29/07/2010 - 00:00

Campaign numbers don’t stack up for business

29/07/2010 - 00:00

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WHEN it comes to this election campaign, Martin Bullock admits to being torn between his direct business interests and his personal views about economic management.

Campaign numbers don’t stack up for business

WHEN it comes to this election campaign, Martin Bullock admits to being torn between his direct business interests and his personal views about economic management.

As managing director of infrastructure civil and electrical contractor Densford Civil, Mr Bullock appreciates the infrastructure opportunities that Labor offers to keep his industry buoyant.

Working on big civil projects such as airports or main roads for private companies and government across the state, Densford is a likely beneficiary of any nation-building spending.

Mr Bullock is disappointed the Liberal Party has pulled back in that area.

Nevertheless he struggles with Labor’s recent form – big spending, which he views as wasteful, coupled with a mining tax that he opposes on ideological grounds.

It is the kind of question that business people across the state have to ask themselves. Self-interest can be a little problematic.

It is not just Labor that presents such a harsh choice. The Liberals want to introduce six-month maternity leave provisions funded by businesses that earn more than $5 million.

And opposition leader Tony Abbott offers to restrain spending and rein-in debt, but his decision to cut back on immigration riles many in business who believe that strong population growth has underpinned the economy for decades.

Among the things the Liberals have done that appears to have riled the business sector, especially the big end of town, it is the party’s influence on population debate.

Both sides have been accused of chasing this issue to its basest level, with talk around population levels seen as a proxy for the harder issue of dealing with asylum seekers. Some say Prime Minister Julia Gillard has used sustainable population as a dog whistle for immigration.

However, it has been Tony Abbott who has driven this debate, concentrating first on boat people and, at the weekend, setting an immigration target of 170,000, well below recent years, though in line with current forecasts.

The subject has caused consternation among business luminaries such as leading Western Australian director Michael Chaney, chair of Woodside Petroleum and National Australia Bank, whose comments were reported last week.

“The fact is we need a growing population to fill jobs in our growing economy, and you’d have hoped for a bipartisan approach on reasonable population growth,” Mr Chaney said.

“The paranoia over asylum seekers is being allowed to influence the population debate, and it’s not getting any better in an election.”

The Chamber of Commerce and Industry WA is also worried Mr Abbott’s planned cuts to immigration would hurt economic growth and job creation here.

“At a time when local employers need hundreds of thousands of extra workers over the coming years, it makes no sense to cut back on the size of the available workforce,” CCIWA CEO James Pearson said.

“What we need, in fact, is more not less people coming into the state.

“Australians need not fear a growing population. What we need is a calm, mature and sensible debate about the nation’s population, and how the country can plan for it.”

The long-running immigration debate has already had consequences for the international education sector, the nation’s fourth biggest export industry, which is being slammed by new regulations and tightened visas.

Rod Jones, CEO of industry leader Navitas, believes billions could be lost to the economy as a result of the government’s overzealous crack down on dodgy operators and visa shops, which have flowed on legitimate businesses like his and the students it teaches.

Industry players say overseas markets have already been hit by tougher visa requirements, with agents reporting that Australia doesn’t want its students.

The International Education Association of Australia has predicted losses of annual export revenue of almost $6 billion, or 30 per cent of the sector’s income. It predicts thousands of jobs will be also lost.

The sector’s cause will not have been helped by Mr Abbott’s weekend announcement. In producing a smaller immigration target weighted to skilled migrants, students will find it harder to gain entry to Australia.

Business lobby group CCIWA has also highlighted industrial relations as a major issue, though it’s hard to see how this will gain traction in the campaign.

CCIWA has stated that employers’ needs included a flexible and fair industrial relations system, and this week it plans a paper on what the next government needs to do to address priority issues for WA employers.

But in trying to take industrial relations off the election agenda, the Liberal Party has announced it will not touch Labor’s laws, even to the point of denying relief to small business for unfair dismissal.

In explaining his position in this weekend’s election debate, Mr Abbott said that business around the country had told him they were sick of the upheaval that occurred in IR over the past few years and they did not want more change.

There is no doubt there is a grain a truth to this reasoning, even if it is convenient in the context of an election.

Even before Labor won the federal election in 2007, many WA businesses were fed up with the changes in IR, having endured two different state systems before John Howard introduced WorkChoices.

Business proprietors in WA like our two case studies, Mr Bullock and Rosemary Cant, have not indicated that IR is a major issue. However, having put up with strike action earlier this year, big business in the state’s north may feel differently about what may come if Labor wins and the unions are let off the leash again.

One area being predicted as a sleeper opportunity for Mr Abbott to exploit is that of the self-employed, a massive number of people who represent a greater proportion of the working population than union members whose leaders have great sway over Labor politics.

Areas such as tax are seen as pinching small businesses. One area causing consternation is new tax treatments for trusts, which are often at the heart of small business. (See page 36.)

Potentially bigger though is a proposal to change personal services income provisions in the tax system, which would dramatically change a consistent approach over the past decade to determining whether independent contractors should be treated as employees for tax purposes.

According to the Independent Contractors Association, the Labor government has endorsed the concept of a new proposal that forces the self-employed to determine how much of their income was due to labour and how much was derived from assets.

ICA executive director Ken Phillips said this would create a great deal of complexity.

“It is just incomprehensively stupid,” Mr Phillips said.

“There is incredible uncertainty for every self-employed person the country.

“We wrote to Kevin Rudd when he was prime minister to state his position.

“Now we are in election mode until we receive a reply from the government we have to assume they have an agenda to turn on its head the tax laws for self-employed people.”

Mr Phillips said about 19 per cent of the national workforce consisted of self-employed people, or 25 per cent of the private sector workforce.

WA has a higher proportion with 21 per cent self-employed.

However, Mr Phillips acknowledges that this self-determined element in the workforce is difficult to coordinate, until they feel directly affected. He points to the original PSI laws, which caused a political furore that forced then-treasurer Peter Costello to return from holidays to deal with.

CASE SUDY

Martin Bullock

WITH little to separate the key policies of the two major parties, Densford Civil managing director Martin Bullock reckons he has to go on past performance.

“There has been a big waste of taxpayers’ money,” Mr Bullock said.

He said that industrial relations had not been a big issue at the infrastructure construction group, which employs more than 50 people.

However, Mr Bullock said the proposed superannuation levy rise was a concern.

“Obviously to any business owner the superannuation levy increase is tantamount to giving everyone a raise and the question is whether the marketplace will allow us to pass that on?”

Mr Bullock is also opposed to the proposed mining tax at a fundamental level.

“What do you do? Pick anyone who is making a lot of money at a particular time and put a tax on them?” he said.

 

CASE STUDY

Rosemary Cant

SMALL business owner Rosemary Cant is surprisingly forgiving of government for the burdens it imposes on the business she is involved in – the Old Bakery on Eighth Gallery and Cafe.

Employing eight people across the week, Ms Cant says the business has worn the upheaval in industrial relations (the business charges cafe customers a surcharge on public holidays but absorbs the staff penalty rates on normal weekends). She would also accept the additional cost a carbon tax might bring if Labor was re-elected, but resents the level of government-linked red tape and taxes.

In the current campaign Ms Cant is worried about the rising superannuation levy and about art investment being removed from self-managed superannuation, but she backs the stimulus spending during the GFC.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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