Fran Bailey, the Minister for Small Business, Bob Stanton, President of COSBOA, Ron Boswell, the Leader of the National Party in the Senate, Tony Burke, the Shadow Minister for Small Business, ladies and gentlemen. I'd like to thank Mr Godfrey for his very warm words of introduction and I remember very vividly the meeting I had with him and his colleagues in Canberra back in 1999, and I certainly reflected with some satisfaction and, I suppose, sense of vindication towards the end of 2001, when the Ansett company collapsed, how right it had been of the Government to take that decision some two and a half years earlier. And, along with Mr Godfrey, I have no argument with Qantas. It is a great airline and a great flag carrier for Australia, but just think of what, particularly the domestic airline market would have been like in Australian now without the participation of Virgin Blue, and I thank that company for the contribution it's made to maintaining competition in that very important part of our economy.
This is, as your President has said, the fourth occasion during the last five years that I have attended this gathering, and I have done so for a number of reasons, but the most important of all is to demonstrate and to articulate as best I can the very strong commitment I personally have to small business within the Australian economy and the commitment I have to your organisation. We are now in the fourteenth year of the longest unbroken economic expansion that Australia has had at any time since World War II. Our economic conditions during this period of time are the best we've had since 1945. They're better than they were in the 1960s because in the 1960s we had a far more protected and cloistered economy. But the environment for your sector of the economy, the small business sector of the economy, is the one that I want to address a few remarks to tonight.
The most remarkable thing, of course, has been the sheer number of small businesses that have been created - not all of them have lasted, but that is the nature of the beast - over recent years. Some figures released by the Bureau of Statistics show that between February of 1997 and June of 2004 the number of home-based small businesses increased by 75 percent or more than 360,000. Now that is really an extraordinary figure, that in the space of 6 years the number of home-based small businesses rose by 360,000. There are now in Australia, of the figure quoted by your president, of the 1.3 there are now some 850,000 small businesses operating at or from home, and the Bureau found that by 2004 home-based businesses accounted for 67 percent, or a full two thirds of all small businesses - this proportion having risen from 58 percent in 1997.
Now I mention this development to underline a number of things: underline the extraordinary growth of the small business sector, underline the extent to which the availability of all of the facilities of information technology have liberated the capacity of so many people to operate their businesses at or from their home, and also to make the point that home-based small businesses represent the new face of entrepreneurial Australia. That is not, of course, to denigrate the role of large corporations in out community, but rather to underline the great importance of the home-based, family-based small business. And this of course is a sector of the economy where the contribution of women in business is growing at an exponential rate, because, as it's rightly been observed, that somewhere between 30 to 40 percent of the small businesses that have been created during this period have been started by Australian women.
I made a commitment during the last election campaign that the Government would continue to do everything it could to further improve the environment for small business. We can make all the taxation decisions we like - and I'll come to that in a moment - we can make other decisions that have a direct impact on the regulatory environment in which small business operates, but nothing is more important than the generic economic climate in which small business operates. Nothing is more important to you than to have low, stable inflation rates, to have low interest rates, to have a consistent climate for business investment, and to have a sense in the community that the economy is heading in the right direction, that those who are responsible for the government of the country, and the government of the states in which you operate, have a sense of the needs of small business and have an understanding of what is required to maintain the momentum of the economy in which you operate.
We are committed to maintaining a strong entrepreneurial culture, and I would argue very strongly that the Budget that was brought down last Tuesday night by the Treasurer contained within it a large number of changes which are very conducive to the environment in which you operate. The Budget has been, I suppose, best known already for the major changes that it has made in the personal income tax scales. Those changes were long overdue. It has long been the view of many people on both sides of politics in Australia that one of the great weaknesses of our taxation system was that our top rates of marginal taxation cut in at too low a level of income. Many of you will know, some will not know, that the top rate of income tax - and I'm talking in comparative Australian dollar terms - the top rate of income tax in the United States cuts in at $425,000. The top rate of income tax in Japan cuts in at AUD$275,000. The top rate of income tax income tax in Canada cuts in $120,000. The top rate of income tax in the United Kingdom cuts in at $87,000, but it is at 41 percent, a full 6-7 percentage points lower than what it is in Australia, and the top rate of income tax in New Zealand cuts in at $55,000, but it is also at a lower rate, namely 39 percent. Now I bore you with those figures to make the point that one of the great weaknesses of our system has been that our top rates have cut in at too low a rate.
The argument has been advanced that if you cut top marginal tax rates you reward high income earners with more dollars than low and middle income earners. That is right, but there's an explanation for that, and that explanation is that high income earners are paying more tax before the cuts and they're also paying considerably more tax after the cuts. If you maintain that argument you never by definition do anything about cutting the thresholds at which high marginal rates of tax come in. I think those changes were long overdue, and I think the Government chose precisely the right time to do them, and if they hadn't been undertaken in this Budget with the strong revenue that we found we enjoyed before the Budget was finalised, then I don't believe that they would ever had been done notwithstanding claims to the contrary. So, the $21.7 billion of personal income tax cuts announced in last week's Budget built on the reductions that were made in last year's Budget. And could I also make the point in social terms the Government has devoted a great deal of effort and large financial resources over past budgets in strengthening the after-tax and transfer payment position of low and middle income families with young children, and if you examine the impact of those changes you find that over the last 8 or 9 years the position of low and middle income families with children in this country has been substantially improved and no rational, sustainable argument can be advanced that over the last 8 or 9 years have the rich in this country got richer at the expense of the poor and more lowly paid becoming poorer or less well paid. The reality is that some high income earners in this country have got richer, more people have been added to that list, but it has not occurred at the expense of low and middle income earners, and that it hasn't occurred at their expense has been a direct consequence of deliberate Government policies designed to support the position of low and middle income families.
Now in this Budget we have not only removed some of the disincentive in higher marginal tax rates, but we have also removed something that I know was very unpopular with small business and that is the superannuation surcharge. That surcharge was introduced in the 1996 Budget essentially in the eyes of the Government, as it then saw it, as an equity measure. Given that expenditure reductions were occurring in many other areas, the view was taken that higher income earners could make a contribution to curing the budget difficulties we then had, and that was the basis of the introduction of that surcharge, and I'm very pleased indeed that we will be in a position, I hope with the current Senate, and certainly with the future Senate after the 1st of July, of removing that impost with effect from the 1st of July. And that will reduce business costs very significantly, and it will be of particular benefit to many people in small business. And the decision to remove the 3 percent tariff applying to business inputs where no substitute goods are manufactured in Australia - once again a measure introduced in 1996 - it's removal with effect from the 1st of July will reduce costs for affected businesses by about $1.3 billion.
Now these taxation measures, all of which are of benefit to small business, come on top of the small business initiatives announced during last years federal election campaign. The 25 percent Entrepreneurs Tax Discount will come into effect from the 1st of July this year, and it will deliver tax relief worth $1.2 billion to many small businesses, essentially those that are set up and operate from home. And, in addition, improved access to the Simplified Tax System will provide additional tax relief to many small businesses to the tune of $360 million.
We also continue to pursue the abolition of a range of inefficient state and territory taxes, including many pernicious stamp duties, as part of the Intergovernmental Agreement signed between the Commonwealth and the states when the Goods and Services Tax was introduced. So taking all of those things together - the announcements made in the Budget, the implementation of the commitments made in the election campaign - all of them represent a significant reduction in the tax burden of particular reference to the small business sector.
Now a number of you already, both Mr Godfrey and also your President, Mr Stanton, have mentioned the regulatory burden. And I acknowledge first up that regulation remains a source of criticism by the small business sector of all levels of government. And my Government will, at a national level, continue to work I hope in a constructive way with your organisation to continue to reduce the burden. In last year's small business statement from the 1st of January this year the requirement for employers to provide regular reports to their employees on superannuation guarantee contributions was removed. And this change to the reporting requirements meets some of the concerns that have been expressed about paperwork and compliance costs. You may also recall the commitment we made to help get the Tax Office off the back of small business by changing the period in which the ATO can audit and adjust tax assessments. And for businesses within the Simplified Tax System the previous four year period has been reduced to two, and this will not only significantly ease record keeping but it will give many small businesses greater piece of mind. And the Government is also pressing ahead with the implementation of the $50 million regulation reduction incentive fund designed to ease the regulatory burden imposed by local councils on many small businesses.
But of all of the reforms of the future that are important to small business, none of course are more important than the changes that we are currently finalising in relation to the workplace relations system. You will be aware that at the time of the last election we undertook to implement many of the changes that we had tried to get through the Senate, not least of course the infamous unfair dismissal changes which we attempted on something like 39 or 40 occasions to get through the Senate that have been unsuccessful. The Government as you know unexpectedly, and I don't mind admitting that, has found itself in a position where the majority of Senators after the 1st of July will come from the Liberal and National Parties. We don't intend to use that majority in a capricious or punitive or triumphal fashion - rather we intended to use it in a sensible, productive fashion designed to give effect to changes that we have long championed in the area of workplace relations and also to give effect to some other changes that will further liberalise the system and make it easier for employers and employees to enter into Workplace Agreements.
So over the weeks ahead the Government will finalise and will announce the changes that we have in mind in this area. Let me make it clear that these changes are not designed, as some have suggested, to reduce the wages of Australian workers. Let me tell you, I have no interest in reducing the wages of Australian workers. I believe in Australian workers being paid higher wages. The foundation of the prosperity of our country is a fully employed, well paid, productive workforce and all of you in this room as small business employers will know that the best employees are the employees that you remunerate well, that the best workplace relations are those relations built on mutual respect and trust where you look after your good employees, you pay them well, you make sure you keep them by keeping their wages competitive and you ensure in return that their loyalty is maintained and their commitment to the success of your enterprise is seen as important to them as it is to you.
But we do need to have an even more flexible industrial relations system. And I see enormous advantages in having a system which has national application - not out of any blind commitment to a centralist view of how this country should be governed, but out of a recognition that even amongst small enterprises increasingly we operate in a national economic environment and it makes less and less sense to have essentially nine industrial relations systems, if you take into account the Australian territories, instead of one that increasingly sees Australia for what it is - and that is a single operating market.
I believe that there is room for further reform in the area of industrial relations. I do not believe, as does my opposite number, the Leader of the Opposition, that the process of change and reform in the area of industrial relations has been completed. I think there is still a significant distance to go. It is not an exercise based on a desire to break trade unions, I have no objection to the proper role of trade unions in the Australian economy, people have a right to join a trade union, they have a right if they choose to have their interests represented by a trade union and a trade union has a right to negotiate on behalf of its members. That right has to be exercised in parallel with the right of employees and employers to make employment arrangements comprehensibly covering their terms of employment, separate and apart from a trade union if that is the wish of the employers and the employees. And particularly in the area of small business we need to recognise the essentially personal nature of the employment relationship that exists between individual employers and employees.
Well my friends, I want to say in conclusion that I have come here tonight again as I said at the commencement of my remarks to recommit my Government, only seven months since its re-election, to the continued importance and cause of the small business sector in the Australian economy. These are great economic times, but they are not economic times that can be taken for granted. The reform process has never been completed, or is never completed. We still have in front of us major areas of economic challenge and reform, none is more important than further changes and improvements in the area of industrial relations. We also need, and I acknowledge in this context the presence of the Chairman of the Australian Consumer and Competition Commission, Mr Graeme Samuel, we also need to maintain the momentum of further building a more competitive Australian economy. Competition has brought great benefits to the Australian economy. Some people complain about competition, some people in business don't like competition, but if you really believe in the free enterprise system you will always place a very high premium on maintaining and expanding opportunity and expanding competition.
Australia is living in a very conducive world economic environment. We are fortunate that the demand for our resources, particularly from the nations of north Asia, is growing. We are fortunate that the changes that our economy has enjoyed over the last 10 to 20 years have made us a country that is able to take advantage of the global environment in which we live.
Last Tuesday my colleague the Treasurer brought down a Budget that would have been the envy of any finance minister anywhere in the world. A Budget that displayed a net government debt of 0.7 per cent of GDP against an OECD average of about 47 per cent; a Budget that displayed a remarkably strong fiscal position; a Budget that reported the lowest level of unemployment in almost 30 years; a Budget that reinforced the low inflationary, low interest rate climate in which we are living; but also a Budget that recognised that as an ageing population we need to take steps to sustain services that are relevant to the ageing section of our population and that as a nation that is now short of workers rather than being short of jobs we needed to provide incentives, or as many people to re-enter the workforce as reasonably possible.
Small business has a major role to play in all of these things. Small business, to use that old clich‚, has been, continues to be and will always be the engine room of the Australian economy. It will always provide the greatest area of job growth. It will always provide the great areas of innovation and change. And it will always be the crucible in which the really competitive animal spirits of the Australian economy work best for the national interest. It's for those reasons that I remain a very strong devotee of small business and my Government will always do what it can to make the climate in which you operate as conducive as possible.
I thank you again for inviting me to be with you at this very important dinner to this very important small business summit.
[ends]