Speech – MPI, The impact of increased taxes on small business
Mr BILLSON (Dunkley) (15:07): The topic today is very important: the impact of increased taxes on small business. I remind the chamber of a great quote from a great leader Winston Churchill, who said, ‘For a nation to try to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle.’ That is the logic we have got from this government. They think that more taxes will somehow generate greater prosperity and greater small business opportunities in this country. What are the small business community asking themselves? They are asking when will this government stop kicking small business. When will the Greens and the government alliance crossbenchers stop holding down small businesses or steadfastly looking the other way while the Gillard government gives them another kick?
We saw it last night and we got a taste of it today during question time. The Gillard government want you to believe that it is taxing big miners to share prosperity with small businesses across Australia, but they will not tell you how it was the coalition parties that last night stood up against a 25 per cent tax hike for 400,000 of Australia’s smallest businesses. Last night the government moved, under the veil of the mining tax package, that it would abolish the entrepreneurs tax offset, which is a modest 25 per cent rebate for our 400,000 smallest businesses who maximise its benefit at $50,000 of income and it is tapered out at $75,000. So now 400,000 of our smallest businesses that are not earning more than $75,000 are going to face a tax increase of up to 25 per cent. Who stood up for them in this chamber? The Liberal and National parties. I give credit to some of the crossbenchers who understand that small business matters. But you need to do more than just talk about it. You cannot talk a good game. It is what you do about it that counts.
After I did a doorstop interview highlighting this attack and tax hike on Australia’s smallest businesses, the member for New England was asked about this. He was asked about my observation about the tax hike that was passed last night. Do you know what he said? He said he did not know. He had no knowledge that this tax hike was part of the package of bills last night. He had no understanding because of the sugar-coated briefings the Gillard government provides the crossbenchers, the self-serving nonsense that carves out all the bitter things that are part of this government’s agenda. He was not aware that embedded in the legislation was a tax hike for probably 1,600 or 1,700 small businesses in the member for New England’s electorate.
He said he was not aware of it. How could he not be aware of it? When you look at the Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011, you can see that schedule 1 says it abolishes the entrepreneurs tax offset. We have raised this point over and over again in this parliament, highlighting the impact on the smallest businesses in Australia, but the member for New England said he did not know about it. You would think this article from Monday entitled ‘Small business tax bomb’ would be a bit of a hint. Do you reckon that would set off an aha that something is going on? Apparently not.
Last night the member for New England and some of his government alliance crossbench colleagues voted with Labor to impose a tax hike of 25 per cent on Australia’s smallest businesses—and that is spreading the benefits of the mining boom! It has been revealed over and over that the big miners are not likely to pay any of this mining resource rent tax increase for at least the forward estimates period. They will not be suffering. No wonder they do not think it is a bad deal. They will be immune from it because of the carve outs and the negotiations between the Prime Minister and the mining companies that were too smart by half for this government. They will not be affected by it, but 400,000 of our smallest businesses—those microbusinesses, those women returning to the workforce, those home based businesses and those independent retailers just trying to make a go of it in a very difficult economic climate—will be copping it though. They will be copping an increase of up to 25 per cent in their tax liability.
What is the government’s explanation? They can go out and buy a car and get accelerated depreciation. As Barbara Gabogreca from Home Based Business Australia said, how many of these microbusinesses have a lazy $30,000 to buy a new ute? Buy a new ute, spend $30,000 of your scarce cash, and you might get about $1,800 back as a cash flow benefit but not in the year you spend it. You may get it in October the following year. What kind of cash flow advantage is that? Small business is saying that that is the kind of help they can really do without—spend a lot to get a little back and then get a tax hike on the way through.
But it gets worse. That is just tax increase No. 1 that is harming small business. If you look further in the package last night, you will see the superannuation guarantee increase. There was a three per cent increase in superannuation guarantee contributions. We rightly opposed that, recognising that is a three per cent increase in payroll costs for our smallest businesses at a time when they are doing it very tough and when trading conditions are very punishing for that community. We make the point over and over again that the Henry tax review said you could achieve adequacy in retirement incomes not by increasing the employer contributions but by looking at the way ingoings and earnings are taxed. It is legitimate for the coalition to look at that research.
But the government said, ‘Employers can pay that.’ Then they walk around this country with the great big Labor line, ‘The mining tax will pay for it.’ I have a message for the government and Labor MPs: employer funded superannuation is paid by employers. It is not paid by the mining tax; employers pay it. In a press conference today they perpetuated this line. Did you see the press conference? The Prime Minister and the Assistant Treasurer were trying to explain what was going on. The Prime
Minister was asked:
You’ve talked about how the mining tax pays for tax issues that the government has, but who pays for the move from 9 to 12%? The 3% is paid for by employers, isn’t it, or are employees forgoing wages and saving them?
Ms Gillard said, ‘I’ll turn to the Assistant Treasurer.’ I will take a step back. The Assistant Treasurer said:
When the conservatives say that increasing superannuation from 9 to 12% over the next seven years is a cost on employers they are lying.
That is what the Assistant Treasurer said in a press conference today. The coalition parties highlighted the simple, indisputable fact that employer superannuation contributions are paid for by employers, yet the Assistant Treasurer ran around saying that when making that simple, factual, uncontested statement we are lying. We know where the nonsense is coming from. We know where the Labor line is coming from.
He went on to say:
Increasing superannuation is not a cost in terms of employers because what happens is that it is offset against real wage increases.
I wonder whether the union movement is aware of that. I wonder whether the working men and women of Australia are aware that they are going to have a reduction in their take-home pay because of some arrangement about superannuation. The truth is there is no such arrangement. There is no such accord where there is a trade-off between wage increases and superannuation contributions. There is nothing of the sort. It is completely false and entirely calculated for the Assistant Treasurer to be making these statements.
I say to every small business: the next time your payroll costs go up because you are paying more superannuation contributions, just think about the Assistant Treasurer. He said that you are not really paying it after all. What is it, funny money? Because that is the way the government goes about running the budget in this country.
But it gets worse. It is bad enough that 400,000 of Australia’s smallest businesses are getting an up to 25 per cent increase in their tax and are being told that they should suck that up on the basis of ‘spend a lot to get a little bit back’ for some of the write-off arrangements and bring forward benefits they were going to get anyway. They are then told that they have increasing payroll contributions for superannuation, though they are not paying that either. Somehow the tooth fairy is paying for that. The government have been spending too much time with the Greens, haven’t they? That is they only explanation as to what is going on here. This kind of funny-money logic is quite remarkable.
But dig a bit deeper and go to the great big carbon tax. Colleagues, remember how there was not a dime of compensation for the small business community? Remember how, with all the carve outs and all the compensation arrangements, small business was told to suck it up, pass it onto customers, and look after yourselves the best you can? What happened during those chilly years when the government was going around telling everybody, ‘The carbon tax won’t hurt that much.
You’ll get compensated but it won’t hurt that much.’ This was at a time when its modelling was proved to be completely unreliable. It was understating the impact on electricity by about 60 per cent and it could not even credit some of the herculean assumptions that the world was going to come on board and that America was going to do all sorts of things. There would be a feverish market of carbon credits that would make everything so cheap you would barely notice it.
We then had the Prime Minister at a press conference in Brisbane saying that there will be a tough carbon cop on the beat. Remember that? That would be the ACCC. That tough carbon cop is going to make sure prices would not increase by more than one per cent to consumers. Is there any evidence to back up that claim? None. The macroeconomic modelling is wrong but the government has not even bothered to do an analysis of the actual carbon tax impact on individual goods and services. The Prime Minister claimed that this tough carbon cop would be on the beat and that consumers could rest assured that this painful carbon tax change would only hurt a little.
Well, it got worse last week. The ACCC released the guidelines that it, as the tough carbon cop, would be implementing. Nowhere in the guidelines does it mention anything about one per cent. There is no basis for it. The Prime Minister, in a self-serving exercise, made that up. It says that you can have a pre-Christmas sale but be very careful if you are going to have a pre-carbon tax sale because the ACCC might come and crack down on you. What kind of logic is that? The Prime Minister has gone out and verballed the small business community. They are terrified that this enormous tax is going to impact on their viability. Survey after survey shows that it will cost jobs, it will undermine profitability in small business, it will see people who are working have fewer hours and it will place those on the border in a very perilous state as they compete with overseas competitors who do not have a carbon tax.
According to the Prime Minister at the press conference, small businesses doing the right thing will not be putting up prices by any more than one per cent, even though there is no evidence to back that up. There is no basis in law for the role she was attributing to the ACCC. Then the ACCC said, ‘Whatever statements you make, make sure you can back them up.’ That is fair enough. Do you know why? Because, if you cannot back them up, you are at risk of being charged with false and misleading conduct, so it is important to back up those points. But when I look at the Prime Minister’s statement, ‘Businesses overwhelmingly will do the right thing and the only costs they will pass through is the less than one per cent cost of us putting a price on carbon,’ we know there is no analysis to back that up. That is a prime ministerial declaration of a self-serving purpose designed to muzzle and intimidate small businesses to not pass on the true cost of the carbon tax impacts.
Then it gets worse. It is a $1.1 million fine. We cannot have pre-carbon tax sales otherwise you risk offending. I have a theory. When it comes to false and misleading representations about the carbon tax, I think I know who the first candidate could be for an investigation. I think it might be the Prime Minister making these claims about the role of the ACCC, unfounded in law and with no factual basis about the price impact on the costs of goods and services. If you are not happy enough with that, if that is a little too sophisticated, go back prior to the election, ‘There will be no carbon tax under a government I lead.’ Remember that? Remember when the Prime Minister assured people of that? So, when I look at the ACCC guidelines, acquaint myself and reassure the small business community that the government has no idea what the impact of the carbon tax will be, but they are entitled to pass on the cost increases that they incur where they can substantiate them, I know who the prime candidate for an investigation into false and misleading representations about the carbon tax should be. That would be our Prime Minister.
These are three taxes hurting small businesses right across the country. This is why 300,000 jobs are being lost in small business. This is why there are 22,000 fewer small businesses. This is why the former small business minister has been shunted off to be the trade minister or is away from the small businesses that were so inflamed by his non-performance, and he has been replaced with the Marcel Marceau of the frontbench. Does anybody know who the Gillard government’s small business minister is?
Opposition members: No. Who is it?
Mr BILLSON: He does not upset anybody because no-one knows who he is. But it underlines the point that, when decisions need to be made about the interests of small business—
Opposition members: Who is it? Tell us.
Mr BILLSON: No, no—it would be more publicity than Senator Sherry has had all year. I remind this parliament that the Gillard government appointed Senator Sherry as the small business minister but he is not even in cabinet. So, when the big decisions are made and choices are evaluated about the impact of government policy on small business, who is there representing them? Nobody. I must say it is reflected in every decision they have made. When you get to ask, what is the Labor Party doing for small business, it does not take long to come up with an answer. When you hear Senator Sherry and the Gillard government talking about how good they are for small business, I go back to that great philosopher, John McEnroe, who said after a bad line call at Wimbledon, ‘You can’t be serious.’ (Time expired)