Nassim Khadem Reporter

Nassim covers the accounting and tax rounds for BRW, as well as general business news. She previously worked for The Age newspaper covering general news, state politics and economics.

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Abbott makes pitch to small business with promise to cut red tape by $1bn

Published 17 May 2013 11:41, Updated 20 May 2013 08:10

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Abbott makes pitch to small business with promise to cut red tape by $1bn

Opposition Leader Tony Abbott has promised to slash red tape and kill the carbon tax. PHOTO: ARSINEH HOUSPIAN

Opposition leader Tony Abbott has made his pitch to small business, saying a Coalition government would cut red tape costs by at least $1 billion a year “to give small business a much-needed break”.

In his budget reply Abbott stuck by his pledge to abolish the mining tax, and also targeted Labor’s core voters, promising he will keep more than $4 billion worth of carbon tax compensation, even after the scheme is scrapped, and will delay increases to the superannuation guarantee by two years.

But $43 billion in spending cuts contained in Treasurer Wayne Swan’s budget on Tuesday will be retained. These include the increase in the Medicare levy, the abolition of the former Howard government’s Baby Bonus scheme, cuts to family payments and higher education, and scrapping tax incentives currently enjoyed by miners and multinationals.

Abbott says while Swan’s cuts are objectionable, “there is now a budget emergency” thanks to “Labor’s poor management over five years”.

Nevertheless, the Coalition will “reserve the right to implement all of Labor’s cuts, if needed, because it will take time to undo all the damage this government has done”.

Likely cut to public sector jobs under Coalition audit of government expenses

As flagged in BRW yesterday, Abbott has promised an audit of government expenses, which is expected to run in the same way as Queensland Premier Campbell Newman’s audit did when he came into office in March last year.

Abbott says a “once-in-a-generation commission of audit” is needed to ensure that “government is only as big as it needs to be”.

But finance minister Penny Wong says this is a hint of Abbott’s “nasty surprises”.

“He made really clear last night that his game plan is all about nasty surprises,” Wong said today. “A Commission of Audit is nothing more than a commission for cuts.”

Senator Wong said “working Australians” would be worst affected under this, and the lack of budget detail was a concern.

Business groups welcome Abbott’s pledge to slash small business red tape

“We’ll have parliamentary days dedicated to repealing laws, not passing them,” Abbott said in his budget reply speech last night.

“We will set up a root and branch review of competition policy to ensure that small business gets a fair go and small business will be a cabinet portfolio within the Treasury department.”

Business groups have refrained from being critical about the $43 billion cuts or about the fact that Abbott will increase company taxes to pay for his paid parental leave scheme. While superannuation lobbyists such as ASFA chief executive Pauline Vamos have been critical saying “short-term tweaks” to the system “ultimately undermine” community confidence and make it difficult for people to plan for their retirement, most business groups have been welcoming.

Business lobbies are praising the opposition leader for promising to address small business red tape and for pledging “a modest company tax cut as soon as it’s affordable” (that’s unlikely to be in the Coalition’s first term if they are elected on September 14).

“The combination of the new announcement to defer for two years the hikes in the compulsory superannuation levy, the intended abolition of the carbon tax and the planned root and branch review of competition policy show a welcome sensitivity to the plight of small businesses and the role they can play in strengthening our economy,” Australian Chamber of Commerce and Industry chief executive Peter Anderson said today.

Abbott promises tax white paper and COAG reform with two years, if elected

Abbott says within two years of a change of government, the Coalition would work with the state governments to produce a white paper on COAG reform.

“The objective will be to reduce and end, as far as possible, the waste, duplication and second guessing between different levels of government,” Abbott said last night.

The Tax Institute’s senior tax counsel Robert Jeremenko said Abbott’s promised tax white paper “builds on the work of the Henry Review and is a positive step towards the vital national conversation on tax reform that Australia needs to position ourselves for in the decades to come.”

Other measures affecting business and industry Abbott has announced include:

- Reestablishing a “tough cop on the beat” – the Australian Building and Construction Commission – as a watchdog over the construction industry. Abbott says this would amount to $6 billion a year of productivity improvements.

- Changes to industrial relations laws. Without specifying exactly what it will do, he says the Coalition would “return the workplace relations’ pendulum to the sensible centre” under the existing Fair Work Act, “with fairer rules for right of entry and for new projects”.

The savings identified to support $4 billion worth of tax cuts (that were supposed to compensate for the carbon tax and will now be paid fortnightly as benefit increases) include:

- Reducing the public service headcount of 12,000 over two years which eventually is expected to bring in more than $1 billion in savings.

- Dumping the low-income superannuation contribution, part of Labor’s mining tax package, saving just under $1 billion a year.

- Delaying the phased increase in the Superannuation Guarantee charge from 9 to 12 per cent, so that the 12 per cent target is achieved in 2021 rather than 2019, saving around $1.1 billion a year by 2016-17.

- Dumping the Gillard government’s proposed increase of Australia’s humanitarian intake to 20,000 – a key recommendation of the Houston report on asylum seekers. The move would have meant Australia increases its annual refugee intake from 13,750 to 20,000 places in this financial year. Dumping this pledge saves $500 million a year by 2016-17, Abbott claims.

- Stopping the twice-yearly Supplementary Allowance introduced as part of Labor’s “spreading the benefits of the boom” package in 2012-13 – this was an amount of $210 a year for singles or $350 a year for couples. Scrapping the measure saves around $300 million a year.

- Abolishing the Clean Energy Finance Corporation – which opposition finance spokesman Andrew Robb has previously labelled as “a reckless slush fund” that private investors “won’t touch with a bargepole”. This will save around $350-450 million a year.

Billionaire prime ministerial contender Clive Palmer says Abbott’s budget response proves that “Abbott as prime minister will be identical to Julia Gillard, but just in different clothes”. Palmer is running his own political party called the Palmer Australia Party.

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