12 January 2016
Transcript - #2016003, 2016

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Interview with Leon Compton, ABC Northern Tasmania

SUBJECTS: Small business; penalty rates; tax reform.

COMPTON:

Good morning to you.

MINISTER O'DWYER:

Good morning Leon. Great to be with you.

COMPTON:

Thanks for hanging on with us. Look, there is an election coming up this year and yet I wonder if small business actually know what the Federal Government's position is on for example, tax that effects what they do.

MINISTER O'DWYER:

They certainly know that as a result of the Budget that we delivered last year, that small business was a major beneficiary of the tax changes that we made. We cut the company tax rate for small business by 1.5 per cent…

COMPTON:

Can I just pull you up there, that was an initiative that was passed under the Labor Government previously and then enacted by you?

MINSTER O'DWYER:

No. This was a decision of the Coalition Government to cut the company tax rate by 1.5 per cent. We delivered it, we announced it, we made sure it happened. We know though that there are a lot of small businesses out there that aren't companies that are in fact unincorporated entities and we didn't want them to miss out so we made sure that there was a 5 per cent discount for them as unincorporated entities as well. We believe that small business is very much at the heart of the economy. 97 per cent of all business in Australia is small business. They employ more than 5.5 million Australians and contribute around about $340 billion to our economy. As I've been travelling around Tasmania, and I was here with my husband over that New Year period having a bit of a break down here in Tasmania, I recognise that pretty much all of the accommodation, all of the small little restaurants, wineries and all the rest of it, they were all small businesses that we dealt with down here and I know that in Tasmania small business really is at the forefront of the economy.

COMPTON:

One of the things that they would like I think is for big business to pay more of their fair share of Australia's tax burden.

MINISTER O'DWYER:

Absolutely, everyone should pay their fair share including multinational companies and that's why the Government has been very quick to make sure that the loopholes that existed in relation to Thin Capitalisation changes, that we have fixed those. That's why we've made sure that the Australian Taxation Office is in those companies making sure that they understand the tax structures and arrangements that they've put in place. That's why we've actually lead the G20 in terms of the changes that we've needed to make here so that there is country by country reporting so that people aren't trying to evade our taxation system. We are at the forefront of making sure that we have one of the most rigorous taxation systems in the world and that multinational companies are paying the tax that they should be paying.

COMPTON:

What's your position on penalty rates Minister? You would know that lots of the small businesses you visited over the Christmas-New Year break pay penalties but do you think they want to see penalty rates reduced on public holidays or Sundays?

MINISTER O'DWYER:

Certainly I have received a fair bit of feedback from small businesses, particularly those in the retail sector and hospitality sector who open on a Sunday who have got real concerns that their business is not viable – partly to do with the penalty rates that they're paying. Now I'm certainly listening to the concerns that have been raised. There has been a Productivity Commission report that has looked at this question. Penalty rates aren't determined by the Government, they're determined by Fair Work. The Productivity Commission hasn't recommended that there be changes to penalty rates but obviously I'm here in Tasmania to listen to small businesses about the key issues that are concerning them and if this is an issue that small business wants to raise I'm very much open to hearing what changes or suggestions they might have.

COMPTON:

Education issues are at the centre of almost every major challenge that Tasmania faces at the moment. You would be aware that fewer of half of Tasmanian students actually complete their year 12 in this state which is a staggeringly poor number compared to the mainland. What can your Government do, given that you've decided not to fund years five and six of Gonski, to actually improve the quality of the young staff that business has to work with into the future?

MINISTER O'DWYER:

Well the previous Labor Government hadn't funded Gonski, I think that's the first point to make. It was an unfunded announcement that was never fulfilled. We have been very realistic in saying that obviously, education is a state responsibility Leon, that hasn't changed. It will continue to be a state responsibility and it needs to be funded properly by the state and the Government is prepared to continue its very generous funding to state governments. We have increased our education funding over the years and it continues to increase but the Gonski announcement that was made by the previous Labor Government was never funded, it was never funded, there was no funding beyond that forward estimates period and we've been realistic in letting the Australian people know that when we make commitments they will be fully funded commitments and that we want the highest possible education standards and it's more than just about funding to make sure that we get those high standards. We need to make sure that we have excellent teachers, that we have a strong national curriculum and that we also have jobs available once people leave school, jobs available for them to take up whether or not they continue on with further education through the TAFE system, through the university system.

COMPTON:

When you said given that lots of the smallest businesses, people in them just pay tax at the personal tax rate and we know that bracket creep is a problem, when will you actually announce what your plans are with the tax rates, personal tax rates in Australia?

MINISTER O'DWYER:

As you know we are undergoing a taxation review at the moment and I should say Leon to you and to your listeners, this is not simply code for hiking up taxes, we believe very strongly in lower taxes. We want to have a competitive taxation system that works for all Australians, for our small businesses and for individuals. You rightly point out that the average income earner in Australia will be in the second highest tax bracket as of this year now that is an extraordinary…

COMPTON:

Minister clearly these are the issues. You've been in Government for two years and still you have nothing concrete to say about what you're actually going to do about tax rates for individuals.

MINISTER O'DWYER:

We're having discussions with the states and territories about how we can have a taxation system that is competitive overall. Let's not forget a lot of taxes are in fact state taxes as well and when we last embarked on taxation reform it was a combination of making sure that we could lower or get rid of a whole host of taxes for other changes in the taxation system. It is something that is a very complex issue and it's something that we are very keen to ensure that we deal with in a very methodical manner which is why we have a taxation process on foot with the White Paper and then with a Green Paper so that we can get these issues right and so that we can hear from those people who would be affected by taxation change. That's why I'm here in Coles Bay with the local member, Eric Hutchinson, who's the Federal Member for Lyons – who is a very powerful advocate for small business – to actually talk to people directly about not just taxation issues but superannuation issues, penalty rates as you've mentioned, all of that are affecting them.

COMPTON:

Good to talk to you this morning.

MINISTER O'DWYER:

Terrific to talk with you too Leon.