Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

I am not sure whether the member for Rankin has ever bought, run or owned a small business, but by the content of his speech I would have to say, no, he has not. I have. My husband and I bought our first small business, a dairy farm, on the day we got married. We learnt very, very early on how important interest rates and tax cuts are. We built a business at a time when interest rates went from 18 to 23 per cent. If you were a small business operating in that environment, every single point or per cent of a tax cut was critical to whether you survived or failed. Now, I would suggest that that is an experience that the member for Rankin has not had the courage to take a risk with. From the content of his speech, he has not. He does not understand small to medium enterprise or the people who are actually having a go which is what we support on this side and why we are so supportive of the measures in this Treasury Laws Amendment (Enterprise Tax Plan) Bill. I am very pleased to speak on this bill. I have every confidence in our Treasurer and the measures that we are taking as a government. In fact, when we look into the medium term it is a saving of around $250 billion on the mess left to us by Labor. So I will not be lectured by the other side.

Australia might well be a geographical island; we are certainly not an economic one—which is the rubbish we hear from the other side, that somehow we stand in isolation. Well, we do not. In economic terms, the world is a much smaller place and a smaller and very competitive marketplace. As a dairy farm, my products are competing with those around the world. If a German group is landing a milk product into China at 65c a litre, I know that that is what I have to compete with. That is the nature of the market—the real world, not the fantasy world of the member for Rankin. When we were a group of independent colonies, early on in our Federation, we could survive easily on our domestic consumption, as we saw, and easy agricultural exports to the Old World. The nation did indeed ride on the sheep’s back—and perhaps on dairy cows. But in the world of this 21st century, it is entirely different.

As a small, open economy competing with the nearby fiscal giants, Australia’s living standards are determined by the level of the terms of trade, our labour productivity, labour force participation and population—all of those. Improvements in our living standards must be driven by a higher level of labour productivity, which we as a government believe will be driven by lower company income tax rates. It is no longer sufficient to believe that the investment will simply come to Australia because of our stable government and safe investment environment. They were the staples underpinning our economy in the second half of the 20th century, and we constantly heard businesses talk of Australia being a safe investment option. But safe is no longer the determining factor.

Today, a raft of nations are seeing a massive influx of capital, including many which were, until the turn of the century, considered developing just decades ago. Asia and Africa are both now magnets for investment capital and we in Australia are at risk of being forgotten by the policies of those opposite and seen as a wallflower in the global economic dance. The rewards available from investment in countries previously labelled as unsafe are too attractive to ignore. That is the competitive world we live in. Yet, within this new economic paradigm, ongoing investment in Australia is critical as one of the key drivers of our labour productivity and economic growth. That investment will demand a competitive corporate tax rate.

Corporate tax rates that are increasingly uncompetitive will make it harder for Australia to continue to attract the necessary investment. Our corporate tax rate is high compared to many countries that we compete with for investment, especially those in the Asia-Pacific region. Of course, as we have heard from the other side and from the member for Rankin, Labor are arguing that this tax burden is better placed on corporations than on individual citizens. However, company tax usually is passed on so that the burden is carried ultimately by shareholders, consumers and employees. So the individual bears much of the burden anyway.

A more competitive business tax environment would encourage higher levels of investment in Australia, which, as an absolute net exporter of capital we need, given the falling levels of private investment we have seen as we transition from the mining investment boom to broader based economic growth. The increased investment will benefit all hardworking Australians through increased employment and wages in the long run, predominantly through permanently higher after-tax real wages and consumption. That is how it works. As economies become more open, barriers to investment can have a greater impact on economic growth and real wages growth. In response, corporate income tax rates have fallen worldwide in recent years. This is our competitive environment. The loss of this competitive edge will have real impacts in the future.

The United Kingdom reduced its main corporate tax rates in stages from 30 per cent in 2008 to 20 per cent from 1 April 2015. Over the period from 2008 to 2014, Canada reduced its main corporate tax rate from an average of 36.1 per cent to 26.5 per cent. And an extreme case, Singapore has reduced its corporate tax rate from 20 per cent to 17 per cent. So we do need more competitive tax rates just to be in the game, not to be ahead of the game just to be in the game. So reducing Australia’s corporate tax rate would increase our appeal as a place to do business and that is what the opposite side used to agree with as well, and it would encourage high levels of investment in Australia.

In Western Australia this is particularly relevant. We back small businesses and we understand their value to the economy. We are reducing their tax rate to 27.5 per cent, starting with businesses with a turnover of less than $10 million on 1 July of this year. This will deliver a lower tax rate for around 870,000 companies who employ over 3.4 million workers in this country. That is a great result for those small to medium businesses. Over 10 years, the government will encourage investment and higher-paid jobs by decreasing tax rates across the board. This helps to make Australian companies more internationally competitive, because it is a very tough global marketplace. That results in much better, higher living standards for Australians, and it is of benefit to all of us.

On this side, we know that small businesses are a key driver in our economy. I see it at the local level all the time. It is the small to medium businesses that carry much of the weight of the economic multipliers in the $16 billion GDP region that is my South West. There are over two million actively trading businesses in Australia. Almost 96 per cent of those are small businesses and 3.8 per cent are medium businesses. The combined numbers of those two business types employ 70 per cent of the nation’s private sector workers, and 59 per cent of all Australian workers are employed in small to medium businesses. It is no wonder we are focused on small to medium businesses. Small businesses, those with less than 20 employees, alone account for nearly 46 per cent of all Australia’s businesses in the private sector. That is an extraordinary effort by the small business sector.

As I have said previously in this place, so often it is a small business that will give the individual their first employment opportunity, and often, in the more senior years, it is a small business that will give somebody the final employment opportunity in their working life.

The DEPUTY SPEAKER ( Mr Broadbent ): That is correct.

Ms MARINO: They do an amazing job in this space. In my community, and in so many others that I see, the small to medium businesses support my football clubs, my sporting clubs and my community service organisations. The small businesses are often the glue that helps to hold our small communities together. It is important for me, as a dairy farmer, to be able to drive into my home community of Harvey and buy the basic items I need for my business. When we break down or we need an item for a repair or maintenance, whether it is for the milking machine or to do with our vehicles, we often to draw on other small businesses that are providing services in our community. That is the importance of small business right around Australia.

I am very pleased that we in this government have been very proactive in supporting small businesses with many of the initiatives that we have taken. The instant asset write-off has been an absolute boon for many small businesses. Some of the businesses in my electorate are doing such a great job. I want to talk about Traffic Force. Traffic Force is a 100 per cent WA owned and operated business involved in traffic management solutions, and they are doing a fantastic job in Bunbury. I look at all of the farming businesses, the small to medium enterprises and, of course, our food manufacturers. So many of them are small to medium enterprises, and we have heard how agriculture has overtaken mining as our major exporter. How many other small to medium businesses, both direct production and manufacturing businesses, sit beneath them? There are thousands of them. These are the ones driving the exports.

I have been able to secure nearly $10 million from this government to help upgrade the Busselton-Margaret River Regional Airport to enable it to manage international freight. That is going to be a transformative opportunity in the South West. Not only are we going to see the potential of 120,000 new tourists coming from, perhaps, this side of the world, some of the members in the House might choose to fly directly into the Busselton-Margaret River area and enjoy some of the amazing experiences and food. Outside of Perth, it is the events capital of Western Australia. We have so much to offer, and the fact that very soon you will be able to fly directly into this area is going to be an absolute economic multiplier. All sorts of small to medium businesses that we are seeking to offer tax relief to will be part of that growth and, in fact, will drive that growth and opportunity. I look at other small businesses like Think Water in Bunbury. Some of the work they do with irrigation systems is just amazing. Hastie Waste at Donnybrook has grown from a small business to be a key part of managing waste in our region. Accountancy and all sorts of service providers in my part of the world are also doing a great job.

I want to finish on a company called BCE Surveying. They have the only 3D-survey-grade, mobile laser scanner in the Southern Hemisphere. They have taken a risk, invested their own money and gone out and bought and perfected this particular equipment. It is an amazing piece of equipment that can have a significant impact on the cost of building major roads and bridges, bringing them up to 3D-survey grade by driving through and capturing all of that information. They are doing an amazing job. Now they are going even further, investing in the type of laser that brings up all the services beneath the surface. There are opportunities in construction and maintenance of long-term assets with the sort of picture that that will give. If you were tunnelling and you were able to do a runthrough with this 3D-survey-grade laser scanner to look at the top level, at all the buildings, you would be able to bring up the finer details of each building. Then, if there were claims made about, perhaps, increased damage to buildings, you could do another run with that particular piece of equipment and you would be able to bring up if and when there had been any damage. So this particular piece of equipment has incredible capabilities, and I commend BCE Surveying for actually investing and taking a risk and employing people to do so. And that is why we are so committed to the measures in this bill, and so committed to offering tax relief to small and medium businesses and to making sure that everybody investing in this country gets the opportunity they deserve.

The DEPUTY SPEAKER ( Mr Broadbent ): Member for Forrest, just to clarify for Hansard: did you actually say, at the beginning of your address, that you purchased your farm on the day you were married?

Ms MARINO: Yes, Mr Deputy Speaker—on the day we got married. My husband actually said to me: ‘I hope you’re not marrying me for my money. It is all printed in red.’ And it was!