It is a great pleasure to be able to speak to you today, and I thank COSBOA for the opportunity to address this forum again.
I have said before that small businesses are the engine of the Australian economy.
That is not just a political statement.
It is a truth based on the quantifiable contribution of small business to our country.
Consider just a few facts:
* There are approximately 1.93 million active small businesses in Australia.
* Small businesses make up 96 per cent of all businesses.
* Small businesses contribute around 35 per cent of Australia's total GDP.
* Small businesses employ 3.8 million people, accounting for around 46 per cent of total private sector employment.
* More than 17,000 small businesses are exporters which last year shipped goods to the value of $1.2 billion in total.
These facts underline the importance of small business to the Australian economy.
And these facts are the reason that the Government has been consistently focussed on the challenges facing small business.
And why we have renewed that focus in the context of the global recession - to make small business a key element of the Government's Nation-Building for Recovery Strategy.
The global economy is experiencing the worst global economic collapse in three quarters of a century.
The global economy is forecast to contract by 1.3 per cent in 2009 - this will be the first contraction since IMF records began.
Growth rates around the world have collapsed.
In the first quarter of this year, the average contraction across the OECD was 2.1 per cent.
Only 3 of 33 advanced economies recorded positive growth in the March quarter.
Australia was one of those countries - growing at 0.4 per cent in the first quarter.
Australia is now has the fastest growing economy in the OECD group of developed countries.
And we are the only major advanced economy not to have fallen into recession at this point.
Australia is not out of the woods just because we avoided a technical recession.
There will be more bad news to come, with growth continuing to be slow and unemployment continuing to rise.
But Australia has fared better than most - because we acted with early and decisive action.
When the global financial crisis intensified in September last year, the Government recognised the severity of the crisis and formulated an economic strategy to support the economy.
That strategy comprised a short, medium and long-term response.
In the short term, the government moved quickly to respond to the immediate crisis in the banking sector.
Our first priority was to ensure that the flow of credit to Australian businesses and mortgagees didn't evaporate as global financial markets collapsed.
Credit is the lifeblood of the economy.
Small business people know that better than most.
Without credit, businesses do not have the cash they need to support their operations and grow their business.
During the financial crisis the global financial system went into meltdown and interbank lending ground to a halt.
Australian banks found themselves unable to raise the offshore funds they need to lend into the Australian market.
In September Australian bank raisings had fallen to just $1.7 billion, down from the $13 billion a month earlier in the year.
As the chart indicates - in October there were no raisings at all.
Offshore markets were totally closed to Australian banks.
That is why the Government took a historic decision in October to guarantee term wholesale funding for APRA regulated banks, building societies, and credit unions.
The guarantee had an immediate effect.
By December - with the help of the guarantee - offshore markets had opened to Australian banks which raised more than $15.4 billion in guaranteed funds that month.
In January, banks raised more than $20 billion offshore.
With the guarantee, domestic banks could access much-needed funds to support lending in Australia.
In addition to securing the financial system, the Government has also acted to support activity in the real economy.
As the global economy deteriorated rapidly, the government recognised that we needed to act quickly.
Since infrastructure investment has long lead times, the Government decided to introduce fast-acting measures to directly stimulate consumer demand.
To achieve this we invested $21 billion to provide immediate support to the economy - through cash payments to families, pensioners, veterans, and low income earners.
As the chart shows, those payments have boosted the Australian retail sector.
While in the major advanced economies, retail sales have fallen on average by 1.1 per cent since November, in Australia retail sales have grown 4.8 per cent during this time.
This is very important for small business, given that small retail businesses account for almost 94 per cent of all retail businesses across the nation.
As an additional immediate stimulus measure, the Government introduced a $2 billion First Home Owners Boost to support the housing and construction industry.
This has been a significant boost to construction activity.
Compared to the same time last year, before the onset of the global recession, building approvals have fallen by only 16 per cent in Australia - and the recent trends has been upward.
That compares to falls of 38 per cent in Canada, 50 per cent in the US and 57 per cent in New Zealand.
The national accounts figures last week proved that the short term measures we put in place worked to support the economy until our infrastructure investment comes online.
As the chart indicates, without the short term economic cash stimulus payments, Australian growth would have been minus 0.2 per cent in the March quarter - pushing Australia into a technical recession.
Many businesses would not be keeping their heads above water through this global economic storm.
Beyond the immediate term the government also acted early to support the economy in the medium term through shovel-ready infrastructure projects, including:
* The largest school modernisation in Australia's history, generating local jobs for businesses on thousands of sites around the nation;
* The construction of more than 20,000 new social and defence homes, and
* Providing free ceiling insulation for around 2.7 million Australian homes.
Over the longer term, the Government's strategy is nation-building for recovery.
We are supporting jobs today by investing in the nation-building infrastructure Australia needs for tomorrow.
* We are investing in major rail, road and port projects.
* We'll be investing in major clean energy projects, including the largest solar energy project anywhere in the world.
* We will also be investing up to $43 billion in a partnership to build a high-speed National Broadband Network to finally bring Australia into the global digital economy of the 21st century.
In total $49 billion - or around 70 per cent - of our stimulus is directed to nation building infrastructure over the medium to longer term.
By the end of the year we'll have more than 35,000 construction projects underway around the country.
This strategy of short, medium, and long term support for the economy during the global recession has helped to cushion Australia from the worst impacts of the global recession.
I welcome the news today that business confidence is on the rise.
The increase in business confidence for May was the sharpest rise in business confidence since 1989.
Business confidence is now at its highest level since February 2008.
There is a long way to go, but this data suggests that Australian businesses can see some light at the end of the tunnel.
We are by no means out of the woods.
But if the Government had not acted early and decisively, Australia would already be in severe recession and the significant fall we've seen in business investment would be even sharper.
In aggregate, Treasury has estimated that without our nation building plan over 200,000 more Australians would be out of work.
Without government action, unemployment would peak at over 10 per cent.
The global recession has of course had a significant impact on the budget's bottom line in Australia, as it has around the world.
The Australian budget has been hit with a $210 billon collapse in Australian tax revenues caused by the global recession.
This is the greatest collapse in tax revenues in our nation's history and has made a budget deficit necessary in Australia until the economy recovers.
But despite the revenue collapse and our stimulus measures, Australia's AAA credit rating has been reaffirmed since the budget.
And Australia's budget deficit and net debt is lower than any of any major advanced economies.
Government net debt as a share of GDP is expected to rise to 75 per cent in the Euro area, 83 per cent in the UK, 83 per cent in the US, and 136 per cent in Japan.
By contrast, Australia's net debt is projected to peak at 13.8 per cent of GDP in 2013-14, before it starts to fall again as our economy moves into a strong period of growth.
In addition to the Government's nation-building strategy for the Australian economy, we have recognised, and responded to, the specific challenges facing small businesses.
Since the financial crisis began, the government has stepped in with a range of specific measures targeted directly to small business.
First, we have taken decisive action to strengthen incentives for small businesses to make capital investments, by introducing the 50 per cent Small Business Tax Break for capital investment.
This means that when a small business buys an eligible asset costing more than $1,000 before the end of this year, small businesses will have access to a 50 per cent tax deduction.
This is up from 30 per cent deduction introduced earlier this year and extends the period of eligibility by six months.
This is a major new incentive for small businesses, and will encourage small businesses to invest for the future and for economic recovery.
And we appreciate COSBOA's support for this measure.
This will not only have positive financial implications for small business but it will have flow on effect for other businesses.
Second, the Government has also announced tax measures that will deliver $720 million in cash-flow relief for approximately one million small businesses, by reducing the Pay-As-You-Go tax instalments in 2009-10.
Third, the Government also recognises that in the tough conditions that many businesses are confronting, small business owners need access to help and advice.
This is why we have moved to establish the Small Business Support Line to assist small businesses during the global recession.
The Support Line will provide initial advice to small business owners and also put them in touch with specialist advisers on matters such as obtaining finance, cash flow management, retail leasing, personal stress and hardship counselling, and promotion and marketing advice.
The Support Line will complement the Business Enterprise Centre network, which is providing targeted advice and support to small businesses.
Fourth, the Government wants to ensure that small business benefits from the national broadband network. That is why the budget also announced the Government's Small Business Online program to help small businesses seize the business opportunities created by the internet.
Operating online is essential for the economy of the 21st century and helps small business to seize the global opportunities.
Fifth, we are lifting incentives for small businesses to engage in research and development.
The incentive to undertake R&D will be doubled for most small businesses from 2010-11, through the new Research and Development Tax Credit.
This will provide a refundable credit of 45 per cent that is not dependent upon a business making a profit in one particular year. This measure has been explicitly designed with the goal of focusing innovation incentives on smaller businesses.
Sixth, we are investing $196 million in a new Commonwealth Commercialisation Institute to help small and medium companies turn great ideas into commercial reality.
Seventh, I know that many small businesses are concerned about interest rates - and the rate at which official cuts are passed through to small business.
As the chart indicates, standard small business interest rates are currently around 7 per cent, having fallen from a peak of 10.10 per cent in August 2008.
But while interest rates for small businesses have fallen substantially, we understand that they have not come down as rapidly as other interest rates.
Over the same period the standard variable mortgage rate has fallen faster - by around 3 ¾ percentage points from 9.6 per cent to 5.75 per cent, and the cash rate has been reduced by 4.25 per cent, from 7.25 per cent to 3 per cent.
The Government has made the case both publicly and privately that it expects the Banks to pass on reductions in official interest rates to all borrowers as quickly as possible.
To ensure credit continues to flow to small businesses, the Government has put in place the wholesale bank guarantee.
The Government has also made available a small business banking complaints clearing house for businesses that believe they have been unreasonably denied credit.
And we will use this information to closely monitor the availability of credit to the small business sector.
At the same time as supporting small business through our nation building and other stimulus measures, the Government has been working on the implementation of the commitments we made to small business before the election.
Over the past two and a half years since I have become leader of the Federal Labor Party and then Prime Minister, I have made a number of commitments to small business.
We take those commitments seriously, and today I want to report back to you on the progress we have made.
First, at this very forum two years ago I committed to establishing a Small Business Advisory Council to give small business a greater say in government policy making.
Today I can announce the detailed implementation framework for the Small Business Advisory Committee.
The Committee will take the form of a panel that will be independent of the government and will be comprised of members who have extensive experience with small business.
This panel will be a strong voice for small business in government.
The panel will be consulted in the early stages of a policy's development, and then as the proposal is about to be submitted for final deliberation.
Next month, the Government will call for Expressions of Interest from suitably qualified people to be appointed to the SBAC Small Business Advisory Committee with the appointment of the Committee panel members to be made this year.
The second commitment I made to you in 2007 was to improve on-time payments of Government contracts.
Small businesses shouldn't have to wait for payments in their dealing with governments.
I can report that since 1 December 2008, all new federal government contracts up to $1 million with small business have been subject to the “on-time payment guarantee”.
That means accounts will be paid within 30 days, otherwise small businesses will have the right to charge penalty interest.
The third I made before the last election was to support 36 Business Enterprise Centres around Australia as one-stop advisory services.
The Government has kept that election commitment and the $42 million program is being delivered.
Building on this commitment, last October I also announced that the Government would provide an additional $4 million for small business advice.
That program, too, is now well underway, with 54 local small business organisations in suburban, regional and rural Australia being funded to provide advice such as preparing business plans and applying for finance.
Fourth, I committed to help small business better access the Government procurement market.
Since coming to power, the Government has issued revised Commonwealth Procurement Guidelines.
These guidelines will improve transparency, better inform small businesses about government contracts and clearly state a balanced approach to risk management in contracts.
The Minister for Finance and Deregulation, Lindsay Tanner wrote to all Portfolio Ministers asking them to ensure that agencies implemented the revised procurement framework so that small and medium enterprises would continue to have fair access to the government procurement market.
Fifth, we committed to strengthen the Trade Practices Act to ensure that small businesses were protected against abuses of market power by larger players.
I can report that the Trade Practices (Cartel Conduct and other measures) Bill 2008 was introduced into Parliament on 3 December 2008.
This bill includes tough measures to crack down on the abuse of market power by large businesses.
The bill introduces criminal sanctions for serious cartels involving bid rigging, market sharing, and price fixing.
Sixth, we committed to cutting red tape for small business.
As a part of our election platform we promised to introduce an optional and cost free superannuation clearing house for small business so that they could meet their superannuation obligations under the choice of fund arrangements with a minimum of fuss.
In our first Budget we allocated $16 million over three years commencing in 2009-10 to deliver on this commitment.
The details are currently being finalised and the clearing house will be operational by the end of the 2009-10 year.
The clearing house will allow small employers to make just one contribution payment to the central clearing house for all of their employees.
The clearing house will manage all of the choice of fund paperwork with the small business employees further reducing costs so that small businesses can get on with what they do best - supporting growth and jobs.
The Government is acting decisively and comprehensively to support economic growth and support the small businesses that help drive our economic growth.
We are also providing targeted direct incentives to foster small business investment.
And we are improving specific assistance to help small businesses to make it through the global crisis.
This represents a new partnership between government and the small business sector.
And it demonstrates that Labor is committed to deliver support and opportunities for small businesses.
The Government cannot turn around ill fortunes for every business, just as we cannot stop the rise in unemployment.
But as a Government, we can make a difference, and we can help cushion the impact of this global economic crisis on businesses and on jobs.
So I encourage small businesses to make the most of the measures in place, and for advisors to pass that message on.
Communities all around Australia depend on the prosperity and success of their small businesses.
And the Australian Government is determined to support you through very challenging economic times.
Because all of us are in this together - whether a business owner, an employee, a customer or supplier, or someone in government or other organisations.
And it's by working through each of the challenges of this global crisis together, that we can make it through and build a stronger Australia for the future.