14 May 2015
Transcript - #2015054, 2015

Interview with Laura Jayes, Sky News Lunchtime Agenda

SUBJECTS: Budget 2015 - Jobs and Small Business Package, paid parental leave, penalty rates

LAURA JAYES:

Joining me now in the studio is the Small Business Minister Bruce Billson. And we will get to paid parental leave in a moment but first I want to talk about the centrepiece, as it has been described in this package, the small business package.

The tax breaks you have announced will run for about two years and two months at a cost of $1.75 billion. Some economists say that that will blow out and there is every chance that will happen.

MINISTER BILLSON:

A couple of things. The reductions in company tax paid by small business companies, that is ongoing, and also the 5% discount on the income tax paid by non-incorporated businesses – they are your self-employed, your tradies, your independent contractors, partnerships and those operating through trusts – they are ongoing.

The measure you are referring to is the instant asset write-off.

LAURA JAYES:

$20,000.

MINISTER BILLSON:

That is for businesses with a turnover of under $2 million making a business related purchase under $20,000. They can expense that immediately.

That is for the rest of this financial year and the next two financial years after that and we are encouraging small businesses to get amongst it.

LAURA JAYES:

So what have you modelled it on? What do you expect business to actually do? Do you expect every business to use the $20,000 instant asset write-off and is that how you have got to that figure in the Budget?

MINISTER BILLSON:

Some may choose to use it, some may not. Some may choose to use it more than once. It is not capped. It is not an aggregated level. For each separate transaction.

If you and I were opening a café 0- $20,000 grand into the fit out, $20,000 grand into the dishwasher, up to $20,000 into the coffee machine – that kind of investment is what we are encouraging.

And there is an appetite there to make those commitments, to improve the productivity, the assets, the plant and equipment in so many businesses.

We are saying to small businesses if you have got that appetite and that ambition, turn that into action. That is what the measure in the Budget was all about.

LAURA JAYES:

This $20,000 instant asset write-off part of these packages seems to be the part that has captured the imagination of small business.

MINISTER BILLSON:

Really positive reaction.

LAURA JAYES:

But it only runs for two years. Is that a strategic policy move? It would only last till just after the next election, or what was the argument for making this not permanent?

MINISTER BILLSON:

We have got to do what we can afford and what is responsible.

We have got a Budget repair task. I am pleased that this Budget improves the deficit by about half a percent of GDP each and every year and we have knocked off some $50 billion or more of Labor’s spending projection in bringing this Budget more into a manageable state but we have got to keep working at it.

LAURA JAYES:

This is a stimulus package.

MINISTER BILLSON:

No it is an encouragement. It is an incentive.

LAURA JAYES:

It is a stimulus.

MINISTER BILLSON:

That might be your word but I am basically saying to Australian small business men and women if you have got an appetite and an ambition to invest, to grow your business, to set it up, to delight more customers, to give you a better capacity to employ more people – get amongst it, because one of the great challenges we face Laura is under the previous Labor Government 519,000 jobs were lost in small business and we have got to recover those jobs.

Under the Howard Government, more private sector work was offered by small businesses than big businesses. That mantle was lost under Labor. We need to get it back and we are doing what we can to energise enterprise in the small business economy.

LAURA JAYES:

On the 1.5% tax cut to 28.5%, it gets complicated does it not for businesses that are really nudging that $2 million turnover mark, so what happens? Could this be a disincentive for business growth in a way because businesses will obviously be keeping an eye on what they are turning over because if they are just over that threshold then essentially there are penalised are they not?

MINISTER BILLSON:

This is an incentive for 96% of Australian small businesses and if they are at that point where they are looking for growth opportunities – I have not met a small business person with a chance for a growth opportunity if that is what they want, they are going to take it.

LAURA JAYES:

But when this drops off, there is a cliff on this essentially.

MINISTER BILLSON:

It goes from 28.5%, the lowest small business company tax rate since 1967.

LAURA JAYES:

Can you speak to those businesses that are near that $2 million threshold that might just go over?

MINISTER BILLSON:

I can speak to them sure. Let me speak to them. Let me say to them if you want to grow and that is your ambition, paying 28.5 cents on your profit versus 30 cents on your profit – is it not great to be paying 30 cents on more profit and more profit and more profit?

So they will keep going. Enterprising men and women that is what drive them. If they have a business growth goal, if they are aiming to increase their profitability that is what they will work on day in day out.

It is very personal for small business people. It occupies every waking moment of your mind, I know I have been there, and that is why with that drive and optimism, that enterprise, we want to energise that and that is what this package will deliver.

LAURA JAYES:

There has been a lot said about the material gains, what we will be seen in this package in terms of a lift in the economy.

When will we start to see the results from this package, stimulus package I call it? Will we see it in the unemployment rate dropping? Will we see it in jobs being created? Will we see it in business confidence surveys? When will we start to see those indicators and what are they?

MINISTER BILLSON:

We are seeing it now.

LAURA JAYES:

But how are you measuring the success?

MINISTER BILLSON:

I am seeing it in terms of what people are telling me, and even in this building where journalists have stopped me and said my friend she runs a bakery, she is delighted, she is now going to go and buy that new barista machine that she was looking for.

That is the feedback we are getting.

LAURA JAYES:

So you have anecdotal evidence at the moment but I am talking about the hard indicators in the medium term.

MINISTER BILLSON:

The data is not in from Tuesday.

LAURA JAYES:

Sure, but what are we looking for? In six months’ time, what do you want to see in terms of results from this package?

MINISTER BILLSON:

I am anticipating you see those enterprising men and women picking up this encouragement and running with them. So I think you will see some growth signs in the economy, I think you will start to see small businesses working out how to position themselves for business growth.

LAURA JAYES:

Will we see a drop in the unemployment rate?

MINISTER BILLSON:

That is our ambition. We will see more jobs created, that is our ambition. And why am I confident about that? For the first year of the Abbott Government – three times the number of jobs were created compared to the last year in Labor. We have got record numbers of businesses forming right now.

This is not the only thing we are doing, it is part of an ongoing plan to energise enterprise, to get the economy moving, to support growth and jobs.

And even the social welfare community, they were greatly supportive of this small business package. What did they say? For someone who has been out of work for a while or looking for their start, it is often a small business that gives them that chance, and even they were welcoming this package.

LAURA JAYES:

You talk about an ongoing plan and small business no doubt will be telling you constantly that still the workplace relations aspect of this, penalty rates, needs to be looked at. You have squibbed it this time around.

MINISTER BILLSON:

We have not squibbed it.

News flash, news flash – the nation’s parliament does not set the rate of the penalty rates. There is a scoop for you Laura. It is something that is not well known around this building. That is set by the independent umpire.

What we do set is the architecture. The architecture is something that is being examined by a Productivity Commission inquiry. But even within that architecture…..

LAURA JAYES:

Can you promise small business that the Coalition will do something about this before the next election?

MINISTER BILLSON:

We are making sure the Coalition is delivering the architecture that supports vibrant businesses, good paying jobs. And you know what? People are already doing things about it. Restaurant and caterers have already made the case that the rate of the penalty rate needed to be recalibrated. Even the Fair Work Commission agreed.

So that machinery is there. We have got the review to see whether the whole regime is fit for purpose. Small businesses are appreciative of that and that work has got to continue.

LAURA JAYES:

Just quickly on a Netflix tax, this only partly satisfies what business have been calling for. Of course they want the Government to look at lowering the GST on overseas goods from that $1000 threshold.

MINISTER BILLSON:

And I am with them.

LAURA JAYES:

When will that happen?

MINISTER BILLSON:

We cannot do it on our own. I led the working group work to develop the models that we put to the states and territories because not only do they get the revenue from any correction of that aberration, that anomaly…

LAURA JAYES:

So you have not given up on it.

MINISTER BILLSON:

No. They also pay the costs of the system. So we went to the states and territories and said here is a few different ways that we could do this. What do you think?

Most were on board, Western Australia were not. They said no let us cryogenically freeze that until we get an argument about the distribution of GST. So Western Australia is holding up that work.

We are keen to see anomalies corrected. That is the best, fairest, most consistent tax system we can put in place. That is a hangover of many years ago. It needs to be corrected but we cannot do it on our own.

LAURA JAYES:

Finally, on paid parental leave – we have seen the Government go from saying mothers are not getting enough support when they have children so we are going to put a more than $5 billion scheme in place.

This Budget – in fact there is a complete turnaround. The Government is saying well a bit too generous and there is a doubling up of schemes. The term double dipping is being used.

I know you have been meeting with some pretty successful business women, mothers, in this place over the last couple of days. I am sure they were not saying that they were double dipping. What is the feedback you are getting? This feels like it is the one part of the Budget that is really tanking.

MINISTER BILLSON:

Can I introduce you to some concepts here – Our measure of a more generous scheme was to lift the support available to all mothers, not just those in the big corporates that have a big scheme or those in the public sector.

The Abbott Government took forward and argued for, and you might remember we got quite a lot of push back and criticism for advocating a more generous scheme that was available to everybody including women in small business that do not have the benefits that are available in the big public sector or big corporate organisations.

We were denied the opportunity to implement that. Labor crowed about that. Now as we seek to make sure there is a consistent, fair and equitable level of support for women in all kinds of enterprises, they are complaining about that as well.

LAURA JAYES:

But what about the language of double dipping. I know these words have been thrown around, rorting, you are essentially accusing…

MINISTER BILLSON:

They are not words I have used. I am talking about fairness and consistency.

LAURA JAYES:

But double dipping suggests that perhaps mothers have been doing the wrong thing for the last couple of years.

MINISTER BILLSON:

I am not getting drawn off in a semantic side story.

LAURA JAYES:

But you would not use the term double dipping?

MINISTER BILLSON:

No and I have not here.

LAURA JAYES:

But your colleagues are.

MINISTER BILLSON:

What I am saying is it is about fairness and consistency. Where there is already ample provision being made in one aspect of a woman’s life in terms of raising children; is there a need to go to the tax payers in Frankston and say supplement that again when those very same tax payers to the scheme that the more fortunate mother does who happens to work in a big corporate or the big public sector.

That is the issue. It is about consistency and fairness. You know we wanted to lift that support for all women having children. Labor blocked us. They crowed about that, now they are crowing about the fact they want a certain kind of scheme for some women and a lesser one for others.

LAURA JAYES:

Would your urge your colleagues not to continue using that term double dip because it is not representative of what you are trying to do?

MINISTER BILLSON:

I urge my colleagues every day to focus on policy. Good policy. Get the nation on track. Let us all be our best. That is where my energy goes.

LAURA JAYES:

I will take that as a yes Minister Billson. Thanks so much for joining us on Lunchtime Agenda.

MINISTER BILLSON:

Thanks Laura.