Finally a result! What business needed most in this election was a clear outcome, and we have it. Tony Abbott will be our Prime Minister and the Coalition has a comfortable majority in the lower house.
In my view the biggest challenge of the outgoing government was not that they had universally bad policy for small business. The tax loss carry back, the increase in superannuation, the increase in the tax free threshold, the significant lift in the immediate asset write off – not to mention a broadband network that was designed for small businesses as opposed to consumers and larger businesses – were all good policies. Experience tells me that the biggest problem with the Labour party is that they did not understand small business. Business owners were left to feel like they were at the end of the line in the government’s priorities – waiting for scraps while almost every other sector was ahead of them. I had to smile when Prime Minister Tony Abbott’s first words were to declare that “Australia was open for business”. While his policies include removing some of the beneficial policies I’ve just pointed to, as a leader he shows the promise of offering more understanding of small businesses and more certainty. These two qualities will hopefully combine to lift business confidence and with it business investment.
Committed to the cause
Australian business owners have big expectations – I hope they will be fulfilled. There is definitely reason for hope. Bruce Billson MP, who I’ve met with a number of times, will become the Minister for Small Business. He has been the Shadow Minister for at least six years, in which time the Labor government rotated no less than six ministers through the portfolio. I don’t believe the Coalition will use this portfolio as a rotating door; I believe Bruce is committed to this portfolio and won’t be using it to climb to others. It is my hope that he is included in the new Cabinet and on the assumption he is, we will be starting much further forward than where we left off.
A change in the parliamentary dynamic
If there is one concern to focus on from this result it is what is happening in the Senate. The Senate won’t change until the middle of next year so until that point the Coalition will need the support of the Labor Party or the Greens to pass legislation. This means we’re in for a lot of focus on the repeal of the Carbon Tax, meaning it is unlikely to happen until the new Senate sits. I call on Abbott to not allow this to stop him moving forward with many of the other important legislative issues in front of his government. Once the Senate does change it is difficult to know what will happen. The Labor and Greens won’t be able to block legislation, as Labor losses mean the two no longer have the balance of power, but we have little idea about the other eight parties that are taking up seats. This includes the Australian Sports Party, which claimed 0.22% of the vote in WA, and the Motoring Enthusiasts Party, which claimed a whopping 0.53% of the vote in Victoria. I believe our electoral system has a problem in that parties with such a small vote can determine whether legislation is passed.
Specific policies to look out for
The Coalition’s small business policies can be seen here. In short they include the following.
- Lowering electricity prices by removing the carbon tax. The main driver of electricity prices has not been the carbon tax, but rather the cost of gold plating our transmission lines to build unneeded capacity. Any reduction in electricity prices will be welcome but unfortunately the immediate asset write off will be lowered and the loss carry back scheme removed to fund this. I think this is a net loss for small business and is unlikely to happen until after 1 July next year when the Senate changes.
- Lowering taxes by a small reduction in the company tax rate. Unfortunately most small businesses are not incorporated as companies, and those that are have their dividends taxed at marginal income tax rates. A tiny upside for some small businesses.
- Cutting red and green tape. The Coalition has a list of initiatives here and this is where there can be a real win for the business community. I think this is an area that could get wide support in parliament and it is my hope that the Coalition will start here. This category is where the Coalition lists its Paid Parental Leave scheme. A paid parental leave scheme that is funded by big business and includes small business can only be good for small businesses. Let’s just hope the Greens will have it reduced to at least $100,000. I personally believe around $50,000 would be an even better threshold as it is likely that few small business employees earn over this and the funds could be used to return to surplus sooner.
- Doubling the rate of small business creation. This is hard to comment on because it is an outcome rather than a policy. New registrations for GST payments (a proxy for growth in businesses earning more than $75,000 a year in revenue) has halved in the past two years, so it is a noble goal to turn this around. Hopefully the increase in business confidence I am expecting will mean this goal is met.
- Review competition policy. This is needed and will hopefully lead to improvements that make doing business easier for smaller operators.
- Extending unfair contract protection to small business.Consumers have this already but sole traders (a business person with no employees) do not. This is a clear shortfall…
Excerpted from an article originally published in the Nov/Dec 2013 issue of Think & Grow Rich Inc. magazine. If you are a subscriber to Think & Grow Rich Inc. magazine, you will receive this article in your Nov/Dec 2013 issue of TGR. If you are not a subscriber, click here to subscribe.