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Small business bears the brunt of Keating's brutal budget



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MEDIA STATEMENT Philip Ruddock MP Federal Member for Dundas Shadow Minister for Immigration and Ethnic Affairs

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Electorate Tel: (02) 858 1011 Fax: (02) 804 6739

Parliament House Tel: (06) 277 4343 Fax: (06) 277 2062

2 September 1992

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SMALL BUSINESS BEARS THE BRUNT OF KEATING'S BRUTAL BUDGET

"Small Business under the Keating Government in our local area has suffered for too long with no visible signs of relief in the near future," said Mr Philip Ruddock MP, Liberal endorsed candidate for Berowra and Federal Member for Dundas.

"One only has to look around at the many 'To Let' signs to realise that many local companies are going under", he continued.

According to budget papers, the Government does not expect any improvement in the plight of the small business sector. The Government clearly expects the small business sector to be plagued with a dramatic increase in bankruptcies and corporate insolvencies.

Small business and personal bankruptcies and corporate insolvencies have escalated from 16,507 in 1989/90 to a massive 27,166 in 1991/92. This scenario is expected to worsen with the Government increasing funding to the Insolvency and Trustee Service by $11.2 million (27%). The Insolvency and Trustee Service has the responsibility for administering corporate insolvencies and personal

bankruptcies.

"It is particularly disheartening to note that personal bankruptcies have skyrocketed to 4339 in NSW alone. This figure represents a 45% increase on last year," exclaimed Mr Ruddock.

An additional $2.8 million has been allocated this year to computerise information provided under the Bankruptcy Act. "It is very disturbing to think that the Government is predicting the situation will degenerate to such an extent that a larger computer system will be needed to cope with bankruptcy information", said Mr Ruddock.

"Clearly, the large increase in funds indicates the Government expects the number of bankruptcies and insolvencies to multiply and to this end they are using extra resources", claimed Mr Ruddock.

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Poor export performance by small business has prompted the Opposition to call for a new strategy to encourage and assist small business to export.

"Most Australian small businesses do not export - they can either not afford the costs associated with developing export markets, their goods are uncompetitive on world markets because of high production costs and excessive taxes or else they simply do not have the funds to finance the production of the order and its dispatch overseas", said Mr Ruddock on behalf of the Opposition.

A recent survey conducted by Arthur Anderson found that 84% of all small business expect either none or else up to only 10% of total sales to come from exports. Only 3% of small firms expect that more than 50% of sales will come from exports.

Quite clearly, the Government's small business export strategy isn't working and it is affecting the local business environment. Indeed, when the Small to Medium Enterprise Export Development Program was first introduced, assistance was only offered to 250 out of 800,000 small firms. The One Nation statement sought

to increase this insignificantly to 700 over 3 years.

Mr Ruddock said that the principles of the Government's Enterprise Export Development program missed the mark. The program fails to address the key constraints on small business, namely lack of competitiveness, high market access costs and lack of finance.

In spite of the expectation of more closures and poor export performance the government did not take any action in the budget to remove the cost burdens from small business and allow them to make a living. Such is their concern that small business did not even rate a mention in the Treasurer's Budget speech.

The small business sector is an essential and fundamental part of the Australian economy and the Coalition Government is planning to provide the best incentives for business to realise opportunities and stay competitive. The Fightback Plan for small business will bring about significant and sustained benefits using a balanced monetary and fiscal approach and restoring stability to interest rates,

allowing small business to invest with confidence.

The Coalition's plan to reform the tax system with Fightback will substantially reduce the cost of running a business and restore confidence in the local business community.

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For further information please contact Philip Ruddock on 858 1011