Tax reform, open borders: we need people working again

This opinion article by Business Council chief executive Jennifer Westacott and Council of Small Business Organisations Australia chief executive Peter Strong was published in The Sydney Morning Herald and The Age on 25 September 2020 

Some time ago, the Council of Small Business Organisations Australia (COSBOA) and Business Council of Australia (BCA) made a conscious decision to break down the divide between big and small business. We chose to focus on what we could do together for the economy and through that for Australia, for the business community and workers.

Coming together in the national interest doesn't automatically mean we agree on everything or ever will but most of the time we do share common ground.

We agree this COVID crisis is a major moment in time. A crisis few saw coming. A crisis that Australia has managed better than most. We also agree this could be our moment as a country if we get our economic recovery right.

As we start thinking about the next steps, as we start to rebuild, Australia is faced with a series of choices.

We can choose to spend money standing still or we can target spending to move forward. We can roll up our sleeves and choose hope and optimism over more of the same. We can choose to direct our energy and strategies to tackling entrenched problems that have held us back in the past.

We can choose to work together - as the majority of big and small businesses are doing every day - in the interests of restoring the jobs that have been lost and creating the new ones that will be needed, or we can remain divided and tread water.

Dismantling the often-arcane barriers that make it harder for all employers, whether they're family-run small businesses or major exporters, to hire just one extra worker will make the herculean task of job creation a little less daunting.

We can decide whether governments at all levels reinstate the type of outdated red tape they removed during the pandemic or stay the course on reducing unnecessary regulation and keeping the regulation needed to protect our competition, our environment and our competitive advantage.

We can make the choice to bring forward the second and third stages of personal income tax cuts to permanently put more money back into people's pockets when they need it most.

This will encourage spending.

The tax cuts give people back more of the money they've earned. We can decide to make the tax system simpler and reduce the disincentives that actively discourage workers from entering the workforce, from doing a few extra hours or from getting a new job.

Ultimately, the budget needs to make the right choices to get people working again. People want to work or they want to get their businesses going again. They want to be secure and want to see how their business can grow. We have a choice to empower people, create Continued next page This could be our moment as a country if we get our economic recovery right.

We have a choice to empower people, create new jobs, new businesses and new industries or we can pull over and drive along in the slow lane.

Right now, we have a choice to spend $10 billion a year to encourage businesses to invest one of the best ways to create new jobs - or keep spending around $12 billion a month on JobKeeper wage subsides.

We are putting forward a plan to introduce a 20 per cent investment allowance. We estimate the allowance could cost about $10 billion a year but generate about $200 billion worth of new investment and 500,000 new jobs over a decade.

It works by providing a bonus tax deduction for businesses of all sizes and types to purchase new machinery, new equipment or build new facilities. Businesses have projects they want to do or equipment that needs replacing.

With a 20 per cent bonus deduction, the math starts to stack up.

The allowance isn't just for heavy machinery. Companies could access it for anything that helps them do business better and hire more workers including upgrading digital systems, doing a fit out of an office or changing the decor and furniture of a restaurant.

Throughout COVID, businesses have demonstrated their entrepreneurial spirit, their innovation and creativity. They've stepped up and adapted quickly, often changing business models within days. An investment allowance would help speed up the adjustments they will need to continue making as the economy recovers and we find new ways of working post the pandemic.

An investment allowance will also serve as a magnet to invest in Australia as well as encouraging local companies to bring their operations, such as call centres, back home.

In the October federal budget, we can decide whether we make our country more attractive to overseas investment and more internationally competitive.

If the pandemic has taught us anything, it is the value of cooperation even when we don't always see eye to eye. Seeking common ground to solve problems is more important than ever, especially as the support from JobKeeper payments begins to taper down.

The way we have managed the health impacts of COVID-19 has enhanced our reputation as a safe destination. Let's maximise this.

With the right measures, Australia could become a powerhouse for global investment.

But the first decision we have to make as a country is to open up our economy. Keeping the community safe is the priority but as NSW has shown, it is possible to work and live alongside the virus while managing the health impacts.

Domestic border closures have been an effective emergency management tool for extreme circumstances, they shouldn't be used as a permanent COVID control measure. With a focus on localised containment and vigilance, Australia can work towards a three month plan to reopen domestic borders and set out a six-month, controlled approach for opening international borders. These are the type of choices that will power our recovery.