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Tuesday, 7 August 2001
Page: 29306


Mr IAN MACFARLANE (Minister for Small Business) (4:00 PM) —In the shadow Treasurer's address, for want of a better word, on today's matter of public importance, he asked us why we would not adopt Labor policies. He answered his own question. In his own address he said of small business, `The last thing they want is more tax return turmoil.' The first thing they would get from the Labor Party, if they were ever to get into government, is more tax turmoil, wave after wave of change from roll-back. When small businesses ask, as they are entitled to, `What is roll-back?' they get no answers, so their concern grows. Small businesses do understand what roll-back means. It means wave after wave of change, extra exemptions, extra changes to their computer systems, extra changes to their accounting systems. The Labor Party have an inquiry going on—


Mr Crean —Are you going to do anything?


Mr IAN MACFARLANE —We have already done it. The Labor Party have an inquiry going on out there, but they have not even included roll-back in their terms of reference. The Thomson inquiry, which I think it is called, is going around the country asking for submissions on changes to the tax system, yet it will not include in its very basic charter any reference to roll-back. Why? The answer is obvious: the Labor Party already know—because every survey you pick up on tax reform states it—that small business does not want roll-back.

The shadow minister for small business asked me today why we would not adopt Labor's BAS simplification. This is the one that the shadow Treasurer just so eloquently outlined, but the shadow Treasurer is in complete contradiction to his leader, the Leader of the Opposition, who on three occasions, in three radio interviews, has talked about a need for an annual reconciliation. The shadow minister asked me why we will not adopt that policy. Well, which one are we supposed to adopt? Which one is it? Come on, tell me now. We do not know, because the fellow who usually sits there at the table says it has a reconciliation, but the fellow who sits behind him says it hasn't got a reconciliation. No wonder small businesses are confused.

What we have here is a party that over the last 12 months have attempted to obtain political gain from the hardships that small businesses are experiencing in the normal way of commerce. The Labor Party have tried to exaggerate those hardships and exemplify those hardships, when in actual fact there are absolutely no data that link the small businesses' normal cash flow issues to any issue relating to the GST. As I quoted in my answer to a question today, ITSA, the body which looks after bankruptcies, even went so far as to say that no small business has quoted the GST as an issue related to its insolvency.

In terms of some of the other issues that were raised in the shadow Treasurer's address, the reality is that this government has gone out and consulted with small business, and in terms of the BAS process we have already delivered. We have not had phoney inquiries that roll around the country but omit roll-back. We delivered a streamlined process on 22 February this year. We have gone on and simplified the BAS process, and we are continuing to consult with small business.

The previous speaker, the shadow Treasurer, raised the issue of the consultative committee, and I am pleased to expand the terms of reference of the consultative committee. I am pleased to include on that consultative committee, which will meet this Thursday, some businesspeople from right around Australia, and they will be consulted on a whole range of issues now relating to small business. We are seeking their feedback, as we do wherever we go. We have already incorporated into the system changes as a result of those consultations with the SBCC, and I can assure the shadow minister for small business that this Thursday they will also be asked to comment on issues relating to government policy.

The one thing we will not be wasting any time consulting them on this Thursday is roll-back, because they have already made the small business position clear. Small businesses have already said that they do not want roll-back, they do not want further complications and further exemptions. They want the system the way it is. The reality is that small business, as it has every other time it has faced a challenge, has bedded down the changes to the tax system and is working and consulting with the government and benefiting from a system which now gives it a far better picture of where it is on a day-to-day basis in terms of its financial situation. In fact, the growing comment that we are getting as we consult with small businesses around Australia is that the big benefit to come out of tax reform—apart from the fact that we have reduced income tax by $12 billion, we have cut company tax by 20 per cent to 30 cents in the dollar, we have halved capital gains tax, we have lowered the tax rate to GDP ratio and we have removed taxes on inputs to business; that is, we only tax businesses now on their profits, not on their inputs—is that the new tax system has given them a better insight into how their business is operating.

The other benefits from tax reform are well known amongst the small business community. From my background in rural industry—which is one of the great exporters of Australia, but of course there are many others—I can say that the export industries and export small businesses that I talk to have recognised very quickly and applauded the government for removing the taxes on their exports. Exports are a key fundamental of a growing Australian economy.

As I said in question time earlier today, Australia, after 12 months of the GST, has got the fastest growing economy in the modern world. That is what happens when you have a government that has the courage to introduce a tax reform system that for 25 years those on the other side have known we needed. Australia needed tax reform; we could no longer rely on a narrow base. We had to ensure that business in Australia was put on an internationally competitive footing—and tax reform has delivered that.

It is perhaps worth while to take this opportunity to reflect on what the government has done with the introduction and finetuning of the new tax system and to speak of the outcomes of some of those consultations that took place with small business and industry representatives. Perhaps one of the more recent comments that we have seen has come from Peter Switzer—and it is certainly an impartial comment, because Peter Switzer, a small business columnist with the Australian newspaper, has been critical of the government in the past. He recently remarked that the government has delivered a new BAS form that `looks as though it has been constructed by someone who is on the side of small business'. I could not have said that better myself. We are a government that is on the side of small business. However, we already know that those opposite are not a party for small business—because that is what the Leader of the Opposition said in Perth. By his own admission, it was said on radio in Perth that `We are not the party for small business.' Here we have, as Peter Switzer said, a form that looks as though it has been constructed by someone who is on the side of small business. Well, he is damn right.

This coalition government has gone out and listened to small business. We have test-run proposals past our consultative committee and made sure that they are in place so that we do not have the ridiculous situation that we have opposite, where the shadow Treasurer and the shadow minister for small business are in complete conflict with the Leader of the Opposition in terms of their proposal. We have put forward a revised BAS, which has been well received. Perhaps it is opportune to quote again from the Australian, where a hairdresser, Leanna Pantone—

Opposition members interjecting—


Mr IAN MACFARLANE —I know you have an association with hairdressing. The shadow minister, I understand, is associated with—

Opposition members interjecting—


Mr DEPUTY SPEAKER (Mr Nehl)—Order! The minister will ignore the member for Lowe.


Mr IAN MACFARLANE —I will gladly ignore the member for Lowe. Hairdresser Leanna Patone— and I apologise to Leanna if I have mispronounced her name—has a salon in the Sydney suburb of Randwick. She said, `It took me no time at all with the numbers being the same.' She went on to say that she had chosen to pay her instalments in fixed amounts and then said, `I'm looking forward to the refund when the annual adjustment is made.' That is just one of the changes we have introduced.

I would have to say that the general response from small business has been very positive. Mark Paterson from ACCI has also said that `the changes were viewed positively' and that `they have enabled the small number of businesses that were struggling to get on top of their situation'. In fact, a TNP Woodside survey found recently that only 3.2 per cent of businesses felt that they were not coping with the new tax system and that two-thirds reported that they were coping well or very well with the new system. The same survey found, funnily enough, that roll-back is an issue for small business. Everywhere you go roll-back is an issue for small business. Yet those on the other side today had the audacity to make the sheer incomprehensible suggestion that we adopt Labor Party policies. The only policy they have got they are arguing about, and roll-back—which they will not define—small business has already made its mind up about: it does not want roll-back.

As I said, we have seen the economy in Australia continuing to improve. We have seen building approvals increase by three per cent over July. As I mentioned earlier, we have seen small business growth of a solid 5.9 per cent. ANZ job ads from yesterday showed a two per cent growth for July. The latest survey from Dunn and Bradstreet—and, again, these guys are not always on our side—showed that business expectations were at a nine-month high. In terms of a whole range of other surveys, the overwhelming consensus is that the economy is in good shape.

We are now in a situation where small business will have to make a decision between supporting a government that, as I say, has delivered low inflation, low interest rates, cuts in unemployment levels, cuts in the ratio of tax to GDP, cuts to small business—the list just goes on and on. In the next six months small business will have to make a choice. It can choose a party that has done all the hard yards—that has paid off almost $60 billion worth of ALP government accumulated debt; that has continued to go out there and consult with small business to put in place the finetuning that is needed for the biggest tax change in Australia's history; that has delivered interest rates for business of under eight per cent, in contrast to interest rates of 22 per cent under Labor when I was a farmer. It can choose a government that continues responsible economic management and that has introduced a tax system which is internationally competitive, or it can choose a government whose only policy is further change, further confusion, further expense for small business—a policy that includes a tax streamlining method that those opposite cannot even agree upon between themselves.

Small businesses can certainly be consoled in terms of their confusion and concern about the potential for a Labor Party government in Australia. Labor does not have a good record with small business. By its own admission, it is not a party for small business. The coalition has delivered to small businesses the fundamental issues that are important to them. I have every intention to go on representing them as the minister for small business as their advocate in the Howard ministry.