06 April 2017
2CC BREAKFAST – INTERVIEW WITH TIM SHAW
Subjects: ASBFEO Payment Times Inquiry, Small Business Tax Cuts
TIM SHAW: The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, former ACT Chief Minister is on the line, good morning Kate.
KATE CARNELL: Hi Tim.
TIM SHAW: I’m shocked. Multinationals are accused of offering small to medium enterprises loans after extending their payment times to 120 days. What’s the story here?
KATE CARNELL: Tim, that’s what we found in our inquiry into payment times and we’re pretty blown away by this I must admit. The first time somebody reported this – one of the small business that have given us a submission into our inquiry I went “No can’t be true,” but it is true now we’ve done lots more work on it and it seems that some large multinational are taking the view that small businesses are a good source of cheap finance so that they can comfortably increase their payment times to 120 days – some of them have told us that we should count our lucky stars because they’ve increased them even further in other parts of the world. I didn’t take that terribly well I have to say but they went to 120 days and realising that’s going to cause a bit of a cash flow problem for lots of small to medium businesses. They’ve said “We’ve got this good deal with a financial institution, we’re able to give you a loan or organise a loan for you at a couple of basis points below what you’d get yourself, so aren’t we wonderful?”. No, you’re not wonderful, you should just pay your bills on time.
TIM SHAW: We have a policy in here in the ACT where we are paying on time. ACT Government has made that an important policy particularly for small to medium enterprises involved in supporting big projects like the Gungahlin to Civic tram, but let’s name them, Kate. According to this story, Fonterra, Kellogg and Mars have been highlighted as offering finance arrangements to suppliers and I know they’re big foreign companies and we’ve got arrangements where Fonterra say their standard payment terms are 61 days and they can offer supply chain finance to help suppliers with cash flow.
KATE CARNELL: It’s 61 days from the end of month. Now what that means if you’ve got to add another 30 days potentially on to that so it’s interesting – they’re not 120 days, it’s true but it’s 60 days from end of month so that means that’s the day it becomes due and they get 30 days to pay. There you go.
TIM SHAW: Well you’re doing the work you see and I don’t know many Labor members of Parliament – I do, Gai Brodtmann ran her own small business – and I know that there are Labor members listening now saying, “I’ve got small business in my electorate”. In Bill Shorten’s electorate they’re there, they’re working in Senator Doug Cameron’s electorate as well. What’s your message to Labour about bipartisanship on being able to get these kind of challenges legislated. Can we see some bipartisanship and is that going to take oxygen out of these minor parties that are sitting there waiting, waiting, waiting for the horse trading on the last day as Nick Xenophon did to get these tax cuts through for small business. Were you surprised that that took place?
KATE CARNELL: I was really pleased to see that in the end it got over the line and with the $50 million figure is a good outcome for small to medium business in Australia. There’s lots of SMEs that are turning over up around the $50 million, it doesn’t mean that their profits all that high in lots of cases but their turnovers there so this is a good outcome. I think the thing that really concerns me is that, as you rightly say, it’s horse trading on the last day and that’s not terribly edifying for anybody. But since then Tim we’ve seen GetUp out there saying they’re going to run a campaign against Nick Xenophon because Nick actually did a deal with the Government on the tax reductions but also on a range of energy issues that really need to happen. Small businesses are telling us everywhere that the cost of energy is becoming a huge issue for them. In South Australia the issue of outages is causing a real problem, so the issues that Nick dealt with were actually good ones. Now he’s got the dilemma of GetUp running robo calls and all sorts of things. Now that’s a real problem as well but you’re absolutely right, what we need is bipartisanship. Issues such as the way banks are treating small businesses on their loans, things like payment times – these shouldn’t be political, should they? Everybody should be behind these things and real change here.
TIM SHAW: The Australian Tax Office, Kate Carnell, is chasing down a number of multinationals that they claim owe them in the billions of dollars. They’ve named them, Google, Apple, Microsoft. You and I know that small to medium business in Australia they don’t get to hide their money offshore in Ireland or to pay in other tax jurisdictions. Are you backing the ATO’s push here and is this again another example of bipartisanship that Labor needs to back the Coalition into ensuring that these measures are applied quickly and that we can get companies paying fair amounts of tax in our jurisdiction.
KATE CARNELL: Absolutely. Nobody should be against this. The ATO are doing a good job. Now Australia’s got some of the toughest laws in the world with regard to multinational tax, or profit diversions tax – which is a really good thing. But I think there’s one step further that governments could take and that’s say “While people are on these what we call the naughty lists at the ATO, they shouldn’t be able to get any government business, they should be off the reservation in terms of a capacity to tender for Australian Government businesses and not just Federal Government but State Governments as well.” We shouldn’t be rewarding companies that aren’t doing the right thing and small businesses tell me every day that they get really really pissed off when they’re competing with multinational that have structured their operations to minimise tax in Australia, something that SMEs can’t do as you rightly say and they get beaten in tenders simply because their costs are higher because their operating here and employing here. I don’t think that’s reasonable.
TIM SHAW: 30 per cent corporate tax rate down to 27.5 per cent on enterprise turning over less than $50 million. I’ve spoken to small business since that decision has taken place in legislation and they’re saying they feel more confident, Kate. Are we going to employ someone right now, we’re feeling more confident about doing that next financial year and as you say lots of small businesses and Scott Morrison said that this week, the last guy that normally gets paid is the proprietor. Are you expecting a jump? We’ve got 3.4 million enterprises in Australia six million plus Australians, do you expect we’ll see a jump in employment, new placements, internships?
KATE CARNELL: I know that will be the case. I know that with small to medium businesses if they’ve got a few extra dollars or the tax rates are lower or if – as the Government also announced – that the instant $20,000 instant asset write off has now been extended to $10 million turnovers at least to the end of the financial year, hopefully longer after the budget, but we’ll see. We know that when businesses have extra dollars they invest. They invest in people and they invest in plant equipment, that’s what they do and that will deliver jobs for Australians and remember we’ve still got 780,000 unemployed Australians and we’ve still got 280,000 young people without jobs so there’s still a lot of work to do in that space.
TIM SHAW: Can you help us? Carpet One here in Mitchell, do you know they were going to apply for a 457 visa for a qualified carpet layer to come to Mitchell here in Canberra. I said “You’ve got to be kidding; we’ll put that out on the wireless”. They also want an apprentice Bayldon Ag wants to put on an apprentice there at Queanbeyan. The Property Doctor in Narrabundah, they’re struggling to find staff and yet 5,894 Canberrans on New Start Kate Carnell, ages 22-64. What can we do? Is there anything you and your team and other small business organisations can do to help connect Canberran business with employees?
KATE CARNELL: I think that it’s an absolutely fantastic point you make. The work that you’re doing in getting those jobs out there really helps – we know it does from previous examples of people actually putting up their hand. I hear from small business that the bureaucracy around the space is still really high, there’s people who hopefully want jobs. There are migrants who have come to Australia, refugees, a whole range of people, who really want to work and pulling the two together seems to be the bit that is missing and we’ve got to do more in my office. There’s no doubt about that. It’s a difficult issue but we’ve got willing employers, willing workers, hopefully, and let’s make sure together that we deliver a few of those jobs.
TIM SHAW: Absolutely. Asbfeo.gov.au or Kate’s office number is 1300 650 460. You and I have got five weeks until the Federal budgets handed down on the 9th of May and we’ll be speaking before then. I’d love to know what your small businesses – what people are telling you as the Small Business and Family Enterprise Ombudsman about what they’re hoping for in the 2017 budget. As always Kate Carnell, great pleasure, we’ll look forward to talking again soon.
KATE CARNELL: Thanks Tim.