Hunter Business Chamber Forum

Address by Kellie Tranter

15 March 2007

Thank you for your invitation to attend this forum this evening.

You'll all agree that you have to be in business to really understand the challenges businesses face.  I am.  I am a small business proprietor and an employer.  We would all like to see government policies that benefit our businesses and increase our profits, and we would also like to see changes that reduce the burdens of compliance and taxation.  None of us enjoy regulation, and many of us begrudge paying tax.  Some people don't pay tax at all, or pay much less than they should.  But the reality is that "business" is just one part -- certainly an important part, but still only one part -- of our larger society, and that society faces unprecedented challenges like the ageing population, skills shortages, peak oil, climate change, high personal debt levels and interest rate uncertainty, large unfunded government liabilities and so on and so forth.  When you look at the big picture you realise that governments can't realistically reduce taxes.

When he was Prime Minister back in 1968, John Gorton said that tax revenues are not the only part, but they are the essential part of social progress.  According to famous writer, Donald Horne, what he meant was, that you cannot prepare for future, the 'restructuring' that lies ahead, by cutting back.  Infrastructure improvements, strengthened research, improved policing and better education and training are for the most part not happening because governments don't have enough money.  Whether we like it or not there are preconditions to economic progress that depend on government spending, and spending depends on the Government having money.

Hugh Stretton wrote an essay called Has the Welfare State All been a Terrible Mistake? in which he shows how we are brought up to see the necessary evil of the public sector and the necessary virtue of the private sector.  The commonest trick is this he said: 'When they buy a private car and a public road to drive it on, present the car as a benefit and the road as a tax or cost.  Tell how the private sector is the productive sector which gives us cars, food, clothing, houses, holidays, and all good things, while the public sector gives us nothing but red tape and tax demands.

What use is the car without a road?

Without taxes there can be no infrastructure, no effective social regulation or organisation, no framework for running a business, no police to protect it, no customers, no profit and no business.

The best sustainable outcome that business can hope for is for the State Government to reduce, or preferably eliminate, tax differences between New South Wales and other states that make it difficult for us to compete.  You will all be aware of the arguments between New South Wales and Commonwealth about that in conjunction with GST revenue.  But if state taxes -- and I include in that levies like workers compensation premiums -- are relatively uniform across Australia then I think our businesses will have an appropriate outcome.

Rather than dangle the carrot of tax breaks governments could reduce the overall burden firstly by ensuring that everyone pays their fair share of tax and secondly by making sure tax revenue is spent wisely and not wasted.  Proper long-term planning and open and accountable government are the keys to prudent government expenditure.

Like any business, government needs the money coming in to pay its outgoings.  The responsibility lies with anyone who is unhappy with our current taxes and regulations to come up with an alternative that permits the Government to maintain that balance while producing the outcome they seek.