Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

Like the member for Solomon, I will be speaking against the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. I wholeheartedly support the amendments moved by the member for McMahon, because the Abbott-Turnbull government has fundamentally failed to deliver any economic leadership. These changes were first flagged in last year's budget and again in this year's budget, when the Treasurer reintroduced them into parliament straightaway. So here we are, in mid-October, with the government finally bringing the bill on for a debate. So much for the importance of Prime Minister Turnbull's apparent jobs and growth agenda. A hollow slogan for a hollow man.

Before I go further, I want to deal with one of the major furphies that the Turnbull government is propagating in this debate: the claim that other countries have lower corporate tax rates and that Australia's tax rates are comparatively high—a mantra regularly spouted by the neo-cons on the other side, or the backbenchers who know no better. Sadly, too many of those opposite have drunk the top end of town's Kool-Aid for way too long—they're a little bit confused. Australia has a rate of 27.5 per cent for small and medium businesses—that is, those with turnovers of up to $10 million—and 30 per cent for other big businesses. It's important to remember that a phase down to 25 per cent is already legislated over the next 10 years for companies that have up to $50 million in turnover. The Turnbull government's argument is that tax cuts are required because Australia's corporate tax rate is too high.

Let's put this to the test. Let's have a look at an analysis of this claim. We'll do our own little fact check. The US Congressional Budget Office, a non-partisan budget outfit similar to the Australian parliament's Parliamentary Budget Office, published a paper earlier this year saying that the statutory corporate tax rate is only one of the many features of a corporate tax system that influence investor behaviour. The US Congressional Budget Office paper outlined that average and effective corporate tax rates are better indicators of incentives for corporate investment than the headline rate. On the statutory corporate tax rate, Australia's 30 per cent tax rate ranks as 10th. On the average corporate tax rate, Australia rates 15th, the fourth-lowest in the G20. On the effective corporate tax rate, we're ranked 11th.

On the statutory corporate tax rate, we're 10th, which is competitive with most of the G20 nations, but when you look at the average we're ranked 15th, and on the effective we're ranked 11th. This means that our average and effective corporate tax rates are average or below average when compared with the other G20 countries. That is a relevant comparison because, obviously, the G20 countries make up the world's 20 largest economies.

Don't forget, Mr Deputy Speaker Howarth, as many do on the opposite side, that we have dividend imputation, which means that we essentially refund our corporate tax to our domestic investors, something which is quite unique around the world and often gets lost in this debate. If we're going to compare our tax rate internationally, let's have a proper debate. Let's compare our corporate tax rates on a proper basis—on average and effective rates—with our competitors around the world. When the Turnbull government tells you that Australia's corporate tax rate is uncompetitive, remember the facts; that is not the case.

It is certainly true that Paul Keating took the approach of lowering the tax rates. However, he only did that by broadening the base. The tax changes were funded in another way. Despite the stern opposition of the Liberal and National parties of the day, Mr Keating, as Treasurer and Prime Minister, brought in lasting reforms, including capital gains tax, fringe benefits tax and an assets test. He made difficult decisions and then had to retail them to the Australian public to ensure that the Australian tax base was broader. What does that mean? It means that our social safety net is better able to target and help most Australians. Labor tax policies always have fairness at their core, not greed. Sadly, those opposite have fallen for the misinformation being peddled from the top end of town.

What has the Labor Party done from opposition? Under the member for McMahon, we've seen some tough decisions, such as those about negative gearing, trusts and deductions for managing tax affairs. Labor and the opposition leader Bill Shorten understand that it is only through proper base broadening that you earn the right to have conversations about expenditure or lower company tax rates. The Abbott-Turnbull government has not earned that right. Here we are in their fifth year of government. The coalition has been unable to make any tough decisions on fiscal policy in Australia, so Labor will oppose this part of the government's $65.4 billion tax cut for big business. We've always opposed such significant structural deteriorations to the budget over the medium term that do nothing to broaden the tax base. In the current fiscal and economic climate, it is not appropriate.

The Labor Party has been clear in highlighting the minimal economic benefits of these business tax cuts. We're heading for one per cent growth in 20 years time—perhaps. This has come at a time when wages growth is stagnant—and, for some people, it is going backwards—and the effective tax rate for some members of society, especially the lower wage earners, is going backwards. At the same time, corporate profits for CEOs are soaring. This huge hit to the budget shows the rank hypocrisy of a government that lectures the Australian people about the need for budget repair.

I remember when those in the government used to talk about a debt and deficit disaster and a budget emergency. I think there was a truck circling Parliament House; there was a truck circling the country. Yet, on the Liberal and National Party's watch, what has happened?

Mr Dick interjecting—

Has the deficit blown out? It has blown out—and I'll take that interjection from my neighbour, the member for Oxley. The deficit has blown out. Debt has crashed past the half a trillion dollar mark—a nightmare for our grandchildren and their children. And who will bear the brunt of this tax cut for big businesses that those opposite are championing? Everyday working families will, through income tax increases.

The independent Parliamentary Budget Office put out a report a few months ago stating:

Personal income tax receipts are projected by the PBO to increase by 1.6 per cent of GDP over the medium term, from 11.1 per cent of GDP in 2016-17 to 12.6 per cent of GDP in 2027-28 (Figure 1). Once the tax 'cap' is reached, personal income tax receipts are projected by the PBO to continue to rise as a per cent of GDP as company tax receipts decline from 2023-24 as a result of the Government's Enterprise Tax Plan. The PBO projects that the average tax rate on personal income will rise from 22.7 per cent in 2016-17 to 25.9 per cent in 2027-28.

In 2023-24—not that far away—people in my electorate of Moreton, in the member for Oxley's electorate and in the whip's electorate will see personal income tax at 12.4 per cent of GDP, while company tax will be at 4.5 per cent of GDP. By 2027-28, personal income tax will be 12.6 per cent of GDP, while company tax will have gone down to 4.2 per cent of GDP. Under the harbourside mansion tax plan, the Australian worker will have to do even more heavy lifting, from 12.4 per cent to 12.6 per cent of GDP, while the CEO battlers—those battlers at the top end of town—what will they be doing for Australian society? Their tax rate will be going down, from 4.5 per cent to 4.2 per cent of GDP. From 2023-24 through to 2027-28, when the company tax rate is supposed to decrease to 25 per cent for all companies, personal income tax will rise by 0.2 per cent of GDP at the same time as company tax decreases by 0.3 percentage points. It's clear that low- and middle-income Australians are paying for the government's $65-billion handout to big business through rising personal income taxes.

What does this mean for the mums and dads and the working young? It means that the chefs from Sunnybank are going to be doing more. It means that the motor mechanics from Moorooka will have to do more. It means that the rockmelon stackers from Rocklea will have to do more. Low- and middle-income Australians will have to do more while CEOs pay less. Earlier this month, this was again confirmed by the PBO—an independent body, trusted by both sides of parliament, set up by Peter Costello—when it said:

In addition to the effect of nominal income growth, average tax rates are projected to increase due to policy changes, most notably the policy decision to increase the Medicare Levy from 2019-20.

Australian workers and their families are facing a cruel and nasty cocktail of stalled wage growth, record unemployment, n increased costs of living and rising electricity prices, all on the Abbott-Turnbull government's watch. And all the government has to offer is the Prime Minister telling us this week that power bills might—might!—fall by 50 cents per week in three years time. We've got a climate of fear and uncertainty. We know that fear and uncertainty in the market are infectious and spreading, and what does the government offer us? 50 cents.

Inequality in this country is getting worse. That is a fact. And yet the Liberal Party and the National Party are still pushing the failed trickle-down economics of tax cuts for big business and the wealthy few, which more and more economists are saying does not work. It is not good for growth. Read Wayne Swan's book on this topic if you need to understand it more.

Mr Rick Wilson interjecting—

Real wages for the top 10 per cent of income earners have grown by 72 per cent over the last four decades, more than three times the rate of increase in real wages for the bottom 10 per cent of income earners. I hear the member for O'Connor laughing opposite. You know where this is felt most? In the bush. In the middle of Perth it might be a different experience, but in the bush it's particularly exacerbated. The latest GDP figures show that 51.5 per cent of income went to employees. This is the lowest percentage since September 1964. Over the past four years, labour productivity has risen by nearly six per cent. Normally, if labour productivity is on the increase, what happens? Normally, wages go up. But we've seen real wages actually fall by 0.6 per cent, and the wealth gap continues to widen.

In 2014, households in the top 20 per cent owned 62 per cent of the wealth, while the bottom 20 per cent owned less than one per cent. Home ownership rates are at a six-decade low. This week, National Anti-Poverty Week, we've heard from the Australian Council of Social Services that they estimate over three million Australians are living in poverty. Governments are all about choices. Their policies can either fight inequality or entrench inequality. The Turnbull government is entrenching inequality.

Election results have consequences and, so far, since the coalition came to office, they have proposed slowing the rate of pension increases, cutting the income support bonus, removing consumer protections from financial advice and giving a tax cut to people who already enjoy million-dollar incomes. They've launched a relentless attack on working people. We've seen wage growth stall. We've seen penalty rates slashed on their watch. We've seen them impose tax increases on the bottom 80 per cent of the workforce. They've attacked unions and workplaces by launching a politically motivated royal commission. They've established the ABCC and the Registered Organisations Commission. We know that unions are the scapegoat—but I'm going to say the 'escape goat'. It's what they go to when they want to sacrifice something to their neoconservative volcanoes. These measures are all about shifting the balance of power in workplace relations, allowing unscrupulous employers to engage in practices that avoid fair work obligations, such as sham contracts and dodgy labour-hire companies. Enterprise bargaining agreements, when they have ended, are becoming bargaining weapons, like we're seeing with the Streets Ice Cream workers at the moment. Inequality is about fairness, and this Turnbull government is unfair. They're entrenching inequality in this country and we deserve better.

The Turnbull government could use its power to fight inequality. Budgets are all about priorities, and this government, quite simply, has them wrong. The 'harbour-side mansion' budgets have delivered big-business tax cuts and high-income earners getting a tax cut. Workers above $21,000 are getting increased taxes and penalty rates are being cut. The Turnbull government's priority will always be to look after the top end of town: the big corporations, the conglomerates, the millionaires and the billionaires. There is no other way to interpret a budget that is so fundamentally unfair to ordinary working Australians.

Labor understands that inequality is an impediment to economic progress and community happiness. We have our priorities, ensuring that we deal with inequality in this country. Obviously, this means properly funding our schools. This means proper investments in infrastructure. This means a fairer tax system and further dealing with superannuation tax concessions. It means levelling the playing field for first-home buyers and capping the deductions people can obtain for managing their tax affairs. And it involves our plan to impose a 30 per cent tax on discretionary trusts. Dealing with inequality means providing more affordable housing so Australians can live close to where they work. To tackle inequality, this country needs a brave government. It needs a country with a brave heart, not a small heart.

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