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Thursday, 25 November 1999
Page: 12693

Mr BILLSON —My question is addressed to the Minister for Employment, Workplace Relations and Small Business. How will the government's new business tax system benefit micro and small business owners and their employees, such as those making a significant contribution in the Dunkley electorate?

Mr REITH (Workplace Relations and Small Business) —I thank the member for Dunkley for his question. His electorate has Frankston as its central part. In these suburban electorates—he is representing a suburban electorate—he has a lot of small businesses, a lot of microbusinesses, and there is no doubt that the reforms which have now been agreed will produce significant benefits for those people. Mr Speaker, I have taken out a couple of examples just to give you a feel for the dimensions of this.

Mr Crean interjecting

Mr REITH —Why interject? These are great advantages. I will send you the numbers and next time you are speaking to a trade union group you can get up and say, `Capital gains tax reform under us is great, and here is an example.' This is my example: someone in a $20,000 to $30,000 range buys a hairdressing shop for $10,000 in June 1994 and sells it this year for $18,000. Under the old system that you are happily with us getting rid of, capital gains tax is $2,450. Under us, there is a 70 per cent reduction, a $710 tax bill. This is a massive benefit, meaning that if you are running a hairdressing salon you keep more of what you earn in building up your asset.

Mr Crean —What about the GST?

Mr REITH —I get the interjection about the GST. I see what Steve Bracks says about the GST this morning. He says that it is just such a great tax, and given the revenue likely to come from it, he is going to spend that on cutting payroll tax to create jobs in Victoria—a fantastic benefit from the GST. You would be opposed to giving people the chance of a job.

Take another bloke who is an operator of a small butcher's shop. This is a butcher's shop where the person has bought it for $100,000 and sells it for $200,000. There are various assumptions you can make about tax rates, but under the old system you were looking at a tax liability of $35,000 or thereabouts for that person. Under us, depending on the age and for a person going into retirement, there is no capital gains tax at all. It is a fantastic incentive for small business, and of course that means jobs.

This is an extraordinary achievement in the area of tax reform, and I want today to publicly pay tribute to the Treasurer for securing such a fantastic win for the small business community.

Mr Fitzgibbon —Are you running for deputy leader now?

Mr SPEAKER —Order! The member for Hunter.

Mr REITH —This does display extraordinary powers of persuasion. This does display an insight and understanding—

Mr Beazley —I raise a point of order, Mr Speaker. What possible relevance can this hypocritical paean have to the question that was asked?

Mr SPEAKER —The Leader of the Opposition knows that he is going beyond any point of relevance. The minister has the call.

Mr REITH —These reforms, supported by the opposition, are putting incentive back into small business. That is great for people who have got their own small business, but it is also great for people they will employ in the future who today are unemployed. It is a singular feat to achieve a halving of the capital gains tax. For somebody who has been in business for a few years, 15 years, and qualifies under the proposal, there is no capital gains tax at all. Again, that emphasises the significance of the benefit for the small business community.

I suppose the Treasurer would have to acknowledge that timing is terribly important in politics. If he had gone to the Labor Party back in June, that was when the Leader of the Opposition said, `You can only take one week's holiday because you have got to get out and brand-name our policies.' When it came to July, he did not have any policies. He was holding a seminar to see what his policies might be. By the time we got to September, he had been liberated so that they could be freewheeling and they could die in a ditch on their principles.

Mr SPEAKER —The minister will come to the question.

Mr REITH —Finishing on this point, Mr Speaker, the latest strategy we have from the opposition is that if you have got a problem with developing a policy you hospitalise the front bench and put it off until next year.

Mr SPEAKER —No, the minister will come to the question.

Mr REITH —This is a great win for small business.

Opposition members interjecting

Mr SPEAKER —But for the uproar in the chamber, members may have heard me draw the minister's attention to the fact that that was an inappropriate way to conclude his answer.

Mr Price —I raise a point of order, Mr Speaker. A number of members have had the misfortune of suffering illness and none have been so reflected on. I would have thought that that remark should have been withdrawn.

Mr SPEAKER —The member for Chifley will resume his seat.