this measure, the 'lock-out rules' that stop small businesses that elect out of the simplified depreciation regime from re-entering it for five years will continue to be suspended until 30 June 2020.
This Bill will benefit small business, improving their cash flow and bringing forward investment.
The $25,000 instant asset write-off also reduces red-tape for small business as they no longer need to track the annual depreciation for assets that are written off immediately, or maintain detailed records substantiating their depreciation claims.
It will boost small business activity and encourage more small businesses to reinvest in their operations and replace or upgrade their tools and equipment.
I call on all Members and Senators to give this measure their full support.
Full details of the measure are contained in the Explanatory Memorandum.
I rise to indicate Labor's support for the Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019. I'm pleased to see a great Labor initiative debated in the Senate and pleased those small businesses across the country will continue to benefit from it. It's particularly good to see the Liberal Party and the National Party once again adopting sound Labor policy in favour of small businesses in this country.
I've got to say, Senator Williams, any government that would put Senator Cash in charge of anything, especially small business, is not looking after the interests of small business. It's particularly good to see the Liberal and National parties adopting our policy. As we know, it was the Australian Labor Party that first legislated for an expanded instant asset write-off from the $6,500 threshold in 2012. The coalition subsequently abolished the instant asset write-off, returning it to a $1,000 threshold before reintroducing an expanded instant asset write-off with a $20,000 threshold in 2015. The government has since renewed it, in 2017, 2018 and again now, in 2019. Of course, Labor supported the original measure and supported its two previous renewals and will support this one today.
While there's no difference between Labor and the government on taxes for small business, the principal difference at the moment is in relation to the Australian Investment Guarantee, announced last year. It will allow businesses to deduct up-front 20 per cent of all new investments, with the remaining amount depreciated in line with normal depreciation schedules. Assets such as machinery, plants and equipment—for example, things like trucks or utes—and intangible investments such as patents and copyrights will be eligible for the immediate deduction. This investment guarantee promotes investment in local economies. The investment guarantee is well targeted, fully funded, cost-effective, fiscally responsible and funded by Labor's reforms to the tax system. I want to make it clear to everyone that under a Shorten Labor government 99 per cent of businesses will receive a tax cut, no business will have its tax rate increased and all businesses will be able to plan and invest with confidence and certainty.
Let me turn to the amendment. Yesterday in the other place we debated this bill on the understanding that it would increase the instant asset write-off to $25,000, yet today the government has announced budget measures that increase the instant asset write-off again, to $30,000 for businesses of up to $50 million in turnover. This is just more policy chaos from this rabble of a government. The real challenge for small business in this country is this government and its hopeless policy development and relentless instability. How can you concentrate on doing the right thing by small business when the minister is in personal crisis and the government is in collective crisis? It just doesn't work.
Labor has been leading the way on small business policy, with our Small Business Access to Justice policy passing into law in the last parliamentary sitting period. Small businesses are less likely to seek help from our court system to stand up to big business. Small Business Access to Justice will make sure they get support to defend themselves against anticompetitive conduct. It's a policy which the small-business sector have wanted for a long time but which the coalition have repeatedly voted against—and you know why? All their mates are up there at the big end of town. Only with Labor and the help of some renegade Nationals did this important reform pass through the House. Labor will provide the stability small business needs. Labor will support small businesses with the Australian investment guarantee. I commend the bill to the Senate.
I just want to make a few comments on this very good piece of legislation. It's amazing that Senator Cameron says he opposes anticompetitive behaviour. We brought in the effects test—the amendment to section 46. Where were Labor? They were over there opposing the effects test. They wanted to protect big business so they could crush little business. Quite ironic, isn't it? We are the government for lower taxes, especially for small business, and this is another good policy brought in last night: the addition to the instant write-offs.
When it first came in, I spoke to businesses in Inverell like chainsaw outlets, retailers and mower centres about how it stimulated their business when people would come in and say, 'I can buy a chainsaw, a four-wheeled motorbike, an ATV or even a side-by-side and write it off straightaway.' It's not happening as much now, because of the drought. Unfortunately that has cost a lot of money in regional Australia. Hopefully, that will change soon. But it's a case where it stimulates people to spend money and it keeps small businesses going. We're glad to see that the criteria has been changed—up to $30,000—and that it's no longer just for businesses with up to $10 million in turnover but for those with up to $50 million turnover. That is an increase in the instant write-off of a purchase of capital equipment, from computers to heaters to air conditioners to machinery—you name it. That stimulates activity, keeps money going around the community and keeps people in jobs. It's a good policy and I commend Treasurer Josh Frydenberg for bringing it in last night.
It's also good to see—I'll make this comment while I'm here—the budget finally into the black print at the bottom. I remember back in 2012 we had a treasurer called Mr Wayne Swan. People would remember him. Four budget surpluses he promised—four! How many did he deliver? Zero. None. When it comes to a black-print budget surplus, it is something that is rarely seen in my life. Whether state government or federal government, when Labor is there, the budget only goes in red print. I think it was in 1989 the last time we saw a budget surplus from a Labor government—30 years ago. And Labor criticise our budget, our good spending, curtailing and getting the budget back to the black so we can stop mortgaging our children's futures away and make them pay our standard of living with interest. It is so wrong. I commend the Treasurer for a good budget last night and finally an end to the borrowing. I hope it lasts. I really do. This bill is another incentive for small businesses to spend to create economic activity, to keep the money turning around and to keep people in their jobs.
Again I thank those senators who have contributed to the debate. This government backs business growth and investment. We have fast-tracked tax relief for millions of small and medium-sized businesses as part of our plan for a stronger economy and more jobs. This bill is yet another illustration of the government's commitment to deliver support for hardworking Australian small and medium-sized businesses, reducing their tax burden and helping them to invest and grow. The amended bill increases the instant asset write-off to $30,000 and expands it to businesses with turnover of less than $50 million. Around 3.4 million business employing around 7.7 million workers will be eligible. I commend the bill to the Senate.
Question agreed to.
Bill read a second time.