This week’s proposed scrapping of more than 9500 unnecessary or counter-productive regulations and 1000 redundant acts of parliament might amount to what Tony Abbott describes as “the biggest bonfire of regulations in our country’s history” but it won’t do much for small and family businesses.
The culling exercise does not target any specific red tape that hamstrings family business and only a handful of measures are aimed at small business.
Family business adviser David Hunt, an accountant from the Hunt Professional Group, says it amounts to no more than “window dressing”. “If you’ve been around long enough you see governments always make big announcements but when you get into the detail, it’s not there,” Hunt says.
Liberal Party policy sets aside at least two parliamentary sitting days each year to wipe out redundant legislation so the family business sector will have to wait until next time around to lobby for changes.
Changes being made
For family business and small business, the kind of red tape eliminated is small beer only.
1. The government is creating a dedicated express line for small businesses inside the Fair Work Ombudsman. This is the best of the repeals for small business, the rest is marginal.
2. The government will move the Small Business Superannuation Clearing House -- a program designed to reduce red tape and compliance costs for small businesses allowing employers to pay their super guarantee contributions into a single location in one simple, electronic transaction -- from Medicare to the ATO.
While it sounds like they’re just moving it from one department to the other, the government says it will increase the uptake rate because the ATO is best placed to promote and identify small businesses that could benefit from the superannuation clearing house as they already deal with them. Medicare so far has done a pretty poor job. As at October 2013 only 48,000 employers were registered with the superannuation clearing house even though there are 750,000 potential businesses that are eligible to use it. The jury is out on whether this change will make a difference.
3. The government will remove the “pay-clerk” burden from the paid parental leave scheme so that the Family Assistance Office will administer the payment instead of business. The government estimates this will save business $44 million a year.
4. The government will change the Personal Property Securities Register to reduce the regulatory and cost burden that falls upon industry. The first change will increase the length of time in which a serial numbered item needs to be leased for it to be registered with the Personal Property Securities Register from 90 days to a year.
The second change clarifies the definition of a motor vehicle that requires mandatory registration, to better reflect commercial realities. How many family businesses would that affect? Not many.
5. A new Commonwealth Contract Suite will make it easier for small business lining up for government work. A simplified process for tendering will apply for contracts below $200,000. Standardised terms and conditions, combined with user-friendly online templates will remove the need for legal advice and other associated costs. The government estimates this will save business around $38 million a year.
What should be changed
The changes do not get rid of some of the biggest examples of red tape for family business, such as:
1. Section 113 of the Corporations Act (2001)
Requires family businesses with more than 50 non-employee shareholders to form an unlisted public company and undergo the red tape of complying with disclosure obligations of public companies.
2. 80-year limit on discretionary trusts
The rule applies in all states except South Australia and imposes an 80-year limit on discretionary family trust. On the death of a trust, its assets may attract capital gains, and beneficiaries are forced to find up to 46.5 per cent of the asset’s value.
Last year’s parliamentary inquiry into family businesses looked at both of these red tape issues but the government has done nothing about them.
David Hunt says the worst piece of red tape family businesses face is when they try to get capital gains tax concessions when shifting assets.
“When you get into the detail of the legislation, they are complex provisions that can’t be read simply or lightly,” he says.
A government spokesman told Business Spectator the government had put that issue on hold until it releases the tax white paper.
Hunt says: “If they had a poll of small business people asking them what the effect of this repeal day was, they would say they haven’t noticed one thing, apart from them moving the chairs around a bit.”
“The real hard stuff still has to be done. I’ll be interested to see what happens with the next Repeal Day because there doesn’t seem to be anything in this first set.”