House of Representatives
3 June 2105
Mr FITZGIBBON (Hunter) (12:30): I must say that the member for Mallee, whom I consider a good friend and a great champion of rural Australia, is living in a different world than the one I see. This idea that the measures in the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015 and related bills are somehow in stark contrast to what Labor does in government or, indeed, what Labor did when last in government is just a ridiculous proposition. This is a government without its own economic narrative—we know that. That is an uncontestible proposition. While Labor welcome all the measures taken in these bills—and we made it very clear from budget night that we would be supporting the bills—many of the measures, if not most of the measures, are a reinstatement of the tax breaks that Labor put in place when in government, which this government repealed as one of its first acts as a new government. So for the member for Mallee to suggest that this bill highlights the contrast between the two major political parties is just simply a ridiculous proposition.
As I said, this is a government without an economic narrative. It has no economic reform program of any merit or of any substantial weight. That this government is cutting funding to those least able to afford to have their income cut or to have the government support of their community organisations cut does not fall under the definition of 'economic reform'. It certainly does not fall under the definition of 'structural reform'. This government has no idea about fiscal policy or social policy, and it certainly does not have any idea about agriculture policy—and how fortuitous it is to have the Minister for Agriculture at the table, as I speak.
But it gets worse than that, because this government talks about small business as if it is homogenous, as if each and every one of our small businesspeople, organisations or entities is the same. We all know that that could not be further from the truth. Our small business sector is very, very diverse. It comprises larger and smaller businesses; those motivated to grow, those not motivated to grow; those motivated to increase revenues, those who are not; those motivated to employ more, those not so motivated to employ more. They are in retail, wholesale, manufacturing, IT, the services sector, entertainment, farming and trades—the list goes on and on and on. The motivations vary considerably. As I said, some want to grow, some do not. Some want to employ more staff, many do not because of all the complexity, responsibility, regulation and red tape burden that comes with such a proposition. Some want to innovate, some do not. Some are effectively just buying themselves a job. That is the truth of it. Many tradies are perfect examples of that. Many truck drivers provide another example. They are buying themselves a job by necessity, or they are motivated to do so. They are happy with a reasonable income stream and to maybe work five days a week rather than seven—many, of course, do work seven, but many do not.
So we are dealing with a very diverse range of people and business entities, and this is well acknowledged and understood by those in academia who follow small business policy and, indeed, promote small business policy. I am very grateful to know one of them, a very good friend of mine, Professor Scott Holmes, who is the Deputy Vice-Chancellor at the University of Western Sydney. He has relied on very extensive survey data in breaking down small businesses into five groups. This is interesting, because the groups not only are very different in their make-up, motivation, profit and ambition et cetera but also see themselves as affected or challenged by different areas of government policy.
The first segment is a group he calls 'financially constrained growth aspirers'. He said these are younger businesses mostly seeking growth but struggling to achieve it. Two-thirds of them feel they are not performing to their expectations. He describes the second group as 'externally impacted growth seekers'. He says they are mature businesses mostly seeking growth and, like segment 1, struggle to achieve it, with something like 65 per cent of them performing worse than they had hoped over the past 12 months. He describes the third group as 'broadly impacted stability seekers'. These are businesses with lesser growth aspirations, yet they are only moderately satisfied with their performance, with almost half reporting their business performed under their expectations. The fourth is the 'stress free stability seekers'. He says they are a well-established group and there seems to be no area that really impacts upon them in terms of their business ambitions. They are, of course, the group we like most. They do not have any trouble with government, apparently; but there is good reason for this, and I will return to it.
The fifth group is the 'technology oriented growth achievers'. These businesses tend to be relatively large and involved in the production of technology-related products and services. Most of these growth-oriented businesses are successful in achieving their goals, with a higher proportion performing better than expected, in their minds and in their assessments of their own businesses.
One of the key points about all this is, as I said, that they see government putting up different sorts of challenges for them. The same survey work demonstrates that the key issues across all groups are as follows: first of all, economic uncertainty—and I think I could spend some time talking about the economic uncertainty this government has created over the last 20 months by constantly talking down the economy and by its fearmongering campaign on debt and deficit et cetera—followed by, second, the maintenance of and growing revenues; third, managing cash flows, costs and overheads; fourth is competition; and the fifth is red tape, taxation and compliance. This goes to the point about the mantra surrounding this bill. Despite the diversity of the small business sector, the Prime Minister would have you believe that what is contained within these bills is the panacea for all ills—that for small business, the world is now its oyster because of these tax measures—when the reality is, I remind the House, that many of these measures are a reintroduction of what Labor had done in government. While they are still welcome—it is a welcome thing that the government has had a rethink—the mantra from the government strongly implies that they see this as the end of the road for government: that government has now done its work, and small business can sail on happily now because of all these wonderful the things the government has done within these bills.
The thing about Scott Holmes's work is that of those five segments I spoke about, various government roles and responsibilities are given different weights by their businesses, depending on which segment they fall into. For example, segment one, the financially constrained growth aspirers, is mainly concerned about maintaining and growing revenues, managing cash flows, costs and overheads, and access to finance. But when you get to segment two, for them it is all about economic uncertainty and competition—I suspect that is competition amongst businesses, and perceptions about market power amongst some of their competitors. In segment three, it is all about red tape, taxation, and managing cash flows—you would expect that these bills would be most welcomed by the 17 per cent of small entities that fall into segment three. In segment four, more than 70 per cent are satisfied with their business's ability to meet their goals, and they are not really concerned at all about government intervention or the way in which government policy impacts upon them. Segment five, the technology oriented growth achievers, are concerned most about technology changes and competition. So you can see the diversity, both in the make-up of the entities—the nature of the entities—and in the areas of government policy which concern them most.
The point I am making here is that small business policy cannot end at some taxation changes, as welcome as they might be. This government—just like with its broader economic narrative—has no story to tell about where it aspires to take our country's small entrepreneurs into the future. There are also some agriculture initiatives in this bill, and I welcome them—and tax breaks generally of varying kinds, particularly in the area of depreciation. The big criticism I had on budget night, which of course has now been repaired by a very significant backdown by the minister at the table, was this idea that farmers who had been in drought for three years were not worthy of a new depreciation schedule—a tax break—until sometime after 1 July 2017. Well, that would have been a great load of help to farmers in drought! In fact, it would have been no help at all. So I welcome the backdown, and the fact that that tax break will come earlier. But it is a good initiative to give accelerated depreciation schedules to farmers facing drought, who have some need for investment in things like feed storage, water initiatives, or fencing—one of the biggest challenges facing many of our people on the land is wild dogs; fencing, for many reasons, is of course a good thing—and we welcome this initiative.
Of course, this has to be seen in the context of some of the lesser achievements in agriculture. The cuts to FAGs grants will not help people in rural communities very much: that is a billion dollars out of councils; money that could have been spent on local initiatives to stimulate drought-affected economies. The drought policy has been an absolute failure: the minister is borrowing at just over two per cent and lending at between three and four per cent—and he still cannot spend the money. That is why he keeps re-announcing his drought money, because either farmers are just not taking up the measure or the support because they do not see that it will help in their circumstances, or they are not eligible for the assistance. I urge the minister again to take another look at the failings of that policy. The opposition stands ready to support any change in direction that would help. I thought the minister's rebate on water initiatives was a worthy initiative, and I would welcome the transfer of some of that loans money that he cannot spend into that initiative to provide more support.
The other big thing—I would describe it as a clanger—is the minister's decision to force the APVMA out of Canberra. This is an organisation that is not funded by government. It is an organisation which works on a fee-for-service basis. Its money comes from the companies it serves—that is, companies that are not based in Armidale, in the minister's electorate; they are companies that are typically based in our capital cities including Canberra. This is going to be a catastrophe for the APVMA and for the agriculture sector. I call upon the minister to have a rethink. He is doing the same thing with our research and development corporations. He promised to spend more money on R&D; he has done nothing but cut it—sorry; not 'nothing but cut it': he has put some extra money in, but he has taken more out than he has put in. So that is a clear breach of his election promise. And now he is forcing them to move—the GRDC to Wagga Wagga, the Fisheries RDC to Hobart, the Rural Industries RDC to Albury-Wodonga and of course the APVMA to Armidale. He had already cut the RDC funding, by the way, which is worth noting.
Minister, I appeal to you. You know that all of these organisations are distraught over this measure. They believe it is going to have a significant adverse impact on the commodity sectors they serve. You know, Minister, they are going to lose a lot of good people. You are forcing them to pay for this move! This is more than $40 million out of research going not to research but to an office move and redundancies. Please, tell me how is this a good idea? Decentralisation, in principle, is a good thing. It can work. It rarely does but it can. But it only works when there is a strategic plan which is well thought out and when we have consultation with those who are going to be affected. You have done none of that, Minister. This is no more than a thought bubble on your part. I would like to think it is not pork-barrelling in your electorate. That is for you to explain. But it is a bad idea, Minister. You should rethink it and listen to what the APVMA people and those who run our world's best RDCs are saying to you.