J f e r

P R I M E  MINJSTER

FOR PRESS 8 MAY 1977

EMBARGO;  7.00 p.m.

ELECTORATE TALK

Tonight I would like to talk to you about some of the measures  which the Government has already taken to help small businesses  function and prosper for the benefit, not only of themselves,   and their employees, but for the good health of the community as

a whole. ,

Small businesses are a significant part of the Australian economy,  employing 40 percent of the workforce.  For many members of the  community there is great satisfaction in being the proprietor  or partner in a small firm despite the often arduous nature of  such a responsibility.

The first of the measures taken by the Government to help small  businesses is the Investment Allowance Scheme. Under this Scheme  40 percent of the material cost of a range of new plant and certain  improvements on primary production land, can be deducted from

income for tax purposes.  After June 30, 1978, the Special Investmen  Allowance will be 20 percent.  In both cases, the allowances are  additional to the normal deduction for depreciation on the full  cost of the plant.  '

Another measure which helps business firms is the special trading  stock valuation adjustment deduction.  Under this scheme the rise  in the cost of replacing trading stock, including livestock, is  being taken into account. So far this is partial.  For 1976/77

the value of stock for tax purposes will be increased by half the  percentage increase in the goods component of the Consumer Price  increase between June 1976 and June 1977. This reform is designed

to protect firms from the impact on their trading produced when  the cost of replacing goods is higher than the amount by which  they have been written off.

The needs of small businesses were particularly in mind when the  Government decided to allow private companies to retain free of  undistributed income tax up to 60 percent of their after - tax busines  income. Previously, private companies could keep only 50 percent

of this income without incurring extra tax.

Primary producers are now able to take advantage of a special  scheme of income'equalisation deposits. To avoid the special  disadvantages that fluctuating income from primary production causes  they are now entitled to lodge deposits with the Tax Commissioner  to reduce the income on which they pay tax in that year. ,  That incom

2

of course becomes taxable as part of the income for the year  in which it is withdrawn.

The modifications to the averaging* system for primary producers  income will also have the effect of lowering the amount of  personal income tax to which they are liable.

All members of the community,  of course, benefit from the  indexation of personal income tax which in July will once again  increase the take-home pay of all people on the pay-as-you-earn  scales.

All these measures demonstrate the Goxrernment1  s commitment to  creating an economic climate in which businesses, small and large,  can expand and prosper.  These benefits which the Government has,^  enacted are clearly of greater benefit than many of the assistant#  measures,  such as advice bureaux and the like,  which are talked of.  These measures are hard-cash injection into small business  profitability enabling them to invest and create new job

opportunities.

Taken together they constitute unprecedented assistance for small  businesses during a period when the rate of inflation is declining  and business profitability rising.

In these circumstances,  it is to be expected that business  investment in plant and equipment should be increasing. It is indeed gratifying to note that this is happening and that  during the calendar year of 1976 investment rose by 18 percent.

The economy is responding to the efforts of a Government which i/-,,  dedicated to returning it to economic health.

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