David Feeney (Batman, Australian Labor Party, Shadow Minister for Justice) Share this | Hansard source

This amendment bill, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, was first flagged in last year's budget. It was the political centrepiece of the Turnbull government's 2016-17 budget. The fact that we've only got to commence the parliamentary debate concerning these bills in mid-September of 2017 speaks to the chasm that exists between what the Turnbull government says are its political priorities and what its deeds reveal its priorities to actually be.

Labor has made plain that we will not support the Turnbull government's $65 billion tax cut for business. It is a tax cut that the Australian budget and the country cannot afford. It is in ever-deepening deficit under this conservative government, with a gross debt that has hit the $500 billion mark in June and is still growing. It is a record debt that has nearly doubled from the $280 billion that existed when the coalition took office in 2013. It is a matter of fact that, when the coalition took office, gross debt per person was $12,076. Today, after nearly five years of coalition economic stewardship, that number has grown to around $20,025 per person. This is a government Australia cannot afford, and this government is proposing a tax cut that Australia cannot afford.

The Turnbull government's plans for growth only meant growth of the debt. The government's budget papers expect gross debt to hit $725 billion in 2027-28, with no peak in sight. It is the coalition that turned out to be the debt and deficit disaster for our country. Labor has always opposed this tax cut because it represents a significant structural deterioration to the budget over the medium term and it represents a deterioration at precisely the wrong moment for the Australian public debt. This amendment bill represents a hit to the budget that shows the rank hypocrisy of a government which lectures the Australian people about the need for budget repair on the one hand and yet deliberately deepens the debt on the other.

Remember the glory days of 2013-14, when the then Prime Minister and the then Treasurer spoke of the nation's debt and deficit disaster? We don't hear that rhetoric these days. Why? Because the successive Abbott and Turnbull coalition governments have dramatically expanded Australia's national debt and have abandoned even the pretext of reining in public sector spending and gross debt. On this government's watch, the deficit has blown out and debt has crashed past the half a trillion dollar mark. The Turnbull government doesn't speak of debt and deficit anymore. Policy failure has rendered that catchphrase an embarrassment to the coalition. In 2016, the Prime Minister found a new catchphrase: jobs and growth. Like its predecessor, this phrase, too, is on its way to embarrassing oblivion in the annals of conservative marketing failures. Today, Australia's gross domestic product growth is less than two per cent. That is lower than the GDP growth of New Zealand, the United States and Canada. That is less than the OECD average. The very low growth rates experienced by Australia are a testament to the fact that, when this government focuses on a policy priority, one can be assured of failure.

We also get a sense of the scale of the budget hit earlier this year when the farcical scenes of question time are recalled. Just after the last budget, the Leader of the Opposition asked the Prime Minister, 'What was the full cost of the company tax rates proposed by this government?' The answer given to the Leader of the Opposition's question included three figures: $24 billion, then $26 billion and then $50 billion. Such was the abject confusion that the Leader of the Opposition, ever the gentleman, asked the question for a second time. When asked again to confirm the projected cost of the business tax cuts, the Prime Minister flicked to Scott Morrison—in a rather comedic display—and the Treasurer said, '$36.5 billion.' Later, in a new answer to the same question, the government finally coughed up the truth. The Treasurer revealed that this was a policy with a price tag of $65.4 billion. In a single parliamentary question time, the coalition's company tax cuts had become more expensive by over $15 billion. This is the kind of shoddy, ad hoc leadership and shoddy, ad hoc management of this country's budget that has seen our deficit and debt position so dramatically deteriorate.

Ever since the government revealed its plan for business tax cuts, Labor has been clear that this was a plan that included not only a very large price tag but extremely minimal economic benefits to the broader economy. Let's have a quick reminder of what it is that this $65 billion cost to the budget produces for the Australian economy. By the government's own boastful measure, this is a policy that will produce a mere one per cent of economic growth over 20 years, only $2 a day increase in wages in 20 years time and wages growth at record lows of 1.9 per cent. What a miserable harvest for more than $65 billion.

Australian families are facing a nasty cocktail of rising costs, rising electricity prices, stalling wages growth and record high unemployment and underemployment. This is a government that has nothing to offer them. Labor has long-held concerns about low wages growth. Without a doubt, the dwindling bargaining power of workers and their representatives has played a central role in the stagnant wages growth and rising inequality that now beset this country—also, at a time when the government has supported penalty rate cuts, operative from 1 July this year, and seeks to raise income taxes on all taxpayers with incomes above $21,000. We now live in an Australia where a worker on $55,000 a year will pay an additional $275 a year and someone on $80,000 only an extra $400 a year. It goes to this government's approach and their misguided priorities that their answer for flat wages growth is a cut to pay and higher income taxes. How entirely unpersuasive is it when we see this country's Treasurer bemoan low wages growth while, at the same time, he speedily creates the conditions for that very same low wages growth!

We hear those who support this proposed tax cut for business say it is needed to drive investment, but it was only a few years ago that we had the biggest investment boom Australia has ever seen, and that was accomplished with a headline corporate tax rate of 30 per cent. Budgets are all about priorities and this government, quite simply, has the wrong priorities. Under this government, big businesses get tax cuts, high-income earners get a tax cut, workers earning above $21,000 get increased taxes and penalty rates have been cut. Now, all of this, you thought, might have been enough to end support for this absurd policy, but it does not stop there. This government has failed on economic leadership and there's one person who is emblematic of this failure—that is, the Treasurer.

The Treasurer is incompetent and his incapacity to do his day job is the most blindingly obvious example of this government's failure in economic policy. This is not a sudden revelation; this is a pattern of incompetence and failure that underlines how badly this government is performing. Remember the heady days at the end of 2015 when Morrison was first appointed Treasurer. At that moment in time, he was believed to be formidable and he was accepted as being a significant political actor. How times have changed. He has literally shrunk in the job. Since early 2016, we have seen him with his GST reforms stillborn, we have seen him proposing and then abandoning tax powers being given back to the states, and we have watched him collapse and faint at various moments across this country's national political conversation. He has shrunk from becoming a person of substance, a politician that was regarded by Labor as formidable, to the shrinking violet and ineffective and inarticulate spokesperson that he has become today. On his watch, this nonsensical $65 billion tax cut has been proposed, and on his watch he has manifestly failed to make out the reasons for supporting it. Treasurer Morrison was supposed to be the chief spear carrier for this government but, as it turns out, he can barely wield a water pistol.

Unlike this government and unlike this government's Treasurer, Labor has it priorities—priorities that will ensure we deal with inequality in this country. That means Labor is committed to funding our schools. This means proper investment in Australian infrastructure and it means a fairer tax system. A Labor government would further deal with superannuation tax concessions, something that we announced late last year and something that this government has since tried to describe as a secret superannuation tax.

Labor have promised that we will level the playing field for first home buyers through reforms to negative gearing and capital gains tax—taking on the challenge of housing affordability. Labor have announced that we will cap the deductions that people can obtain for managing their tax affairs to $3,000 per person. Announced recently, our plan to impose a minimum 30 per cent tax on discretionary trusts and to deal with the issue of income splitting means dealing with some fundamental issues that have been in the too-hard basket for far too long.

We now live in a topsy-turvy world where, from opposition, Labor has more aggressively promoted reform and more effectively articulated the need to manage the economic affairs of this country, while we have a government that, while in office, has managed to triple the deficit, expand the debt from $280 billion to more than $500 billion, and, of course, couldn't argue its way out of a wet paper bag. This is a government that, frankly, is paralysed—paralysed by its incompetence and paralysed by its divisions. When it comes down to it, this is a government with simply the wrong priorities—a government that is determined to reduce the tax on businesses, and big businesses in particular, while at the same time increasing tax on working Australians.

We have made the point that, in technical terms, what is being proposed by this government is an unfunded corporate tax cut—because that is what it is. There is no funding to pay for this. This is a tax cut for business that is funded by future debt. This is what, for instance, former Treasurer and former Prime Minister Paul Keating has pointed out: that it is an unfunded corporate tax cut, quite different to what he did when he was Treasurer, which was to broaden the base, go after loopholes and deal with inequities within the tax system. Paul Keating was paying for his policies. This Treasurer had a thought and said, 'Well, the politics of this ramshackle show need rescuing; I will produce a $65 billion tax cut for business.' But he is unable to fund it, unable to justify it and unable to speak to the effects it will have in our economy.

But, in another sense, this government's $65 billion tax cut is funded: it is funded by the tax increases that this government has delivered for working Australians. We know that the tax burden on PAYG taxpayers will increase in coming years, and it will increase because this government is increasing the tax rate in part through increasing the Medicare levy. The Parliamentary Budget Office 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. Under this government, the tax burden grows. From 2023-24 to 2027-28, when the company tax rate is meant to decrease to 25 per cent for all companies, personal income taxes rise by 0.2 percentage points of GDP while company taxes decrease by 0.3 percentage points.

It is clear that low- and middle-income Australians are paying for the government's $65 billion handout to big business, and they are paying it for it in the form of rising personal income taxes. This was confirmed by the PBO earlier this month, with the PBO saying that, in addition to the effect of nominal income growth, average tax rates are expected to decrease due to policy changes—most notably, the policy decision to increase the Medicare levy from 2019-20.

We have also seen reports in the last weeks and months that there is confusion about which companies are eligible for this government's excessive tax cuts and the contrast between active trading businesses versus companies holding passive investments—a contrast that simply led this government into further confusion. You would have thought that, this being the centrepiece economic policy of this government, its major political survival line, the government may have had these details thought through and able to be explained. But, no, as has been shown time and time again, this is not a government that should be overestimated. This is another example of its incompetence, and its poor politics married to lousy policy.

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