3 September 2015

Address at the Business Armadale Breakfast, Perth


Check against delivery

Thanks Andrew. Thank you for all coming today. It does feel a little bit like my own electorate some forty to sixty kilometres out of Melbourne. That great southern hemisphere capital. You know of Santiago, Buenos Aires and Frankston. Great part of the world but not dissimilar in its challenges from here.

People used to live in this wonderful environment and value that natural eco-system and feel the quality of life as a real guiding principle in their choice of where they call home.

I guess my work takes it a little bit further and says the natural eco system is so delicious and talented there is a reason to be part of this community.

The entrepreneurial eco-system needs to be supportive and nurturing also so that entrepreneurship and people who mortgage their houses and their first born to start a business actually know this is a place where they can put those ambitions and those ideas into action.

Because one of the things that we find, and it is something that Andrew and I spoke about yesterday, was that livelihoods matter. Communities are not just dormitory areas. For a round and full life you need economic opportunities as well.

Andrew was drilling that point well into me yesterday. A lot of the messages that he was sharing with me were very much aligned with my own efforts to represent my community.

It is something Don and I shared a great deal. The life that we had in the outer suburban peri-urban area has some unique challenges and as those 35,000 individuals come here to live a great life, they will be looking for economic opportunities as part of that picture.

I just want to say, I have not had a chance to, but I miss Don. He did stalk me about coming today. My program is booked almost a year in advance but Paul* (*Business Armadale President) you and your team were very persuasive and so was Don.

You know how important your work is as a community and an organisation and I just want to say he is missed.

Something else has happened though, and we have got an outstanding individual prepared to work as hard for this community's successes as Don did. And to be honest with you, we as a nation invested heavily in Andrew, developing his leadership skills, his extraordinary capacity.

The House of Representatives is green, it is not quite khaki, but I reckon there is some extraordinary capability in you Andrew and I admire you greatly and I want to thank you for continuing your service to Australia in a different way and I wish you so well for the election.

I think you as a community would be thrilled to have Andrew as your advocate because he is incredibly bright and very strategic and as we talk about infrastructure, logistics is key to success in other fields of endeavour. And to knit together the story that you have put Paul, infrastructure, they are the arteries of enterprise - and if we are too constrained we choke off those possibilities. A good strong message. Thought you were a little bit indecisive though. I was not quite sure where you were coming from.

I suppose that knits in to what I try to do. Outside the mining areas and outside the capital cities where there are towers of banking workers, there is the economy that all of you can give a bit of a shake. Small business and family enterprises are the economy. To see enterprising men and women thriving and prospering is not only a great story for them but it adds vitality and opportunity for the community.

We see this at a national level and I suppose that is what gets me out of bed in the morning. The previous government presided over almost half a million jobs lost in small business across the country. You did not read much about them because usually they are not union jobs. There is no protest going on.

They might be a business around the corner that has just decided to quietly discontinue. Or it might be a small business where someone has left and they have just not re-employed. And we saw this happening and we thought - this cannot be the trajectory for our future economy because we actually need to reverse the habit. We actually need the agility and the entrepreneurship, the innovators, the disruptors that the enterprising men and women with a new idea or a new way to delight customers to actually grow economic opportunities and welcome our economy.

And we were seeing it heading off in the wrong direction which is why in the Abbott Government I am actually in Cabinet. I am one of the nineteen people that is in the board room of the Commonwealth of Australia. So whenever there is any discussions, even around NBN. I can say hang on there is not much point building NBN over the top of existing broadband capability in suburban neighbourhoods because that is not going to improve anything.

Go to the industrial and commercial areas where their broadband capability is not what is needed to enable those businesses to thrive.

So we were trying to turn around the mother ship. I suppose it reminds me of that Irish joke in Dublin, the tourist is down by the river and says to a local 'I would like to go [inaudible]' and the local says 'well I would not start from here if I was you'.

Now the problem is the tourist is where the tourist is. You would have to start from where you find yourself and that is one of the challenges we got with NBN Co. To sort of shift its focus.

Rather than from a view that was born out of engineering, convenience and sequencing which might see overbuilding other broadband capability and leaving under service and unserviced areas down the track – We are saying 'no go to those areas that are unserviced and underserviced – there are customers there ready to pay to engage in the economy'.

And why is this important for small businesses? Four out of five Australian consumers are now making an initial inquiry on one of these. They might not conclude the transaction but they are wondering whether there is someone who can detail my car in Armadale – they will check it out. Car detail Armadale.

Of those four out of five, those eyeballs then go to that internet presence, but half of Australia's small businesses are invisible on the internet.

And you think how is that helping? For me it is whether that capability is in reach or not. To open the door to the customers that are there looking for what they offer.

To think further about what the internet also enables. It enables a business based here in Armadale to service a catchment far wider than it may traditionally.

It enables a business to reach into North Asia. To be able to delight people with their services, the experiences and the lifestyle and use that to push off from fine food and wine and visitor experiences. These are the stories of our future economy and it will be the men and women of small business that attract them.

What we have been trying to do is make sure you have the best opportunity to thrive and prosper. It is not my gift to make every one of your businesses successful.

I will share a secret with you. When I pay my mortgage, half of it is for my enterprise. We lost a lot of money. Loved every minute of it. The pillow talk of cash flow at night when you get home. Living the dream. Spending every waking moment wondering what else you can do to delight customers in a highly discretionary area of the market.

We had a gallery. A fine Australian craft retail outlet and I can tell you Colin Healey's blown glass is world class but it is not the first thing you need to buy each month. Highly discretionary purchase. To cut a very long story short, I still remember to this day how much rent we paid: $4667. Because you are so invested in your business, it is so personal.

When we shut up and we decided we are not going to keep pouring more revenue into more red ink, letting our team know that it was over was a tough day. You cannot outsource that to a human resource department. In a small business it is you. You cannot get the compliance department to do the BAS. That is Sunday night, you go to cuddle up with your bride and she says sweetheart the BAS is due. And you think ok, that puts my focus in a different direction.

And Kate says 'I have really helped this month'. I said 'thank you darling what have you done?' And she said 'I am sure all the paperwork is either in the shoebox, it is at the front hall stand and I have put some in the glove box in the car'. Great we are all good to go.

What I am sharing with you I am suggesting is a sense that I have walked in your shoes and I admire you greatly for what you do. And I admire the fact that there are enterprising men and women prepared to take those risks. To create the livelihood opportunities in communities like Armadale, if it was not you stepping up who would it be.

When you think about those that are engaged in trade and commerce backing the local footy team involving parents and citizens at the local school – who is it? It is the small business community. Really embedded and inculcated in the very vitality and vibrancy of your community. That deserves enormous respect.

It also reminds us though that in terms of the future, we need more of that entrepreneurship, not less. With that half a million jobs lost under the previous government; with fewer small businesses actually employing people than was the case when they were elected; with the share of the private sector workforce made possible by all of you going from 52% to 43% - that is a trajectory that is not healthy and we needed to turn it around and that is what we are doing.

What is our strategy? Put someone who loves and lives and breathes and has your interest running through his veins, that is me, in the key decision making forum of our country.

Every decision we make small business is top of mind, front and centre of our deliberations because you deserve that respect and responsiveness from government.

We also want to get the obstacles out of the road. I can't make all your businesses successful but I can get some of the headwinds out of the road.

We have become world champion regulators. When the Howard Government left office, the World Economic Forum rated us at 68th in the world – in terms of compliance cost and regulation burden. The last election we were 128th in the world, only 127 economies less gummed up from regulation and compliance cost than our own.

If you go back to that example I was talking about earlier where an Armidale business is trying to contest an opportunity delight a consumer who wants macadamia nuts coming out of your region into Korea or something like that; that opportunity is not reserved for us, we need to win it; we need to win those opportunities.

To win them we should not impede our own prospects of success by putting excessive led in our saddle bags to make us slower, less agile, less able to respond, less nimble to meeting those customer demands than 127 other economies around the world.

This is a contest, and unlike footy you don't get priority picks for being that bad, you just miss out.

Getting those red tape and regulatory burdens out of the road is why we can make that red tape reduction commitment. My invitation to you is that if you see in your working life red tape and regulatory burdens that cost you time and money and serve no good purpose, please tell me. We made a billion dollar reduction commitment; we are at two and a half billion and as the song goes we have only just begun. Because too much of our economy is consumed with that stuff that adds up.

This is not about getting rid of regulation, it is about right sizing it and making sure it is justified.

I have had people want me to regulate the re-sale of tickets at concerts, if you have a Britney Spears concert ticket and you can't go and you flog your ticket; I have had people say 'go and regulate that, it is a secondary market'. I say 'hang on a minute, how big your problem we are trying to solve here? What harm is it we are trying to mitigate? What is the downside of letting someone who can't go to a concert go and sell the ticket to someone who can?'

This is just an example where you can get invited to regulate and on any cost benefit analysis it is a dumb idea.

In the disciplines we apply now, if there is a call for regulation we have to work out whether the problem solved would justifies that intervention. Whether there are any other actions we can take to solve the problem and then if we do then still conclude that a regulation is required I need to find offsets somewhere else, so the stock of regulation doesn't grow whilst we reduce the cost.

This is our approach to improve our capacity to win those new opportunities that are at the heart of growth in our economy. That is what the trade agreements are about.

I learnt the lesson which you all know well. It doesn't help having the world's greatest business plan, my masters of business and leadership, my bachelor of business, and my grad dip of managements, all of my work – my business plan was the spunkiest thing the bank had ever seen.

They said to me 'Bruce we love your business plan but we love your house more'.

We will give you the money if you give us the house. But I learnt something else, and that is these is no substitute for customers. My business plan didn't bring me any revenue but it made it clear what our ambitions were and how we would pursue them, but we need customers.

We supplied free trade agreements, hundreds of millions of prospective customers that we are able to delight and grow our economy and jobs through meeting that market and growing demand.

Regulation impedes us: Get it right we have got an opportunity to compete more.

Getting our regulators to understand what life in a small business is like. So that their engagement is right sized for small business.

We now benchmark the performance of our regulators: How responsive and understanding are they? Why is it that some of the rules that government passes are geared for the biggest business in the country when 96% of those responding to them are small?

Getting our own work, our second strategy, first getting the headwinds and obstacles out of the way, second getting our own act together with our own policies and approach.

Aligning all the work of government to be supportive of small business, the single business entry point, having the Small Business and Family Enterprise Ombudsman in place; having someone on your side working with you as an ally and advocate day in day out.

Getting the entrepreneurial ecosystem right so it is fair for big and small businesses; that is what the franchising code talks about.

Unfair contract terms protections. You know when big business gives you a contract on a take it or leave it term and you don't have a whole lot of choice but in it there is a clause which says you are signing onto an agreement but we actually reserve the right to change everything.

Well what is fair about that?

Getting the right to right to repair for people to take their vehicle to the repairer they choose.

The food and grocery code so that the suppliers to our major supermarkets are treated fairly and in a transparent way with respect.

Even the competition reforms you might have seen there is some commentary about my efforts to make sure our laws support efficient businesses big and small to have the opportunity to thrive in our economy.

It is not a complicated idea.

I don't think it is reasonable that dominant, incumbent businesses can fortify their interests by excluding other participants from competing in the market place: That is in no one's interests.

We want innovation, the disruptors, the new business models, the entrepreneurs; they should have every opportunity to contest. Not guaranteed at winning, no one can give them that.

But where a dominant business can exclude other participants from their chance to meet customer needs: That impedes innovation, it is a block to investment, it is unhealthy for the growth in our economy and it is bad for jobs and it is bad for consumers.

The last part of the picture though is incentive and reward.

We need to celebrate profit.

I don't know why some people think profit is a dirty word. It is an essential precondition for people to be inclined to employ somebody. If not the existence of profit some prospect of it.

It gives meaning and momentum to economic decisions to invest, employ, to grow, to take a chance to do all the things we need to do in our nation to make sure that we can achieve our best as a country and everyone else in terms of their own economic opportunities can be their best selves as well.

That is what the budget package is about. Five and a half billion dollars - the largest small business budget package in our nation's history.

The small business company tax rate down to now where it hasn't been since 1967. A recognition that in communities like Armadale, one in three small business are incorporated.

The other two thirds are sole traders, Tony's tradies, operating as partnerships or trusts.

Why can't Labor realise that two thirds of small businesses aren't companies?

That is why we have brought that incentive in for discount of up to five percent for those business owners up to a thousand dollars.

The asset right of measure; have any of you used the $20,000 instant asset write off?

Really attractive measure that said to small business people, 'you know what is needed to build the capacity of your business, you make the decision. You have to pay for it. So choose wisely, we will just get those resources back to you quicker though being able to expense them in the year that you made that purchase.'

That was all about saying again 'what is the catalyst to turn an idea or an ambition into economic action and investment?' We have seen a really positive response right across the economy from those measures.

We still have work to do.

Crowd source equity funding we can talk about. Getting employee share schemes right- we have fixed that from 2009 because there is no better way of aligning the goals of the business with the goals of the team then giving them a stake in that enterprise. Particularly for start-ups and growth businesses where cash is scarce, you might not be able to pay the top talent top dollar so they can have wagu S.T.E.A.K for dinner every night.

But you can give them a stake in the business and say the noodles may be not quite what you want now but if things go well we will all share in our success.

That is the work I am doing. I get out of bed every day with one simple ambition and that is to work as hard for your success as you do.

Because I have been there and I know it is tough.

We need to celebrate entrepreneurship.

We need recognition for the heroes of our economy and that is courageous enterprising men and women that are the backbone of the Armadale economy and the engine room of the national economy. But you are also the best hope for our future.

We can't rest on our laurels with the economy we had.

It is a good strong platform to build from. As we think about the future, there is a new contest out there. There is a new economy- the agile, the innovative, the disruptive, the new thoughts of the entrepreneurs like you in this room; and increasingly women, the growth of women's businesses is twice the rate of blokes.

That is a great story, it is the story of ambition, it is the story of Armadale, it is the story of all these communities and economies across our country where enterprising men and women of small business and family enterprises are the economy.

I reckon that is something to celebrate. When we are the best place to start and grow a small business, my work will be done.

We are not there yet but we are having a red hot crack at it.