My Business: Last year you announced the Productivity Commission inquiry into retailing and the $1000 GST-free threshold on importers. Were small retailers as vocal on this issue as large retailers?
Nick Sherry: Oh yes, certainly. I had been receiving complaints and concerns for months [before the announcement of the inquiry]. I think it got more public notice when the large retailers complained. I actually discussed this issue with the Assistant Treasurer’s office, with Bill Shorten a couple of months ago [in October 2010].
MB: Who raised it first?
NS: COSBOA raised it with me.
I was in Peter Strong’s bookshop a couple of weeks ago [in early December 2010] and he raised it with me.
MB: The book-selling industry certainly has strong offshore competition!
NS: It does! In that industry it’s not just the $1000 GST threshold or evasion of GST.
There are some online activities where there has been much greater penetration than others.
Books and travel are the classics.
Anyway the Productivity Commission will look at online trading, the extent to which there is any GST minimisation as well as the trends and developments.
By the way, I would urge any businesses that have any concerns about GST and online tax evasion.
They need to present facts and examples to the Productivity Commission. Anecdotes are no good.
They need facts and examples, if necessary on a confidential basis. Stories are not good enough for hard policy development.
MB: Does the government have any thoughts of revisiting the Fair Work Australia decision on after-school jobs? We’ve had a fair bit of correspondence about it.
NS: The short answer is no. Fair Work Australia makes these decisions. The Fair Work Act passed with bi-partisan support from both sides of politics.
MB: The feedback I get from business is that it robs them of flexibility and leaves burger flipping and very process-driven jobs for kids. That denies kids life experience as well as the chance for a job.
NS: Well they need to present their evidence to Fair Work Australia and argue their case. We have an independent tribunal that decides these things.
MB: The first term of the Rudd/Gillard government delivered some good reforms for small business, not least the guaranteed 30 day payment terms for small business. What’s on the reform agenda for this term?
NS: Firstly there are two major tax initiatives.
One is the drop in company tax.
The second is the improvement in the instant write-off of assets. Currently that’s at $1000 and that will be increased to $5,000. That’s for small to medium businesses (SMEs) and is a significant increase in the threshold. It also benefits all SMEs.
because the company tax only benefits those small businesses that are companies.
There are a couple of other reforms in the regulatory area. One is personal property security reform. We know that a significant number of SMEs rely on personal property for security of a loan, using their home is a classic.
At the moment, there are different laws in each state for valuing those personal property assets. Those differences make it harder for a financial institution – which are mostly national – to value a personal property asset for lending purposes.
We are introducing a national property securities reform that will make a common set of rules for valuation of personal property and it will be easier for financial providers to assess the value of the personal property assets.
MB: Will that make it easier to borrow against personal property?
NS: Yes. It will be more speedy and accurate.
The second reform is business names. At the moment laws and fees vary from state to state. We are going to introduce a national business name register to replace state registers.
Why is that important? If you operate a small business across states, you need to register in each state and there are different rules. The second benefit is the Commonwealth will be charging $30 a year, and every state and territory bar one charges significantly more than that. It’ll be cheaper. The third and very important part of this is that we will then use the national business name as a portal, so you can go through the business names register and access other government activities like the tax office. Eventually we want to add state and local government activity.
MB: So you’ll be able to arrange all your licenses and so on, all on the one website?
Senator Sherry: Precisely. You’ll be able to portal through to all other government services. That’s an example of a reform that will be cheaper to use and delivery a more efficient range of services.
The final area of reform that I’ll be making some announcements on in the new year involves dispute resolution. At the moment business-to-business dispute resolution is only offered in a very small number of areas.
Most small business do not have access to dispute resolution outside the courts.
I’ll be releasing a policy and options paper moving to national, universal, small business dispute resolution.
That will set out what exists, much of which is not known by small business, and second it will set out the options for moving to a comprehensive small business dispute resolution [service] around the country.
I’m very keen that we are able to spread business-to-business dispute resolution in the coming year.
MB: You’ll be crossing several jurisdictions. This could get constitutional!
NS: That’s one of the issues we’ll canvas.
There are certainly constitutional issues, but I think it is an important goal. It doesn’t have to be operated by the Commonwealth but it is important to have dispute resolution across the country.
MB: Is there a small business that you think is a benchmark or a standout?
NS: I’ll give you an example of a business.
It’s a medium business now, but it was a small business.
There’s a business in Burnie in the North of Tasmania called S.E.R.S. It started out as a mum and dad roof installation company, in their backyard and garage. They started 20 years ago and were established just around the corner from where I lived. Today they have about 80 employees and they have diversified and have two business streams.
They still have their traditional roof installation and guttering business, but they started to manufacture their own roofing iron and guttering. They decided to buy the bending and cutting equipment needed to cut their own roofing and guttering.
Then they expanded that side of the business to manufacture and cut roofing equipment for other installers.
Then they diversified the cutting and bending equipment used for roofing into cutting and bending specialist aluminium panels for things like mining equipment, panels for specialist motor vehicles and a whole range of other applications.
They have some of the most modern laser cutting and design aluminium in Australia, and now they’re buying new equipment to expand their aluminium pressing and cutting.
The business plans to employ another 15 people in the next year.
It’s a classic example. Mum and Dad still run the business, they’re very focused on the employees, treat them well, and they see the business as being for their employees, not just for them
MB: They’d be a very substantial employer in Burnie?
NS: Yes. And the 15 new employees they are looking for will be sourced from a couple of the other paper manufacturing businesses that have closed here on the north-west coast. They are a really, really good business case study.
That’s a really good example of a local business, and in a tough time for local manufacturing they have grown and thrived.
This interview first appeared in the February 2011 edition of My Business.