Bill's Speeches

ADDRESS TO THE COSBOA NATIONAL SUMMIT

ADDRESS TO THE COSBOA NATIONAL SUMMIT
CROWN CONFERENCE CENTRE
MELBOURNE



FRIDAY, 8 AUGUST 2014



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It’s great to be with you this morning.

 

Like many of you, I don’t make a habit of having breakfast at the Casino – so perhaps it would be better if we just think of this as another great, third-generation Australian family business.

 

I am here today both as Labor Leader, and as Labor’s lead spokesman for small business.

Labor’s commitment to building prosperity and growing the economy depends upon the success of Australia’s 2 million small businesses.

 

And I took on this portfolio responsibility because I believe that Labor can do more for small business – and we can do more with small business.

 

We can, and we will.

 

We will do more to help you grow, to innovate and thrive.

 

I don’t see this as enemy territory.

 

I don’t subscribe to some kind of shuttered, narrow political ideology that arbitrarily puts Labor on one side – and small business on the other.

 

This kind out outdated division, this artificial border benefits no-one.

 

Indeed I am certain many of you have found, to your frustration, being pigeonholed as a ‘traditional’ supporter of one side of politics – diminishes your influence with that party.

 

Your support is too often taken for granted, and your concerns are met with vague assurances instead of meaningful Government action.

 

You deserve better than this – you deserve to be engaged and valued in the decision-making process.

 

And for my part, as someone who has spent their working life conciliating, negotiating and constructing workable compromise to achieve a better future -  my first instinct is always to find common ground and to build upon shared interests and objectives.

 

That’s the approach I’ll be taking as Leader – and as Small business spokesman.

 

Labor and Small Business

 

For modern Labor, the innovative party of inclusive economic growth, small business will always be a big part of our plans.

 

As the party of innovation, we know small businesses are hives of creativity and commercial potential.

 

As the party of jobs, we value small business as an employer of nearly 5 million Australians – and a supporter of their families.

 

As the party of entrepreneurs, we understand that all of you who start small businesses are taking a risk, stretching yourselves and making sacrifices to build a better future for your families.

 

As the party of equal opportunity for women, we know that small business gives women the chance to bypass the glass ceiling and bridge the gender pay gap.

 

And we need only look at the unbelievable success of some of Australia’s inspirational ‘mumpreneurs’ – once dismissed as a fad, now so often leading the way.

 

These women aren’t looking for a hobby, for something to do – they’ve got great new ideas, they want to run successful businesses, and they are.

 

As the party of working people – we know how much small business owners value and appreciate the talents and flexibility of their staff.

 

As the party of safe and inclusive communities, we admire the social investment that small businesses make: the butchers sponsoring sporting teams, the newsagent championing public parks, the fruit shop sponsoring playgrounds and the hosts of retailers campaigning for civic amenities in high streets across Australia.

 

And as the party of fairness, Labor believes in cracking down on multinational profit-shifting.

 

Because business owners who do their banking in the local high street, should have the same opportunity to grow and thrive as the multi-billion-dollar operators who do their banking in offshore tax havens.

 

And as the party of working families, Labor knows that work-life balance can be the first casualty of starting and running a small business.

 

While there is much we share with all of you, I know that there is also enormous diversity within small business:

 

-       Family businesses like Ferguson Plarre

-       Franchise owners, sole traders and families working from home

-       And start-ups commercialising innovative new ideas

 

In short, we understand and value your time, your energy, your investment, and your contribution to Australia.

 

But your time does not belong to the nation.

 

Your energy is for your family as well as your customers.

 

You are investing in your community, but also in your children’s future.

 

And the Government decisions that affect you, should reflect your views.

 

As Minister and as Leader

 

That’s why, as Minister, I worked with Peter and COSBOA to improve dealings between Small business and Government.

 

Because none of you have time to sit on the phone listening to ‘hold’ music when you have customers waiting.

 

My focus was on streamlining interactions between small business, the Fair Work Commission and the Fair Work Ombudsman.

 

And also – giving small business owners some of their weekend back - through the creation of the Superannuation Clearing House which has already distributed more than $1 billion of superannuation payments for owners.

 

That’s the way I and Labor will work with small business – taking concrete, practical steps that deliver tangible benefits.

 

We know that you can’t build a more prosperous Australia for small business simply by rehashing platitudes, or invoking old Menziean ties that no longer bind.

 

Because small businesses don’t run on rhetoric.

 

Politicians and Governments are judged not by what they say to you on mornings like this – but what they do for you in Canberra.

 

Words come and go - the only measurement that matters is our deeds.

 

The simple test for Labor and Small business, the first question we will always ask, is: ‘will this decision make it easier for small business to grow, to thrive, to innovate – to do business’.

 

Economic Policy for Small Business

 

In Government, Labor made it easier for small businesses to grow by:

 

-       Creating an immediate small business tax deduction for assets costing up to $6,500.

-       Allowing small business to depreciate assets costing $6,500 or more in a single simplified depreciation pool; and

-       Allowing small businesses to claim an immediate deduction for the first $5,000 for motor vehicles (new or old) and to depreciate the rest in a single simplified depreciation pool - 15 per cent in the first year and 30 per cent in subsequent years.

 

In this time of economic change and transition, the Instant Asset Write Off helps small businesses make the hard adjustments and the necessary investments to seize opportunity.

 

And it is also a convenience measure, removing the need to track the deprecation of assets over several years – meaning less time spent on book-keeping and paperwork, and more time serving your customers and growing your business.

 

Labor made it easier for small businesses to endure tough times by allowing companies in a loss position to carry back losses to get a refund against tax previously paid – a measure which benefited almost 100,000 businesses.

 

And we made it easier for small businesses to lead innovation in work practices and technology by doubling the rate of research and development assistance available to small and medium-sized businesses.

 

Small Business and Taxation

 

Labor also lightened the small business taxation burden – and that is our continuing mission.

 

We tripled the tax free threshold, providing a benefit to around 1.4 million small business owners who are sole traders or hold an interest in a partnership or operate through a trust.

 

And we want to extend this benefit.

 

Indeed, in the Parliament right now, the only party fighting for fairer, simpler taxation for Small business is the Labor Party.

 

We all know Tony Abbott likes to say that Australia is ‘open for business’ – what he means is ‘open for 6000 big businesses’, while ignoring the 2 million small businesses that keep this country strong.

 

This Government spruiks its company tax cut – but 93 per cent of small businesses won’t benefit from it.

 

Either because they don’t operate as a company, or they aren’t in a profit position.

 

And at the same time the Government is seeking to wind back around $4 billion of Labor’s small business tax incentives.

 

It’s not just a matter of lightening the taxation burden – Labor is committed to streamlining the taxation process too.

 

A Labor Government will reduce the number of times small and medium businesses need to lodge GST returns from four times a year to one.

 

Moving from quarterly to annual returns will ease the paperwork load for around 1.3 million small businesses with a turnover of under $20 million.

 

And right now, dealing with GST paperwork represents nearly half of the tax compliance cost for business – and it consumes nearly 500 hours a year for small and medium enterprises.

 

This is a practical change that frees up your time and resources - and that’s why it is Labor policy.

 

Red Tape

 

This Government loves to say that it is cutting red tape – as if simple repetition can turn a mantra into meaningful action.

 

But the test, again, is not what they say – it is what they are doing.

 

And because small business is so central to our prosperity, so integral to our economy – almost every piece of social and economic decision-making has an impact.

 

Not just measures that are explicitly labelled as ‘small business’.

 

This Government loves to say that it is cutting red tape – as if constant repetition can turn a slogan into meaningful action.

 

Take the Government’s policy to change the work for the dole requirements, so that job seekers now have to submit 40 job applications per month to qualify for their payments.

 

At one level, this over-the-top targeting of our society’s most vulnerable members, is deeply offensive to Labor’s values.

 

But it is also short-sighted – and economically damaging.

 

Just as depriving jobseekers under 30 of any support for six months pushes the price of unemployment onto the Australian family…

 

…this latest dose of Liberal snake oil shifts the cost of looking for work onto business – especially small business.

 

It is a half-baked plan that shows no understanding of small business.

 

A change that seems purposefully designed to make life harder for the engine room of our economy.

 

For the sake of a couple of tough-talking tabloid headlines, the Government is prepared to unleash a tsunami of unsolicited and underprepared resumes on the small businesses of Australia.

 

It won’t be Centrelink or job services providers that will have to manage this massive flow of paper.

 

It will be you - and hundreds of thousands of small business proprietors like you.

 

Because while large companies have HR staff working full time on recruitment and reviewing resumes, in small business it is almost always the person with their name on the door who has to sift through the CVs.

 

This takes you away from the business, away from the counter, away from design work, planning and budgeting and it takes away time you could be spending with customers.

 

And the cost of this process - the burden imposed by what the Minister has already admitted is nothing more than a tick-box compliance exercise – it is staggering.

 

Using the Government’s own Business Cost Calculator, and estimating that there are around 760,000 employing small businesses….

 

…and assuming that each of these businesses spends just one additional hour a fortnight processing the increased number of job applications, then this policy will have an economic cost of nearly $700 million per year.

 

This means a $2.1 billion hit to small business over the three years of the program.

 

A business cost of nearly $1 for every $2.50 spent by the Government.

 

This single decision – seemingly taken without a regulatory impact statement – is the equivalent of the total gains claimed by the Government on their now increasingly laughable ‘repeal day’.

 

A red tape ‘bonfire of the vanities’ that was always more vanity than bonfire.

 

Of course, these changes are yet to pass the Parliament.

 

In what is becoming an all-too familiar pattern of shoot-and-scoot, they were loudly announced, widely criticised, timidly defended and then quietly withdrawn.

 

This is typical of the state the Budget is in three months after it was announced by Joe Hockey.

 

Small Business and the Budget

 

Much of Labor’s case against the Budget has been framed by fairness.

Yes, we believe in fairness.

 

But for Labor, fairness is more than a social value, it is a pragmatic pathway to economic growth.

 

That’s the problem with the Budget – it’s not just unfair, it’s economically debilitating.

 

And there is no doubt that small business occupies a prominent place on the long list of those harmed by the new taxes and deep cuts in the first Abbott-Hockey Budget.

 

The Budget increases your taxes and it reduces your cash flow.

 

The new petrol tax adds to your costs and at the same time, the Budget is harming business conditions.

 

Small business people know better than anyone that when Governments cut, family budgets suffer – and the family budget is the bedrock of consumer confidence and economic growth.

 

As people who make complex budgeting decisions every day – it must be particularly galling to be on the end of Government lectures about lifting and leaning.

 

As businesspeople engaged in the macro-economic picture, you know too well that the overblown bluster of ‘crisis’ and ‘emergency’ has done far more harm than good.

 

And as people who interact with customers every day, the hammer blow that this unfair Budget has dealt to consumer confidence has hurt you too.

 

The Westpac Melbourne Institute Index of Consumer Sentiment tumbled by 7 per cent in the aftermath of the Commonwealth Budget.

 

Looking to the future - the best driver of consumer sentiment are the results from the quarterly survey on news recalled.

 

Even two months after the Budget, a record 74 per cent of those survey recalled news on ‘Budget & taxation’, the highest ever recall rate for this issue, swamping all other news items.

 

The more Australians learn about this Budget, the less they like.

 

And clearly, this unfair Budget is hitting confidence.

 

Confidence – and jobs.

 

Yesterday’s increase in the unemployment rate to 6.4 per cent – 7 per cent here in Victoria - was the first time Australia has had a higher rate of joblessness than the United States since 2007.

 

And it is our highest level of unemployment since 2002.

 

In fact, unemployment hasn’t been this bad since Tony Abbott was Employment Minister.

 

If I could paraphrase Oscar Wilde: presiding over one unemployment peak may be misfortune, presiding over two is beginning to look like carelessness.

 

70,000 Australians have been added to the unemployment queues since the Budget – and all of you know the impact rising unemployment has on your businesses.

 

These hits to jobs and confidence are grave short term threats – but in the longer term, the Budget’s cuts to research and development have the potential to be every bit as harmful for small businesses.

 

Small Business and Innovation

 

So often, it is small businesses that take the biggest strides in innovation.

 

Both in modifying and adapting their existing work practices and products – and in the entrepreneurs who embrace risk and seek to turn a great idea into a successful start-up.

 

And to grow that start-up into a thriving business.

 

I took on responsibility for Labor’s Science and Innovation portfolio because I believe that Australian creativity and Australian brainpower can underpin our future prosperity.

 

Nowhere is this more important than in small business.

 

In 2014, in a world that has never been more borderless, on the doorstep of the fastest growing region in economic history, we have a tremendous opportunity.

 

We can encourage the genius of our people and help enterprises share in innovation-led growth.

 

But we also face a pivotal choice.

 

Australia can get smarter, or we can get poorer.

 

We can choose to compete in the new, knowledge-driven economy.

 

Or we can give up on nurturing our own ideas.

 

Of course, not every new idea will be a good one.

 

And not every new business will succeed.

 

Innovative countries know this.

 

They understand that sometimes failure is merely a marker on the road to success.

 

And shrewd investors realise that it is often an entrepreneur’s second or third business that will be their most successful.

 

I believe that Governments play a role in setting this tone, in creating this culture.

 

The job of Government is not to replace private investment, or crowd it out.

 

But we should be supporting start-ups, nurturing creativity and rewarding ingenuity.

 

There is a perception that America is a land of small government.

 

Perhaps this is true in healthcare – and in social security – but not in innovation.

 

Today - the rate of patent applications in the United States is at its highest level since the Industrial Revolution.

 

The US Government supports more basic research than the private sector.

 

And a recent report from the Brookings Institute shows that patents funded by the US Government are of much higher than average quality.

 

When the Federal Government provides funding for small business research and development – the result is higher metropolitan productivity growth.

 

The difference between a high patenting and low patenting area is worth more than $4000 in productivity per worker over a decade.

 

Above all, the Brookings Institute Report shows us the value of collaboration – of innovation hubs and integrated graduate research.

 

I have no doubt that Australia can do more to encourage entrepreneurs to do what they do best.

 

And Labor is looking positively and closely at changes to the Employee Share Scheme, to ensure that the tax burden aligns with the likely realisation of equity stakes in a company.

 

This would remove a significant drag on innovation – and it would make it easier for small businesses to grow a new idea into a profitable business.

 

If you’re an Australian with a good idea, you should be able to attract talented employees, and give those employees genuine buy-in.

 

You should be able to offer good people an incentive to stay with your business on the hard road road to commercialising your innovation.

 

Australia’s future prosperity – and the future strength of our 2 million small businesses - depends upon getting smarter, on helping our people capitalise on their genius.

 

Conclusion

 

Every successful small business is the product of courage, hard work and ambition.

 

Your courage should be acknowledged and Government should take on the challenge of rewarding your hard work, repaying your effort and encouraging your ambition.

 

This requires a big picture understanding of our economy, and our society.

 

And it demands a connection with the interests and values of small business.
For Labor, this means returning to the threshold question I articulated earlier.

 

We will always ask:

 

Will this decision make it easier for small business to grow, to thrive, to innovate – to do business?’

 

And we will continue to back in the family business dream, to support the courage of sole traders – to be on the side of the risk-takers backing in their ideas.

 

I look forward to talking further with you today – and in the weeks and months and years ahead.

 

Under my leadership, Labor will always be open to business.

 

We will always be ready to work together with you to deliver the best outcomes for our country.

 

For employers and employees, families and communities.

 

Because when small business succeeds, Australia succeeds.

 

Let us make that shared success our common goal – and our compass in the years ahead.

 

ENDS

 

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