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Tuesday, 3 February 2009
Page: 40

Ms NEAL (4:52 PM) —My question is to the Minister for Small Business, Independent Contractors and the Service Economy. Will the minister advise the House of the benefits for small business of the government’s Nation Building and Jobs Plan?

Dr EMERSON (Minister for Small Business, Independent Contractors and the Service Economy and Minister Assisting the Finance Minister on Deregulation) —I thank the member for Robertson for her question. I can advise the member for Robertson and also the member for Dobell that the package announced today will be of great benefit to all those small businesses operating on the Central Coast of New South Wales, who have so strongly built the economy and prosperity on the Central Coast. Right around Australia—in outer urban Australia, in regional Australia and in South-East Queensland—small businesses are big winners out of this package announced today.

When the government have been designing various initiatives we have had small businesses firmly in mind. We had small businesses firmly in mind when we were designing last October’s fiscal stimulus package. We had small businesses firmly in mind when we were designing the tax measures that were announced in December last year and, similarly, when we announced the financing arrangements for car dealers, because in fact most car dealers are small businesses. We had small businesses firmly in mind in designing the $4 billion Australian Business Investment Partnership. Who builds commercial property? It is small businesses—it is contractors—and they will benefit from this initiative. Small businesses will benefit greatly from the $42 billion Nation Building and Jobs Plan, announced by the Prime Minister and the Treasurer today.

It is a huge fiscal stimulus. Small businesses are big winners from it. One particular component of it is a boost in the investment allowance, which was announced in December last year, from 10 per cent to 30 per cent. That means a lot more incentive for small businesses to invest and, of special relevance to small businesses, we have reduced the threshold for eligibility for capital expenditures under this initiative, from $10,000 to $1,000. One consequence of that is pretty obvious: if you bought, for example, a coffee-making machine or a laptop computer, it might not cost $10,000—you would not think so for a laptop computer; it would have to be a ripper—but somewhere between $1,000 and $10,000 is ordinarily the cost of a laptop computer, so it now qualifies for the 30 per cent investment allowance. That is great news for small business. It will encourage small businesses to bring forward investment and it will encourage small businesses to undertake investments that they otherwise might not have undertaken.

Importantly, during the earlier debate, the shadow minister for small business said, ‘But how’s this going to boost small business cash flow?’ I can tell him. Imagine a $20,000 piece of capital equipment for an office or a factory. Through this investment allowance, a special tax deduction of $6,000 becomes available. If you get a tax deduction of $6,000 that you did not otherwise get, what does that do? It boosts small business cash flow. Is there any wonder that the opposition does not understand basic economics and does not understand basic tax law? I can report that the Australian Industry Group is at odds with the shadow minister for small business, because, just today, in response to the package, it said:

The nation building and jobs plan announced by the Federal Government today … will provide a big stimulus to help keep the economy moving …

The package targets consumer spending, which is absolutely critical to our near-term economic prospects, and boosts capital expenditure—looming as one of the real casualties of the downturn.

I draw the attention of the House to this statement:

In particular, business welcomes the $2.7 billion investment incentive. This measure will help sustain business investment and support jobs and productivity improvements.

There you are, Mr Speaker: the endorsement of the Australian Industry Group. I have spoken to many small business organisations. They are thrilled about this boost in the investment allowance and the increasing availability of it. It builds upon the 20 per cent income tax instalment discount, which will be available from 2 March this year. We know this: for small businesses, cash flow is king. We are boosting the cash flow of small businesses, supporting the Australian economy, supporting our great entrepreneurs and supporting the nearly four million Australians employed in those businesses.