Susan Templeman (Macquarie, Australian Labor Party) Share this | Hansard source

Well, some people can remember them. But I think we've got to be as dubious about them as we are about the 'jobs and growth' phrase. It was first flagged in last year's budget. Then just before this year's budget, we really got a bit more detail about it.

I want to put on the record that I'm a huge supporter of tax cuts for small business. As someone who's been in small business for 25 year, I've had the benefit of being my own small business, employing people, having different structures and there's no way I would travel to the other side of the chamber. I am certainly not the exception on my side of the chamber either. There are many, many of us who at different times in our life have had different models of self-employment. It's certainly not a gift that's only bestowed on those on the opposite side. I've had the benefit of being a small business but have also worked a lot with big business. I'm hugely supportive of tax cuts for small businesses. Small businesses do an enormous amount with very little. The people who miss out when it's a small-business tax cut and have missed out through all of this are the people who aren't incorporated, the people who are sole traders and work for themselves. They don't often employ people—it might be a husband and wife team. They miss out completely on any of the benefits.

What I'm not a supporter of is a small-business tax cut that just goes on and on and on to any size business, especially one that ends up being a $65 billion tax cut for business. I will never forget the question time when we actually first heard the detail of what these cuts would be—and I should be specific; it's $65.4 billion. This is a hit to the budget bottom line; absolutely, a straightforward hit to the budget bottom line. Really, for a government that has so hypocritically ranted and raved about reining in the budget deficit and about budget repair, to throw this on to the table is an extraordinary act, and then to watch as the figure to this was allocated. It was a simple question that we asked in question time. It was the Leader of the Opposition who asked the Prime Minister a very simple question: what's the cost of the full company tax rate—cut, plan? What is the cost? The answer had three figures: $24 billion, $26 billion and $50 billion. Forgive us, but I think on our side we were a little confused as to which was the right figure. So when asked again to confirm the figure, the Prime Minister , as is his want, flicked it to the Treasurer. We've seen him do that a lot with energy in the last few days. Out of that the Treasurer disclosed, with quite a bit of drama and performance, a figure of $36.5 billion that this enterprise tax plan would add to the budget bottom line. We were still confused because this was a different figure to the three that the Prime Minister had given us. So we asked again, and we got yet another answer to the same question. The Treasurer replied $65.4 billion. In one question time, those tax cuts, the ones we're discussing today, got more expensive to the tune of $15 billion. It's probably lucky question time wasn't much longer.

We've been very clear since this plan was first introduced to highlight not just the hit to the bottom line but how minimal the benefit will be. We are talking about—and people should really remember this—one per cent of economic growth, not next year, not the year after, but in 20 years time. And we're talking about how this would trickle down to wages. Well, it will—to the tune of a $2 a day increase in wages in 20 years time. As a small business operator, you're always weighing the investment and the return and you're trying to keep your costs down and maximise the benefits that you get. I just can't see that $65.4 billion is a really great use of that money to get only one per cent of economic growth in 20 years time or a $2 a day increase in wages in 20 years time. This is all happening when wages growth has completely flatlined to record lows of 1.9 per cent.

The economic data shows that our living standards which had been climbing have gone backwards, that families are facing a really difficult mix of rising costs of electricity prices, stalling wages, record high underemployment. These are all the issues we're confronting, and this is all we've got. It does nothing to address any of those issues. It also comes at a time when this government has supported penalty rate cuts which came in on 1 July this year. By the way, the penalty cuts were meant to allow employers to hire more people. I don't think we've seen that yet. Maybe I'm missing something. In my community I'm not hearing people say to the government, 'Thank you so much for cutting those penalty rates, because now I've got a job—lower pay but I've got a job.' I am not hearing that; I'm hearing that people are starting to feel that pinch, and I'm listening really hard to my electorate of Macquarie. I think I must be listening much harder than government members are listening to their electorates.

When I hear those who support this measure say that it's needed to drive investment, I reflect that in no time in the 25 years I've been in business can I really see that these sorts of initiatives have made any difference. Fortunately, governments have not tried this very often but, if you put it into the broader context, not that many years ago, we had a huge investment boom in Australia and we had a headline corporate tax rate of 30 per cent. It didn't seem to impact on that massive investment. The US Congressional Budget Office put out a paper earlier this year, saying they recognise the statutory corporate tax rate is just one of many features of the tax system that influences corporate behaviour. My experience with corporates would reflect that as well: that there isn't one single reason a company decides to do what it does. There will be a number of things, but a corporate tax rate is not the sole driver of it. And the US Congressional Budget Office says that, because of their broader scope, the average and effective corporate tax rates are better indicators of a company's incentives to invest in a particular country, rather than the statutory corporate tax rate. The paper points out that, with a headline rate of 30 per cent in 2012, the average rate for Australia of tax paid by corporates was 17 per cent and the effective tax rate in the end was 10.4 per cent. I really think that this is a government trying to take a shortcut—to try to be seen to be doing something to help big corporates, to try to be seen to be doing something about unemployment and to be seen to be creating jobs. But there are so many better things that they could be doing than this. I can think of so many ways that $65.4 billion could be better spent.

I noted with interest this week that the Assistant Governor of the Reserve Bank, Luci Ellis, actually quashed the argument that you need this tax cut to drive investment. Maybe the RBA is missing something but, in my experience with the RBA, they are smart people and they look really closely at the evidence before they say things. Ms Ellis said:

When businesses make decisions about where to locate – the tax rate does presumably matter, but so does the business environment, the institutional framework, the rule of law, the macro-economic outlook and where the resources are.

There's a broader business environment to consider and those advantages haven't gone away.

We are very fortunate that we do have those business advantages. When it boils down to it, budgets are all about priorities. This was announced as part of a budget, and this government has quite simply got the priorities wrong. They've got their big business tax cuts, they've got high-income earners getting a tax cut, they've got workers who earn $21,000 getting increased taxes, and they've got penalty rates cuts. You would have thought all of this might be enough. But we have a government that continues to try to take more and more measures.

In the time that I have left, I might mention that we are one year into this term of parliament, but we are five years into a coalition government. Australia and the economy are facing serious challenges on the jobs front. It's not often that you hear those on the other side acknowledge that, and acknowledge that things are tough. But in the other chamber today, I did hear some acknowledgment that things are tough, and I think that's important for people to hear from all sides of politics. It should be more than enough for the Treasurer of this nation to be focused on these challenges, and possibly coming up with some more creative ideas. Let's think about what would be some better ways to tackle the issues that, supposedly, this enterprise tax plan will address.

I think the things we have to focus on are things like properly funding our schools. That is one way to reduce inequality. If people have money to spend, they have learnt well, they have got great tertiary education, and they get well-paid jobs or they create their own businesses. We on this side of the House would definitely like to see people creating their own businesses. They are the things that will make our economy boom and, quite frankly, then there'll be demand, and then big businesses will benefit as much as other businesses. We could see a fairer tax system. We could further deal with superannuation tax concessions. It's something that we've announced—and yet somehow this government has decided it was a secret super tax and we've been hiding it. But, in fact, we are very upfront about the sorts of changes to the tax system that we would like to see. If you want to improve the tax system, forget this one—let's level the playing field for first home buyers through reforms to negative gearing and capital gains tax. Let's cap deductions that people can obtain individually from managing their tax affairs to $3,000, so they actually do pay a fair share of tax. Let's make sure big business pays its fair share of tax. They're the sorts of things we should be discussing in this chamber, not this bill.

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