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Monday, 20 June 1994
Page: 1695


Senator KERNOT —My question is directed to the Minister for Small Business, Customs and Construction. When inflation is at 1.4 per cent—and Senator Gareth Evans told us that all the fundamentals are right, so we can probably expect it to remain at that level—why is the uplift or inflation adjustment factor for provisional taxpayers still set by this government at the 1980s high inflation level of eight per cent? What is the rationale for the rate being set so high, especially when the effect is to force many small businesses to go out and borrow money to pay high provisional tax bills on income they have not earned and are not likely to earn?


Senator SCHACHT —I am sure Senator Kernot is aware that this question is a matter for the Treasurer.


Senator Kernot —I am asking you about the position of small business.


Senator SCHACHT —Just let me finish. I will refer the technical aspects of the question to the Treasurer and bring back information.


Senator Kernot —You are the minister responsible for small business.


Senator SCHACHT —I am the minister for small business but taxation matters are the responsibility of the Treasurer. The view of the Treasury and the Treasurer is that we try to keep a stable pattern for the uplift factor but from time to time it is clearly reviewed.


Senator McMullan —Small business incomes are increasing.


Senator SCHACHT —Senator McMullan just interjected, quite rightly, that with increasing prosperity in the economy incomes for small business are on the increase, which was proven recently. The Yellow Pages small business survey showed substantial improvements in prospects for income, sales and growth for small business. It is not as though the provisional tax matter is driving small business to the wall. In fact, because of the broad macro-economic settings of this government, small business is now doing extremely well and is providing the best job growth in the overall economy.

  I am pleased that Senator Kernot has shown an interest in small business. I have noticed that in the last month the Australian Democrats have announced that small business is going to be a major area of their political interest. We welcome the interest that the Democrats are at last showing.

  In the recent industry statement and after discussions with small business we introduced a number of policies that will help small business. For example, through the pooled development funds we have improved the ability of small businesses and SMEs which want to start off new businesses to get access to capital. We have improved the access of small businesses to the R&D tax concession by reducing the threshold from $50,000 to $20,000. There is a range of measures in that statement. The Small Business Forum, which represents over 30 small business organisations, strongly welcomed the initiatives in the industry statement.

  There are many initiatives already in place to help small business. It is all very well for the opposition and the Democrats to ask for reductions in revenue without indicating where the revenue will be made up if they want to meet the fiscal deficit program of this government to reduce the deficit to one per cent of GDP by 1996-97.


Senator KERNOT —Mr Deputy President, I ask a supplementary question. The fact is that this would essentially be revenue neutral over two years. Does the Small Business Forum ever tell the minister that this is a problem for it; if so, does the minister ever lobby on its behalf to the Treasurer or is the minister a non-interventionist small business minister?


Senator SCHACHT —The Small Business Forum meets at least twice a year and sometimes three times a year. We had a meeting on Friday, a week ago, at which nearly 35 small business organisations were represented. The Small Business Forum has raised that issue along with many other issues. A number of those issues have been taken up and addressed by the government, which is why it has welcomed the industry statement. I have to agree that not every issue raised and every suggestion made is agreed to by this government. I think Senator Kernot would be surprised if that were the case.

  This issue was raised. It was put before the Treasurer and was considered by cabinet in the context of the budget and the budget discussions. But it was not agreed to by the government. However, as I said to the honourable senator at the beginning of the question, I will refer the question to the Treasurer, because he is responsible for taxation, and bring back an answer to the honourable senator.