It’s been an underwhelming election campaign for most entrepreneurs. While both parties have tried to put the economy at the centre of their campaigns, very little has been said about real economic reform that could create and support fast-growing businesses.
While both parties have promised company tax cuts, this relief won’t be in place for at least two years. While both parties have promised some money for skills and education, both have also promised to keep tight control of immigration levels. Incredibly, both parties have even promised to leave Labor’s new industrial relations regime alone for at least three years.
But there are some clear areas of policy difference, including support for small business, broadband and regulation.
In order to help business owners assess the parties ahead of polling day, SmartCompany has focussed on 10 key issues that are crucial to SMEs, and scored the parties’ policies out of 10.
In the lead up to the 2007 election, our scorecard gave the nod to Labor. Is it time for change, or more of the same?
After Labor spent the best part of two years waiting for the Henry Review, you would have thought they would have entered this election with a strong set of tax reform initiatives. Instead, their tax plan has two planks: impose a super profits tax on coal and iron minors, and cut company tax by 1% to 29% on July 1, 2012 for businesses with less than $2 million in turnover, and a year later for companies over this threshold.
As part of its Henry Review responses, Labor also promised to introduce an instant tax write-off for businesses with less than $2 million in turnover who purchase assets worth up to $5,000, plus simplified depreciation rules. It has not promised to move on any of the other recommendations from the Henry Review.
The Coalition is promising to cut company tax by 1.5% to 28.5% on July 1, 2013, but offsetting this for large companies is the introduction in July 2012 of a levy of 1.5% to fund the Coalition’s paid parental leave scheme. However, the Coalition has promised to release all of the assumptions underpinning the Henry Review and has promised to come up with a tax reform plan before the end of its first year in government.
Given two-thirds of small businesses are not incorporated, the tax cuts won’t mean much to the majority of SMEs. Still, the company tax rate does need to fall, and both parties have taken a step in the right direction. We are not impressed with the fact that both sides will be levying new taxes on sections of the business community, but the Coalition gets some credit for at least promising to tackle wider tax reform.
Labor has been trumpeting its record on economic management for the entire campaign, and for good reason – its performance through the GFC has been very impressive. Despite some big problems with the insulation and school building programs, its stimulus measures worked very well and insulated the economy from what was a major crisis.
The only negative for Labor has been the introduction of the mining tax, which has raised Australia’s sovereign risk profile for international investors.
The Coalition has been harping on its promise to pay back Labor’s debt, but in reality this isn’t much of a problem – the debt is tiny by global standards. The Coalition can point to its record during the Howard years – which is certainly impressive – but the new team of treasury spokesman Joe Hockey and finance spokesman Andrew Robb have lost some credibility by refusing to get their policies costed under the rules set up by Peter Costello.
One interesting proposal floated by the Coalition is for infrastructure bonds to fund major projects. While the devil is likely to be in the detail with such a scheme, it could be a way of unlocking Australia’s vast superannuation pools.
No contest here. While Labor’s National Broadband Network plan is expensive, and the business case is a little unclear right now, and the ability for a government body to deliver something like this is a little questionable, this is a truly visionary bit of nation building that will help transform the Australian economy.
The Coalition’s plan is terrible – a hodge-podge of technologies that appears far from future proof. While the Coalition has raised some important questions about the viability of the NBN, and while it is good they have promised to invest in black spot areas, in reality the Liberal broadband policy is a big black mark against their business credentials.
IR has been a non-issue in this campaign, which is good and bad. After two IR regimes in three years, most entrepreneurs have change fatigue, but that’s not to say the Labor Government’s laws are perfect and do not need tweaking.
The Coalition has promised not to touch the Fair Work regime in its first term, but says it will assess the workplace laws and if changes are needed, it will seek a mandate at the 2013 election.
In the area of education, both parties have made fairly similar promises on rebates and handouts for parents, and incentive payments for teachers and schools.
In the area of skills training, Labor is clearly ahead, with a number of proposals to boost apprentice numbers and increase skilled worker numbers. However, there has been virtually nothing for universities or training bodies, which is extremely disappointing.
This is another area where both parties have let business voters down badly. For many entrepreneurs, doing something about climate change is about risk mitigation – while there is debate about how bad the problem is, there is clearly a need to do something.
While Labor at least is committed to putting a price on carbon at some stage, Prime Minister Julia Gillard’s “citizens assembly” is woeful – if ever there was an issue where real leadership was required, and not a big focus group, this is it.
The Coalition’s climate change policy is based on the idea of direct action, through incentives to industry and households to reduce emissions and what Tony Abbott calls a “standing green army” of people who will attack issues like tree planting and land care. It’s uninspiring and perhaps not enough to make a difference.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
Comments