HELEN DALLEY:
After a massive tax discussion paper, a competition policy review report coming on the heels of the Intergenerational Report, Australians could be forgiven for being ‘reviewed-out’. Too many options, not enough action perhaps? But what looks to be central to next month’s budget is a small business package, along with the Government’s much changed child-care package.
The Government is planning a tax cut for small businesses and as widely reported in the media Small Business Minister Bruce Billson may also have a few other goodies in the package.
Minister Bruce Billson joins me now from our Melbourne studio.
Minister thanks for joining me on this holiday Easter Monday.
MINISTER BILLSON:
Good evening. I hope your Easter was a good one and likewise for your viewers Helen.
HELEN DALLEY:
Thank you. Now let’s start with the small business package – how far away is it and will it contain a tax cut and of what size?
MINISTER BILLSON:
The Prime Minister has already made it clear in his speech to the National Press Club that a 1.5 per cent cut to the small business company tax rate is the starting point. As you introduced this segment with, we have been working on other measures too, to energise enterprise.
Only one in three of Australian small businesses are incorporated, so we need to be mindful of those that are structured in different ways.
We are also keen not only to see improved incentive and reward for the risk taking that is so important amongst the small business community but also what can we do to encourage investment, productivity improvement and continue our work to remove some of the red tape and compliance obstacles that land most heavily on smaller enterprises.
HELEN DALLEY:
Minister, how does a 1.5 per cent tax cut really encourage small businesses to start up? Or are you saying it will encourage jobs?
I mean, wouldn’t getting rid of payroll tax be much better, that’s one they have long complained about.
MINISTER BILLSON:
There is a range of possible measures Helen and what we need to be mindful of is - what is our capacity to sustainably fund a range of initiatives, that combined, will energise enterprise.
We have had 519,000 jobs lost in small business under the previous Labor Rudd Gillard Rudd administration. We need to recover those jobs. We need to see small businesses recognising that there is reward and incentive for their enterprise.
To make sure that we are encouraging improvements in productivity and also making sure that we are getting obstacles and impediments out of the road.
There is no single silver bullet that is the answer to all the variety of different enterprises that operate in our economy.
What we are clear on Helen though is we really are looking to small businesses and family enterprises to not only be the engine room of the economy today, but the real drivers of opportunity and productivity improvement and higher incomes for our nation into the future, and that is our focus.
HELEN DALLEY:
Right, well there has been a bit of talk that 1.5 per cent is not enough off their tax. I mean I know everybody wants much lower taxes, but how low would you take tax for small business? There has been a discussion paper out saying it should be way down below 10 per cent?
MINISTER BILLSON:
Well there is all sorts of ambitions that are around in our world and what we need to be realistic about is…
HELEN DALLEY:
Is that one of yours?
MINISTER BILLSON:
I would like to see our taxes as simple and as minimal and as effective as they can be, but it is not within my gift to transform our entire tax system overnight.
What we can do though is take sensible and affordable steps now in the direction that we are working toward, to let the small business community know and to give them practical encouragement and incentives to continue to recover those jobs lost under the previous Labor Government. And to really encourage them to continue to take risks, to mortgage their homes, to want nothing more than a fair go while they are having a go, and we want to support that.
HELEN DALLEY:
But what will be in it that will make them do that? What will be in it?
MINISTER BILLSON:
Helen, I know this is prime time viewing but I am not going to announce that tonight. The broad spread will be recognising that incentive is important -that we want to see investment and productivity improvements as well and that we have an ongoing task around red tape and compliance cost reduction. Some of that involves targeted investment. That is the spread of the package that I have been working on and working with my colleagues to develop.
HELEN DALLEY:
Alright, I want to get to a few other issues. Do you for instance support the idea floated last week that the Government will impose a tax on bank deposits which the CBA has at least said it could pass onto their customers, and at a time when interest rates on bank deposits are so low, wouldn’t that mean a double whammy for people relying on bank deposits for their income?
MINISTER BILLSON:
I will not give you a blow by blow commentary on some of the pre-budget speculation and I do not think you would seriously expect me to…
HELEN DALLEY:
No but do you support that sort of idea?
MINISTER BILLSON:
What I understand it is the Australian tax payer – through the Government - guarantee a generous guarantee that is available for bank depositors to make sure that their savings are protected – that if there is a call made on the tax payer, through the Government, that we need to fund a pay-out to preserve those deposits in the event of a bank failure.
Now, there is a range of ways of financing that. The previous Labor administration pointed to… this is what you are talking about as being a way of generating a pool of funds that could be ready and standing by in the event that that deposit protection that the Government offers – a generous deposit protection that is highly valued by bank depositors – is called upon, that we have some capacity to fund it. We have got a range of different possibilities, but that was one that was brought forward.
HELEN DALLEY:
Okay, would you be worried if the banks passed it onto their customers so it in fact became a tax on the customers?
MINISTER BILLSON:
I would be surprised if the banks did that to be honest with you.
Our banks are very profitable and there is only one thing worse than a profitable bank, it is one that is in a loss situation. So there is nothing wrong with banks being profitable, but they are significantly profitable and their position is buttered by this deposit guarantee.
I know in some areas of the banking system I would actually like to see more competition, particularly around small business finance. I know the spread, the margin above the cash rate, to what small businesses are paying has actually gone up quite substantially over recent years.
I think there is plenty of capacity there for the banks to recognise that that deposit guarantee is in their interest and that it is reasonable for them to make a contribution towards its availability.
HELEN DALLEY:
Bruce Billson, the GST came up in the tax discussion paper but then the idea of broadening it, widening it, putting the rate up seems to be kyboshed by your Government?
MINISTER BILLSON:
I am not sure that is a fair characterisation.
I think what the tax discussion paper is doing is inviting people to turn their minds to what we need as an effective tax system for our future. One that is supportive of our national objectives. One that also raises the revenue that is needed for essential works and services and the activities of Government.
Now, we have resisted the demands from some not to include the GST - as I think the third largest revenue raiser of the tax tool kit in this discussion - but it needs to be in the discussion. The Prime Minister is absolutely right – any change in that regard needs the unanimous support of states and territories.
It is something that frankly needs bipartisan support to be implemented and we are not planning to do anything of that kind before the next election. Certainly not in the absence, I mean if there is not support, not a bipartisan position, if the states and territories cannot even agree on a change then there is no prospect of having a sensible conversation with the public about what change might be necessary.
So I do not quite see it in the way that you saw it. I think it is a realistic and pragmatic assessment of what the capacity is to implement change, if and when there is a decision made that change is justified.
HELEN DALLEY:
Alright, but perhaps more politically able change is that you are now – there were weekend reports – that you are looking at putting the GST on the smaller online purchases from overseas.
Now this was an idea Gerry Harvey came up with, he was calling for it two or three years ago and he was howled down for it.
Is that idea just to save you any domestic political pain on the broader issues around GST?
MINISTER BILLSON:
I have had a fair bit to say about this over the years. Maybe not as high profile as Gerry Harvey Helen, but this aspect is a tax anomaly in the current GST arrangement; where goods imported into Australia under $1,000 are outside the tax take for GST purposes.
HELEN DALLEY:
Right so there’s no GST on them.
MINISTER BILLSON:
That is right, so that is under $1,000. And that is a historical setting that reflected where the more detailed excise regime kicks in, so it is at a historical precedent.
But now as the economy changes and you are seeing a lot of online transactions and Boeing after Boeing of bringing goods into our country bought online from overseas that it is a reasonable conversation to have, that it is a tax anomaly that we may be in a position to address, again, if we can get the states and territories on board. This is the discipline that sits around the GST.
HELEN DALLEY:
Right, so you still have to get all the states and territories agreement on this just to even put the GST on purchases under $1,000?
MINISTER BILLSON:
That is right - because what happens is the GST revenue goes to all the states and territories…
HELEN DALLEY:
I just didn’t realise on that small amount…
MINISTER BILLSON:
…but the costs involved in collecting it and the systems that need to be put in place, well they are obviously a cost that the states and territories need to agree to that is then deducted from the revenue that goes to the states and territories.
Now, we have had a number of discussions through the Finance and Treasury Ministerial Council that my colleague and friend Treasurer Joe Hockey chairs. There is lots of recognition that this is an anomaly.
At this stage the states and territories have not agreed on what a response should be - how to bring about change and what that would look like. So there is still a need to get the agreement of the states and territories for even a change that tackles this fairly obvious anomaly in most people’s eyes.
HELEN DALLEY:
Minister Billson, I do want to get through a few issues so we’ll move on, there is much to cover.
MINISTER BILLSON:
We are covering a bit aren’t we Helen?
HELEN DALLEY:
We are; much debate around tightening the pension assets test, reducing the threshold from the current $1.1 million down to $800,000 – now at the moment that is on top of your family home. ACOSS, who put that plan up, has said the family home should still be excluded. Do you agree with that?
MINISTER BILLSON:
That is my instinct, but again let us not get drawn into the detail of speculation Helen.
My colleagues are having these discussions. I know Minister Morrison has been in discussions with ACOSS.
There is an issue that we need to confront as a nation and that is the sustainability and affordability of income support arrangements into the future.
The Intergenerational Report recognised that pension costs alone will be around some 3.6 – 3.7 per cent of our entire turnover as a country by the middle of this century, or of that order. And we have got at the moment five people in the workforce for every one retiree – that becomes 2.7 by the middle of the century.
So we need to make sure that that income support system is targeted at those that need it. That is what fairness and reasonableness is about.
I know ACOSS has been making a contribution in that area and so have others and we are very interested in that kind of input.
HELEN DALLEY:
But the family home is still untouchable?
MINISTER BILLSON:
I am not going to make any judgements and offer any calls, even though it is Easter Monday, about that work. The point is we need to make sure that the income support system is targeting those that need it and that it is sustainable and can be depended upon into the future and that is the focus of the deliberations that my colleague Scott Morrison is focusing his efforts on.
HELEN DALLEY:
Superannuation too seems to be under fire with talk about tax concessions being too generous. Now, would you think that it would be fair enough for the public to be very confused about what might change and when? It has been put out there in just really the last few weeks and months, it leaves the public with perhaps the nasty feeling that their superannuation is going to be touched again.
MINISTER BILLSON:
No I do not think that is right either Helen. I know lots of people have had plenty of things to say about it, but let us not get confused between advocacy groups making their point known and somehow that amounting to the Government’s position.
The Government’s position has been very clear: we have said there will be no adverse, unexpected, unannounced changes to superannuation before the next election. We have made that point over and over again.
HELEN DALLEY:
You did promise a no surprises Government back a year ago, then we had a year of the Budget hardship for many people so that is not necessarily so credible.
MINISTER BILLSON:
That is your call Helen, all I can say is that that is the position of the Government. It has been a consistent position.
I know a lot of interest groups have been making their views known as part of the broader tax discussion paper and even more broadly on the budget repair task, mindful that we have already halved the debt trajectory that we have inherited from Labor, but there is still a need to be very prudent and thoughtful about our expenditures and our income profile into the future.
HELEN DALLEY:
Alright, the competition review. Are you really prepared to take on the pharmacists’ lobby, the taxi lobby? I mean they are both very powerful and are you prepared to break competition open in their industries?
MINISTER BILLSON:
Well there are 56 recommendations in the Harper Review and you have touched on two of them.
Of that 56 they are all aimed at ensuring that our economy has the right settings to support productivity, improvements, competitiveness that builds new enterprises and new opportunities and removes out some of the roadblocks that stand in the way of our nation and our economy.
HELEN DALLEY:
I just want to bring you to the point it does come down to having to take on very powerful forces; taxis and pharmacies are very powerful and so are two dominant supermarkets, who like the flexible trading hours, they like being able to maybe sell prescription drugs but they will fight against the new effects test.
MINISTER BILLSON:
Of course they will and that is what has characterised competition policy debates for the last 20 years. There are very strong, vested interests that like certain arrangements just the way they are now. But in many instances they might not be serving the National interest or might be coming at the expense of what consumers and the broader economy is looking for.
That is why we have done exactly what we promised we would do – have an independent, objective, analytical examination of competition policy, the laws, the institutional arrangements and Professor Harper and his panel handed me their very comprehensive report last week.
Now we will be working through those recommendations – all 56 of them – over the next eight week period I will be consulting. I know there is lots of vested interest there Helen. They have been making their position known very strongly for nearly a generation.
Some of those views are not very surprising, they are quite consistent and quite predictable but we still have the task of making sure efficient businesses, big and small, can thrive in our economy and generate the income and employer and economic opportunities we need for the future.
HELEN DALLEY:
Alright I do want to ask you about another issue that I know is a big one but I’m going to ask you to be concise. Crowdfunding, now, you have talked about legislation around crowdfunding, you have indicated you think it is necessary. Why? What are the problems?
MINISTER BILLSON:
At the moment the crowdfunding model does not allow contributors to take an equity position in the businesses that they are funding.
You and I might have a great idea for a newsletter or a newspaper; we can get advanced subscriptions that once we get to a certain point can crowd fund that service or that enterprise, but if you or I wanted to take a stake in equity position in the business we current cannot do that.
Under the current corporation laws there are restrictions on how we would make that offer available, how many people can participate. That framework needs to be put in place so that investors can get behind these in most cases start-up businesses, take an equity position but not see themselves having to navigate a listed market prospectus and all of those requirements that are completely over the top for the funding that has been sought.
HELEN DALLEY:
Alright and just finally, should authorities prosecute former Northern Territory Labor President Matthew Gardiner for becoming, as we understand, a foreign fighter?
MINISTER BILLSON:
Now that is a law enforcement matter. The Federal Police have had an interview with a Darwin-based man that relates to the circumstances that you are describing. The AFP have also indicated that they have executed a search warrant. It is now a law enforcement matter.
I will leave that to the law enforcement agencies to deal with under the Commonwealth law and they can carry out their work unimpeded by a politician offering a running commentary on that work.
HELEN DALLEY:
Alright, they have let him go though so you didn’t answer the question whether you think he should be prosecuted?
MINISTER BILLSON:
And that is because I am not in possession of all the facts Helen and you being a thoughtful person like me you would not want me to speculate on topics. I do not have all the facts.
The law enforcement agencies are doing their work and they should be free to do their work in accordance with the law.
HELEN DALLEY:
Alright Minister Bruce Billson, appreciate your time, thanks for joining us.
MINISTER BILLSON:
Thanks Helen.