PRESENTER:
We’re joined this morning by Minister for Small Business and the Member for Riverina, Michael McCormack,
Good morning Michael McCormack…
MICHAEL McCORMACK:
Good morning Julie.
PRESENTER:
Thank you for joining us this morning.
McCORMACK:
It’s a pleasure.
PRESENTER:
Before we talk more about what impact it will have on small businesses in terms of arriving at this $50 million turnover decision, there was a lot of wrangling and it was quite an interesting ride if you were watching what was happening in the Senate. Obviously you were watching on with interest?
McCORMACK:
Politics is the art of negotiation and sometimes you have to give a little to get a lot and I’m sure the 18,328 small businesses in the Riverina and Central West, many in the listening area will certainly know what we’ve done is a good thing for them.
What the Parliament has passed is going to be a real burn for their business. It will enable them to hire more staff and it will allow them to have more money to invest in their business. Because the tax rate is going to come down to 27 and a half cents and for those businesses with under $10 million in turn over, we know that just because you might be between $2 million and $10 million in turnover doesn’t mean that’s what you’re earning as a small business.
We also know for those businesses when they do get a bit of extra money, they do reinvest that money into their business. They put on that young Australian or perhaps an older Australian.
These are the small businesses, the farmers, who back themselves, who take a risk; they’re doing it everyday, each and every day for and on behalf of the nation.
I’m really pleased as the Small Business Minister that we can now get out there and really sell the message, because it’s a good message and one that will be very much welcome by the small businesses of the Riverine and Central West.
PRESENTER:
In terms of the economic modelling, we’ve heard the Treasurer, Scott Morrison just saying that he’s not going to go into detail about the economic modelling, is there a concern that this isn’t going to stack up?
McCORMACK:
I hear from people like Peter Strong, the CEO of COSBOA (Council of Small Business of Australia), who says that this will create many many more jobs, other people such as Stephen Cartwright from the NSW Business Chamber who also says the benefits that will flow from the tax cuts and all the other associated things that have happened lately are going to help small business, they’re going to help small business to be able to hire more people and help small business open for longer hours and this is going to be good for the economy.
PRESENTER:
Do you agree with Treasurer Scott Morrisons’ sentiment that the average person in the pub doesn’t care less about economic modelling?
McCORMACK:
The average person in the pub just wants more money in their pocket. The average person in the pub just wants lower cost of living and that’s what the Coalition is endeavouring to do with every one of its economic policies. These sorts of policy decisions and these sorts of outcomes passed by the Parliament last Friday, yes, they pass the pub test because everyone knows someone who works in a small business if they don’t work in one themselves.
Small businesses make up 97% of Australian business and this tax cut enables that percentage to grow higher. This tax cut puts more money in people’s pockets and grows the economy. It has to be good for the nation and certainly with the trade agreements we’ve been able to broker with South Korea, China and Japan there are marvellous opportunities for agriculture and services, everything that is produced in the Riverina and Central West of NSW. They should take advantage of these tax cuts and take advantage of these trade agreements and take advantage of the economic policies that we are putting in place.
So yes, it does pass the pub test and certainly I’ve been into a few pubs and been talking about this, and even on Monday night when I was in a pub, the owner, as he was pouring me a nice little orange juice said to me this is great and will enable me to grow my business.
So it actually works and I’m really pleased were going to be able to get on board with what we said we’d do, passing policy we announced in the last budget. We’re getting on with the job and helping small business.
PRESENTER:
It is different to what you originally said you were going to do, what parts of the Government’s original plan has had to change to achieve the deal you have with the Nick Xenophon team, as not everyone has been following along…
McCORMACK:
Well what has happened is the limit to which the tax cut will apply over the 10 Year Enterprise Tax Plan at the moment is $50 million, so the limit is $50 million and we wanted to make it for all businesses so we have had to make that little concession. But that’s ok, as I said politics is the art of negotiation and even at $50 million, ultimately when you add up the unincorporated businesses that actually makes up a number bigger than 6.5 million Australians employed by those businesses which this tax cut will ultimately apply. In the short term its 5.5 million, so that’s a lot of Australians working for small business that will benefit from these tax cuts.
PRESENTER:
So you’ve talked a little about the benefits, I guess if we were to take an average business in the Central West, what are you expecting this will actually mean for them when these tax changes come into effect, and I should ask you , when will they actually come into effect?
McCORMACK:
They will be backdated to 1 July last year, as they were actually part of the budget process in May last year. So they will apply straight away and they will also enable those businesses between $2 million and $10 million to take advantage of the instant asset write off. Before that was only for companies under $2 million, so for those companies with a turnover of up to $10 million they will be able to take advantage of the $20,000 instant asset write off, which enables them to buy things. I walked into Esme’s, a café in Forbes, not that long ago and the owner there told me that she’d bought an industrial dishwasher; she then showed me the stainless steel servery. These had helped to boost her business beyond what she had originally expected. To the point that she was thinking of selling her business, then she decided she would retain her business because of the extra custom (these purchases) it had produced because of the fact she was able to take advantage of the instant asset write off. It was a boost for her business. So you can just imagine the boost for businesses between $2 million and $10 million that this will create.
PRESENTER:
You’re out and about in the community today, in Forbes and Parkes, are you going to be speaking with small businesses in those towns to find out what they make of these changes?
McCORMACK:
Absolutely! Look I go into small businesses every day of the week and I love talking with small business owners and operators they’re the ones taking a risk and they’re the ones the Government is backing. So as well as opening the extension of the Forbes Medical Centre and a Water Recycling Treatment Plant in Parkes, I will also be visiting schools and small business.
I’m visiting schools as part of my ANZAC day writing competition and handing out some awards and also very much looking forward to dropping into small businesses around the region. Talking with them about what they think about the tax cuts and also listening to their issues and concerns and what we can do for them further on their behalf as a Government.
PRESENTER:
Thanks for joining us this morning.
McCORMACK:
You’re welcome Julie anytime.
PRESENTER:
Michael McCormack , Minister for Small Business and Member for Riverina.