David Coleman (Banks, Liberal Party) Share this | Hansard source

I cannot believe that in 2017 those opposite, who purport to be the alternative government of Australia, are seriously arguing that reducing the rate of tax does not affect the decisions of business about how much to invest. That is a completely absurd proposition. The principle goes back a couple of hundred years, and I would have thought it would have been a pretty settled fact in economic life: if you want someone to invest more, you reduce the cost. There is a thing called the internal rate of return, where people calculate and say, 'If I invest a given amount of money, what is my return going to be? What are the cash flows going to be from that?' Then you take into account tax in working at the after-tax rate of return.

Based on the way those opposite put it, whether the rate of tax was 30 per cent or 70 per cent or five per cent the investment would be exactly the same—exactly the same regardless of how much tax the investor was required to pay. That is an extraordinary proposition. I think they start teaching economics now, and maybe a bit of commerce, in year 5 or 6. That the purported alternative government would seriously stand before the Australian people and contest the notion that the rate of tax affects the level of investment by businesses is absolutely unbelievable. It is not surprising because, let's be honest, those opposite have never worked in the business sector in Australia. If you wanted to do a little survey of all the members of the opposition and ask who has actually run a business, it would be a very small number. What if you asked who has worked in business—a business that tries to make money in the private sector, a full-time job in the private sector? That is not a particularly high bar to reach—I think most Australians would have reached that bar, given that close to 90 per cent of them work in the private sector—but if you asked that question of those opposite, it would be a very small group. I suspect it could fit in a small minibus. That is a big part of why those opposite have no fundamental understanding of this space.

The other thing that I find extraordinary is the way they describe income tax reductions as a giveaway. What that basically says is that in their minds—it is interesting because it gives you an insight into how they think—there is this big amount of money that sits in Canberra—it is somehow created here in Canberra—and then politicians sit around and decide that they will give this much to this company or this group or whatever. Of course that is completely absurd, because government does not create any money. Government does not generate wealth. Government basically looks at the economy and says, 'Here are some sources that we can get tax from.' Of course government does need to get tax revenue to provide services et cetera. But the government says, 'We're going to require you to pay us some money. If you don't do that it is against the law, and if you continue to refuse to do that over an extended period you might go to jail.'

So, it is a pretty serious thing to impose tax. And government is not out there running the corner store or the supermarket or prospecting for gold or whatever it is. Government is basically extracting that revenue from the efforts of people who actually go out there and do stuff. And those people, in the private sector, represent close to 90 per cent of all Australian employees. So, this notion that it is a giveaway, that the government is so good to consent to give some of its money back to these companies, is just unbelievable. And it is very important in the political debate in Australia that we just call out some of these absurd things that those opposite are trying to get away with at the moment, because this is 2017; it is not 1930. We know free trade works. It is very clear. We know reduced tax means more investment. We know so many things about the way free markets work. We know business is good. We know free markets are good. We know capitalism is good—and we should not be afraid to say so.

Those opposite want to construct this kind of fantasy land where the government sits at the centre and decides how everything is going to happen, and also a world where you can just make something up and repeat it a thousand times or so and just hope that it becomes received wisdom, even though it is completely false. The so-called $50 billion giveaway of the government's money is a classic example of that.

I want to come to the details of the bill, but let us just pause and reflect a little more on those opposite, if I might. We know what they think about tax, because they have actually put out some really interesting policies that I think are particularly instructive about the way these people think about the economy. Housing affordability is very important, with the Treasurer, the member for Deakin and others working on this issue. Those opposite say, on housing affordability: just basically raise a whole bunch of taxes and everything will be okay. You raise a whole bunch of taxes, house prices will be whatever you want them to be, and it will all work out perfectly. They say, remove a basic principle of Australian taxation law that has been there for over a century, just because it seems like a good idea. And that is an extraordinary proposition.

And this is probably my favourite part of the housing affordability policy, because if a policy is about housing affordability then it should have something to do with houses, shouldn't it? It is very difficult to understand how things completely unrelated to houses could have an effect on housing. It might just be that I do not follow the great, complex logic. But the thing I am very unclear on—and I would really appreciate knowing, and maybe members opposite can help me with this—is: say you increase capital gains tax by, say, 50 per cent on a farm, maybe one that is outside Mudgee in New South Wales. Someone invests in a farm outside Mudgee. And you say, you know what? We are going to increase the tax on that by 50 per cent. How does that affect housing affordability? I am genuinely open to any sort of interjection from anyone opposite who might like to assist me on this. How does increasing capital gains tax by 50 per cent on a factory—it might be a factory in your electorate, Mr Deputy Speaker Irons. You might have some people there who are willing to put some investment into that factory. Those opposite seem to be arguing that if you increase the capital gains tax on the investment in that factory—it might be plastics, or machinery; who knows?—then that is going to improve housing affordability. That is really quite an extraordinary proposition.

The shadow Treasurer purports to be a very thoughtful, learned sort of a fellow. He should put out a statement and explain the link here between the 50 per cent increase for the factory in your electorate, Mr Deputy Speaker, or the farm in Mudgee or wherever it is and just draw that causal link between that and housing affordability. I think that is going to be hard. Do you know what I suspect? I suspect that it is not about housing affordability. I suspect that it is about a way of raising additional tax revenue. I suspect that it is about a way of getting additional tax revenue so that you can just spend more and more of the money of the people who are out there investing. I do not think that is a very good idea, and it is clearly utterly unrelated to housing affordability. As I said, I am really keen to hear more about the link between increasing taxes on farmers and factories and maybe someone who invests in a commercial property and housing affordability. I might have missed it in the policy, but I would really like to hear it.

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