David Taylor:
Australian entrepreneurs are lobbying the government to unwind the changes to the capital gains tax discount announced in last week’s Budget. They say the reform could spark a mass exodus of small businesses from Australia. Andrew Leigh is the Assistant Minister for Productivity, Competition, Charities and Treasury, and he joined me earlier. Assistant Minister, welcome.
Andrew Leigh:
G’day David, great to be with you.
Taylor:
Look, tech startups have taken to social media to express their frustration that the CGT changes will mean losing close to half their gains to the government upon sale of their business. Is that realistic?
Leigh:
Well, we’ve been very clear that we’re open to the conversation with that community. The Treasurer has been continuing that conversation. We’ve had good discussions already with the Tech Council and the Investment Council. But it is important to remember that new businesses and small businesses are at the heart of this Budget. We’ve got making the instant asset write‑off permanent, permanent loss carry back measures and changes to the research and development tax credit that will deliver, in our estimation, another $400 million of research and development by new firms.
Taylor:
Just curious, in the lead‑up to the Budget though, did the government consult start‑ups, the tech sector and small businesses more broadly before penning the changes to capital gains tax in the Budget, because it seems such an impediment on them?
Leigh:
Look, those conversations are certainly ongoing, and we value the engagement and the constructive way in which the tech sector has worked with us. I was on a panel last week with Kate Cornick, talking through some of the big issues in the economy and the importance of boosting innovation because we do have a dynamism challenge in Australia.
We’re seeing fewer new firms entering the market, fewer employing new firms. So we do have a challenge which we need to tackle. Thankfully, we’ve seen a significant increase in the start‑up sector from $15 billion in 2015 to $360 billion in 2025. But more broadly, the Australian economy hasn’t been producing this sort of dynamic competitive environment that’s good for consumers and good for productivity.
Taylor:
So then, is this the right time to be hitting them with uncertainty? Because obviously consultation with startups is continuing in the sector. But what does that mean? How can that translate to what you’ve just talked about? There being a lack of confidence. How can that translate into small-business owners and tech startups being confident that there is a future for them?
Leigh:
Well David, I’ve been clear that we’re continuing that conversation. Indeed, I’ll be opening the Agile Australia conference in Melbourne here tomorrow, talking with the tech sector again about the importance of innovation and about some of the measures in the Budget.
Taylor:
There’s no doubt the government is making measures to support small business, but the tech startups and small businesses are genuinely worried about what’s ahead and talk is cheap. So, is the government opening formal submissions ahead of the legislative changes?
Leigh:
We’ll continue to engage with the sector on these questions, but I wouldn’t describe this as talk, David. There’s $3.5 billion of investments which are targeted in making businesses more dynamic and more competitive out of this Budget.
This is a Budget which responds to long‑standing concerns from the tech sector and from small business about the way in which the R&D tax credit has operated. We had Robyn Denholm, Kate Cornick and others put in place the Ambitious Australia report to which this Budget directly responds. And under our estimation, each dollar spent through the R&D tax credit will now be 20 per cent more impactful than it would have been without these changes.
Taylor:
Andrew Leigh, the tech sector and entrepreneurs within it have taken to social media to try and lobby for change. And look, it’s made its way through to the halls of power, there’s no question about that. What I’m interested to know from you though, is that if there is changes to CGT discounts and the tech sector is singled out as being a beneficiary of that, how are you going to manage other sectors or other businesses saying, ‘Well, what about me?’
Leigh:
Well, we’ll have a respectful conversation as we always do. These are implementation issues that arise with any serious tax change. But this is a Budget which is more ambitious than any we’ve seen in over a decade. I’m really pleased that in an environment in which we’re having a lot of shocks thrown at us as a nation, we’re not simply sitting back and taking the punches, but we’re actually looking at how we can make those generational changes.
The easiest thing in the world in politics is to sit back and do nothing. The hard work is reform, but of course that requires implementation and requires us to engage with the affected sectors as we do it.
Taylor:
Well Andrew Leigh, we certainly appreciate your time today. Thank you for joining The Business.
Leigh:
Thanks so much David.