Address by The Hon Lindsay Tanner MP
Minister for Finance and Deregulation
25 May 2010, Canberra
It’s a pleasure to be able to join you here this evening.
I would like to begin by commending the Council of Small Business Organisations of Australia for the work they do in representing small businesses around Australia.
I don’t underestimate the difficulties associated with trying to represent close to two million businesses and their five million employees, but the Council does so very effectively.
I grew up around small businesses. My father ran a country accounting firm for most of his working life, employing half a dozen staff. In the part of country Australia I grew up in, the only businesses were small businesses.
Some of them were successful, some of them were not; and there were various reasons for that. The common factor amongst those that prospered was they built on the creativity, innovation and imagination of their owners and staff.
Regardless of how ingenious a small business is though, they are not going to prosper if the environment in which they operate stifles innovation and growth.
That is where the Government can assist.
The Rudd Government is determined to restore incentive for small business through initiatives such as reforms to the tax system and removing cumbersome red tape.
As the Minister for Finance and Deregulation the latter is obviously an area I have direct responsibility for and is a topic I would like to focus on this evening.
Since being appointed to this role I have had many discussions with business representatives and operators about the impact of regulations.
I can assure you that I am all too familiar with the anecdotes small business owners around Australia have on regulations that are cumbersome, ineffectual and sometimes simply nonsensical.
Why can a product be deemed safe to sell in Victoria but not in South Australia?
Why do we require a small business owner to report the same information to half a dozen different government agencies?
I know I don’t need to tell anyone in this room this but poorly designed or unnecessary regulation drives up business costs, stifles wealth creation, limits innovation and increases consumer prices.
It means for people like yourselves, that you are spending more time dealing with red-tape and less time on your businesses. For small business, the time-cost is just as serious as the dollar cost.
At a macro level the result is a choke on the productivity growth and economic development Australia needs to improve our standard of living.
Basically, ineffective and inefficient regulations are nobody’s friend.
That is why you will always hear Opposition parties say they will cut red-tape if they get into office. It’s an easy thing to say and it resonates in audiences such as this.
The difficulty comes when you have to actually back up the talk with action.
The Rudd Government signalled our intention in this area when I was appointed as the first Federal Minister for Deregulation back when we took office in 2007.
Since that time the Government has been pursuing an ambitious deregulation agenda.
This agenda has focused not only reducing the level of unnecessary or poorly designed business regulation; but also on strengthening regulatory oversight processes, to better evaluate the impact of new regulatory proposals.
One area I know has been of particular concern to small business is the costs generated by inconsistent regulatory regimes between the Commonwealth, states and territories.
It was because of this issue that the Council of Australian Governments (COAG) signed the National Partnership Agreement to Deliver a Seamless National Economy.
The partnership commits the Commonwealth, States and Territories to implement 27 deregulation priorities, eight competition reforms, and ongoing regulatory reform.
As I said, talk in this area is easy; achieving actual results is a long and complicated process.
That is why, as part of the Agreement, $550 million has been made available to facilitate the action and reward the states and territories for delivering on these reforms.
To date, the Government has already delivered on a range of reforms in areas such as rationilising Commonwealth, State and Territory environmental approval processes.
And we are on track to further reduce the regulatory burden on small businesses by 1 July 2010. The new round of reforms includes:
Progress in this area is never going to be rapid, and I can understand the frustrations many of you may have, but we are working in the right direction.
To further strengthen the way we engage with business, my department is developing a deregulation blog. The blog will allow business to engage directly with government about areas of regulation that need addressing.
Earlier this year the OECD released a review of regulatory reform in Australia that stated “Australia is one of the front running countries in the OECD in terms of its regulatory reform practices”.
We are on the right track, but there is still a long way to travel.
Reporting financial information to Government is one of the most time-consuming activities for small – and large – businesses made worse by the fact much of the same information needs to be reported to different Government agencies.
The same financial information goes into the business activity statements a business provides to the ATO, the financial statements they provide to ASIC, the payroll tax returns they provide to State Revenue Offices and into a range of other reports that go to other agencies.
The Government’s Standard Business Reporting program is rationalising these reporting requirements.
Rather than having to continue reporting to numerous different agencies, the SBR program has developed a method through which businesses need only enter the information once, and it is sent to all relevant agencies.
Importantly for small business, major retail accounting software such as MYOB and Quicken will have the ability to integrate with the Government’s new system.
This software will be able to ‘talk’ directly to government agencies, meaning that simply by keeping robust accounting and financial records, businesses will automatically comply with most reporting requirements.
Businesses will be able to commence using standard business reporting from 1 July this year and once fully operational it is estimated the project will deliver savings of $800 million to Australian businesses annually.
Reducing the amount of time and resources small businesses must spend on regulatory compliance is also what is driving our Superannuation Clearing House project.
As of this week, small business can register for the service which will enable them to pay their employees’ superannuation to a single location in just one electronic transaction.
The Clearing House will then send the contributions to the appropriate superannuation fund and employers will be able to access a record of their contribution history whenever it’s needed.
The free clearing house delivers on the Government’s election commitment to reduce the heavy compliance burden for small businesses associated with the choice of fund rules introduced by the previous government.
I would encourage any of you interested to go to the Medicare website to get more details and register for the service.
Another of my lesser-known responsibilities as Minster for Finance and Deregulation is Government procurement. This area, like deregulation, is currently undergoing some pretty serious reform that has the potential to benefit small business.
Small businesses face some substantial barriers in accessing the Government procurement market. The Rudd Government is working to alleviate those barriers and provide more opportunities for small businesses to contract to Government.
One of those barriers I know small businesses face when trying to access Government contracts is the costs associated with excessive risk transfer and insurance requirements.
The Liability Risk Assessment Guide has been developed by the Department of Innovation, Industry, Science and Research to provide liability risk consistency in agency contracts.
By assisting Government procurement officers understand procurement risks and how appropriate insurance can mitigate such risks we believe we can bring down costs for small businesses.
Another of the barriers small businesses face is around the timing of payments.
The implications of not receiving payments for weeks or months are obvious for small businesses and that is why the Government has introduced a 30-day payment policy.
For procurement contracts up to $5 million, the policy requires small businesses to be paid within 30 days of invoicing.
In 2008-09 - following the introduction of this policy - the government paid 96.5 per cent of small business invoices within 30 days; the highest on record.
As a result of the work we have done to reduce these barriers, small and medium enterprises were awarded close to half of Government contracts in 2008-09.
Of the 85,000-odd contracts the Government entered into in that year, 42,300 were with SMEs; the total value of these contracts was approximately $9.6 billion.
I would like to finish up this evening by touching on the tax reforms associated with the Resource Super Profits Tax announced by the Government recently.
The headline change for many small businesses around Australia is that company tax will reduce to 28 per cent.
There has been some ill-informed commentary around this tax plan, with confusion on what we are actually doing with the proceeds from the Super Profits tax.
The receipts that the Government receives from gaining a more equitable share of what are essentially the Australian people’s resources, will go towards wealth creation across the economy.
Company tax will be reduced to 28 per cent as a result of the reforms. This is in stark contrast to the Coalition who would not only keep the rate at 30 per cent, but put a 1.7 per cent levy on businesses with a taxable income above $5 million.
Along with the cut in company tax rate being funded by the Super Profits Tax, small businesses will benefit from a new, instant write-off for assets worth up to $5,000. Depreciation for other assets will also be simplified, reducing complexity, cutting red tape and providing up-front tax relief.
I know that the last 18 months has been a tough period for many small businesses and applaud those of you that have stuck out a tough time. Encouragingly, indicators show there is reason to be optimistic.
The figures released in May’s Federal Budget have the economy growing steadily in 2010/11 and beyond, and unemployment trending down to below 5 per cent.
The May ACCI Small Business Survey shows improvement in Small Business Conditions over the March quarter to the highest level since the end of 2007 and conditions are expected to improve further over the June quarter.
These are extremely positive indicators for Australia because small business is not only a vital part of our economy; it is a vital part of our society as well.
| Media Contact: | Website: |
|---|---|
| Nardia Dazkiw - 0418 144 690 | www.financeminister.gov.au |
