24 May 2015
Transcript - #2015060, 2015

Interview with Barrie Cassidy, ABC Insiders

SUBJECTS: Budget 2015 - small business package, PPL, superannuation, Ireland gay marriage vote

BARRIE CASSIDY:

Now Bruce Billson, as the Small Business Minister, has the carriage of the major initiative in the Budget, designed to rev up the economy.

But is it all it seems?

Economist Saul Eslake makes the obvious point, if you don't make money, you don't pay taxes, so you don't get a tax concession, and he says that applies to 63% of eligible small businesses.

SAUL ESLAKE:

So much of the benefit of the cut in the tax rate for companies won't be of any benefit to a majority of small businesses that aren't making profits that can be taxed.

And although the accelerated write-off for purchases of assets worth less than $20 000 will stimulate more spending of that sort. The vast majority of that spending will be on imported goods, so the net impact on the Australian economy will actually be quite small. I don't think this will have any net stimulatory impact worth talking about.

BARRIE CASSIDY:

Bruce Billson, welcome.

MINISTER BILLSON:

Thanks for having me Barrie.

BARRIE CASSIDY:

If Saul Eslake is right then that sharply reduces the number of people who can take up your stimulus measure.

MINISTER BILLSON:

Yes, I saw that article that Saul had in the Fairfax Media on Thursday, and he fell into the same trap that Labor fell into.

Only one third of Australian small businesses are structured as companies. Two thirds are not.

And the beauty in our package is that we have recognised that and we have put incentive and encouragement there for small businesses regardless of how they are structured.

BARRIE CASSIDY:

So the two thirds who aren't companies are making profits?

MINISTER BILLSON:

Well, the two thirds which are not companies are in a position to get a discount of up to five per cent for a $1000 cap.

BARRIE CASSIDY:

[Interrupts] Provided they're making profits?

MINISTER BILLSON:

Correct.

And that is what we're trying to do is give them encouragement, support growth and jobs in the Budget.

That is what the Budget was about, and Saul frankly is a bit of an outrider on all of that. The commentary on the Budget…

BARRIE CASSIDY:

[Interrupts] But are most of them making profits?

MINISTER BILLSON:

In the company space about half are profitable at the moment, and that is why we need to do other things, and that is why the Budget was about growth and jobs.

It is not just about the incentive of reduced tax on income.

In that package was the accelerated and instant asset write-off.

There was also support for the formation of businesses, funding to restore proper tax treatment of employee share schemes and even getting a crowd-source equity funding framework in place.

So there are many parts to this Budget, all about energising enterprise.

Because through that we will create the economic growth, the jobs and the opportunities that our citizens want and our nation needs.

BARRIE CASSIDY:

Is it too early to say- is there any evidence about the rate of take up?

MINISTER BILLSON:

Only the field evidence. I have been travelling around the country, speaking first hand with small businesses, and they are absolutely energised, they are very positive.

BARRIE CASSIDY:

Are they buying?

MINISTER BILLSON:

Well, they tell me they are. It is quite catalytic, and that was the purpose of it.

What the Budget was aiming to do was take a small business ambition, an idea, and turn it into economic action and real jobs and opportunities.

So the field evidence is terrific.

Even the economists at our banks are saying they are picking up a real lift in confidence, and optimism, a real boost in activity. And that was the purpose and why we have structured the package with a number of elements, to give that boost that the economy is looking for.

BARRIE CASSIDY:

What are they buying?

MINISTER BILLSON:

Well, I have heard a range of things.

Everything from a dry cleaner who is wanting to buy a new piece of kit so that when an article is finished a text message will be sent immediately to the clients.

I have seen restaurateurs talking about catching a new market which is based on these television cooking shows where everyone wants to be a legend in the kitchen and how they are going to extend their business to deliver many of the ingredients to do that.

Even cafes that catch commuter traffic in the morning. If you have only got one coffee machine there is a lot of train and tram and commuter traffic you cannot serve. And they have said to me they are going to buy a second coffee machine.

So it is a good story.

BARRIE CASSIDY:

A lot of this stuff, though, might be imported. Might be imported goods, and the retailers benefit, but does the economy more widely benefit from this?

MINISTER BILLSON:

Well, I mean, I think Saul was looking really hard to find something not positive to say.

I mean some of that equipment will be imported of course, but much of it won't be.

And in terms of what a trades person needs- a new kit, new capacity, new opportunities to delight customers, grow their business, employ more people.

And bearing in mind where we start from Barrie.

The previous Rudd-Gillard-Rudd Government saw 519 000 jobs lost in small business. And at the end of that six years there were actually fewer small businesses that were employing people than when the Howard Government left office.

We have got to turn that around, put momentum behind our enterprising men and women and that is exactly what the package does.

BARRIE CASSIDY:

Yeah. How much money do they actually get back though? For example, if you buy a ute. Nineteen thousand dollars? How much of that money can the small business person expect to get back?

MINISTER BILLSON:

Well, what happens is, those purchases, and it can be any number of purchases up to $20 000 and that is something we also need to emphasise.

It might be a ute, it then might be a new compressor system or a new set of other equipment that a painter might use for instance.

As many times as you need, each and every one under $20 000.

That amount is then treated as an expense in the year that equipment is purchased and takes that amount off the income that the business has recorded and therefore reduces the tax.

BARRIE CASSIDY:

So, ballpark. What figure? What do they get back out of 19 000?

MINISTER BILLSON:

Well, it will vary.

Out of 19 000, if you are a company- a small business company, you will expect 28.5 per cent benefit out of that expenditure.

If you are a sole trader and in some of the higher tax brackets it could be nearly half.

It is not a grant, it is not a gift, you need to earn the money.

And this is what small business people understand.

And I have found I have spent a lot of time educating journalists about what this is like in entrepreneur-land, and explaining it is not a grant, it is not a gift, you cannot just decide ‘I am a small business’ tomorrow.

You need to be actively trading, generating an income and then that expenditure on assets that adds to the productive capacity and the income earning potential of that business, you can treat that as an expense in the year you purchased it, rather than have it depreciated over a number of years.

BARRIE CASSIDY:

Alright, in an area where you're not so generous in the Budget, and that is on the PPL. Are you comfortable with the situation now where people are now eligible for just $11 500 over 18 weeks.

MINISTER BILLSON:

Well, Barrie are you asking me what I'm comfortable with now, or what our ambition was?

BARRIE CASSIDY:

What are you comfortable with? Are you comfortable with this?

MINISTER BILLSON:

You knew what our ambition was and we were not able to deliver that.

BARRIE CASSIDY:

[Interrupts] Ambitions count for nothing.

MINISTER BILLSON:

That is right. So we have had to recalibrate.

Electoral mandates appear not to count for anything either.

So we have had to recognise that our plan that would have seen a person working in a small business getting the kind of benefits someone working in a big corporate or a Government department would get, we wanted to make sure that support was there and consistent across the economy.

BARRIE CASSIDY:

So you've moved to a position where you're uncomfortable with it?

MINISTER BILLSON:

No. We are now dealing with the position where there is consistency of that support for a family with a young child, therefore there is not a huge imbalance in the support that a mum in a public sector role or in a big corporate gets, compared to the support that is available if you were working in a small business.

So we have now got consistency around that. You know we wanted to go further, you know that, but we could not deliver that, so we have had to recalibrate and see what we can do to achieve a fair and equitable outcome.

And that is what we have done.

BARRIE CASSIDY:

And on superannuation, do you think it was sensible to rule out any changes, any adverse changes to superannuation concessions into the future, given that this is a growing problem?

MINISTER BILLSON:

I think you are slightly verballing the Prime Minister. We said we would not be changing anything in this term of office. We have no particular….

BARRIE CASSIDY:

[Interrupts] No, no, no. He said, beyond that- he said, into the future- no adverse changes [indistinct]

MINISTER BILLSON:

[Interrupts] We have no proposition on the table.

BARRIE CASSIDY:

I'm not verballing the Prime Minister. He said he would make no adverse changes into the future.

MINISTER BILLSON:

Well, what we have said is there have been too many moving parts in this space.

Remember even the previous Labor Government thought there were too many moving parts and leading up to the election of Labor it was no changes, not a jot, not a tiddle, and then there were changes everywhere.

Superannuation is a long term investment, preparing for retirement incomes. You cannot keep chopping and changing and you cannot treat superannuation savings an ATM to prop up a bad budget position. And that is what Labor's proposed.

BARRIE CASSIDY:

[Interrupts] It might come back to haunt you.

MINISTER BILLSON:

Well, if you are saying to me solid ground and certainty around people's longer term retirement income is something that haunts us, I am prepared to be spooked.

But we think certain consistency and stability is important to encourage people to put some of their own savings in to make sure they have got adequacy in their retirement and too many moving parts is an enormous disincentive for people to do that.

BARRIE CASSIDY:

Alright. Ireland. Voted over night.

MINISTER BILLSON:

To be sure.

BARRIE CASSIDY:

Two to one in favour of gay marriage. Do you suspect that there might be changing attitudes, not just around the world now, but in this country as well?

MINISTER BILLSON:

Well, I saw many Irish eyes are smiling in the coverage form this morning, and that voluntary vote energised the yes campaign and you have captured the results.

I think it is an ongoing discussion. It is very profoundly important to some. I love that fact that people can love whoever they want.

That is fine by me.

The issue around the technicalities of how you characterise that relationship that seems to be, in some people's eyes, less important than the quality of the relationship. Less important perhaps than the opportunity to pledge commitment to a life partner before friends and family and have that recognised by the…

BARRIE CASSIDY:

[Interrupts] That's changing as well isn't it?

MINISTER BILLSON:

Yes. This is the thing. I mean, you would have known, I have said I think that there should be a committed life partnership opportunity for same sex couples so that they can pledge their lifetime commitment to each other before family and friends and have that recognised that way.

I also know there is very strong opinions about people who see marriage as a proper noun meaning something quite specific in the type of relationship.

BARRIE CASSIDY:

So are you a yes, a no, or a maybe?

MINISTER BILLSON:

Well, I have put on the table I do not think we should use one word to cover all kinds of relationships when people feel strongly about the description that it is communicating.

BARRIE CASSIDY:

So that's a no?

MINISTER BILLSON:

That is why I have put forward the idea of a committed life partnership as a way of achieving public recognition before family and friends, an attestation of one's commitment to a lifelong partner.

That respects the strong feelings on both sides of the argument.

That is something we need to take account of.

People feel very strongly about this in a range of ways.

I think there is a way forward but polarising the discussion is unhelpful and completely ignores it should be quality of the relationship and the opportunity for people to love who they love.

BARRIE CASSIDY:

Thanks for coming in this morning. Appreciate it.

MINISTER BILLSON:

Good to see you Barrie.