The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 July 2010

NO.022

Small Business: The Engine Room of Our Economy

Address to the COSBOA National Small Business Summit

Brisbane

8 July 2010

Introduction

Thanks Kochie, and thanks everyone for having me here tonight. It's good to be home and escape the depth of Canberra's winter for a while. And it's really great to just be here to recognise the massive contribution that small businesses across Australia play in creating jobs and growth.

Of course we all know Kochie from Sunrise – and we know he's got a head for financial matters – but many Australians wouldn't be aware of the really important role he plays in advocating for small business. It's an understatement to say Kochie's been a fixture in the business and financial management scene in this country for many years.

And I'd also like to acknowledge Bob Stanton – who during his leadership of COSBOA has built very strong relationships in Canberra.

Bob has worked closely with Cabinet ministers like my colleague Craig Emerson – who's fought tirelessly for small business and their workers. As Minister for Small Business, Craig's voice is heard across Government on matters of small business and the broader economy.

And welcome also to Bruce Billson – Craig's opposite number.

Unsung Heroes Of The Crisis

I just want to start by saying that I know the last two years have been tough for everyone in this room – in fact 'tough' doesn't even describe it. The global recession threatened everything we knew about economic stability and economic security. It had profound consequences for the global economy which some of the world's major advanced economies are still grappling with today.

Australia's performance through this period has been nothing short of remarkable – with businesses and their workers pulling together to make it through the toughest conditions the world has seen in 75 years.

One of the big factors behind that success and one of the reasons many Australians have jobs today, is because of the hardworking women and men in this room. Our stimulus measures just wouldn't have worked if you hadn't all stepped up like you did and shown confidence in the national economy.

And you delivered in full – in a range of innovative ways. Some workers reduced hours. It was a short-term fix, and painful, but much better than the alternative – for families and for our economy.

But the end result? At a time when other advanced economies have seen spiralling unemployment, employment here has grown by around 350,000 over the last year. And we saw today more evidence of your hard work and commitment in a jobless figure of 5.1 per cent.

Now I know that despite our national success, some parts of the economy are still facing challenging conditions. I know that some here would still be working week to week – still trying to balance the books. I'm certainly mindful that Australia's recovery is running at two speeds, just like the global economy, with different sectors of our economy growing at different speeds.

But – with the help of stimulus – together we avoided recession and the large scale job losses and business closures that occurred elsewhere. And we've avoided the permanent destruction of our capital and skills base that flows from long-term unemployment.

Coming back from the G20 meeting in Toronto last week, I was again reminded of just how far ahead of the curve Australia is. While Europe faces a long, slow grind towards recovery, our economy emerged from the global downturn in a stronger position than any other advanced economy. And while the major advanced economies are working towards halving their deficits by 2013, we will be back in surplus by 2013.

It's always been my view – and I know it's Craig's strong view as well – that much of the credit for Australia's success goes to all those small business owners here who took care of their workers and kept their doors open. Small business played a huge role in keeping our economy ticking over in its darkest hour, and is still making a massive contribution to jobs.

Around 5 million Australian workers are employed by small businesses – businesses like Cyber Hair. Cyber Hair – one of the case studies showcased earlier this evening – put a lot of their success down to the loyalty of their staff.

Because you are so important to the success of our national economy, we did our best to make you a priority in our response to the global crisis:

  • Our Small Business Tax Break, which helped over 200,000 small businesses invest in new capital items through a 50 per cent bonus tax deduction;
  • Our stimulus, which kept customers walking through your doors;
  • Reducing quarterly pay-as-you-go instalments to boost cash flow;
  • Our on-time payment guarantee for contracts of up to $1 million;
  • Our small business advisory services like Enterprise Connect;
  • Our steps to help small businesses manage their tax obligations:
    • We're extending for another 12 months measures we brought in last year to help small businesses meet their tax payments to the ATO. This package will now be available out to 30 June 2011, providing real support to small businesses through interest-free payment periods and the deferral of some payment dates;
  • And crucially our bank guarantees, which supported the flow of credit during very difficult times.

I know that many of you still faced tight credit conditions during the crisis and are still facing difficulties, but I really believe that things would have been diabolical without this action. That's why we have been determined to take action where we can to boost competition in the banking sector.

This is why we insisted on specifically supporting small businesses when I announced our second $8 billion investment in AAA rated RMBS at the end of last year. Because I know things are still tougher than they should be on this score. And I know how important the flow of credit is to small business.

So it was great to get a letter recently from the CEO of smaller lender RESIMAC, telling me our support for the RMBS market has "been vital to permitting a continual flow of finance to the small business community." I was really encouraged to hear him say that "without such support, there would be literally thousands of Australian small business owners who would have been deprived access to finance." He said this included a range of small businesses like those in plumbing, paving, dry cleaning and restaurants – businesses just like yours.

Now I know some in this room might not agree wholeheartedly with that assessment – and I know individual cases vary – but it's an important start.

Our Broader Reform Agenda

We've taken all these important steps because we are committed to reforming our economy so Australian businesses can make the most of the opportunities ahead.

Craig has already mentioned the progress we're making in terms of Standard Business Reporting – and I commend all those working so hard on this front.

Of course we are also making huge investments in our nation's infrastructure. This includes the largest ever infrastructure project in the nation's history – the National Broadband Network – which will give small businesses around the country superfast, affordable broadband. Particularly for those in rural and regional Australia, the NBN will mean significantly improved access to domestic and international customers.

And this is all just part of our very broad agenda to get behind small business, as small business gets behind the recovery.

Now, obviously dominating this agenda in recent times has been the historic reforms we are delivering in our tax system. You're all aware of the breakthrough tax agreement last week with the resources industry.

This agreement is a really powerful demonstration of what we can achieve when we sit down at the table to build a consensus on how to do things better. Clearly, we have a new Prime Minister whose natural style of leadership is to build that consensus. Julia Gillard has taken this approach from day one – she gets agreement, and she gets things done. And we're seeing dividends from this already.

I am enormously proud of the way we've come together to reach a breakthrough agreement that will see an extra $10.5 billion returned to the Australian community.

Of course, you might be forgiven for thinking that the tax debate of the last few months was all about mining. In my view it was about much more than that. This mining tax reform is real reform – the biggest reform to mining tax for 25 years – in part because it lets us do so much more to support small business.

We're giving all 2.4 million small businesses across Australia a $5,000 instant asset write-off. This will be a major boost for cashflow and will also cut red tape substantially. Because we know you'd rather be spending your time with your customers and your families, rather than doing endless paperwork. Now to put that in perspective, it means a café owner could buy a display fridge worth $4,000 and get a tax deduction of $4,000 in the same year.

We're also cutting company taxes to 29 per cent in 2013-14, and giving small companies like those in this room a real head start from 2012-13 to help you get ahead of the game. As I've said before, obviously we'd like to do more, and we'll continue to assess our capacity to do so in the light of our fiscal circumstances into the future.

But let's be clear about this: the Gillard Government clearly believes that the direction of company tax in Australia must be downwards so we can help our businesses compete. By contrast, our political opponents are proposing not a company tax cut, but a company tax hike – lifting the rate to 31.7 per cent. So it's pretty clear which side of Australian politics is working to build up our businesses so we can strengthen our whole economy.

Tonight's for You

Now, I'd just like to finish up by recognising some of the individual businesses which are being honoured here tonight for their successes. It's great to see some really innovative Australian small businesses get the nod – like Group Training Australia and Byron Bay cookies. Growing, thriving, and competitive small businesses like these are central to a growing, thriving and competitive national economy.

I know you guys did it tough during the crisis. I know that a slowdown has a bigger impact on you, and you're often the first to feel the effects. If your customers stop coming through the door, your bills still need to be paid. But you pushed on anyway.

So tonight's for you – for all your work. For the ticker you all showed when things looked really bleak. For the way you worked with us to push the economy through. For the way you kept your workers on and took care of them – so we now have an unemployment rate the envy of the world.

And as important as you were to staring down a global recession, you're going to be even more important to building the recovery. And I want to work with the small business industry – and all its workers – to ensure a brighter economic future for all Australians.

Thanks again for having me, thanks Kochie for hosting a great night, and enjoy yourselves.