ROBBIE BUCK:
There is a national small business summit being launched in Sydney tonight. Federal Small Business Minister, Bruce Billson will be there for the opening. Good morning to you.
MINISTER BILLSON:
Robbie, how are you this morning? And best wishes to your listeners.
ROBBIE BUCK:
I am very, very well and keeping rugged up, I am glad to say.
Why suddenly, I do not know if it is suddenly, but this big focus that we have seen, both from the Federal Government and from the State Government, when it comes to small business, why the focus on it in 2015?
MINISTER BILLSON:
The focus has been ongoing for me for a mighty long time and making the very simple point that small businesses, family and farming enterprises are absolutely crucial to our economy.
You might be lucky to have a mine or a big tower of financial service workers in your community and good luck that you do. But for the rest of us, the cost is vast continent.
It is enterprising men and women, often mortgaging their house to have a go, to create businesses to then create economic opportunities and the livelihoods for others.
It has always been front of mind and a real burning passion for me and I am pleased to see it is the new black. Everyone wants to talk about small business Robbie. Even getting a call from you mate, is fantastic.
ROBBIE BUCK:
I love small business, do not get me wrong. It is not without its controversy though, of course. We saw the Harper Review of Competition Law which was hailed as the biggest shake up of Australia's economy in more than 20 years, if I am not mistaken.
Take us through some of these recommendations, because not everybody is happy about these recommendations, that it might affect small business. Retail trading hours was one of those areas.
MINISTER BILLSON:
Yes, there was a few recommendations in the Harper Review and the Government will be responding formally to the review at the beginning of the last quarter of this year, we are a couple of months away.
One of the reasons I will be in Sydney is actually to discuss some of those recommendations with interest groups while I am in Sydney. But the recommendations were quite broad, you are right, you point to some that are very much in the state jurisdiction.
There were issues around trading hours, obviously ongoing discussions about the taxi industry and things of that kind. But then more broader issues too about whether the law provides for the right environment where efficient businesses, big and small can survive and prosper or whether there is too much opportunity for really big behemoth businesses just to push the little ones around because they can.
ROBBIE BUCK:
This is the big concern is it not? Small businesses having to compete against major, major international companies that have very deep pockets when it comes to litigation and those sorts of areas, as well as competition of course.
In that kind of respect, let us talk about pharmacy owners. If you are a chemist who owns your own little chemist and it has been running there for a long time, you have been putting all your heart and soul into it, the Harper Review has recommended pretty major changes in those areas and chemists as small business owners are not very happy about some of those recommendations.
MINISTER BILLSON:
That is right and the recommendations were looking at two key areas Robbie. One was what is known as the location rules. Those are rules that govern where a pharmacy can open and operate from and they are largely in place to make sure that right across this country we have a reliable, dependable access to publically subsidised pharmaceuticals so you can get them within 24 hours.
That was their logic when they were introduced back in 1990. That is something that has been constantly discussed, is this helpful? Is it not? If you took them away, you might end up with 25 pharmacies in Double Bay and not somewhere you need them in the central west.
That is the logic behind them and what the pharmacy industry has agreed with the government, is that over the next 18 months we will have a look to see whether they are still fit for purpose, still doing what they were intended to do and that is actually provide a channel to market, if I could use that term, for pharmaceutical products that are subsidised by the taxpayer to make sure that no matter where you are, you can get them when you need them from an appropriately qualified person.
That is an example where Harper said, these rules at first blush look anti-competitive, but if there is a public policy point to them, make sure that point is still relevant.
And that what the rules are that you have in place is the most efficient way of delivering that public policy outcome so that you're not causing distortions in the economy or causing customers to pay more than they need to for something that they want to buy. That is an example of that…
ROBBIE BUCK:
Ok. Minister we have a lot of calls coming through this morning. There is a lot of people keen to talk to you. Let us take one, Bruce Billson, the Federal Small Business Minister is on the line with us.
We have Paul from Coledale. Morning Paul.
CALLER:
Good morning Robbie.
ROBBIE BUCK:
You are wanting to talk about book making and small business?
CALLER:
I realise it is rather a niche industry but I am a small bookmaker who works with the horses. Not a corporate bookmaker. A combination of the state and federal taxes, just to give a quick scenario, I work about 100 meetings and they cost $1000 a day of expenses, so that is $100,000.
You turnover about $1.5 million a year. The state levy to turnover tax of 1% on your turnover, so that is $15,000 worth of tax. Then you pay 10% on your gross profit which is another $10,000…..
ROBBIE BUCK:
Without going into too much detail Paul, you are saying that you are being hit twice, is that right? You are being double taxed?
CALLER:
I am not earning anything. So I was earning $100,000 gross, it has cost me $100,000 to work so I pay, my income is zero, yet I pay $25,000 tax.
ROBBIE BUCK:
Minister, can you speak to that one?
MINISTER BILLSON:
Look, a tricky one without knowing all the details. I thought Paul was going to move to the impact of some of these new technologies which are also having an impact on industries like his where rather than going to place a bet, a wager with a book maker, you might go online.
Without knowing the specifics, Paul, I am not sure how I can best help. Ordinarily, your income is, the tax you pay on your income, relies on you having that income, so if you are in a circumstance where your business is not earning any income, then that should not be a major concern.
As for the input costs, I do not know enough about the racing industry to be able to give you a good answer other than to say, I know when I part owned a racehorse, all it did was cost me a mountain of money.
ROBBIE BUCK:
It is a bit like owning a boat.
MINISTER BILLSON:
Yes, I think so.
ROBBIE BUCK:
Paul, I do not know if that answers your question, but thanks for the call this morning. Shane is from St Clair. This is a question about the definition of small business. Morning Shane.
CALLER:
Hi, morning. We run an electrical contract business. There are about 20 employees. Because of our turnover we are really classed as a large business. Essentially, we are still a mum and dad business.
My wife and myself are still actively involved and the employment laws and so on that we get, we qualify as a large business. We cannot just sack someone if we feel like it. We have got to go through the whole three warnings and all that kind of thing…
ROBBIE BUCK:
Good question. Minister what is the threshold for a small business when it comes to the numbers of employees?
MINISTER BILLSON:
Shane is right on the money there, Robbie. There are about more than half a dozen definitions at a federal level and if you include the states you get into a dozen and a half.
For employment law, the definition is 15 headcount, for the ABS it is a 20 headcount, for tax purposes it is a turnover number and for competition law it is the transaction value. Just to make it simple.
What we are seeking to do is whenever we are making a policy step, seeing if we can tidy up those definitions so there are not too many moving parts that see a business just like the one that Shane described in as a small business for some purposes but out for others and then you end up saying, well hang on why am I treated one way; like under the tax law if you are under $2 million turnover, you can account for your BAS as on a cash basis rather than an accrual basis.
There is different treatments for fringe benefits taxes and there is a whole range of things that are the way you depreciate your assets. One of things that we weighed up as part of that $5.5 billion Jobs and Small Business package, which is the largest one we have ever seen Robbie in our nation's history, was what we could do to make sure we get greater alignment.
And that is why all of those tax measures were within that $2 million turnover definition. I recognise though that has not been increased since the late 90's and therefore what was a $2 million business then is now not quite the same scale of business.
If you look to some businesses, they might have a large turnover, but a small number of people and a relatively small margin. You end up with these different treatments.
Trying to harmonise those is an ongoing process, it costs a bit of dough and that is why we weigh it up as part of our Budget considerations.
ROBBIE BUCK:
Shane, I do not know if you got a solution out of that one, but maybe an explanation at least.
CALLER:
I would like to see the thresholds ramped up for sure. That just kills us.
MINISTER BILLSON:
What do you think mate? Do you think it should be about five or something like that? Is that what you are thinking?
CALLER:
Yes.
MINISTER BILLSON:
That was one of the one's I had modelled in putting the budget package together. But I only had that $5.5 billion funding envelope which would work hard....
CALLER:
Sure.
MINISTER BILLSON:
It is certainly on the things to do list. But a sense that five is more about right is a really useful piece of feedback.
ROBBIE BUCK:
Shane thanks very much for the call this morning.
Minister we have had a conversation earlier on about the changes. I know this is a state law and you are a Federal Minister, but we have had some calls this morning from café owners concerned about the new smoking laws in New South Wales.
And the fact that it actually benefits larger businesses rather than small businesses, namely that the larger businesses are able to split their outdoor dining areas into smoking areas with no eating and eating areas with no smoking.
If you are a smaller business owner, like a café for example, you are not able to do that at all. Is there a response from you from those criticisms about those kinds of laws being introduced?
MINISTER BILLSON:
It is an example of how, when a government makes a law, sometimes it lands differently and has different impacts for a bigger business than a smaller business and this is something that even the Harper Review touched on Robbie.
Where they are saying, do not regulate in a way that gives an implied advantage to one type of business structure over another. In the case that you mentioned, this is a similar experience we are seeing in other states, some of the smaller businesses have found it helpful to have a smoke free area, an environment around their business, but where they had patrons that would like to have a cigarette as well, that was a real turn off for them. It did land quite differently.
The point is though, whenever a government is looking at implementing these laws, we need to make sure they work well for the small business, not just the big business.
Look at things like workplace relations. That whole machinery seems to assume you have got four or five people in a human resource department. When you are a small business, you are doing it yourself.
Even the shudder that I am sure many small businesses would have reading that the Carbon Tax might be coming back under Labor if they are re-elected, that will frighten the daylights out of many small businesses because they are price takers. They cannot actually just pass on extra increased costs to their customers and it ends up really hitting their budget.
That is an example of where a policy idea, if not thought through, can land quite differently on a smaller business than a big business.
I would continue, if I was those callers, to get onto John Barilaro, your State Small Business Minister. In some liquor licensing laws, I know there is a slightly different way in which they are applied depending on the size of the venue, that takes account as a different position of a small business from a big business.
Maybe that might be something that needs to be canvassed with the State Government.
ROBBIE BUCK:
Alright, Minister, before I let you go, Liza on the text line is saying, Robbie can you ask Bruce Billson why the government is withdrawing support of small business solar projects. That is hardly supporting small business.
MINISTER BILLSON:
That is dead wrong. I do not know where that idea has come from. Under re-negotiating the renewable energy target, we went out of our way to make sure small-scale solar, which has had more momentum to it than just about any other segment of the renewable energy market, has been absolutely protected.
Because that is direct action at a household and small business level that we want to encourage, not discourage and that is exactly what we have done. More recently though, there was a discussion about the Clean Energy Finance Corporation, the lender of last resort, and the government was saying it is not helpful to put that funding into proven technology. Have it available for new innovative technology that really needs the leg up to get off the ground.
There is some misconception that, as your texter alluded to, that it has some adverse impact on small-solar instalments. That is absolutely not the case. Absolutely not the case.
ROBBIE BUCK:
Ok, that may be for a different discussion with a different Minister. Thank you very much for your time this morning.
MINISTER BILLSON:
Thanks for having us Robbie and let us energise enterprise.