Federal Treasurer Scott Morrison took on the “taxed-nots” yesterday when he conceded that Australia has a revenue problem, but leaders in the small business community say that jobs creation is the only way to fix the budget and broader economic outlook.
In an address to an audience at Bloomberg in Sydney, Treasurer Morrison claimed the new divide in Australia was between the “taxed and the taxed-nots” and that “more Australians today are likely to go through their entire lives without ever paying tax than for generations”.
This morning Australian business groups told SmartCompany that while the budget black hole is the key to confidence and growth, more needs to be said about assisting small operators to create jobs in the long term.
Paul Drum, head of policy at CPA Australia, says it’s somewhat misleading to say that many Australians do not pay tax, because even those not on taxable incomes contribute in some way through petrol excises or the goods and services tax.
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“The best way to reduce the number of ‘taxed-nots’ is to grow the economy. A growing economy creates more jobs and higher pay,” Drum says.
Council of Small Business Australia chief executive Peter Strong says the wording of “taxed vs taxed nots” is very clumsy and that while both sides of politics are trying to attack the budget deficit, the government is failing small business when it comes to training for jobs creation.
“They’re not training people for work, and if you look at the apprenticeship sector it’s really floundering,” Strong says.
“I think a lot of people who don’t currently pay income tax want to – they want jobs.”
While the treasurer acknowledged the nation had an “earnings problem”, Strong says companies at the larger end of the spectrum are setting the business community’s expectations on tax revenue.
“The ones at the big end of town are robbing us of billions of dollars – it sends a very bad message that tax is optional,” he says.
Morrison’s speech also highlighted that the current generation of working Australians have never seen a recession and that hard decisions would have to be made around reigning in spending on welfare and health.
“I do not want my kids to know what a recession is and everything that goes along with that,” he said.
Small Business and Family Enterprise Ombudsman Kate Carnell says Morrison’s speech was not a particularly new narrative, but it at last acknowledged that “both revenue and expenditure” needed to be considered when it comes to budget repair.
“Whether you’ve got a small business budget or the federal budget, everyone knows that there are two sides to balancing it,” she told SmartCompany.
“But what I would like to see going forward is a conversation about what they plan to do about growth, looking at the other side on increasing job creation – and how the government can get out of small businesses’ way,” she says.
Red tape is a big concern for both Australian businesses and the government, but Carnell believes the framing of the regulation debate doesn’t help smaller operators.
“Legislation is always written with the view of big business in mind,” she says.
“We should be writing regulations with small business in mind, letting them know what’s required of them, and adding more detail for bigger businesses.”
CPA Australia saw yesterday’s address as an indicator that the government should restart its failed tax reform process, given revenue has now been acknowledged as an issue in budget repair.
“As the Government’s own research makes explicit, the number and proportion of people moving into the ‘taxed-not’ category will grow as the population ages,” Drum told SmartCompany.
Thursday’s address was the first of three speeches that the Treasurer will give in the next month on Australia’s long term economic plan.