ROSS GREENWOOD:
Welcome back to the program. This week the Federal Budget of course was clearly the absolute show case in terms of news that has come out that’s affecting business. Now clearly, some high income earners, those on $180,000 plus are going to be hit with an extra tax – that so called debt levy or the deficit levy as they have called it. Those people with family tax benefits, particularly family tax benefits B with stay home mums, will also pay a price in terms of those benefits being reduced.
But one area that I felt was not necessarily touched in the Federal Budget, in fact got some incentive, is the small business sector. If you’re paying tax bills up to five million dollars a year, and no more, then you will see your company tax rate cut from 30 per cent to 28 and a half per cent. Those with bigger tax bills will still have to pay for the paid parental leave scheme which will put their tax bills back up to around 30 per cent. But let’s go through some of what is in that budget plus other issues that are around the place with the Minister for Small Business and Competition Policy, Bruce Billson, who is with us on the line now. Thanks for your time Bruce.
MINISTER BILLSON:
G’day to you Ross and your listeners on this lovely Sunday.
ROSS GREENWOOD:
Yes indeed. Can I just go through a few bits and pieces that will affect business? Let’s say for example the Government establishing a Small Business Ombudsman to deal with disputes with the Commonwealth. Why have you done that?
MINISTER BILLSON:
Well what we were hearing from small businesses was that at times it was the Commonwealth and its agencies that were sometimes the hardest to deal with. There were often disputes around the timeliness of a payment, the way in which contracts were managed and even a near commercial issue where the Commonwealth was getting involved and seemingly displacing a small business – many felt there was nowhere to go.
Now I’m there, I’m there as the dedicated Small Business Minister in Cabinet but with these operational issues, you want someone on the spot who can go in and work across Government, across the Commonwealth agencies to help resolve those matters quickly, get the business back to business and also make sure that as departments are consulting about programs and about regulatory propositions. We want to make sure there is real field evidence to feed into that process.
Finally Ross, you shouldn’t need a PhD in constitutional feng shui to understand the way the Commonwealth organises itself to get help and assistance. We wanted a single entry point to help small businesses access the help that is available. Small business people are time poor but there is help available and we are working to help them find it in an efficient way, so that’s the role that we’ve developed and are implementing through the budget.
ROSS GREENWOOD:
Tell me about those tax cuts because I indicated that there are some parts of our community, those earning more than $180,000 with family tax benefits who clearly are having a burden imposed upon them with the benefits withdrawn or additional taxes or levies imposed upon them. In the case of the small and medium sized business area tax cuts, does that fly in the face of where people have to make the short term sacrifice for the long term gain for the nation?
MINISTER BILLSON:
Well its part of a balancing act Ross. I think everybody knows that there is a budget repair job and we are looking for everybody to contribute. But the best way out is to grow our economy to create better jobs with better incomes and better prospects for the future and we need to have the incentives there.
For those small businesses and the companies that are seeing this company tax cut the message is this is an incentive to pursue those opportunities to create more economic prosperity, that will give us the jobs and income that we need for the future. So it’s about correcting the budget but also putting those incentives in place to create more jobs and better prospects for the future. It’s partly why the PPL scheme is important to let the small business community have the best chance to recruit the best people and not to lose that opportunity because they don’t offer some of the benefits that the public servants offer or big corporates offer.
In the Restart space, there is that $10,000 incentive to employ a mature aged person over 50. For a small business their client base might be mature age, they might be on the edge thinking do I employ one more or do I not? We are saying make that decision, get the benefits of a mature aged worker in your workforce which is good for the economy, good for them and this is what the incentives are about.
ROSS GREENWOOD:
Well that’s an important thing because certainly when there are skills shortages around the place, the incentive to try and get an older worker into your workplace and get some assistance from the Government. Now it is fair to say that the Government has said, Joe Hockey has said and you have said that basically the age of entitlement is over and that means a lot of corporate welfare has been withdrawn. That’s one area where there is assistance but on the other side there are a number of areas, a number of different Government schemes are going to be culled including Commercialisation Australia, the Enterprise Solutions Program, Innovation Investment Fund and so forth. Is that going to impose any burden on business trying to get access to markets or finance?
MINISTER BILLSON:
No we are reshaping those programs. Yes there has been a cut in the total amount and corporate welfare wasn’t free from the need to repair the budget, but what we are replacing it with is a
$484 million Entrepreneurs Infrastructure Program. It’s designed to take those best elements of the programs that you’ve mentioned but then make sure they are targeted to improve the capability of small and medium enterprises. It aims to streamline those business access programs so that you are not again confused about which project or which program is best suited for your needs, and then to make sure those small businesses can actually access them. The thinking is the same around EFIC, for those exporters, making sure that is more small business friendly, so there is an injection there. In the Export Market Development Grant Program, a further boost of money targeting those smaller businesses to grow markets, to build the economy, to create more jobs and that’s the incentive and the framework that guides a lot of the budget deliberations.
ROSS GREENWOOD:
Okay two more points that people may have missed on the way through. One is the instant asset write down. That’s been cut back to its original $1000 from $6500 where it has been for the last year or so. Was that simply aligned with some other program?
MINISTER BILLSON:
Yeah that was one that the previous government said was being funded by the Mining Tax. Now we know the Mining Tax wasn’t producing anywhere near the revenues that the previous government had promised but they were trying to spend the money before it was even in the bank - so this was one of the programs. We would all like to have improved asset write off arrangements but they have got to be affordable, so what we have gone back to is that $1000 instant asset write off and then the simplified pooling arrangements so no one is missing out on their depreciation and I think that’s where the previous government got a bit ahead of itself. It was telling people that this was a tax cut. Well it wasn’t, it was actually a pull forward of a depreciation allowance. Now we have got the pooled arrangement, it’s not to the value of that instant asset write off of $1000, but again we have got to be able to pay for it and the Mining Tax wasn’t producing the revenue to do that.
ROSS GREENWOOD:
Alright, that’s okay. The final one and you might explain this to people as well, is the repeal of the company loss carry back rules – that will be effective from 1 July this year. So in other words between now and 1 July or 30 June, companies have got the chance to still get some company loss carry back. So can you explain how that works?
MINISTER BILLSON:
Yeah well your listeners will know they can carry forward losses. What we were arguing as a response to the GFC was that for businesses that have been profitable and paying company tax, if they then hit a wall because of circumstances or some events and had a loss in the subsequent year, you could say look I’ve paid company tax in the previous year, can I get some of that back as a…
ROSS GREENWOOD:
That’s not the way it’s worked for investors or for others.
MINISTER BILLSON:
Yeah and that was the logic but again, that was something that was supposed to be funded by the Mining Tax. So we’re saying, look that was a nice idea and was one that the Coalition argued for and was rejected by Labor when the GFC hit. But then all of a sudden it was put on the table as a sweetener for the Mining Tax, that being the same tax that wiped out the Entrepreneurs Tax Offset and did other things that were particularly damaging to small business. The money is not there to support that measure and that’s why it’s not being continued with at this time. Notwithstanding Ross, you needed to be in quite a specific situation to actually qualify for it in the first place.
ROSS GREENWOOD:
Well there you go. The federal Budget, what it means for small business with the Minister for Small Business and Competition, Bruce Billson. I think that gives you some flavour of what’s there but remember those tax cuts are absolutely key at this point to try and encourage business to get out there and have a crack and also to hopefully employ some people as well. Bruce Billson, great to have a chat to you.
MINISTER BILLSON:
Great to chat with you Ross and have me back – we can talk about unfair contract terms and a few other measures that are about getting the entrepreneurial environment right. Would love to come back and talk about that another time.
ROSS GREENWOOD:
We will do it very shortly, thanks Bruce.