HANSARD EXTRACT
|
Tax Laws Amendment (2006 Measures No.5) Bill 2006: Second
Reading |
| 13 September 2006 |
Mr HAYES
(Werriwa) (11.03 a.m.)—I
rise today to support the provisions of the
Tax Laws Amendment (2006 Measures No. 5) Bill
2006, but I have to say that my support for that bill is
not unqualified. This bill before us today deals with three aspects
of tax law.
The first is the fringe benefit tax changes to
implement some of the recommendations of the report of the Taskforce
on Reducing the Regulatory Burden on Business: Rethinking
regulation. The second is the GST car and pharmaceutical
concession from the establishment of the military specific
compensation scheme. The third is the removal of the part-year
tax-free threshold for taxpayers who have ceased to be full-time
students. These changes introduced under this bill will reduce the
complexity of the system, and it can be reasonably expected that
such a reduction will result in a reduction in compliance costs.
Fringe benefit tax changes included in this
bill are broadly targeted at small business. I am a long-term
supporter of improving the lot of people in small business and
reducing their compliance costs. I know only too well what it is
like to try to manage a small business, meet the regulatory
requirements and try to find enough time to spend with your family,
away from your business. It is difficult; it is a balancing act, and
it is one that many small business owners find difficult to manage
successfully—or at least manage to their satisfaction. This issue
was raised with me recently, when I took part in Pollies for Small
Business Week. Pollies for Small Business Week is an excellent
opportunity not just to talk with the owners of small businesses
about their specific needs but also to get involved, get behind a
counter and, for a time, stand in the shoes of those on the front of
running small businesses.
I had the opportunity to spend some time with
Sam
Cavallaro at Cavallaros Sweet Indulgence—which, I hasten to add, was
a gourmet eatery—in Liverpool and also sell newspapers and
stationery items with Chris Redondo at Ingleburn Newsagency, which
is directly across the road from my office in Ingleburn. These are
quite different businesses—one is a gourmet eatery and the other is
selling newspapers—but they had some very similar themes.
Both small business owners expressed to me that
the changing nature of their business environment had made their
businesses tougher. By this they did not mean that their business
was suffering a downturn as a result of a drop-off in the economic
climate. Rather, competition was making things more difficult. Both
men have been in business for quite some time, and both indicated to
me that business was getting harder, not easier, in their line of
work. Margins are thinner, competition is greater and cash flow
management is more important than ever.
It is interesting that both businesses thought
that competition is getting tougher. It is particularly interesting
that they did not make note of this in terms of competition from
like businesses establishing themselves nearby or down the
road—although they freely admit that that would have some impact.
Rather, the message that I received is that the competition that
they were concerned about was unfair competition from larger
organisations that have the capacity to engage in loss-leading
behaviour—unfair competition—that means that they can secure a
greater market share over a short period of time.
This brings me to the issue that I have raised
on many occasions in this place: the failure of the government to
implement the findings of the
Dawson
review of the Trade Practices Act and make businesses fairer for
everyone in the market. I am sure both
Chris and
Sam—along with the more than 4,000 other small business people
operating in my electorate of Werriwa—would enjoy the even break
that the reforms of the Trade Practices Act would allow.
These small business operators are not asking
for the playing field to be slanted disproportionately in their
favour. All they are asking for is to be able to at least ply their
trade on a level playing field. They are not looking for
preferential treatment; they are just looking for the opportunity
for genuine competition to be played out on a level playing field.
They want the chance for the hard work and dedication that they give
their businesses not to be wasted simply because a large
organisation can set up shop and carry short-term losses in order to
secure a greater market share.
I spent a number of hours with both these small
businesses and their staff. I thank everyone involved for their
time—and particularly for their patience, as I am rather a novice in
both of these areas of business.
The operators made comments about how tough
business can be. But what really struck me was another matter that
they did not raise, and it is the second most interesting thing that
I would like to draw this House’s attention to. At no time in my
period with either of those businesses did these operators express
any view about industrial relations or industrial relations
policies. They certainly did not express a view that Labor’s
position on industrial relations would ruin them. They did not
express that view that the Prime Minister is attempting to
perpetuate—that Labor’s plans for industrial relations would make
their businesses even more difficult. They did not even express a
view that Labor’s plan to clean up unfair dismissals would create
the sort of burden that would ruin their businesses.
But the most telling thing about their size
when it comes to industrial relations was that they did not sing the
praises of this government. These businesses did not sing the
praises of the government in any way as to the way in which they are
being encouraged to treat their own employees. These two small
business operators—and many other small business operators who I
have spoken to since the Prime Minister made that famous ministerial
statement on industrial relations in May last year—have not been
telling me how good these changes are for them or how bright their
outlook would be under Work Choices.
The government claims to have made changes with
the strong backing and support of small business sectors, but when
push comes to shove it is not the small business owners or operators
who are singing the praises of this government’s industrial
relations agenda. They are wondering what happened to the stalled
trade practices reform to make their business environment a bit
friendlier, a bit more of a level playing field. They are not
praising the government on industrial relations.
Don’t get me wrong, Mr Deputy Speaker; I know
that some business organisations and individual business operators
are praising the government’s extreme industrial relations changes.
However, these are not the mum and dad small business operations
that the Prime Minister claims he was making these remarks about and
making changes for. No, these business operations who are out there
championing the cause of the government are from the big end of
town. They are the people who
Mr
Hendy represents. I know the government says a lot about small
business in their representations to the media about these things,
but realistically we all have to concede that, whilst people are
referring to small business, the people who are driving the agenda
in the efforts that have been made to support this government’s
industrial relations agenda are at the big end of town.
I mentioned earlier that a growing problem for
many small business operators in my electorate is the difficulties
they face in managing cash flow. I understand that a recent survey
of small business operators—which was mentioned by the member for
Hunter—listed cash flow management as the top issue for the
management of businesses today. While the changes implemented
through this bill will reduce the compliance costs faced by small
businesses when it comes to fringe benefits tax and a more
fundamental review of taxation, as Mark Fenton-Jones noted in the
Australian Financial Review on 29 August this year:
The latest changes to the way GST and fringe benefits are
calculated by small businesses are welcome measures to reduce the
compliance burden. But it is only tinkering on the margin, as the
whole tax system needs to be revamped with small business in mind.
I would not want to misquote the words of the member for Mitchell,
but I note that in his contribution to the debate a little earlier
he drew attention to the fact that he did not see the way ahead
involving a tinkering at the margins but that we should be looking
at fixing the system—and I think he was referring to GST
arrangements for vehicles and pharmaceuticals for those covered by
the Military Rehabilitation and Compensation Scheme.
The combination of small business cash flow
problems and broader tax reform brings me to a problem experienced
by a number of small businesses following the recent Australian
Taxation Office ruling ‘Goods and services tax: deposits held as
security for the performance of an obligation’. Mr Deputy Speaker,
as you would appreciate, this tax ruling, which could force small
businesses to pay the full GST on a sale price, even when they have
received as little as 11 per cent of the price as a deposit, could
have a serious impact on many small businesses and exacerbate the
difficulties that they are already experiencing with cash flow. I
note that the member for
Adelaide has a particular concern in this regard, having recently
placed a question on notice to the Treasurer about it.
This ruling has the potential to greatly
cripple small businesses as they take another hit to their cash
flow. Once again, it may present the opportunity for larger
competitors to make a grab for market share as they are better able
to manage the cash flow implications of this tax ruling. It will
certainly impact very directly on small businesses—and I refer in
particular to the small businesses in my electorate of Werriwa.
On 6 April this year, the Treasurer noted that
the matter will go before the courts and that he will examine the
findings of the case once the courts have dealt with the matter. I
have to say that that is an abrogation of responsibility, if we are
serious about protecting and furthering the interests of small
business operators. I join people such as the New South Wales
Minister for Small Business,
David
Campbell, in calling for the government to overturn this ruling in
the specific interests of small business operators. It is about time
that this government acted on behalf of small businesses across the
country rather than using them to create a myth surrounding the
demands of the small business sector for the industrial relations
changes spearheaded by this government.
As I said, small businesses do not want these
industrial relations changes. Small businesses like the certainty of
the award system because they know how much they are required to pay
their employees. They also like the certainty of the award system
because they know that other businesses that they compete with are
governed by the same set of rules. They like the certainty of the
award system because it prevents the cowboys in their industry from
using the full extent of the law to drive down costs and to force
them to cut the wages of their staff. This is something they do not
want to do, as staff in many small businesses are considered to be
family rather than employees. Small businesses make every effort to
look after their employees. They do not want to be forced to join
this government’s race to the bottom. Despite the government’s
attempts to perpetuate the myth that small business wants this
government’s extreme industrial relations agenda—
Interjection
The DEPUTY SPEAKER (Mr
Lindsay)—Order!
The member will return to the substance of the bill.
Continue
Mr HAYES—As
I was saying a little earlier, this bill relates to fringe benefits
tax changes in order to implement some of the recommendations of the
report of the Taskforce on the Reduction of Regulatory Burdens on
Business titled Rethinking regulation. Mr Deputy Speaker, the
bill picks up some of the recommendations of that report and reduces
the regulatory burden on businesses, and that is why I am drawing to
your attention the position that small businesses are taking in
relation to the government’s industrial relations agenda. They are
being forced, through Work Choices, to embark on a pattern of
behaviour which they do not want to follow. They are being forced to
do this by the government—
Interjection
Dr Emerson—No
choice.
Continue
Mr HAYES—and
with no choice. This is why they are reeling. I appreciate that I
may have taken a slight liberty in this regard, Mr Deputy Speaker,
but I do want to draw to your attention, and to the attention of the
House, that small businesses are concerned that every time the
government talk about their industrial relations agenda they say
that the changes are attributable to the demands made of them by
small businesses. This is clearly wrong. As you would appreciate
from what is happening in your own electorate, Mr Deputy Speaker
Lindsay, this is not the reality when it comes to what local members
are seeing in their connections with relevant small business
operators in their electorates. But I do heed your caution in this
regard, Mr Deputy Speaker.
I put on record that small businesses are sick
and tired of being used in this debate and of being quoted by people
like
Mr
Hendy who purport to represent small business, when everybody knows
these industrial relations changes are about the big end of town and
about industry driving the wage agenda.
Interjection
The DEPUTY SPEAKER—The
member for Werriwa will return to the bill or I will sit him down.
Continue
Mr HAYES—Having
said that, Mr Deputy Speaker, let me talk a little about some
student related issues that flow from this bill. The bill contains
provisions which remove the part-year tax-free threshold for
taxpayers who have ceased to be full-time students. Under existing
tax law, the tax-free threshold is only received for that part of
the year in which a student first enters the paid workforce. I
support this change; it makes sense. This amendment, along with
others contained in this bill, makes sense and on any reasonable
analysis will result in a reduction in compliance costs for
business.
Of course, I cannot help but wonder why this
has happened. Sure, government members or, I should say, the lone
government member, the member for Mitchell—the only one who had
enough interest to stand up in this place and make a contribution to
this debate—can make comments about how this government should not
be tinkering at the edges of tax reform, particularly on certain
aspects relating to car and pharmaceutical benefits provided by this
bill. Quite frankly, I am sure we would be better off not tinkering
at the edges but actually getting in and delivering a proper system.
To return to how the legislation applies to
students, if you look more deeply into the change that is before us
you cannot help seeing it in the context of the changed requirements
of students under this government. Students now face a much harsher
reality than at any time in the past. It is no longer possible—for
the vast majority of students anyway—to simply concentrate on
studies as a full-time occupation. Given that this government has
acted to take away virtually all support from students, it is now
necessary for students to work on a continual basis to support their
studies. The eligibility rules for Austudy have particularly
draconian aspects under this government. (Time expired)
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