Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

Thank you, Mr Speaker. If you cut the company tax rate you will have more debt, and right now we have debt rising faster than it was during the global financial crisis. We have, from this side of the House, a series of constructive policies that would see Australia retain its AAA credit rating, such as Labor's negative gearing, superannuation and capital gains tax changes. From the other side of the House, we have a tax cut delivering $16,400 to millionaires, and we have a corporate tax cut which is going to cost the budget billions of dollars.

The argument we get for this corporate tax cut is that Australia has a peculiarly high company tax rate. Let's look to the evidence on that. In March of this year, the US Congressional Budget Office brought down a report on corporate tax rates in G20 countries. The report shows that on the statutory corporate tax rates, Australia is not at the top but slap-bang in the middle. Australia's statutory corporate tax rate is average for the G20. But the CBO then goes on to look at our average tax rate—that is, the amount of company tax paid as a share of corporate income. It found that was 17 per cent—the fourth lowest in the OECD. And we have recently had—thanks to Labor's tax transparency laws—the revelation that one in three big Australian companies do not pay any corporate tax. So this idea that Australian companies are being slugged a uniquely tough burden just does not stand up to the facts. The Congressional Budget Office finds that whether you look at statutory rates, average rates or effective marginal rates, Australia's company tax rates are average or lower than the G20.

The government's own modelling suggests that this delivers extremely little for the economy. Their own paper Analysis of the long term effects of a company tax cutfinds that in the first instance most of the benefits of a company tax cut flow overseas. As the Grattan Institute's John Daley has noted, benefits only flow to domestic shareholders if the profits are reinvested rather than paid out. Indeed, if US-based multinationals repatriate their profits then there will actually be a benefit to the US taxpayer from a cut to the Australian company tax rate. But the benefit to Australian households is tiny. The benefit to households, on the government's own modelling with the most credible scenario, is 0.1 per cent. It is not annualised; that is 0.1 per cent in total.

We are being asked here to support a budget-busting tax cut for big businesses—a tax cut which is coming at a time when this government has turned one debt truck into five debt trucks and is still driving them out the door. They have a convoy of debt trucks, as the deputy leader has pointed out, yet they still believe the right prescription for Australia is not funding Medicare or looking after schools but giving big company tax cuts for the big banks and the big multinationals and a $16,400 personal income tax cut to Australia's millionaires. When inequality is at a 75-year high, living standards are sluggish and underemployment is at a record high, this is the wrong prescription for the nation. (Time expired)

See this speech in context