Transcript – Address to the National Press Club
Subjects: Growing Jobs and Small Business package, other Abbott Government measures, importance of small business, accelerated depreciation for farmers announcement
Ladies and gentlemen, welcome once again to the National Press Club for this week’s Westpac address.
It’s long been an economic mantra that small business is the engine room of the Australian economy.
According to a report by the Reserve Bank, small businesses certainly do play a highly significant role accounting for around half of employment in the private non-financial sector and around a third of the nation’s production. They’re an important source of innovation.
That’s certainly the view held by our guest today, one reflected in the substantial Small Business Package that was announced in this year’s Federal Budget. To deliver the third in our series of post-Budget speeches, would you please welcome the Minister for Small Business, Mr Bruce Billson.
Well, thank you Laurie, to my parliamentary colleagues, to a room full of friends of enterprise, thank you for having me here at the National Press Club.
I am sure many of you have been listening to the news bulletins, talkback radio, the chatter at the dining table and around the cooler and it is all about small business.
It is like small business is the new black, the new kale of the cafe scene, the yogalates – the yogalates of the exercise world.
Everybody is talking about small business and isn’t this terrific?
But for me it is a conversation that I haven’t stopped engaging in since my first speech nearly 20 years ago, an engagement that stepped up with greater purpose and influence as the Coalition spokesperson for small business during the past five and a half years.
For me and my Coalition colleagues, many of whom are here today, the hard-working men and women of small business and family enterprise who spent almost every waking moment thinking about how they can do better, how they can grow, how they can innovate, small business has been ‘in’ for as long as we can remember.
Our focus on small business is no fad, it is no passing fancy.
Small business has been and continues to be an enduring focus and priority for me, both professionally and personally and a central tenet of the Abbott Government’s team.
You would have heard the Prime Minister, the Treasurer and I- dare say me a few times- refer to small business as the engine room of the economy. It is not just a throw-away line or a sound-bite. It is actually a national, economic, cultural and community reality.
96 per cent of all Australian businesses are small businesses.
Combined they produce over $330 billion of total economic national output.
They employ over 4.5 million Australians.
In fact, one in three Australians in our economy, active in our economy are employed in a small business and more than four in ten of every private sector job relies upon an enterprising small business person.
So these hard-working men and women of small business really represent the ideals that we see as quintessentially Australian.
They are truly out there having a go.
They are taking a risk and applying their best efforts.
They display extraordinary work ethic and a deep commitment.
They mortgage their house, they do without, they apply all they have got to finance and support and drive their venture, to provide opportunities for themselves, for others, for those that they employ, those they serve, those they feed, those they clothe.
And our Budget marked the start of a great era when enterprising men and women know that they are valued and are really respected in our national Parliament.
They know our nation supports their entrepreneurship and their tireless work.
They know their Government is committed to them as an ally and advocate for their interests and not as an adversary.
Their Government, our Government is keen to encourage enterprising people to take their idea that business ambition and translate that spark into economic opportunity, jobs and success.
It has not always been this way.
The small businesses haven’t always been able to count on their national government being so unashamedly on their side.
It was not so long ago under the Rudd Gillard and Rudd Labor Governments where the needs of small business clearly were not understood, and seen as a priority and certainly were not translated into policy.
There was a revolving door of small business ministers – six in six years – 5 in 15 months.
In that time 519,000 jobs were lost in small business under the previous Labor government.
At the end of Labor’s term, fewer small businesses were actually employing people than was the case when the Howard Government left office and the small business share of the private sector workforce fell from 52 per cent to 43 per cent of all employees.
We knew we needed to turn that around and we are working hard to do so. The Coalition signalled that it is serious about small business when my role was evaluated to a dedicated Cabinet-level position.
During the past five and a half years I have been with small business owners from right across this vast continent drawing in, absorbing, learning from their field evidence, their experience, their commitment and their aspirations.
It is these insights and experiences from these hard-working men and women who contribute so much to our community and economy that shaped our thinking for this Budget.
For the Coalition, this is not just about doing the right thing, although it is, but it is also doing the necessary thing to support the transition in the Australian economy.
Our economy is set to strengthen over the coming years as we transition from a mining investment-led boom and non-mining sectors step up and drive economic and jobs growth.
And it is small business, the agility, the innovative, the disruptive strength of the small business men and women in our economy that will be in the driver’s seat of this transition.
Our approach to small business has been focused on three key fronts.
One, getting road blocks, obstacles, unnecessary head winds out of the road of small business, family and farming enterprise.
Two, we have worked to better align our work as a Government and our responsibilities with the legitimate aspirations of small business community and three, we are about restoring incentives, rewards and encouragement for small businesses to start up, to invest, to grow, to create more jobs.
Now our comprehensive program aimed at reducing obstacles and doing our job better to support the work of small business was largely encapsulated in our election policy.
My first year as Minister was very much focused on delivering on our commitments, and we have made good gains for small business.
The cost burden of the carbon tax that hurt and harmed small businesses also acted as a reverse tariff for those small enterprises locked in a contest with international competitors.
Excessive compliance burden is the bane of time-poor small business people’s lives who need to be the Jack or Jill of all trades in their enterprise and where costs can be disproportionate.
As of March, the Government had announced reforms to generate more than $2.45 billion in annual red tape compliance cost savings.
We have transformed the Fair Work Ombudsman into a small business friend, not foe.
We have implemented many of the recommendations of the Board of Taxation review of tax impediments facing small business, which has also helped to improve that key relationship.
We are making good progress on removing those road blocks impeding small business.
The second element of our approach focused on the need for Government get its act together, to perform our best so that we enable enterprising men and women to do the same.
This is also delivering for small business.
The single business portal has been established, small business-friendly procurement reforms have been implemented.
We pay our bills on time or we pay penalty interest just to show that we don’t want the Commonwealth’s cash flow improved at the expense of our small business suppliers.
And we are nurturing a fairer, more healthy, competitive environment where efficient businesses business and small can thrive and prosper. A new strengthened and more effective Franchising Code, Australia’s first Food and Grocery Code.
The changes we have made and the agreement we have secured under the right to repair Heads of Agreement in the motor industry.
Legislation will soon be introduced this session for the creation of the Small Business and Family Enterprise Ombudsman.
Unfair contract terms protections for small business, all about getting that entrepreneurial ecosystem right and supportive for small business.
We have also aligned our expert support programs to better meet the needs of small business, so more SMEs are engaged in the trade opportunities. Andrew Robb’s highly successful Free Trade Agreement progress has opened the doors to hundreds of millions of new prospective customers and we want our small businesses to delight and win those customers.
And our goal is to make sure Government is a supporter, an ally, an asset, an advocate for small business as they form, as they grow, as they employ and innovate and compete here and internationally, and we are getting this right.
A record number of companies were formed in 2014 and all signs point to this momentum continuing.
But the third pillar of our small business action agenda is about improving incentives, about enhancing rewards and opportunities for private endeavour and that is what this year’s Budget was all about.
Building on the work we have already done and the progress we have already made, but going that step further with a focus on opportunity, incentive and reward.
Now what distinguishes our $5.5 billion jobs and small business package from other measures that may seek similar outcomes is we are not telling people ‘government knows best’.
We are not saying to people ‘government knows what to do with your money, and we know how to spend it better than you’.
That is not our approach.
We are not about splashing cash handouts and hoping for the best.
Instead, we are not giving any money away.
We are just making sure small business people are supported to get the best out of their money and get more of it returned sooner.
We have said to small business, ‘you know best how to grow your business’.
Here are the tools to enable you to do it, let’s hope this package is catalytic for you to turn ambition into economic action.
The $20,000 accelerated depreciation measure gives small business men and women their money back sooner.
A great example, just a few weeks ago I met Duncan Dalgleish in Lindfield Espresso. I met him before the Budget and he explained how he needed an extra coffee machine. There he was busy, but seeing people walking past his coffee shop to catch the commuter train in the morning, and not always able to serve all of the customers to their full potential in a timely way.
For some commuters, not missing a train was trumping not missing Duncan’s delicious coffee.
But now he can get that extra coffee machine, fully deduct the asset purchase price in the year of acquisition, employ another barista and delight even more customers.
For this measure, businesses need a turnover of under $2 million.
The item that they purchase can be valued up to $20,000 as a business-related purchase and it will be deductible in the year of purchase and it can be done again and again and again.
It is not a cap, there is no limitation on a business’s appetite to make use of this incentive.
And we didn’t want small business to wait, so we started the measure from Budget night, and it will continue for the rest of this financial year and on into the next two financial years.
It is for this very same reason I am very happy to announce to you all today that the $70 million immediate asset depreciation measure for our farmers and primary producers originally intended to start from 1 July next year is being brought forward to be effective from Budget night.
This is great news and it will enable farmers to claim accelerated depreciation on vital infrastructure such as water facilities, fodder storage, fencing and the like – and it is an ongoing initiative.
Now, this reflects the feedback we have gotten from primary producers and, I must say, the vigorous advocacy of my friend and shy colleague the Agriculture Minister Barnaby Joyce.
And it is about our aim to give a boost to regional Australia and to do it now, and that is what farmers were asking for.
They know this will make a real difference to them, and this is fantastic news to be able to get on with that straight away.
On Budget night, we also announced tax cuts to encourage behaviour and reward incentives for enterprise.
The company tax cut of one-and-a-half per cent was announced as a starting point by the Prime Minister long before the Budget and in this very room. What we are doing is taking the small business company tax rate down to the lowest it has been in almost half a century. It was only lower in 1967.
Our Government knows small business and we know that two-thirds of small businesses aren’t structured as companies. This has been the source of just one of the errors the Opposition leader made in his budget in reply speech when he outlined unfunded thought bubbles without a plan to fund or implement them. Bill Shorten ignored two-thirds of small enterprises. These included Tony’s tradies, independent contractors, the self-employed, the sole trader, small businesses working through partnerships and trusts.
That is why we have had to come up with an agile measure that will deliver a 5 per cent discount of up to $1,000 for 1.7 million unincorporated small businesses, which will simply be calculated in the ordinary way they have their tax liability on their incomes and apply the discount. This incentive is exactly proportionate to the small business company tax cut.
Some of the lesser-reported measures but ones that really excite me are the ability to change your business without a change of ownership and not risk a capital gains tax liability; making it easier for the Fringe Benefits Tax exemption for portable technology devices, improving certainty, reducing red tape, and recognising the demands of a modern, digitally engaged economy.
We are streamlining business registration processes, improving access to finance and capacity by improved and simplified Employee Share Scheme arrangements and access to a crowd source equity funding framework.
And these measures all present great benefits for start-ups and smaller businesses in growth phases, but we are a nation of entrepreneurs.
Our start-up ambitions are ingrained in our national character. Around 13 per cent of Australia’s adult population are engaged in some form of early-stage entrepreneurial activity.
Now, this is one of the highest rates in the developed world, so as a government we are unashamedly supportive of start-ups.
I would like also, though, to take a moment to acknowledge the extraordinary culture of women entrepreneurship in our country.
Statistics show more women than men are actually starting businesses in Australia, finding new avenues to follow their passion, to show innovation, to apply their creativity and entrepreneurship, and to balance interests and goals in their lives.
Now, I have been talking with many entrepreneurial women at round tables as I travel around the country. They are an amazing group of women who are really blazing away. From mum-preneurs to business chicks they are setting an outstanding example that we need to celebrate. They are remarkable stories of success and they are providing remarkable role models for the next generation of women thinking about what it is they would like to do with their life.
The Budget has been universally welcomed by the small business community. It has sent a really powerful message to small businesses that this Government admires them. We will continue to support small business. We will encourage enterprising men and women and value the small business contribution to our economy and to our communities.
But it is also a pretty big statement about how central we see small business success to our nation’s future economic success.
Some of you might have picked it up, I know I am a little indecisive, but I am buoyed.
I am buoyed and so is the small business community and I have no doubt that this package will achieve its aims to energise enterprise, to create jobs, to boost positive momentum in our economy.
We will move quickly to enact the legislation to implement these changes. In fact, you will see many of the measures brought to Parliament tomorrow.
When that package is there, we will be looking for Labor, who have made noises of support to turn that into tangible action, to be true to their word and see the early certain passage of these measures so that small businesses have solid footing and know precisely what it is that they can take advantage of and move forward with confidence and purpose.
Now, when that package of Bill is passed, I won’t be sitting back exclaiming, ‘my work here is done’, because it is not.
There is still so much more to do: shaping the Government’s response to the Harper review of competition policy, the taxation white paper process, and ensuring that small business considerations are highlighted in that work.
The productivity review of the fair work system and making sure the industrial relations regime is fit for purpose for small enterprises which, after all, represent 96 per cent of the workplaces needing to navigate that system; completing our work to implement the unfair contract term protections; and the Small Business and Family Enterprise Ombudsman initiative.
But let me take a moment to recognise and thank the small business men and women who have taken the time to meet with me, to send me an email, to ring, to share their advice, their field evidence, and their experiences.
We are partnering with the people of small business to energise enterprise.
Government cannot do it on its own.
Businesses will need to reach out with both hands to grab the opportunities available to them and the more that are opening up. And our Government will be supporting enterprising men and women to make these opportunities their own and deliver the jobs and economic growth that arise.
Now, it has been great to share a few moments with you today, to outline our ambitions and our action agenda and the progress we have made, but I do have one message – one message I want all Australians to be alive to, and it is this: there is no substitute for customers.
All of us have a role to play in supporting small business across our country by being thoughtful customers.
If you love being able to stroll down a shopping strip in your local neighbourhood, support those businesses that create that precinct, create that ambiance.
If you love having a local shopkeeper who knows your name, support that enterprise.
If you appreciate Australian-made innovation, buy that locally-developed product or service.
Demonstrate our support by shopping small and shopping local. That is why energising enterprise is everybody’s business.
As the Government we are inspired by enterprising Australians who get up every single day and work extraordinarily hard in our small businesses across this continent.
We are getting the settings right, but we need to keep working to ensure that we innovate as a government and pursue continuous improvement in our policy and program work in partnership with small businesses.
My work as Small Business Minister will only be done when Australia is the best place to start and grow a business.