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Wednesday, 17 October 1984
Page: 1861

Senator COOK(3.27) —We have just heard a fairly dreary presentation of Liberal Party of Australia policy on small business from Senator Hill. I was interested to note that, at the beginning of his presentation, he used the words 'total failure' to describe our policy. I guess that Senator Hill 's use of the words 'total failure' in terms of our performance illustrates why he will always remain a molehill and will never become a mountain when it comes to debate in the Senate. The eight or so minutes he spent at the beginning of his address stating how the Liberal Party intends to explain its policy, suggests that there is very little to say about what content there is in its policy. It reminded me of someone. Once we got down to hearing what the policy really was, when we inspected the quality of the shoelaces the Opposition might possess on this subject, it stands there with no clothes.

The matter of public importance that we are debating today is aimed at chastising the Government on its performance with respect to small business. It is a matter of public importance which I think goes into the category of being a joke. There is one comment, and one comment only, that is necessary to dispatch all the arguments that the Opposition is putting. This comment, which was reported in the Australian on 28 August, was made by the Treasurer, Paul Keating , when he was explaining Budget measures on small business to the small business community. I think I should quote this article and, from that point on, we ought not hear any further discussion on this subject from the Opposition. The article states:

Mr Keating backed his argument by quoting national account figures showing that while the income of unincorporated business fell in 1982-1983 by $1 billion, it rose by $5 billion in the last financial year.

'Company profits for 1982 to 1983, were also up by $800m and 1983 to 1984-

that is in our term of office

they were up by $5.5. billion,' . . .

We have had a policy presentation of what the Liberal Party will do about small business. Let us look at the figures and compare performance. The figures show that in the last year of the Fraser Government the income of unincorporated business improved by $1 billion and that in the last year of our Government it improved by $5 billion. Perhaps the Liberal Party will tell us why small business should be rushing back to support it and return to the unprofitable, bankrupt days of its period in office.

I believe that the questions that have been presented this afternoon require the Government to outline its record of performance with respect to small business. In doing so it ought to concentrate, firstly, on the macroeconomic settings for Australia-what type of growth and what type of economic climate we have created for small businesses to flourish in-and, secondly, on what specific policies we have launched to encourage the development of small business. We are quite happy, in fact we want, to talk about our performance in both those areas. Our performance is strong. However, when we are talking about what we have been able to do it ought to be remembered that when we came to power we inherited a projected Budget deficit of $9.6 billion and we were constrained in what we could move immediately to implement by virtue of the wreckage to the economy that had been left to us by the now Opposition. However, we have moved well. To get this matter in context I think it is necessary that we tour the statistics of the economic performance of this Government, because all of the economic indicators describe the economic environment that has so helped small business to resume its more profitable role in the economy and to employ and expand, as it aims to do.

In terms of unemployment, 264,000 new jobs have been created by this Government since the National Economic Summit Conference. We are well on our way to realising our goal of creating half a million new jobs in the first three years of our Government. That should be compared to the situation in the last year of the Fraser Government, when there was an actual fall in employment of 186,000. So, on the jobs front-workers in employment, earning wages, with disposable income to buy the products that small business produces; indeed, many of them being employed by small business-the economic performance of this Government stands in startling contrast to the dismal and defeatist economic performance of the previous Government, the Government that Senator Robert Hill is now trying to offer to the small business community as an alternative government.

This Government has halved the inflation rate and, with further measures as outlined in the Budget-with Medicare now affecting the consumer price index and therefore wage indexation-the prospect is very good for continuing low inflation rates, which will help the economic environment considerably for small business. It is in the area of economic growth that we should perhaps pause and consider performance. In terms of gross domestic product, for the year 1983-84, under the Hawke Labor Government, we experienced a growth rate of 5.7 per cent. Compare that to the situation in 1982-83, the last year of the Fraser Government, when there was an actual contraction of the economy and a negative growth rate of 1.2 per cent. So the environment is one of expansion. Small businesses are able to look forward to new markets and expanding opportunities to diversify their development and, of course, to continue to expand and to realise their goal of becoming medium sized to bigger industries.

A major factor affecting the ability of small business to borrow and to expand is the fact that interest rates have fallen. Commonwealth short term bond rates have gone down by 2 percentage points since this Government came to office. Since March 1983 home lending rates have fallen by half a per cent to one per cent, depending on which source people borrow from. In terms of the financial opportunities for small business to take advantage of the general economic climate, interest rates are lower, their ability to invest and borrow is better. On the home lending front, with the fall in interest rates and the massive support for and development of home building in Australia, small business is facing a very buoyant future. Compare that to the dismal performance of the Fraser Government, under which home loan interest rates were rising. It is in that sector of home building and construction-the number of approvals and commencements-that small business has a major stake. A lot of small business, of course, is related to the development of the building industry and in that area small business is in fact expanding quite well.

The performance of this Government in terms of retail sales is very strong compared to the zero growth rate in retail sales in 1982-83, when consumers were unwilling to spend because of the gloom under the Fraser Government. Consumers had a very real prospect then of losing their jobs. The value of retail sales has rebounded strongly in the three months ended July 1984. The seasonally adjusted value of retail sales for the three months to July 1984 was 7.3 per cent higher than that for the corresponding three months of the previous year. The index of consumer sentiment-the index compiled by the Melbourne University's Institute of Applied Economic and Social Research, in co-operation with the Roy Morgan Research Centre Pty Ltd-showed the highest September level ever recorded, and that survey covers the last 10 years. In terms of retail sales, we are facing the prospect of a very buoyant Christmas, a Christmas of spending and a Christmas that many people in this community will be able to enjoy much more because of the tax cuts that were introduced in the Budget.

Senator Missen —Do you think you are Father Christmas?

Senator COOK —In fact, with the economic resurgence of this country this year, compared to the situation of the last Christmas under the Fraser Government, the answer is positively yes, we have performed the economic Father Christmas role. I am pleased to see that the honourable senator rightly recognises that and thus the defeatism of his Party. I referred earlier to housing commencements. The total number of new dwellings commenced in the 12 months to June 1984 was 136, 800, a 30 per cent increase on the figure for the corresponding period of the previous year. This is well in excess of the Government's target range of 130, 000 to 135,000 commencements announced at the National Economic Summit.

Private investment-an area that one ought to be concerned about if one looks to the future health and growth of the economy-has come in for a great deal of attention from this Government. We are concerned at the fragile nature of private investment, and have been for some time. However, new fixed capital spending rose in real terms in both the March and June quarters of this year. They were the first rises since the June quarter of 1982. Expected private capital spending for the year 1984-85, as reported in the June quarter of 1984, is some 14 per cent higher than expected spending for the 1984-85 year as reported just three months earlier. This big upward revision in investment plans is highly pleasing to the Government. It shows that the business sector has great confidence in the economic policies of the Government, and that ought to be contrasted to those of the Party that is now offering the Hill package for improvement for small business, when in the last year of the Fraser Government private sector investment fell by some 12 per cent.

The final economic indicator that I think ought to be considered in an analysis of performance in setting the outer constraints of what the environment will be is the drop in the level of industrial disputation. Industrial disputation unfortunately does affect small business, frequently in terms of deliveries and by imposing other impediments in terms of supply. We have the best record for 16 years in industrial disputes. The 1984-85 figures show a 28.3 per cent improvement on the amount of time lost for the comparable period in 1982-83. So in that area as well all of the indicators are positive. The environment has improved dramatically. Small businesses along with other business activity in Australia, are realising better profits. They are employing more people. They are looking forward to expanding. They are able to attract better interest rates . In addition to that, the prices and incomes accord has worked in such a way that real labour unit costs have fallen back to the level of the late 1960s and early 1970s. Australia has enjoyed the highest growth rate of the Organisation for Economic Co-operation and Development countries. We as a government have delivered, and that has created the environment that I believe makes a mockery of all the things Senator Robert Hill said. Just on 18 months ago it was his Government that was in power and it was his Government that wreaked the damage to the economy that I have referred to.

However, we have not sat back and said that because we have done things to the macroeconomy that have worked, the small business sector, in terms of its own specific needs and policies, should be left alone and no action should be taken. This Government is mindful of the fact that there are half a million small companies which are not involved in the rural sector and which contribute to 95 per cent of all enterprise and provide some 50 per cent of private sector employment. This Government has set itself the goal of encouraging the development of strong, viable, diverse and vibrant small business in Australia and it has moved generally in that direction not only at the macroeconomic level but also specifically in targeting policies for the small business community.

Senator Missen —Just tell us them.

Senator COOK —The Government will tell them to the Opposition. Of course the Opposition knows some of them and it will try to obfuscate the advantage they are to small business by introducing its new look plan in a moment. I assure Senator Missen that there will be no joy in that for him.

Senator Button —There has not been much joy so far.

Senator COOK —Exactly. Game, set and match and the rubber will come up at the end of the debate on this matter of public importance. Senator Button's Department, the Department of Industry and Commerce, has set up a special division for small business, thus upgrading the Government's attention to its needs. Also the Government has set up a Small Business Council which has an independent secretariat, and which is chaired by Mr Jack Boorne, the Chief Executive of H. I. Clements Pty Ltd, a successful small business manufacturer of medical equipment in Australia. It will put small business's voice on the Economic Planning Advisory Council-EPAC. All of those organisational steps are essential in realising this Government's commitment to finding consensus with that area of industry in the new reconciliation that this Government has brought to the divisive economic and industry framework of Australia. We have done all those things.

Senator Robert Hill complained that the new Small Business Council is writing to small business for its opinion. I would expect that to be exactly what the Small Business Council would do because it is to act as a filter for encouraging small business to put forward its views, synthetise those views and advise government. That is precisely its role and to complain about it fulfilling its role, to complain about the Government seeking attitudes of small business, shows that a Liberal government is not prepared to take those steps.

This Government has been sensitive to the needs of small business bound by the red tape that more frequently affects it, sometimes afflicts it. As small operators, small business is often unable to handle the forms and the work that are necessary to be done to respond to all of the regulations that beset it, so this Government set up a committee to review all of those regulations and it met last week for the first time. That, of course, involves State governments as well as the Territories. From the remarks made by Senator Hill, I understand that Senator Missen will shortly present to us an outline of how he intends to do so. It is too late, Senator Missen. The cab has left the rank. This Government is doing it, it is in the act of addressing those questions and will ultimately deal with them.

In the Budget, in order to provide specific relief for small business and to encourage it to flourish in the economic environment we have set, this Government extended the investment allowance, improved the tax depreciation write-offs on non-residential buildings, established the nationwide advisory service on computer assisted manufacture, maintained funding for export development and trade promotion, and continued to support industrial research and technological development programs involving the technological transfer council-the Productivity Promotion Council of Australia. Also the Government has set up a training program for which expenditure has been doubled in this Budget. It has provided for expenditure on training programs for small business and other back-up assistance to the level of $360,000 on the 1984-85 figures.

In addition to this the Government has helped small business considerably by having the Commonwealth Development Bank of Australia remove its borrowings from Loan Council approval and has significantly expanded the borrowing program of the Commonwealth Development Bank. There has been a massive increase in the Commonwealth Development Bank's small business borrowing programs. Small business has voted with its feet as it has taken advantage of that change. This Government has expanded the charter and borrowing program of the Australian Industry Development Corporation to enable it to increase the provision of equity and loan finance to industry, including small and medium sized firms. This also allows the AIDC to play a larger role in establishing new enterprises with growth prospects and in developing and commercialising Australian technology. The Government has introduced a scheme to stimulate the provision of equity capital for high growth, small business firms through generous personal taxation incentives for investors in management investment corporations.

Those are some of the things that have been done. I conclude my remarks in the debate on this matter of public importance in the knowledge that my other colleagues in debate will explore those things in greater detail. But let me come back to the subject of this discussion-small business. It has been noted that the Treasurer of Australia, Paul Keating, was recognised by the Euromoney magazine as the finance minister of the year, a notable achievement for any Treasurer. It is an award which, I believe, has never been given to a Liberal Treasurer. The basis for his winning that award was the action that he and this Government have taken in deregulating the finance market, which must help the small business community to develop even further.

In today's Bulletin the polls indicate that the Government enjoys a 55 per cent approval rating compared with the Liberals' 37 per cent approval rating. Small business will rejoice in those figures because the greatest damage that could ever be done to it, given the performance of the Liberal Party, is for the Opposition to be elected. Small business will rejoice in the certain knowledge that that will not happen on 1 December.