SUBJECT/S: New Jobs Tax Cut, Small business, Labor policies

FRAN KELLY, PRESENTER: Michelle Rowland is the Shadow Minister for Small Business and she joins us this morning, good morning Michelle.


KELLY: $20,000 per employee, up to 5 employees per company, that’s a big tax deduction. What safeguards will be in place to make sure a company adds to its workforce and doesn’t use these tax incentives to replace existing, more expensive workers?

ROWLAND: Well firstly, it will need to be new employees who are taken on and it will also need to apply to small businesses that have been operating for more than two years. So the beauty of the…

KELLY: Yeah but that doesn’t guard against someone getting rid of someone who is more expensive and getting someone new?

ROWLAND: What we have done also is we have budgeted for auditing of this, but we have also designed it because we recognise that the existing wage subsidies schemes are seen by many small businesses as too cumbersome and in this way we are utilising that money to provide a much more targeted and much more incentivised approach for small businesses to take on these new employees.

KELLY: Because the truth is that in the past they haven’t been so successful have they, as the economics commentator for the Australian Judith Sloan reminds us today, she says here we go again, another jobs scheme dream when 40 years of analysis shows they don’t work, they carry very high administration costs and apparent new jobs are offset by displaced workers.

ROWLAND: Well for a start I would argue two things. Firstly, we’ve been listening to small businesses and it is quite clear whilst they are quite frankly one of the biggest employees, employers in the country, they would like to take on more employees and we would obviously like to see this, particularly those vulnerable groups. Those under 25 or those who are older being taken on and those who have been displaced from the workforce. So we know that there are small businesses who want to take on more employees where they can, and we also know we have an issue with these particular sets of employees.

So how do we marry these up? Well, we need to give these incentives to small business to do this. Now it’s one thing to criticise, well these previous schemes haven’t worked but that is exactly what we have looked at and we have taken approximately $250 million out of that existing scheme and said we are going to trial this, see if it works, assess whether it is having the intended benefits and look quite frankly, small businesses have said the existing scheme is too cumbersome and that’s why they’re not using it.

KELLY: When you say you’ve consulted with small businesses, we spoke with Peter Strong from the Council for Small Business who says you haven’t consulted them over this package, he has tried to contact you to discuss the threshold issue and you haven’t even returned his calls. Is there not much of a relationship there with COSBOA?

ROWLAND: Well I haven’t received any calls from Peter Strong but we have been going around Australia and listening to small businesses on this matter. This was actually something that came out of our conversations with many small businesses.

KELLY: A big issue for small businesses in the current debate, and it’s following from what the Government did in the last budget, is the threshold, because to be eligible for your scheme a small business must have a turnover of less than $2 million. What about the 93,000 businesses with turnover between $2 million to $10 million? Small business says you’ve got to upgrade the threshold, even the Greens now define a small business as being a company with a turnover of up to $10 million. Why is Labor so stubbornly refusing to change this, it’s been set like this for decades now?

ROWLAND: Well the vast majority of small businesses are those with a turnover of less than $2 million. But Fran I’ve also made it very clear, I’ve heard these arguments for changing the threshold and I’ve openly said look we should have an open conversation about that. But what the Government ended up doing in its Budget was actually redefine a small business for the purpose of giving these tax cuts to large businesses. It was a ruse.

KELLY: Sure, but I’m not talking about that. I’m talking about the first tranche, I mean we’re only talking about this because the first tranche of Budget tax cuts are for businesses up to $10 million turnover and the Small Business council says this is the number one issue for their members, the turnover threshold, because they’re not so fussed if Labor doesn’t give them the tax cut but they want you to lift the threshold which would allow 100,000 businesses access to a number of tax breaks on offer.

ROWLAND: Well, we’ve always said we want to give a tax incentive and tax breaks to small businesses and Bill Shorten actually made that clear in his Budget reply last year. Now if there needs to be a conversation, and I know this actually has been going on for some time. The Henry Tax Review raised it, but again I would say, I would like to see this worked through in a proper way. It shouldn’t be a case of the Government just declaring what is has redefined to be new small businesses and the only way they’ve done this, the only reason why they have done this, is for the purpose of their budget tax cuts and giving that to big business as well. We want small businesses to benefit from it.

KELLY: Well I think, from our conversations we’ve had here on the program, with Peter Strong from COSBOA, is that the new threshold, the $10 million threshold has come very much from small business and that’s what they were concerned about, that the $2 million turnover threshold was too low. Labor has small business offside on a number of things, such as opposition to the threshold and therefore the tax cuts, but also the Effects Testing Competition Policy and the truckies’ dispute over safe rates. How much do you think this policy that you have announced will perhaps neutralise the Government’s attack on Labor declaring war on business?

ROWLAND: Fran, this is one limb of a number of policies that we have announced for small business.

KELLY: What are the others?

ROWLAND: Well, the others include in May we announced that we were going to have an access to justice scheme. Now, this is about small businesses being able to get relief when they claim to have been subjected to abuse of market power. So it’s one thing to say oh, we can change the laws in this area, but I tell you what the real barrier is for small businesses seeking to bring claims is the risk of adverse cost orders. So we’ve actually consulted widely on that, and come up with a scheme whereby the courts can actually declare that no cost orders be issued. So that actually provides very practical ways in which small business can access relief.

We’ve also announced just the other day that we would act upon some very serious claims and some very serious issues that were brought up in a recent Senate inquiry about subcontractors not being paid. Now the Government hasn’t even touched this. We have at the end of the chain, in the construction sector in particular, many tradespeople who were left out of pocket, have no recourse whatsoever and this amounts to billions of dollars each year. We have proposed to trial a project bank account so that large contractors have to put aside the money to pay these smaller subcontractors, and it’s a huge issue, a huge issue for many small businesses who are often sole traders in this area.

And we’ve also announced our initiative on positive credit reporting. Too often when small businesses look to get access to finance, they simply can’t keep looking at putting up the family home for example as collateral, and too often the banks and the normal financial institutions just look at negative credit reporting. We want to initiate a positive reporting scheme to address this very serious issue about access to finance.

KELLY: Michelle Rowland, thank you very much for joining us.

ROWLAND: Thank you.

KELLY: Michelle Rowland, she’s the Shadow Minister for Small Business, Citizenship and Multiculturalism.