Small Business is the largest employer but suffers the most hardship in trying to comply with the weight of so much complex regulation. Small business is the key to getting Australia out of the mess it is in.
Let mum and dad business thrive and so will the country.
Transcript
Thank you. Thank you, Chair.
Senator Roberts.
[Malcolm Roberts] Thank you, Chair. Thank you Mr. Billson and your staff for coming.
Thank you.
[Malcolm Roberts] Small business, we know is Australia’s largest employer. It’s the engine room of our economy. The previous small business ombudsman in a report said, “A tax system that works for small business,” that was the title of the report, in February 2021 at page six, recommendation 21 stated “that the government must undertake tax reform to prohibit the ATO from charging penalties and interest issuing garnishee notices or instigating other recovery action on tax arising from a decision that is disputed”. We support this change as the ATO’s current policy could kill many struggling small businesses and it’s not fair. It’s completely unjust. On May 13th 2021, the Honourable Stuart Robert, MP, Minister for Employment Workforce Skills, Small and Family Business said in parliament that the government too would back small business over the ATO. The message is clear, in your new role as ombudsman, will you be advocating for this tax reform? And if so, what are you doing?
Yes, and yes, we are advocating for a very thoughtful use of the enormous powers the tax office has.
[Malcolm Roberts] They are enormous.
They are very substantial.
[Malcolm Roberts] They make laws basically.
Well, I mean the thing is we’ve been consistent on three fronts, Senator, one is they’ve got quite a lot of discretion about how they use it. So we’ve been trying to put a spotlight on how that discretion is exercised so that it’s consistent and thoughtful. Deputy Commissioner, Deb Jenkins, and I meet regularly about our experience with tax office interactions. I think you might’ve missed my absolutely, gripping opening remarks where I did touch on some of these issues, Senator, where we’ve had punitive penalties of 200% for late payments. Well, sorry, payments of superannuation guaranteed contributions being made in a timely way but not processed in a timely way. And that can trigger a liability. The tax office is saying to us they form a position of these are the rules. We’ve not got a lot of wiggle room with those 200% penalties. They’re now reflecting on that and dialling back that a little bit and putting more discretion that’s less punitive into their decision-making. Secondly, there’s a measure been recently announced that an aggrieved taxpayer can, seeking a decision from the AAT, can actually ask the AAT to direct the tax office to suspend recovery actions. So that you’d know well, if they judged that we were liable for a tax amount they can pursue the recovery of it even though it’s disputed. And in some cases we’ve heard that can limit the aggrieved taxpayer’s capacity to argue their own case. So we think-
[Malcolm Roberts] And to stay in business.
That’s right and so we welcome that announcement, we thought that’s a good step in the right direction. There’s also scope for me to come to our office. So if there’s a dispute a small business has with the tax office our concierge service can do three things. One, if we think it’s really odd, we can suggest to the tax office, they might want ever another look at this because we think they’ve perhaps made an error. Secondly, there is a mechanism to get fresh eyes review within the tax office so that someone else can have a look at the assessment to see where that judgement –
[Malcolm Roberts] That is a fundamental problem because the assessor can sometimes be the reviewer of the assessment.
And we were wary about how effective that measure was going to be. It was trialled initially. But the feedback we got was overwhelmingly positive from the small businesses that used it, even those that didn’t get the outcome that they wanted. So we were very, in that tax report that you’re referring to, we were urging for that to be maintained as a permanent service. So that’s there-
[Malcolm Roberts] So you’re advocating for structural change in that way?
And really a thoughtfulness around the way the tax office uses those awesome powers that it has. We surface case studies and think you know, maybe this could have been handled a bit better. Deputy Commissioner Deb Jenkins is a wonderful ally. I think the Inspector General of Taxation is doing some good work as well around understanding the nature of the tax debt. It’s often said small businesses is a big tax debt problem. Well, in total numbers, it’s a big number, but it’s spread across an awful lot of small businesses. And then there’s an awful lot more that are paying, that are fulfilling their obligations in a very timely way and that should be celebrated as well. The last one Senator is the idea of this AAT review. So we offer as part of that service and it was touched on earlier that $1.4 million administered funds we can have an aggrieved small business tax payer come to us, say they’re not happy. Say why they’re not happy. We will collate relevant material, suggest to them, maybe they might be misreading the tea leaves or we might suggest to the tax office they might’ve misread their obligations, see if we can get an outcome. That doesn’t happen, we may support and arrange a review by a tax expert, there’s about 20 around the country that we might refer, or refer that small business tax payer to where they can give an assessment of their prospects of success at the AAT. And then we may also provide a role in assisting that small business tax payer at the AAT, if they decide to proceed to that point of challenge.
[Malcolm Roberts] Thank you. That’s a comprehensive reply. And I know one expert who’s dealt with tax and small business for many, many years, and also the next topic I’m gonna get onto, he estimates that the $25 billion that small business owes to the ATO comprises 60% penalty and 40% principal and interest. And of course the penalty builds on that interest. So it’s huge.
And I think there’s an Inspector General report coming out on that very matter to break up the client group tax debt and then there’s some interest in what the components are like what you described. So I’d encourage you to keep an eye out for that report, Senator, that is also a gripping read.
[Malcolm Roberts] Thank you. I just mentioned the topic of my second, my second question is, what can be done to reduce industrial relations complexity for small business? The tax, sorry, the Fair Work Act is about that thick, when it’s printed out on piecec of paper, that’s horrendous for any small business employee any small business employer to get their head around it. And we need to restore the employer-employee relationship, surely.
Yeah, it’s difficult for many small businesses who want to do the right thing to know precisely what that is. I did point earlier to Senator O’Neill’s question around small business measures in the budget. One of the reg tech measures is to actually try and help small businesses navigate the award system. There’s also an advice line for small businesses that aren’t a member of an industry association. They’re not of a size where they’ve got an HR professional that they can get some advice. Our agency has also put out a report about simplification and for the purposes of full disclosure, Senator, I actually authored a report for the Fair Work Commissioner judge, his Honour Justice Ian Ross, about practical steps I thought could be taken within the current law as it is to make the system work better for smaller employers.
[Malcolm Roberts] Could we get a copy of that?
Yeah, That also is a good read,
[Malcolm Roberts] If you could send that on notice.
and I will make sure you receive that.
[Malcolm Roberts] Send that on notice? That addresses my next question, which is that, what better ways are there for small business that are not limited just to simply developing a small business award? That’d be one thing on the list, I’m sure. But are they contained in your list?
Yeah, there was, yes, it didn’t actually advocate for small business award.
[Malcolm Roberts] What are the measures?
It actually advocated for a small business annexure to each award. That was basically the essential elements that a smaller employer needed to turn their mind to. And it made some recommendations around the effectiveness of the fair dismissal code. It did speak to the formation of a small business division within the Fair Work Commission so that their procedures are right sized and relevant to small employers. It also called out the impact of the club. Dare I say, industry associations, the legal profession and unions that actually revel in the complexity, it makes their insights and expertise very valuable.
[Malcolm Roberts] And the employer industry groups? You’ve got the people who benefit from problems and no solutions.
Well, it did point out that they probably are less concerned about complexity whereas a small business owner and leader, he or she can create a great innovation and change the very nature of society and then needs to get help to understand what their workplace obligations are because it’s so complex, it’s so nuanced, it was putting the point forward that very intelligent small business owners shouldn’t need to rely on external advice to be surefooted in their compliance with their employment obligations.
[Malcolm Roberts] Well, let’s take care of my next question. Are there still gaps between your office and the Fair Work Ombudsman that need to be improved? For example, small business support?
Well, they’re doing more and I’ve met with the Fair Work Ombudsman. We had a panel of regulators, Senator, was a cold night in Canberra and I’m sure we took an enormous amount of the audience away from Home and Away when we were talking about regulatory challenge, it was just a real cahoot, Senator, but we were working quite collaboratively. They’ve got some good resources. One of the things we can do is amplify and give higher visibility to those resources and also work carefully with them. They have their own small business helpline. I actually launched it in a former life. So I’m quite familiar with the need for good advice but we also thought there was some structural opportunities at the Fair Work Commission that could work alongside the Fair Work Ombudsman and make the system work better for smaller employers.
[Malcolm Roberts] Okay, next one is a specific around some of the broader areas you’ve been talking about. Do you get feedback from small business that the Fair Work system is too expensive for small businesses? For example, not just the complexity and the cost that entails and the distraction out of the business but paying “go away” money because they’re too busy to defend claims. For example, those kinds of things?
Yeah-
[Malcolm Roberts] And employees on the same note?
They tend not to come directly to us, but when we’re out on the road, Senator, it is a vivid topic for those that have been through it.
[Malcolm Roberts] And applies to employees, not just small business employers.
That’s correct, and one of the things that we were highlighting in our work is that the award system and the power imbalance assumes that the employer has got enormous resources and capability and the employee hasn’t. In many small businesses, it actually can be the reverse, say an employee with the support of an advisor or a representative, perhaps a union that can take cases and to appeal over and over again, probably has more horsepower and resources than the small business will ever have. And that was one of the recommendations we sought to address in my report, not the agency’s, but the report I provided his Honour Justice Ian Ross.
[Malcolm Roberts] Could you just recap, I think Senator Brockman asked this similar question, what are the main issues facing small business and what are you doing to sort these out? I know you mentioned bank loans, some find it difficult to get insurance?
Well, access to finance remains a big issue, Insurance remains a big issue as Senator Hume was alluding to, the focus on digital engagement is very important that we see a spotty level of engagement. I would hazard a guess that a significant minority are less open to the delicious possibilities that deeper digital engagement can offer. They may have been of my vintage, sir, where there were vendors promising the world when I had more hair that tech would change my business and it didn’t. And we often hear about that and those people now at a more mature age still in the economy might be hesitant to take up some of the digital engagement opportunities that are there. So that’s a big issue. For us, we still think government procurement offers great potential for greater small business engagement. And we think that’s a key priority for us. Women’s entrepreneurship, it’s also an area where we’re quite interested in and I’m also quite evangelical about alternative dispute resolution. It’s interesting in Australia a lot of small businesses turn to the regulator to defend their own economic interest because they’re frightened of cost order gorillas if they pursue legal recourse, they’re just worried. So they turn to the regulator. This is quite unusual in other comparable jurisdictions the people whose economic interest has been infringed upon are very up and about defending their own interests and are less reliant on the regulator. We think there might be something in that where the way the court system operates power imbalances may well be amplified throughout the legal process, me as a small business, you as a behemoth business owner, you’ve got five QCs, I’ve got my solicitor and we’re having a discussion and you’re reminding me that if I lose I get to pay for your crew. That can be a real disincentive to engage in that court based process. We think we can probably come up with some better avenues. That’s a priority for us as well.
[Malcolm Roberts] What about tax? Not just personal tax, but business tax and especially the complexity of the tax system?
We put a report out, when was that? May I consult the Deputy’s Ombudsman who was here when I wasn’t, sir?
February.
February, that just rolled off. It’s quite fresh, Senator. I can make sure we refer that inquiry report to you as well. And your winter reading list in Canberra will be abundant, sir.
[Malcolm Roberts] Thank you. Based upon your experience, although it’s only limited for a few months, should the role or powers of the Small Business Ombudsman be enhanced and if so, in what regard?
Yeah, we think there’s some scope for having more nudge ability to get disputing parties around a mediation table and potentially into arbitration to get matters sorted out quickly so that businesses can get back to business-
[Malcolm Roberts] What sort of power would that look like?
Well, at the moment, whilst we carry the title of Ombudsman we have no determinative power. We can’t decide anything. All we can do is facilitate and enable a process and put the parties together and give them wise advice, we hope, that they see it’s in everyone’s interest to sort it out quickly. Where there’s some few areas where we think a little bit of nudge potential might encourage those parties to engage in good faith and get those disputes resolved quickly, affordably and get business back to business.
[Malcolm Roberts] Since the last round of Senate estimates, which is what three months ago? Has there been any work done to identify opportunities for small business including red tape reduction and other initiatives, business codes, would it like to be reviewed and updated to ensure fairness for employers and employees?
Yes, we’ve engaged on a couple of reviews that other portfolios are doing. We’ve also been active on mutual skills recognition across jurisdictions, which was a measure included in the budget, so that if you’re a trades person in one state, you could readily apply your trade in another and have your qualifications carried over. We’ve also had some discussions with industry associations about their pain points, particularly where they might be multi-jurisdictional. Some examples, sir, may include, well you’ve seen we’ve been active in the Australia post area, where they felt complex and diferring state regulation was the reason for them to announce that they intended to discontinue perishable goods delivery. And we said, well, don’t discontinue it, let’s work out what these regulatory challenges are that you speak of. And so we’re engaged in that process as well. Areas of-
[Malcolm Roberts] A review of the business Fair Dismissal Code from both an employer and employee perspective to make it fairer for both?
That was a recommendation in our report.
[Malcolm Roberts] Okay, thank you
Actually, to make it function as it was intended, might be a more accurate description.
[Malcolm Roberts] Which protects both parties?
Yes.
[Malcolm Roberts] Employers and employees. Has the Small Business Ombudsman had the opportunity to engage in the development and review of regulation and information guidelines for small business in relation to casual conversion? That’s the conversion of casual employees to permanent employment?
No sir, we haven’t.
[Malcolm Roberts] Are you aware of the casual conversion guidelines?
Vividly so sir.
[Malcolm Roberts] Are they fit for purpose?
Well, there’s some positive response from small businesses that there’s now clarity around that, there was some chagrin that other reforms could perhaps have been included in that legislation that works. That’s the feedback we’ve had.
[Malcolm Roberts] So you’re passing that on?
Well, anyone who asks us, we’re not shy, Senator, we will pass on our feedback.
[Malcolm Roberts] To the Fair Work Commission?
Yeah, at that stage we haven’t engaged with them on that topic. The last discussion we had with the Fair Work Commission was at an officer level just on things they’re doing to streamline their processes, to make them more accessible for small businesses.
[Malcolm Roberts] They’re responsible, no it’s the Fair Work Ombudsman that’s responsible for the casual conversion guidelines-
The commission set the rules and the ombudsmans make sure that they’re being implemented.
[Malcolm Roberts] You had discussions with the Fair Work Ombudsman,
Only in terms of their guidance material they make available. Yeah, but not on that particular topic you asked, to be very specifically about
[Malcolm Roberts] Will you be having that?
casual conversion. I can add that to my list, ’cause I catch, We, I think I even chair a federal regulator agency group meeting where we all get together and work out who’s doing what?
[Malcolm Roberts] So you’re the Ombudsman’s Ombudsman.
I am, I think I’m the passionate but neutral chair amongst powerful regulators, sir.
[Malcolm Roberts] Okay. One final question, Chair, we’ve now got the term circuit breaker instead of lockdown.
[Mr. Billson] Yes.
[Malcolm Roberts] Which to me and others seems to be an attempt to bypass the growing resentment towards lockdowns. And they’ve belted small business now for about one of the quarter years. Not for the whole time, but intermittently along that time. A taxi operator, a taxi driver in Sydney on Friday, when I went home from Canberra, said to me that it’s not only belted his business on Friday the sudden shutdown in Victoria but it’s affected coffee shops, restaurant owners, hotels motels, a whole swath of businesses all with no advanced warning
I talked about this in my opening remarks, Senator, that they’re not-
No, they were there and it did point to the fact that that was a circuit breaker lockdown which created probably some expectation to be short but now the discussion is it might be longer. My point to the committee was it, in my view, it highlighted the need for greater certainty and predictability for business about what different types of lockdowns would trigger in terms of support and other measures that business could count on. Because at the moment there’s not a clear menu, there’s not a clear set of trigger points where people go, okay we’re now having one of those lockdowns, call it what you will, but we know the suite of measures that accompany that, that would give small businesses good clarity and it would also identify who’s expected to do what when these events occur, and that’s not just government, I mean, at what point does the conversation move to what’s the finance sector doing to accommodate these businesses, all the issues around leasing, that was all part of it and I’m from Victoria, Senator, and to be here in person, I didn’t go home, because I wouldn’t be allowed back but that’s the sort of thing that we think would be most helpful.
[Malcolm Roberts] And then we see, just listening driving home one evening, listening to Talkback Radio, which in Brisbane sometimes carries the feed from Sydney, And there was a Sydney sider saying, okay we get the hundred dollar voucher for travel to Cairns, stay in Cairns, but why the hell would I go to Cairns and risk two weeks in a lockdown afterwards at 3000 bucks just to save a hundred dollars. I mean those kinds of things and WA, Queensland and Victoria in particular have been capricious with these lockdowns and are you getting much resentment from the small business on that?
Yeah, absolutely, we are. I mean, they’re infuriated and bewildered by what is sensed to be inconsistencies across jurisdictions, proportionality to responses, why some jurisdictions treat certain events that look to a small business owner’s eyes as very similar as somewhere else, and that’s treated differently. That’s not surefooted conditions for a business owner to navigate and that’s why some improved predictability about trigger points and what sort of support they can count on would be, I think, a very positive step as we learn to live with COVID.
[Malcolm Roberts] The Chair is giving me the signal to wind up so-
I think he’s giving me the signal Senator, so I will.
It’s a general signal,
In my general direction.
[Malcolm Roberts] United Nations… Just a final comment, The United Nations World Health Organisation which I happen to think is a dishonest, corrupt and incompetent organisation –
Can I take that as a comment, Senator?
[Malcolm Roberts] Yes, even, and you don’t have to give your opinion. Even the world Health Organisation has said that lock downs are meant to be used as a last resort initially only just to get control of the virus. Does small business look upon the use of lock downs as an inability of the states to get control of the virus, so the virus is essentially managing the state economy rather than the state managing the virus?
Senator you’re leading me, and I might let that one just go through to the keeper okay?
[Chair] I think we need to treat that one as a comment. Thank you, Senator Roberts.
Chair, can I just use that though cheekily to flag that the United Nations Micro, Small and Medium Enterprise Day of Recognition is coming up in June. So that would be a great opportunity to say thank you to the small businesses and family enterprises you count on. That would be a good thing coming out of the UN. And I might hand back to you, Chair.
Mr. Billson, I don’t think anyone would be left with any doubt about your passion for the small business sector and your suitability for the role. Thank you very much for appearing for the first time, I’m sure it’s not the last, we will see you again in a few months very likely.
Thank you, Chair, thank you Senators.
And thank you very much for your time, and I wish you all safe travels back to wherever you are heading. Thank you.