20 June 2014

Interview with Stuart Bocking, 2UE

Note
SUBJECTS: G20, small business

This is a transcript of the Hon Bruce Billson's interview with Stuart Bocking on 2UE. The main topics discussed were the G20 and small business.

STUART BOCKING:

This morning we are joined by Bruce Billson, the Minister for Small Business who is at the G20 in Melbourne. Thanks for joining us this morning Bruce, what’s going on down there today?

MINISTER BILLSON:

Good morning to you and your listeners. Today

More guidance on starting and growing a business, engaging with new technology and frankly some delicious trade opportunities just in our neighbourhood where we can export our goods and services but that can be quite overwhelming and daunting for someone who hasn’t done it before. We are looking at what we can do to support small businesses to get into those new markets.

STUART BOCKING:

It’s incredible as well when you look at the size of small and medium enterprises in this country with around 68 per cent of all employment and about 56 percent of output in the private sector. It’s a significant group isn’t it?

MINISTER BILLSON:

It’s a huge contributor and I guess today one of its subtle messages, if I could put it that way, is to reach out to the broader community that might not be deeply engaged with small business men and women, to say this is a fabulously crucial group within our economy and within our community, providing millions of livelihood opportunities for our citizens but really generating wealth. What we are looking for is that kind of economic drive that the innovative engine room of the economy that is small business, plays here in our country but also in those G20 countries and what we can do to get obstacles out of the road, remove headwinds, energise enterprise and make sure that this important part of our community and economy gets the best opportunities to succeed. Through that, we will all benefit Stuart.

STUART BOCKING:

No question about that. Obviously one of those is the removal of the carbon tax which I know steps are well underway to do. We also know that for larger incorporated businesses there will be this 1.5 per cent tax cut, some of the larger firms will then pay the 1.5 per cent levy as part of the paid parental leave scheme. But for some of those smaller businesses which aren’t incorporated, what is in it for them given that they won’t be the beneficiaries of that tax reduction?

MINISTER BILLSON:

Well you are quite right but there are about one third of Australian small businesses that are actually structured as companies and will be able to benefit…

STUART BOCKING:

But effectively we’ve got two thirds of what is a large part of the base of employment and output that won’t benefit from those cuts that are coming into place.

MINISTER BILLSON:

And that’s where those other cost pressures in their businesses. You mentioned the carbon tax, the burden of red tape and regulation, the opportunity to be more profitable – that’s what we are working on as well as things like pausing the increase in the uptake in superannuation contributions so that they can get their head a little above water and keep going. But more broadly, just making sure that there are the opportunities in the economy for them to grow. We’ve got an important tax discussion that is starting in the coming weeks that is going to involve all in the community and one of the issues you’ve touched on, is the different way in which you structure your business has a different impact in terms of the tax regime. That is something that is also a discussion that we are having here internationally and are considering if it is better for smaller businesses to shape themselves as kind of mini corporations, because that is better for tax and reporting purposes. Or, as many tell me Stuart, the reporting and obligations that go along with that are overwhelming and that’s why some are describing a different kind of entity to flatten out some of those differences in tax treatment that you’ve alluded to in your question.

STUART BOCKING:

And I suppose one of the difficulties is that within the group, small to medium size enterprises, you are talking about a whole different heap of organisations with differing rates of revenue, differing sizes of profits. It may suit some sole traders to continue to pay tax under the PAYG system, it may suit others if suddenly they were incorporated and have the benefit of what could work out to be a lower average marginal tax rate.

MINISTER BILLSON:

Yeah and that’s a good discussion that we are having here and one that I know in government I am working with our Treasury officials on. Just to see if there are some disadvantages faced by some small businesses that aren’t structured as companies, where they have a different rate and in some cases a different regime of tax, where it kicks in, how it is applied, when it is liable to be paid, what are legitimate discounts and deductions, ideas around such as the bcorp or closely held organsiations that lets a small business pursue those enterprise objectives without having their personal assets compromised if things don’t go well.

Then there is the broader discussion, that I am sure your listeners would know about and that is for many small businesses to get access to finance they have to mortgage their house and their first born effectively, and the separation between private assets and business assets is getting blurred by other influences in the economy. But this is part of the discussion – what can we do globally that puts in place responsible structures that support and encourage enterprise, aren’t overbearing and overreaching in terms of their compliance obligations but gives us a strong foundation to energise enterprise and secure this growth that we need in the engine room of our economy.

STUART BOCKING:

Well certainly the raising of capital and other issues. So there is no shortage of issues for you to go on with today. I appreciate your time and wish you well.

MINISTER BILLSON:

Good to talk and good to share some thoughts with your listeners.

STUART BOCKING:

We’ll catch up again. Bruce Billson who is the Minister for Small Business and that G20 conference is underway today as we speak in Melbourne.