Julian Hill (Bruce, Australian Labor Party) Share this | Hansard source

Thank you to the member for La Trobe. It's always good to be here in the Federation Chamber, the place where good speeches go to die! I'm sure I have 15 minutes of remarks in me. I feel confident about that.

In setting the scene for the remarks I have on this bill, I would pick up, actually, on something the member for Barton said. I was here a little while ago and heard her sterling remarks. She said that this does not make sense politically, and I believe that to be true. As I will try to outline, these big company tax cuts fail the fiscal test. They fail the economic test. They fail the fairness test. But also they fail the political test. You only have to go to any everyday community in Australia and you can get a pretty quick response from people as to what they think about the idea of firing up the nation's ATM and handing away $65.4 billion of taxpayer money to big, multinational companies and big companies. If you ask most people in the street, 'What do you think you'd spend $65.4 billion on?' you would get all sorts of responses. It might be to fix the hospital system. It might be to not cut school funding by $17 billion. It might be to not threaten our world-class universities with yet another $4 billion cut. It might be all sorts of things. From my experience, I encourage those opposite to try that test. Go out into your main streets. Have a little stall in the main street up in La Trobe, or wherever you are this Saturday, member for La Trobe, and say, 'I've got $65.4 billion, people. What do you reckon we should spend it on?' I think it fails the political test. But if those opposite want to stand over there and yet again bash themselves over the head bringing this bill back again—if that's what they want to do and if that's their political strategy—then who are we to argue against it? I know who it will advantage at the next election.

Of course, this is part of the government's jobs and growth agenda. 'Jobs and growth'—remember that? People listening at home—if anyone listens to the Federation Chamber at home—may remember 'jobs and growth'. You couldn't turn on the telly in the never-ending campaign through winter without hearing: 'Jobs and growth, jobs and growth, jobs and growth!' You might have been fooled. I get the political strategy—if you say it enough, maybe someone will believe it. You might have been fooled into thinking there was actually a plan because they said, 'We had a plan for jobs and growth.' If you say you have a plan, then maybe someone will think you actually have a plan.

As it turned out, and as has been revealed, month after month, week after week, day after day, it is not a plan. It was a logo. It was blue and yellow. There was a website and a slogan, but there was no actual plan. That started to become clear to me, because I remember that it was the priority. The centrepiece of the government's economic strategy in the jobs and growth agenda were these big company tax cuts. And they introduced the legislation last year. Nothing happened. I was thinking, 'Nothing happened'—for this critical part of the economic plan. It wasn't even brought on for debate until March this year. Then they struck this bizarre and desperate deal with some of the senators in that moment where the Prime Minister needed some kind of legislative victory—a political win, so to speak; anything really. They put through the lower end of it, and now we're back here with the bit that really stinks. It's the bit that brings home Gina's bacon—the tax cuts for the top end of town.

You might also remember—it was hilarious from our side, I suppose, but it probably wasn't the best day to be a government backbencher. Member for La Trobe, we sit opposite up there every day—

Mr Wood interjecting—

It probably wasn't the best day to be a government backbencher when the Leader of the Opposition asked the Prime Minister, 'How much is this going to cost?' And we had an answer of, 'Well, it's going to cost $24 billion'—waffle, waffle, waffle, glasses come off. 'Oh, I mean $26 billion'—waffle, waffle, waffle. But of course that would be $50 billion. We had one answer with three different costs. We thought that was a bit weird. So we thought we'd try asking the Treasurer, 'How much is this package going to cost?' The Treasurer said, 'Well, of course, it's going to cost $36.5 billion.' We thought, 'That's a fourth number. Maybe we'll go back to the Prime Minister.' So we asked, 'Prime Minister, how much is this package going to cost?' The answer was $65.4 billion. In just three minutes of question time, the government spent an extra $15 billion, and so there it sits. The true figure over 10 years in the long-term estimate is $65.4 billion of taxpayer funding for this tax cut for big companies and multinationals.

Of course, this is in an environment where there was a 'debt and deficit disaster'. But somehow, magically, just by electing the Tories of course that was going to be fixed—just because they're Tories! Of course, the budget was just going to whirr back into surplus in some mystical fashion.

The true record under the drunken-sailor spending of the previous Prime Minister, the member for Warringah, was to add $100 billion to Australia's debt—it's not really in the right direction or trajectory. One of the things which really disturbs me about this is the unfunded nature of it. Sure, if you want to put forward a plan that says, 'We believe this. Here's the economic theory and here's how we're going to pay for it,' do that. That is not what this government has had the courage or policy conviction to do. There is absolutely no clarity, no explanation—not even a peep about how this is going to be paid for. And we know this trick: it's what conservative governments around the world do to justify cuts to essential public services. We've seen it in America. We've seen it in other countries. You say, 'This is the critical thing: we have to cut these taxes for the top end of town, whether it's income tax cuts'—because the only people who got an income tax cut from this government, of course, were people who earn over $180—'so we'll pop that in because that's somehow the priority.' The other priority is: cut taxes for the top end of town. Then, when you get that you through, you say, 'Goodness gracious me, the deficit's got bigger. We've got a fiscal crisis. The only way to fix a fiscal crisis is to cut Medicare, cut education, cut social spending. Goodness me, the age pension—that's a bit high. We'd better go and have another hack at pensioners.' And of course the Notice Paper is littered with bills that have another hack at pensioners.

We're not going to be fooled by this trick. If you are fair dinkum, if you actually believe this, if you actually had any idea how to manage the budget, you would have come into the parliament and said, 'We think this is an important economic reform'—make the case—'and here's how we're going to pay for it. Here are the things that we're going to stop doing, Australian people. Let's be honest: here are the things that are going to be cut to pay for this enormous company tax cut.'

We're told that this is essential—actually, I'll just go back to the member for Hughes; probably my least favourite member for his complete lack of rationality in any of his speeches. I had the misfortune of being on chamber duty for a few months in a row and, every single time I was on chamber duty, we had the foghorn of the member for Hughes blaring across. But I discovered 'Kellynomics' from listening to his speech in March on the company tax cuts, and it goes something like this: 'Because we're going to cut government revenue by cutting company tax, actually revenue is going to increase and we'll create a surplus.' Somehow by cutting revenue, you're going get more revenue when you're the member for Hughes.

Then he misrepresents the wonderful legacy of Paul Keating when he was Treasurer—the government is obsessed with Paul Keating; they're jealous of his enormous legacy. I understand why because he transformed the Australian economy, and John Howard's government kind of coasted through living off the proceeds of that reform—I still haven't heard of a single structural economic reform that those opposite can name that the Howard government implemented after the GST; they just reacted to events. But what the member for Hughes and those opposite love to claim is: 'Well, Paul Keating cut the company tax rate from 49c to 39c, and somehow Labor portrays that proud legacy because we oppose this unfunded tax cut.' There are a couple of critical points though that you conveniently miss in putting forward this misrepresentation of what occurred in the eighties and nineties—that is, because the Treasury summary notes then that the company tax reductions have largely corresponded with base-broadening measures, such as the removal of accelerated depreciation. That's right: in plain English, the cut in the company tax rate that Paul Keating put forward was fully funded. It was clear where the money was coming from because the base of the tax was broadened at the expense of budget and important services and investments; whereas this government is putting forward a company tax cut which is unfunded. It shows the rank hypocrisy of the government.

The reductions in the headline rate in previous years, such as Paul Keating's, were funded through making the tax more efficient and broadening the base. It is a special kind of love that you have discovered of late for Paul Keating—and actually we hear a lot about John Curtin and Ben Chifley as well; we don't hear much about your own legacy. I will read again into the Hansard an extract of what Keating said in 1998. It goes:

The government is to cut the corporate tax rate in one step, from 49 cents to 39 cents, to give Australian companies a tax structure more than competitive with the rest of the world.

… the government has decided to lower the tax rates by removing some tax concessions—

that is, lower the company tax rate by broadening the base; not just take $65 billion out of the forward estimates, give it away to big business for little to no economic benefit and call that reform. That's Kellynomics. Apparently we should all be in a race to the bottom on company tax—and we have to do it because some other countries have a bit of a lower headline company tax rate, therefore we should. Presumably, if you take that logic, if President Trump cut the company tax rate to 15 per cent, then we'd have to match that, and then someone would cut it to 10, and we'd cut it to 10—and zero would be nirvana. So we would have no tax revenue and somehow that would be a perfectly competitive world! Of course, you'd have to cut all government spending, but we don't actually get to that part of the conversation of how we are going to fund this ridiculous tax cut. That's Kellynomics.

Why are you doing this? What's the government's stated policy reason for doing this? There's the global competitiveness bit, even though any sensible economist will tell you that the headline rate is not the correct comparator. You just take the headline rate and say, 'We'll compare that to another headline rate.' The US Congressional Budget Office is the most respected and well-developed budget office in the world, providing independent budget analysis for the Congress there. Our PBO, relatively young in its life, is learning from it, but that's a different story. But the Congressional Budget Office in America has said: 'You don't look at the headline rate. That's for dummies. That doesn't mean anything. You look at the effective tax rate that companies actually pay.' When you look at the effective tax rate, that is not 30 per cent in Australia. I think that on the last figures—I haven't got them in front of me—it was in the order of 24 per cent, which is a very different proposition.

What you also find, if you've worked in investment facilitation and think broadly, is that the company tax rate, headline or effective, is but one of the many inputs that companies take into consideration in making investment decisions. I used to work in the Victorian government, in the economic development department, in the trade and investment facilitation area, and it's a very sophisticated methodology. You look at all sorts of things. We should not be ashamed in Australia that we have high-quality public services. This is something to aspire to, and you need money to provide them—not that that has dawned on those opposite, because apparently you can just take money out of the budget and not worry about where it's coming from.

There are many other things: the stability of our financial system, the reliability of our regulatory environment, the rule of law, the quality of life, the human capital, the kinds of skilled workers you can get in Australia if you choose to invest, the infrastructure—putting aside the NBN, 'fraudband'; that actually is a problem, as we move down the competitiveness rankings. But all of these things are factors which are properly taken into account in the real world, the grown-up world, in making investment decisions. It's not just some race to the bottom on company tax as the only thing that matters.

The purported gain is one per cent. This is the best estimate. The Treasury figures, the ones that the government is relying on, show a one per cent gain in 10 to 20 years. In 10 years something might start happening, and after 20 years it might get to one per cent. What does that mean? It means $2 a day in wages in 20 years time—for spending $65 billion over the next 10 years. That sounds like a pretty dumb return to me, but perhaps the political strategy of the Prime Minister, 'Mr 50c', is shining through. He's now adding 50c off your electricity bill in 10 or 20 years time, so you might get $2.50! Maybe that's it. Maybe that sort of spread-copper, burn-coal, spin-crap election strategy that we're starting to see emerging—

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