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Thursday, 30 August 2001
Page: 30661


Mr FITZGIBBON (1:48 PM) — I thank the member for Gellibrand for her thoughtful contribution to what is an important bill. The Bankruptcy Legislation Amendment Bill 2001 seeks to give effect to a number of amendments to Australian bankruptcy law. Amongst other things, the bill will introduce a mandatory 30-day cooling-off period and repeal the existing seven-day period. It will abolish early discharge for bankruptcy and it gives official receivers a discretion to reject a debtor's petition where it appears that, within a reasonable time, the debtor has the capacity to meet his or her commitments. Of course, it doubles the current income tax threshold for debt arrangements to allow and encourage more debtors to choose alternatives to bankruptcy.

The opposition will be supporting the main thrust of the bill, but of course the shadow Attorney-General has foreshadowed that he will move amendments in the consideration in detail stage. My colleague has also moved a second reading amendment which seeks to highlight the impact of the GST on small business and the relationship between the GST—the new tax system—and all those burdens that go with it and the increase in bankruptcy in this country.

This bill is very timely. We now know, thanks to Dun & Bradstreet, that bankruptcies in Australia are up 30 per cent in the first quarter of this year compared with the same period last year. The latest figures from the Australian Securities and Investments Commission show that the rate of bankruptcy has gathered considerable pace. It is up 13 per cent compared with the survey relating to the same period last year. Indeed, there is no shortage of surveys available which conclusively show that bankruptcies, including small business bankruptcies, are up considerably.

Of course, it is right that we should be looking for a cause of this phenomenon. We need to look no further than the GST. If people are looking for further evidence of that point, they need to look no further than Tuesday's Sydney Morning Herald, which carried an article with a very interesting headline. It read `Debt collectors are excited but tough GST regime is pushing up bankruptcies'. It goes on to say, amongst other things:

Dun & Bradstreet's managing director, Ms Christine Christian, said the pressure on firms to make regular GST payments had contributed to the rise because they required quick payment so that they could satisfy the taxman.

Since the GST, the debt collector Dun & Bradstreet has had a 220 per cent increase in the outstanding claims it has been asked to collect and the average size of each claim rose from $1,255 in 1999 to $4,699 last year.

Let me share with the House some other quotes which go to the relationship between the GST and the increased rate of small business bankruptcy. Dun & Bradstreet again say:

Things will get worse for small business because many are struggling to pay their bills on time.

Ernst and Young say:

It's like the calm before the storm.

The NTAA say:

People are devoting so much time to get their records correct, and there was so much change so quickly we have seen more bankruptcies.

TMP Worldwide say:

These changes to the tax system have brought small business in Australia to its knees.

Walker Insolvency Lawyers say:

For many firms it's like a hidden cancer that has not been diagnosed yet. The patient has not yet died, but it's inevitable. There has been a rise in insolvencies already, but we have not seen anywhere near the full impact. When the eruption occurs then we will have an economic calamity on our hands.

There seems to be a general consensus in the insolvency bankruptcy industry. There is a causal effect. There is a relationship between the GST and the increased rate of bankruptcies in this country. Why? It is because nothing the Howard government promised with respect to the GST and small business has been delivered. The government said it would be good for cash flow, but there is no shortage of surveys that show that that is simply not the case.

I noticed in this week's Yellow Pages small business survey that cash flow remains in the top three concerns for the small business sector. The GST has had an impact on cash flow for a number of reasons. It has had an impact largely because small firms, unlike their larger competitors, have been forced to absorb the impact of the GST. We recall the Minister for Financial Services and Regulation in this place on a regular basis waving the big stick at small firms, threatening them with fines of up to $10 million if they were found to be seeking to profit from the new tax system. Of course, he did not wave any big stick at the Minister for Small Business when he decided that the FEC in his own electorate would seek to take advantage of the input tax credit scheme but at the same time not seek to operate in the GST system. There seems to be one standard for the small business sector and another standard for the small business minister himself.

Of course, we have had the phenomenon of slow payments to small business—slow payments from the larger companies with whom they do business. The larger companies themselves are seeking to pass on the impact of the GST by slowing down their payments to their small business suppliers. It is no surprise that there has been a cash flow impact. Of course, I remember very well the Minister for Small Business during question time in this place one day trying to tell us that small business had so greatly benefited from the GST in terms of cash flow that one small business person had paid the final instalment on his T2 shares out of the GST he had collected within his business. What a funny form of advice to be giving the small business community: spend the GST collected, use it to pay off your T2 shares, but do not worry about the tax obligation you have to the government at the end of the month! What a wonderful piece of advice from the Minister for Small Business!

What has been the government's response to this calamity? Minister Macfarlane told the Small Business Show on Channel 9 last Sunday morning that small business is over the hump, that all of their worries with respect to the GST are behind them. Of course, we had the Treasurer come in here this week gloating about the latest small business Yellow Pages results, saying that small business sentiment is sky high now; they are all feeling very optimistic about their future. I have to say that they were coming off a very, very low base.

Of course, as usual the Treasurer was selectively quoting. What he did not say was that each one of the seven prime concerns of small business at the moment are GST-BAS related. Yet a little while ago when the Minister for Small Business went to his cabinet with a plea for assistance, what did we get? We got no substantial initiatives or recommendations, nor did we get any assistance. Of course we heard a lot about industrial relations issues. We know that, whenever the government is in trouble, it rolls back out the IR issues for small business.

If honourable members have a look at that Yellow Pages index survey released this week, they will see that industrial relations is not even on the radar. Surprise, surprise, again we saw the Minister for Employment, Workplace Relations and Small Business come into this place this morning to introduce an industrial relations bill which seeks to make some changes to unfair dismissal laws for small business. It is quite clear that that is not a bill that the government expects to pass during this parliament in any regard. Again, we have lumped in that bill the extension of the ACCC's power to take representative action under the secondary boycott provisions of the Trade Practices Act.

Only a matter of weeks ago, Mr Speaker, you know and the parliament knows that the Democrats and the Labor Party combined in the Senate to reject that proposition and there has been no indication from either party that they are likely to change their view on that issue. So why would the government lump that provision into that legislation introduced this morning? Simply because they know it is not going to be passed! But, again, whenever they are in trouble on the small business front, they roll out the unfair dismissals proposition.

I have shared with the chamber a fair few quotes this afternoon on this issue, but I saved the best for last. I have used this quote about BAS in the chamber in the past, but it is so good that I think it is appropriate that I share it again, particularly with respect to this piece of legislation. It states:

I'm not sure how many businesses went ... out of business because of it but I certainly know that marriages were strained, small business were taken away from running ... their small business ...

... ... ...

The government was sorry for putting such an `undue burden' on small business. `It was an unwelcome imposition ...

Small business people are ringing my office and they are asking two questions. The first question they ask is: with respect to the GST why does the Howard government apply one standard to the small business sector and another standard to Liberal Party branches? The second question they ask is: why is it that a small business minister spends so much time devising ways of avoiding the GST rather than devising ways of making the GST simpler for small business?


Mr SPEAKER —Order! It being 2 p.m., the debate is interrupted in accordance with standing order 101A. The debate may be resumed at a later hour and the member for Hunter will have leave to continue speaking when the debate is resumed.