Monday, 11 September 2017
Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017; Second Reading
Here we have a government, which lectures the Australian people about the need for budget repair. They used to talk about a debt and deficit disaster and a budget emergency. Here we have a government bringing to this house legislation which is the single biggest hit to the budget bottom line we have seen in this term or in the last term. This government is proposing to the House a measure which will materially, significantly and structurally damage the federal budget.
This is the government's corporate tax cut. We know that this is an expensive piece of legislation because we asked about it in parliament earlier this year, and we would have thought the Prime Minister knew how much this measure would cost over the decade, but it took some considerable effort to get it out of the government. Remember 12 months ago when they announced this; they announced a big 10-year corporate tax cut plan but they couldn't tell us the 10 year cost. But 12 months later it was deja vu all over again, because we asked the Prime Minister in question time what was the new 10-year cost, given that we're in a new fiscal year, and in scenes which were reminiscent of a farce, the government engaged in four different figures in the space of just four answers in question time. We had $24 billion, $26 billion, $36 billion and $56 billion. Eventually we got the right answer and the Treasurer replied with $65.4 billion. I did say to the Leader of the Opposition: 'Stop asking the question, because it's getting more expensive every time. The nation can't afford this!' The nation can't afford this hit to the budget bottom line that this government is so intent on producing.
We know that the government's mantra is jobs and growth. They say this is the key part of their economic plan, even though it's being introduced now, some considerable time after it was first announced. In fact, it was introduced in May in this House and is only being debated now. But, of course, they are a one-trick pony. When it comes to economic growth, this is all they've got. Their one shot in the locker is the corporate tax cut. It's what they've got. It's all they've got. It's a one-point plan.
What does that one-point plan deliver? It delivers a one per cent bigger economy in 20 years time—by their own figures, not by my figures, not by analysis or by any other independent commentator. It is a one per cent increase in 20 years time and a $2-a-day increase in wages in 20 years time. At a time when wages growth has flatlined at record lows and in real terms has gone backwards, the government's big idea is a wage increase in 20 years time of $2 a day.
The economic data recently released showed that living standards continued to decline and went backwards in the last quarter. This, again, is the government's big answer to the cocktail of rising costs, electricity prices, stalling wages growth and record underemployment. They say: 'It's okay. We have a plan. It'll work in 20 years time.' We also have a government which is supporting cuts to penalty rates from 1 July this year.
And, of course, this is despite all the lecturing about tax cuts and the Treasurer getting himself in a lather, getting himself very angry every question time, I must say, about Labor's plans on tax. This is a government which is actually proposing in separate legislation to increase the tax burden on every working Australian who earns more than $21,000. So this isn't a government which believes in lower tax; it's a government which believes in different tax. It's a government which believes in lower tax for big business but higher tax for working Australians. There are two pieces of legislation before the House as we speak. The minister at the table says, 'We want lower taxes.' You are trying to increase them. You are trying to increase them on working Australians who earn more than $21,000, and we oppose that.
We actually would support legislation which would see a proper approach to these matters, but we've got the government lecturing people about tax when they are increasing the tax rate on working Australians. Every single Australian who earns more than $21,000 will pay more in tax if this government gets its way. A worker on $55,000 will pay $275 a year. For somebody on $80,000 it's an extra $400. So this is not a government which believes in lower tax; it is a government which believes in different tax.
And of course we need to have a view to the competitiveness of our tax rates. The tax rates are one thing which goes into investment decisions. The United States Congressional Budget Office put out a paper earlier this year stating that the corporate statutory rate is one of the many features of the tax system which influence corporate behaviour and we need to look at the average tax rates. We do have a headline tax rate in Australia of 30 per cent, but the average tax rate for Australia in 2012, which these figures were based on, was 17 per cent, and there was an effective tax rate of 10.4 per cent. Of course, in Australia we have dividend imputation—a great Labor reform—which means that every domestic payer of corporate tax in effect gets it back. We actually 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 are going to compare apples with apples, let's have a proper debate. Let's see our corporate tax rates being compared on a proper basis with our competitors around the world.
The other thing which goes to competitiveness is, of course, consistency of policy and we see very little of it from this government. We see the Treasurer falling over himself trying to make political points and trying to accuse this side of the House of being high taxing when in fact it is them who are increasing taxes on every working Australian earning more than $21,000. They are being opposed by us. The Treasurer is quite obsessed with this. If you do a search of his speeches and his transcripts, Bill Shorten and Labor get mentioned a whole lot more than Liberal, the government or any other government policy. The Treasurer is obsessed with those who sit opposite him—a Treasurer completely devoid of any of his own strategy or policy.
We saw this particularly a few weeks ago with the Treasurer. He thought he was very clever. He added up all the policies that the Labor Party had announced and threw in a few others the Labor Party hadn't announced and said that it amounted to $160 billion worth of tax rises. He told people that the Parliamentary Budget Office had done this work. I thought that was unusual. I would have thought if the Parliamentary Budget Office had done work like this I would be aware of it. I thought that this was a highly unusual course of events. But my mind was put to rest shortly afterwards when the Parliamentary Budget Officer Jenny Wilkinson said:
References in the media this morning to modelling being released today by the Parliamentary Budget Office are incorrect.…The analysis reported in the media this morning was not conducted by the PBO.
The Treasurer had said this was PBO modelling. Government ministers were out there saying it was PBO modelling, and they were caught out. It was not PBO modelling. It just goes to show how desperate this government is to say and do anything when it comes to the economic debate. Labor will continue to lead that economic debate. We will continue to make our announcements which the government can either follow or not follow, and we've seen this consistently.
Again, the government lectures us about tax. Labor took the difficult decision of dealing with tobacco tax in the last term. The government said that this was a tax grab and didn't approve of it at all. Then of course, they adopted it in the budget. We announced our superannuation tax measures. The now Treasurer, who was Minister for Social Services at the time, personally led the campaign against our reform. He said, 'Labor is going to touch your superannuation. Hands off super. This government won't touch your super.' Then of course he became Treasurer and adopted large measures of Labor's policy despite all the rhetoric that he had previously adopted. He didn't do it very competently. He got some of the details wrong, but nevertheless, he did at least realise that something had to give.
Then came the negative gearing and capital gains tax. Again, Labor led this debate and announced a detailed policy. The government thought about a scare campaign which went flat at its first outing, and has not taken off at all. We know, perhaps why that's the case, because later on, we read that the Prime Minister and the Treasurer actually support negative gearing reform but got rolled in the cabinet, so their hearts are not in the scare campaign. Maybe that's why it hasn't worked. And then of course Labor has announced our very important plans to deal with tax minimisation through a minimum 30 per cent tax on discretionary trusts. Again, Labor was leading the debate, doing things which had been in the too-hard basket for 30 years.
The minister at the table says small family businesses. Peter Costello tried this and failed. Joe Hockey tried this and failed. Out of all the last Liberal treasurers, the only one who doesn't believe in dealing with family trusts is the incumbent. John Howard dealt with it when he was Treasurer. He had the courage to stand up to vested interests. John Howard had the courage to deal with family trusts. He applied a minimum tax rate to distributions for minors, but he did not apply it to adults. That was the unfinished business that John Howard left when he was Treasurer. I give him credit for at least attempting against the vested interests which were rampant in the Liberal Party at the time. He showed considerable courage in doing that. Then Peter Costello tried to deal with family trusts. In fact, Peter Costello wrote a letter to the Labor Party promising to deal with family trusts as part of the arrangements at that time. He was forced to renege on that agreement by his party room. Then we had Joe Hockey, when he held my role as shadow Treasurer, giving a speech saying that discretionary trusts needed to be dealt with. The policy was junked the next day. All of these Liberal treasurers have recognised that family trusts needed to be dealt with, but they have not had the courage or conviction to follow it through. Again, this is Labor continuing to lead the economic and policy debate.
I mentioned, before, the matter of competence, which is something that leaves the Labor Party plenty to talk about when it comes to the incompetence of this government. In relation specifically to corporate tax and the legislation before the House, we have seen very considerable confusion over recent weeks about the government's approach: which businesses are eligible; the contrasts between active trading businesses; companies holding passive investments. You would have thought that, on the centrepiece of economic policy which was announced in last year's budget, the government could've got the detail right. But here we have, in this case, the minister for revenue playing desperate catch-up, saying: 'Oh, no, you've misunderstood the law. That's not what we mean.' Well, there are plenty of experts out there who will point out that the legislation, in their reading of it, has a different impact from the one that the minister for revenue and the government would assert it has. So it goes to the heart of the competence of the government—let alone their wrong priorities—that they have not been able to get that policy detail right.
When it comes down to it, this is a government with the wrong priorities—a government determined to reduce the tax on businesses, and big businesses in particular, while, at the same time, increasing the tax on working Australians. I've made the point elsewhere that, in technical terms, in detail terms, this is an unfunded corporate tax cut, because it is. There is no funding plan to pay for this. This is what Paul Keating, for example, has pointed out—that this is an unfunded corporate tax cut, quite different from what he did when he was Treasurer, which was to broaden the base, go after loopholes and deal with the inequities in the tax system. He was paying for his policies. This Treasurer has a thought bubble and says: 'Well, we're in political difficulty. We know what we'll do. We will give away $65 billion, completely unfunded.'
But in another sense it is funded, because it's funded by tax increases on working Australians. We know that the tax burden on PAYG taxpayers will increase in coming years, and it will increase partly because this government is increasing the tax rate through the increase in the Medicare levy. This is very different from what the Treasurer told us would be his approach when he took his current office. He said he was passionate about personal income tax cuts.
I saw the member for Reid on Lateline with the member for Chifley a few weeks ago. They are very fine entertainers, the pair of them. The member for Chifley towelled up the member for Reid, in fairness. But I saw the member for Reid say, 'We support lower personal tax'. The trouble is: he's going to vote for higher personal tax when he votes for the increase in the Medicare levy, and he's going to do that to fund the corporate tax cut. There was a small hole in the member for Reid's argument—just a little, small hole: that the lower personal tax that he believes in will not be delivered by increasing tax rates. There is a little tip for the member for Reid. The member for Reid has maybe forgotten that policy, but I don't hold it against him. He can't be blamed for it because he looks to his leadership—he looks to the Treasurer—and he gets very mixed signals from the leadership in the government, because the Treasurer told us he was passionate about personal income tax cuts. He told us that it was something that was a priority for him and that he was going to introduce big, swingeing personal tax cuts. He told us that it was a key goal and that bracket creep was an inflation tax and that he was passionate about dealing with it.
He did deliver a modest degree of personal income tax cuts in his first budget. He announced that, from 1 July 2016, the tax threshold would rise from $80,000 to $87,000, as some tax relief to middle Australia, and the Labor Party supported that. But he has taken it all back—and more—a year later with the Medicare levy increase, which actually raises more than the tax cut that he delivered the year before, but actually applies to different people, because the tax cut that he delivered only applies to people earning more than $80,000, but the tax rise that he wants to deliver applies to all those earning more than $21,000, and that is clearly linked to the legislation which is before us today, which is the $65 billion corporate tax cut, because they have to fund it somehow. The way they're funding it is: an increase in the pressure on PAYG earners, despite what the Treasurer and the government told us would be their approach. Their approach is the complete opposite of what they said that they would do.
We actually want to ensure that the PAYG taxpayer gets a fair go, which is why we've worked so hard to announce policies which are dealing with those tax concessions which aren't available or aren't used primarily by your average PAYG taxpayer. The average PAYG taxpayer—maybe a nurse or a teacher or any number of occupations—can't, for example, start a family trust and distribute the income they've made through the PAYG system to members of their family on a lower tax rate. They can't say to their university-aged child, 'Look, you're under the tax-free threshold; we're going to give you $18,000 so that you don't have to pay any tax on that.' They can't say to their parents, 'You don't pay tax, so therefore we'll distribute some income to you to minimise your tax.' They can't do that. Only people who have access to family trusts can do that. How is it fair that some people can do that and other people can't? The fact of the matter is that we've looked at that and said, 'Well, this is about making the tax system fairer,' but we actually carry through with what we say about the tax system.
The Treasurer makes outlandish claims and sweeping promises that he's going to massively reduce personal income tax and deliver tax cuts and do this and do that, and then he does the exact opposite. What the Labor Party has done is lay out the challenges and problems that we see in the tax system and then deliver detailed policy prescriptions which follow through on that.
The minister at the table is at it again! He can't help himself—'Mr Comprehensive Housing Plan' over here. He has been sitting at the feet of the Treasurer learning from him, hasn't he? He's been doing it too, because he told us there would be a comprehensive, sweeping housing affordability plan in the budget. That's what he told us. The minister said: 'You are going to be blown away! It's going to be so big, it's going to be the biggest housing plan since Chifley.' We were told it was going to be just ginormous. Expectation management isn't your strong point, Sport! You've got to do better at expectations management, because what we saw was a damp squib from the minister at the table—a complete grab-bag of little measures, some of which are counterproductive and others which don't amount to two-fifths of zero when it comes to housing affordability.
We see the government again talking a big game. They are talking a big game, saying: 'We're going to deliver housing affordability. We're going to deliver big personal income tax cuts.'
The minister now asks me to name one area where the Labor Party stands for low taxes. We stand for lower taxes on low-income earners, and you stand for higher taxes. You want to increase taxes on every working Australian. That's what this government wants to do. Minister, go out to the Australian people, go out to your electors and explain why you want to increase the taxes on people who earn more than $21,000. That's what you want to do. You stand for higher taxes. The government stands for higher taxes on working Australians. This minister at the table is proud of it. He supports higher taxes on working Australians because he supports an increase in their personal tax rate which this side of the House will oppose and stand against in this chamber and in the other chamber.
We will say that those Australians who are dealing with low wages growth and negative real wages growth, who are dealing with the loss of their penalty rates and who are dealing with electricity prices going through the roof on this government's watch as a direct result of the policy uncertainty that this government is delivering, that what this government is doing is increasing their tax rates. This side of the House will stand against that. This side of the House will stand against their proposals to reduce corporate tax because they are a hit on the budget. They are a hit on the budget which will make budget repair impossible.
This nation and the governments of the day have a choice: you can have budget repair and a return to budget balance or you can have a corporate tax cut, but you cannot have both. This government has chosen corporate tax over budget repair. I say to the government: go out and say so. Fess up! Why don't you just be honest with the Australian people and say you've given up on budget repair? You no longer think it's necessary. You no longer think it's important to return to budget balance. The government thinks: 'Actually, we thought it was important, but now it's no longer important. We actually now think a corporate tax cut is more important.' Fair enough. If that's your argument, make it.
The government won't admit that they can't deliver a balanced budget and they can't deliver budget repair because they are prioritising the corporate tax cut. You simply can't have the situation where you believe in budget repair and you believe in returning the budget to balance, but at the same time you can just give away $65 billion in a corporate tax cut, which is unaffordable and unfunded. And so it is appropriate that the House expresses its view to the government by carrying a second reading amendment. I move:
That all the words after "That" be omitted with a view to substituting the following words:
"the House declines to give this bill a second reading as:
(1) this significant structural deterioration in the Budget is unaffordable;
(2) the Government has prioritised giving millionaires and big business tax cuts, and raising income taxes on workers earning above $21,000, over saving penalty rates; and
(3) the Government has failed to deliver any economic leadership".
The economic leadership point is an important one, because there is a very important anniversary later in the week. There are a couple, actually. The House will be interested to know—the member for Werriwa I notice is taking a keen interest—there are a couple of milestones for the Prime Minister later in the week. First, he will overtake Tony Abbott's record as Prime Minister. He will have been Prime Minister for longer than Tony Abbott. He's managed to hold on longer, by his fingernails, in the party room.
Opposition members interjecting—
That's right: I am making a supposition that he lasts until Thursday, but I think I'm on reasonable grounds. Next week I couldn't be so sure, but I think this week he's going to make it. And then, later in the week, he will have been Prime Minister for two years. Remember he promised two things. The first was to turn around Newspoll. I make no comment on Newspoll; that's for others to judge. He pointed out that there were 30 negative Newspolls and he said he would turn that around, but that's for others to judge. He also promised new economic leadership. Now, the new economic leadership that he is proposing for the Australian people is a tax rise for those who earn more than $21,000, taking away the penalty rates for Australians who commit no crime other than working on a weekend, and increased electricity prices as a result of the policy uncertainty and instability at the heart of this government.
This is a government that commissioned a report by the Chief Scientist. The Chief Scientist has told it that the best way you can put downward pressure on electricity prices is a clean energy target. We on this side of House have said, 'Well, okay, that's not our preferred policy option, but we'll go with it if that puts downward pressure on prices and delivers that policy certainty and stability.' But there is a government here that cannot deliver its own policy. It commissioned a report and now its members are at war with each other about whether it should be adopted or not. Well, this side of the House is here to help. It's extended a hand of bipartisanship, but there's no hand on the other side!
This 'new economic leadership' goes to all the wrong priorities incompetently delivered, and that is not new economic leadership; that is a shame for the Australian people. We have had to put up with these two years of false starts, wrong priorities and a government that told us that they wanted to give income tax powers to the states, for example, and reduce all federal funding from education. That was 'new economic leadership'. They are a government that told us that they'd have an increase in the GST and then they wouldn't have an increase in the GST. They are a government that told us they would have big personal income tax cuts and are increasing tax through the Medicare levy. They are a government that told us they would have a corporate tax cut, which is entirely unfunded and is a massive hit to the budget bottom line over the next decade. They are a government which told us they understood the cost-of-living pressures on the Australian people but are reducing penalty rates for those who work on weekends. And they are a government that, of course, have seen the debt blow out on their watch. They are a government that told us there was a debt and deficit disaster, but they have added more debt onto the national accounts or onto the government's figures than was added under the previous Labor government. In their time in office, in their fifth year in office, they've added more debt than was added under the previous Labor administration.
This is the lack of leadership we see from the government. We see an approach that is fundamentally out of keeping with the priorities that the Australian people so desperately want to see from their government. However, the opposition has taken the opportunity to lead the economic debate and will continue to do so. And, when we contest the next election, we'll seek a mandate to do those big and important things, which this government has so blatantly failed to do.
I thank the member. The original question was that this bill be now read a second time. To this the honourable member for McMahon has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form 'that the amendment be agreed to'. The question now is that the amendment be agreed to.
I rise to speak in support of the original motion—that the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 be now read a second time—and against the amendment that was moved. I think in the last half-hour—a half-hour of my life that I definitely will never get back—you have seen the absolute capitulation of the once great New South Wales Right of the Labor Party. The man that was seen for a long time as the future of that has basically put his hands up in the air and surrendered, rolling over to those in the populist Left of his party in search of votes and, at the same time, walking away from everything that he actually believes and espousing absolute rubbish about the fiscal priorities of this country.
Why do I say that? Because you don't have to look back too far. He said back in 2014—the shadow Treasurer's words, not mine:
… Keating knew that the corporate tax rate needed to be cut to make Australia competitive, that capital and investment would flow to tax-competitive nations and that this was an important job-creation move. Today capital is even more mobile than it was then and it is important that our corporate tax rate is competitive.
You know what? He was right. The significance of what he had to say then and what he's just espoused in this chamber shows you that some politicians are prepared to turn their back on what they believe for their own advancement over that of the general public. This is something we see far too much in modern politics. But it didn't stop there. Again, these are the Shadow Treasurer's words:
… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.
He was right then; he's wrong now. He kept going. He kept giving us cannon fodder:
… the United Kingdom, facing a much tougher fiscal situation than Australia's, cut its company tax rate to 23 per cent in April 2013, to be reduced further to 21 per cent in April 2014.
What you see being espoused on a daily basis both in this chamber and in public by those opposite is their latest iteration of a war on business and a war on investment. The two go hand in hand. They do not have one policy that will create one job. They are about politics, not policy. You go through what the shadow Treasurer has to say on negative gearing, a historic reform if you believe the Shadow Treasurer.
The member for Batman yells out, 'I do.' I'll leave it there, David. I won't bite. I won't say what I should.
What do you say to the people in Perth? I was there last week. In suburbs in outer Perth, prices have decreased between 15 and 25 per cent in the last 12 months, not only on investment properties but on all properties. The shadow Treasurer, the alternative Treasurer of this country, will be, if elected, the Treasurer for every postcode in this country—not just those in Western Sydney and western Melbourne, where there are marginal seats that he wants to win, but in places like suburban Perth, where, if it weren't for the fact that banks in Australia have an Australia-wide loan book, you would have right now a subprime crisis. You have people who have bought into that market in the last five years who have negative equity in their homes. You have record numbers in mortgage stress around the country. Darwin is suffering from the lack of fly-in fly-out workers, with house prices down seven per cent year on year—and the shadow Treasurer thinks negative-gearing changes there would be a good move! You will rip the guts out of the housing market in places that can't afford it. In Perth, you will deadset have tumbleweeds rolling down the street. You have 25 per cent decreases in people's homes. A lot of people find themselves in a situation of negative equity.
With negative-gearing changes in those places, rural Australia included—in Western Sydney and western Perth, we have an issue, yes. However, you have seen on the front page of today's TheAustralian that changes by APRA to the ways banks lend to investment, coupled with clampdowns on foreign investment in this market, have seen declines. Harry Triguboff came out and stated that in New South Wales and south-east Queensland—the Reserve Bank governor adding south-east Queensland last week—you have the lag of supply following demand. But the sad part is that the measures that have been taken in the last 12 to 18 months have now curtailed demand. You will now see that glut hit the market, and that will be an issue for the broader market in its entirety.
But the war on business is not limited to opposing these tax cuts; it is a war on investment across the board, be it capital gains tax—the shadow Treasurer spoke about family trusts. What he completely neglected to point out—and no-one has yet pointed it out in this debate—is that the global financial crisis saw a change in the way businesses in this country employ people. They needed flexibility. You saw two things happen. You saw a casualisation of the workforce and you also saw companies disband their workforce and hire them back as contractors. Guess what the contractors did? They had to set up as businesses themselves to contract back to the companies. So what did they do? They went to see their financial advisers.
Mr Husic interjecting—
The member for Chifley yells out. I am explaining what the workers did. They would then set up their business with, usually, a proprietary limited company sitting out at the front of a family trust. Why? Because you have limited liability in the company and you distribute through the trust. The trust does not actually pay tax; it distribute to the beneficiaries, who pay top-up tax at their appropriate marginal rate. The growth that has occurred in trusts in the last five to seven years has been driven by how the workforce has evolved post GFC. Businesses are still shy. The economy is still soft. Underemployment sits at levels that are of great concern. Attacking business is not the answer; fostering business is the answer. Why? Because when businesses make greater profits—it has happened since Adam was a boy, and not just in Australia but worldwide—they reinvest in their business. What happens when they do that? They grow. What happens when businesses grow? They employ more people. We see it with small and medium-sized businesses all the time. They are interested in reinvesting in their business.
Mr Husic interjecting—
The member for Chifley yells out, 'What about the sacrifices the workers make?' SME operators through that GFC period—I have known many of them since before politics for me—paid their workers first and themselves last.
If they lost their job, they would most likely lose their home. They put their family home on the line every day. What do they do at the back of it? They employ workers. I can tell you this, coming from a family business background, and I have been lucky enough to have met with some success along the way. My family owns a number of assets. However, the most important asset that my family has at its disposal is our amazing workforce, our staff. Why? Because we can't open the doors without them, as all small and family businesses can't. I grew up going to staff weddings, staff christening and staff funerals. Why? Because the staff were part of the family. That's how it happens in small and medium-sized family businesses. That's the reality of what we're talking about here. That's what those opposite, sadly, don't understand, because they've never actually done it.
What we're talking about is fostering entrepreneurial flair, backing people who take risks, backing people who put their homes on the line to start small and medium-sized businesses that grow to be big businesses. The principle doesn't change, irrespective of the size of the business. If you reduce company taxation—and we have a policy that we're talking about today to do that—you will incentivise business to invest.
As the shadow Treasurer said in 2013, in today's highly competitive, mobile-capital world, you need to be competitive internationally. The shadow Treasurer, in his additions or amendments to the bill, spoke about tax cuts also for millionaires. Since when did $180,001 become a millionaire? They selectively choose the number they want, because it makes a nice political slogan. They want the top marginal tax rate in this country to be at 49½c in the dollar. That's not internationally competitive. You will lose people to places like Singapore and all through south-eastern Asia, where the tax rates are far lower and human capital is mobile.
He spoke about penalty rates and the fact that the Fair Work Commission has come up with a decision that we won't stand in the way of. However, last Saturday I worked on council elections—another day of my life I might not get back—and I stopped at a McDonald's on the way there to grab a coffee. As the barista was making the coffee, there was a young boy there sweeping the floor. The barista said to him, 'Are you new?' He said, 'Yes, I started last week.' I looked at him and I said to him, 'What's your name, mate?' He said, 'Shaun.' I said: 'Mate, what shifts do you work? What are you doing? You're at school, obviously.' He said, 'Yes, I am.' He said, 'I work six hours on a Wednesday after school; I work six hours on a Saturday and six hours on a Sunday.' Under the EBA that the SDA union has done with McDonald's—which is starting to come out in the Senate inquiry that is going on into this—Shaun will be short paid. He'll be paid $27 less this week than he would if he was on the award. That's 1,350 bucks a year that the union movement has ripped off a 15-year-old schoolkid. That's the hypocrisy of what we're talking about opposite. The SDA union, which has given $10 million—
And I'm blaming McDonald's. Big business and big unions have combined together through the EBA process. It does not pass the BOOT test—your own test, Member for Chifley. Under the BOOT test, every person—
An honourable member: It didn't fail?
Sorry, it failed the BOOT test. Under the BOOT test—Labor's test, not ours—every worker must be better off.
Better off overall. Fifty-six per cent of the workers, according to an Ernst & Young report, were worse off under the Coles EBA. The union official that signed the stat dec and lodged it as passing the EBA is on record in the Fair Work inquiry as signing it knowing that it was wrong. The process—
No, I've gone to Coles to show you it's not just unique to McDonald's. It's Coles. It's Woolworths. It's McDonald's. It's KFC. It is big business combining with big unions, at the expense of low-income earners, to have a superior wage outcome for their own business. The kickbacks that happen for the SDA union are then funnelled back into the Labor Party, amounting to $10 million over the last seven years. This is the hypocrisy, this is the popularity, of those opposite.
The story here is simple. This is the latest in Labor's attacks on business. If you attack business and investment you are ultimately attacking its employees. The question for Australians between now and the next election is: if you are employed, particularly by an SME, in this country and your boss is attacked or doesn't get these cuts or they don't flow through, what might ultimately be at risk in order to cut costs moving forward? Your job. That's what might ultimately be at risk. That should never be the case. You should never attack business, because businesses employ people. The shadow Treasurer understood it in 2013. Sadly, he has put his hands up and capitulated—as have others on the shadow front bench. It's sad, because it goes against everything economic he has written. The original bill should be supported.
Today, I want to deal with three arguments that the coalition have made for cutting the company tax rate. They've claimed that Labor once supported cuts to the company tax, they've claimed that other countries have lower corporate tax rates and that ours are comparatively high and they've claimed that cutting the company tax rate for big business will boost growth. I will explain to the House, in turn, the problems with each of these arguments.
First, the coalition claim that Labor in the past supported lower company tax rates. It is certainly true that Paul Keating took the approach of broadening the base so you could lower the rate. Against the opposition of the Liberal and National parties of the day, Paul Keating brought in reforms like capital gains tax, fringe benefits taxation and an assets test on the pension. He made hard decisions to ensure that our tax base was broader and our social safety net better targeted, and in so doing was able to finance a rate cut. This broadening of the corporate tax base was the same philosophy that underpinned the Gillard government's approach. We said at the time we'd support a modest reduction in corporate tax in return for broadening the base.
What has changed since then? Unfortunately, a lot has changed. In 2013, net government debt in Australia was $184 billion. Now net government debt is $325 billion, in 2016-17, as reported in the last budget. In the 2013 Pre-election Economic and Fiscal Outlook, the estimate for 2016-17 debt was $217 billion. That is a full $108 billion lower than the actual figure came in at. Net debt will have increased by $141 billion since the coalition came to office, which equates to $5,700 for every man, woman and child in Australia. When we debated for the first time the coalition's tax plan, everyone listening to the debate was told that the Liberals had increased government debt per person by $4,500. But now, if you need an answer to the question: 'Why is now a bad time to cut the corporate tax rate?' the simple answer is: $5,700 of Liberal-National debt.
In the notorious 2014 budget, the projected deficit for 2017-18 was about $3 billion. It has now increased to $29 billion, nearly 10 times worse than forecast just a few years ago. A party that used to hold press conferences in front of debt trucks, ought by rights to be driving debt road trains for what they've done to debt. They used to talk about debt and deficit disasters and used firefighting metaphors, but you don't hear much now from the coalition about debt, and that's for one simple reason: their $65 billion corporate tax cut. Frankly, they have taken the Reaganite approach. As Ronald Reagan in the 1980s ramped up debt, cut taxes and left the problem to someone else, so too the coalition are now hoping to kick the debt can down the road, increasing debt but failing to make the hard decisions, as Labor has done.
Under the leadership of the Leader of the Opposition and the shadow Treasurer, Labor has made tough decisions around negative gearing, around trusts and around deductions for managing tax affairs. We recognise that it is only through proper base-broadening that you earn the right to have conversations about expenditure or about lower rates. The coalition have not earned that right, because the coalition have been unable and unwilling to make tough decisions on fiscal policy in Australia.
I want to turn to the comparative position of Australia's corporate tax rate. Australia has a rate, as honourable members know, of 27.5 per cent for small and medium businesses up to $10 million and 30 per cent for other businesses. The government's proposal is to bring the overall tax rate down to 25 per cent for all companies. A phase down to 25 per cent is already legislated over the next decade for companies up to $50 million in turnover. Their argument, the argument they so often make, is that we have to do this because Australia's corporate tax rate ranks us unusually high. Well, let's have a look at a careful analysis of that. The US Congressional Budget Office, a non-partisan budget outfit, published its international comparisons of corporate income tax rates in March 2017. It contains summary table 1 on page 2, which ranks G20 corporate tax rates from highest to lowest on three metrics: the statutory corporate tax rate, the average corporate tax rate and the effective corporate tax rate. On the statutory corporate tax rate, Australia's 30 per cent rate ranks as 10th. On the average corporate tax rate, Australia's rate ranks us 15th, the fourth-lowest in the G20. On the effective corporate tax rate, we're ranked 11th. So we are average or below average for our corporate tax rate compared with the G20, which is surely the relevant comparison. The G20 are the world's 20 largest economies. If we want to do an apples-to-apples comparison, let's not sit there cherry-picking comparisons with countries that have no social safety net to speak of. Let's not do comparisons with countries whose residents are pushing hard to move to Australia and to which very few Australians would like to move. Let's do comparisons with the world's 20 biggest economies. When you do that, you get the answer that our corporate tax rate is at or below average compared to the G20.
But there is another little secret that those advocating a corporate tax cut don't often let you in on and that's dividend imputation. It is a system that gives back a share of the corporate tax revenue to individual taxpayers. A rough rule of thumb, according to Geoffrey Kingston's 2015 analysis, and JASSA: The Finsia Journal of Applied Finance, is that dividend imputation gives back a third of corporate tax revenue. So in terms of what the government raises through corporate taxation, a 30 per cent rate with imputation raises about as much as a 20 per cent rate without imputation. If you hear anyone doing international corporate tax comparisons and they don't mention imputation, you know they're being deeply disingenuous. You hear people say that Britain has a 20 per cent rate or Donald Trump would like a 20 per cent rate for the United States, but just remember that Australia's 30 per cent rate with dividend imputation already today raises about as much as a 20 per cent rate without imputation. If you ignore that, you are either deliberately obfuscating the debate or ignorant of one of the central facts in this debate. The very fact is that powerhouse economies around the world have corporate tax rates comparable to Australia's ignoring imputation. Take into account imputation and Australia's corporate rate is, if anything, significantly lower than the relevant comparator companies.
Then we turn to the government's argument that a corporate tax cut will boost growth. One way of knocking down that argument is to simply go to the government's own analysis, a paper released on budget night last year entitled Analysis of the long term effects of a company tax cut. You need to work carefully through this paper to see what the government's argument is. Firstly, domestic shareholders barely benefit from corporate tax cuts. As the Grattan Institute's John Daley pointed out, local shareholders only gain if profits are reinvested rather than paid out. Given the surprisingly high pay out ratios among Australia's listed companies, most of the $8 billion annual gain from a corporate tax cut will go overseas in the first instance. Indeed, there'll be cases in which US based multinationals repatriate their profits, paying the difference between their higher rate and our lower one, which will mean that an Australian corporate tax cut will just go into the coffers of the US Treasury and be spent by the successors to President Trump—because, of course, we're talking about impacts a fair way down the line.
Let's go on with the argument in the government's own analysis. The Treasury report argues that, having enjoyed the first-round benefits of a company tax cut, foreign shareholders will respond to higher after-tax profits on their Australian investments. The theory goes that overseas shareholders then invest less in other countries and more in Australia, which means greater demand for land and labour, so in the long run land prices and wages are supposed to rise. But this long run is pretty long. Given that we're typically talking about seven to 10 years after the change comes to fruition, and since the coalition's tax cut only reduces the tax rate on big business to 25 per cent on 1 July 2026, this means we're talking about benefits somewhere between 2033 and 2035. At that stage, Prime Minister Turnbull would be in his late 70s and the longest-serving Prime Minister since Menzies.
But how big will those gains be? The Treasury report says that corporate tax cuts could be funded by a nationwide land tax, which is pretty unlikely given that the federal government hasn't had one of those since 1952, or lower government spending, which is pretty unlikely given that the government has failed to implement its promises on government spending. The most likely scenario is that a company tax cut for big business would be funded by higher personal income taxes. In other words, we'd cut the taxes on big business and increase the taxes on individual taxpayers—just as, for example, we're seeing with the coalition's attempt at the moment to raise the Medicare levy on anyone earning over $21,000. It's well along a path which would see it fund a corporate rate cut through an individual rate rise.
On that assumption, the government's modelling suggests the benefit to households is 0.1 per cent. How big is 0.1 per cent? It's roughly the rate of household income growth per month since the early 1970s. So the government is promising an extra month's worth of household income growth, in the 2030s, in exchange for higher personal income taxes. Put that way, it doesn't sound like that much of a deal. Particularly with wage growth at a 30-year low, inequality at a 75-year high and homeownership at a 60-year low, 0.1 per cent to households in the mid-2030s isn't much to write home about. As Ross Gittins says:
If you wanted to create jobs, cutting the tax on foreign investors isn't the way to do it.
Bernard Keane says:
It could be the greatest tax avoidance scam ever perpetrated …
A recent study written up in The New York Times by Sarah Anderson of the Institute for Policy Studies takes another approach. She and her co-authors consider the argument that a lower corporate rate creates jobs by looking at the 92 publicly held American corporations that reported a profit every year in the US from 2008 to 2015 but paid less than 20 per cent of their earnings in federal income tax. They looked at the job creation rate in those companies. Do US companies that pay a low corporate rate create more jobs? After all, we get told every day that a lower corporate rate will be a job creator. But they found exactly the opposite. They found that those companies had a median job growth rate over the past nine years of negative one per cent, compared to six per cent for the private sector as a whole. Of those 92 companies, they found that 48 got rid of a combined total of 483,000 jobs. Of course, the news wasn't all bad in those firms. If you were a chief executive in those firms, your pay averaged nearly $15 million, compared to the $13 million average for S&P 500 companies. So, right now in the US, companies that pay less corporate income tax create fewer jobs but pay more to their CEOs.
If that's the kind of race to the bottom that the coalition have in mind, it's short shrift for Australian workers. Australian workers won't see more jobs as a result of this big business tax cut. Instead, they'll see more debt and higher taxes. If you want to see business grow, you need to invest in trained workers, move away from National Party pork-barrelling in infrastructure and put in place clean energy policies that are market driven rather than continually attacking renewables. You need an instant asset write-off that doesn't have a sudden-death expiration but continues providing stability for businesses looking to invest.
We also have the extraordinary spectacle of the coalition wasting millions of dollars trying to buy credibility for its multinational tax reforms. At the very time when we have a $340 million judgement against Chevron, the coalition are patting themselves on the back. Yet, in 2012, they voted against the very same laws that secured that judgement. If they had any honesty, they'd be apologising to the Australian people for voting against Labor's laws to close multinational tax loopholes, not patting themselves on the back. The coalition needs to commit to tightening debt-deduction loopholes used by multinational companies, which would improve the budget by nearly $5 billion over the decade. We need greater transparency. We need better treatment of multiple-entry consolidated groups. We need to close tax loopholes.
It's always good to follow the member for Fenner, dressed resplendently in his woollen suit—made from wool probably from a sheep raised on a farm in an electorate which was held by a National Party member. I know he's a very good marathon runner, and to run marathons you need to be able to have the food inside you that keeps you running to the finish line—food grown, probably, in one of those National Party electorates that he condemns. There is nothing wrong with National Party electorates getting well-funded so that we can provide the food and fibre that you, Member for Fenner, and everybody else needs. When the regions are strong then so, too, are the capital city electorates just like yours.
The member for Fenner mentioned the imputation system and said that members would be disingenuous if they didn't mention it. If you go to the Australian Taxation Office website, it talks about imputations; it talks about franking; and, importantly, it talks about the prevention of double taxation. It says that that is:
… the taxation of profits when earned by a corporate tax entity, and again when a recipient receives a distribution.
So true. Indeed, double taxation is when a Labor government, like we had when I first entered parliament, goes and proposes a policy and implements it—like the minerals resource rent tax, which was never going to raise any money—and then spends it before the money even comes in, and then, when the money doesn't come in, because it was never going to, they've already spent the money, and they've just added to the debt and deficit. Mr Deputy Speaker Kelly, you know as well as I do, and as every member on this side of the parliament knows: that's what Liberals and Nationals do—we clean up the mess left by those opposite.
I refer to the Sydney Morning Herald article entitled 'Goodbye to the mining tax, and good riddance', written by Elizabeth Knight on 3 September 2014, where it states that:
In isolation, the mining tax didn't raise any funds. However, the previous government—
had earmarked the phantom revenue it was to generate from the MRRT to pay for a variety of goodies …
That's what Labor does. They've paid for things long before they've accrued the money to pay for them. It is a form of double taxation because then they have to tax the daylights out of small business and out of good hardworking Australians to make up for their mess.
The Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 goes to the heart of why taxation cuts are so important for small business.
… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.
The member for McMahon said that in his book Hearts & Minds, published in 2013—available at all good garage sales! He was right then, and I don't know why he didn't—during the half hour of time which we on this side of the House endured in listening to him just a short while ago—talk about it being a Labor thing now. If it was well and good in 2013, why isn't it good now?
The Liberal and National's plan for a brighter future, for supporting jobs growth, for attracting investment and for creating opportunities for more Australians: that's what the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill is and will be into the future. It's a 10-year plan for a secure future for our children and generations to come. What could be more important?
As I've gone about the nation on my small-business roadshow—I've visited a number of Labor electorates, too, I might add—I've met hundreds of small-business owners who've backed themselves and risked it all to make a go in business. It's fantastic to see them doing just that. Business creates jobs, not government. It's entrepreneurial spirit. People willing to take that risk are the ones who are creating jobs, not us. We might talk a big game—we might take the credit for it—but it's business people who risk everything, including their houses, to have a go who are creating the opportunities for more Australians to be employed. As we heard from the Treasurer during question time today, there have been more people employed in the past six months than at any other time in recent decades.
Let's be under no false illusions: the road on the path back to wealth and prosperity is not an easy one to navigate. Having run my own small business, as have many of my colleagues, I understand the personal investment and commitment involved to get a business up and running and off the ground. We know that by lightening the load on business, economic activity will increase, including increased investment, employment and wages growth. The Liberal and Nationals government wants to give business the confidence to grow and to invest and to create more jobs for all Australians to benefit.
This bill builds on the vast array of small-business measures the government has delivered. Never has there been a more small-business-friendly government than this one. We've already cut taxes for small businesses with a turnover of less than $50 million, reducing the tax rate to 27.5 per cent, its lowest level in 77 years. There are more than 3.2 million small businesses in Australia, having a go and employing 5.6 million people, who are set to benefit from this bill and other measures that we're putting into place. The response for small businesses has been resounding: 99 per cent of businesses have access to small-business incentives, including the popular $20,000 instant asset write-off, which was extended by 12 months in this year's budget. This popular program supports small businesses to invest in the assets they need while boosting business productivity.
We're cutting taxes and we're also cutting red tape. As part of the budget, $300 million was put on the table to incentivise states, whatever their political persuasion, to get on board and to cut some of that bureaucracy, to cut some of that red tape, to cut some of that overlap between federal and state jurisdictions. Time is money in business, and so we're working with the states and the territories to simplify red tape and streamline services. We've recently passed legislation for fairer competition laws, levelling the playing field for small business and driving competition in the market while also providing better, greater, stronger protections. The Liberals and Nationals want to see businesses grow, and our plan is working to reduce barriers, to stimulate investment and to encourage more investment. We want to see jobs growth and increased wages through tax relief.
I know the member for Fenner doesn't understand that. I know he doesn't get that, but if you put in place tax cuts, businesses profit. They then have the incentive to employ more Australians. That leads to higher wages, which leads to economic growth. Treasury modelling suggests that when the Ten Year Enterprise Tax Plan is implemented our policy to cut taxes to 25 per cent across the board will permanently generate an increase to the economy of more than one per cent of gross domestic product—more than $17 billion in today's dollars each year. They are big numbers. They are important numbers. For a business to pursue a new idea or give someone else a go takes courage. It requires risk. That's why our plan to provide tax relief will back business and inspire confidence to invest and to grow. The National Australia Bank small-and-medium enterprise report released on 5 September said that 70 per cent of SMEs think Australia is a great place to do business. The report shows that SMEs want to grow but are finding it difficult to see through a maze of red tape and regulation. That's why the government has taken action. That's why it's part of the May budget. We incentivised the states to do what they could to remove duplication and compliance for small business. To date we have already cut $5.8 billion between 2013 and 2016, eclipsing our target of a billion dollars per year. We are also making it simpler for businesses to report payroll and superannuation information to the ATO through the Single Touch Payroll. I complement the member for Reid, the assistant minister, who has rolled out the National Business Simplification Initiative in the hospitality sector in Parramatta, reducing the time it takes for the first registration papers to go into ASIC. From the time you decide to start a small business, it used to take 18 months. We've got that down to three months in the hospitality sector. Because it's been such a success, it is going to be rolled out in other sectors in other areas and in other places across Australia.
The NAB report on SMEs also shows that more than 84 per cent of small and medium enterprises believe the government should provide better tax breaks and incentives to small business. We are doing just that. We are getting on with the job. It also shows that almost 37 per cent of SMEs have wanted to expand but have hesitated, 45 per cent citing uncertainty and economic conditions. Australian business can have confidence that the coalition government is delivering its commitment to lower taxes across the board to increase growth and competitiveness. The economy is diversifying and expanding, and the government understands that businesses of all sizes have an important role to play. The tax cut that we've already delivered is a good start. The passage of this bill seeks to lower the company tax rate to all businesses and that will provide another boost. As I said, we are getting on with the job.
Over a decade, this bill will lower the tax rate for all businesses to encourage investment and higher paid jobs by progressively decreasing the tax rate for all businesses to 25 per cent by 2026-27. We have to do this to remain internationally competitive, to take advantage of the Asian century and to make sure that we're right up to speed with our competitors and with those with whom we trade. Our plan to lower taxes has received wide support from business and industry. Ai Group Chief Executive Innes Willox in a survey of members released on 5 May said that tax relief is top priority. The survey gave top ranking to reducing the burden of business taxation and showed that, '54 per cent of business leaders give top or second-highest ranking to the reduction of the small business tax burden. This is an unambiguous expression of support for the government's enterprise tax plan.' I couldn't have said it better myself.
The Business Council of Australia Chief Executive, Jennifer Westacott said:
It’s imperative that the parliament passes the Enterprise Tax Plan in its entirety to restore Australia’s company tax rate to the middle of the pack and protect and grow jobs in this country.
Again, I couldn't have said it better myself. We want to encourage investment and for more Australians to back themselves and follow their business dreams. Our plan supports them to make those dreams, those aspirations and those hopes a reality.
On the other hand, what do we see? A Labor Party that is antibusiness and beholden to the union agenda. Labor's reckless attitude to spending will be funded by taxing small business at every opportunity and ripping money out of the pockets of hardworking Australians. Labor counts the cost of the enterprise tax plan in its savings figures—that's what they do. We all remember, just prior to the last couple of elections, Labor putting in savings measures and going to the electorate saying that they were going to put in place savings measures if they were elected. And what did they do? They then opposed them in the Senate. They opposed them in this place when we said, 'Look, let's do it. Let's go with your savings measures.' They don't want to do it. They count the cost of the enterprise tax plan in their own savings figures. Australian small business can only assume that Labor is taking a backward step, as per usual, and redefining small business to that of a turnover of $2 million and not what we've got it at now of $10 million.
Under Labor, Australian families and businesses will be hit with more than $150 billion worth of taxes. Labor views small business turnover as a river of gold from which they can fund their tax and spending ideology, hurting business and our economy. No-one is safe from Labor's tax grab. There will be tax upon tax upon tax to fund their spending addiction. Under the Labor alternative, tax cuts for small business will be under siege. The instant asset write-off will probably be gone. Family and small-business trusts are also under siege. We heard the member for Fenner condemning trusts. But we expanded it. We extended it in the last budget and, let me tell you, Australian businesses love it.
Mr Thistlethwaite interjecting—
They love it, member for Kingsford Smith. We heard the member for Fenner talking about negative gearing as if it's something that shouldn't happen. He wants to pull the rug out from under the housing market—so typical. What Australian small businesses do not need is another policy from Labor that will put pressure on budgets, stifle growth and destroy confidence, because confidence is what courses through the veins of small-business owners. Confidence is a perception, but it's also a reality and, let me tell you, the member for Maribyrnong is pro union and anti business. If he ever becomes the Prime Minister of this country then pity help the small businesses, the medium enterprises and the farmers in your electorate and mine.
Unlike the coalition, Labor is made up of former union officials, not businesspeople. They don't understand it. They don't care. Only half-a-dozen of Labor's MPs have actually run a small business, and that's the shame and pity of it all.
I'm speaking in support of the amendment that's been moved by the shadow Treasurer and in opposition to the substantive bill. The Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, of course, institutes the government's proposals to provide further tax cuts for multinational corporations in Australia. It demonstrates just how this government believes our economy should be managed and who it should be managed for, because what this bill does is provide a massive tax cut for large multinational corporations, including the big four banks in Australia.
At the same time, this government is making it harder for pensioners, for families, for mums and dads and kids and for small businesses to get by. We see that every day in the explosion in electricity prices that small businesses and families have to deal with. Pensioners can't afford to put their heaters on at night, because they simply can't pay their energy bills anymore due to a lack of investment in the electricity industry in Australia, fuelled by the policy uncertainty generated by this government and the fact that it just can't agree on a clean energy target. By supporting cuts to penalty rates, it's talking about again making it harder for workers to make ends meet. It does everything in its capacity to make it harder for unions to collectively bargain and represent workers in particular industries, but it is willing to give a big tax cut to multinational corporations.
It's instructive that the minister that spoke before me in support of this particular piece of legislation was quoting the Business Council of Australia. I mean, are you kidding me? They're really in touch with the average pensioner, the average Australian worker and the Australian battling family in rural and regional Australia, aren't they? The Business Council of Australia! Of course they're going to support tax cuts for their large multinational members, and what these tax cuts mean is more profits for those businesses.
If you look at the profit share of income in Australia over the last decade, you see it's been growing for big businesses and it has been shrinking for wage earners. Big businesses have been getting more profits. For Australian workers that work their backsides off day in, day out, week in, week out to earn money for their families, their share of GDP in this country has been shrinking, and this bill will make it worse. This bill will exacerbate the inequality that exists in Australia when it comes to incomes. Is it any wonder that Australian pensioners, workers and their families are just sick to death? They are sick to death of the growing inequality in this country and feeling left behind by change and by government reform of this nature.
Schedule 1 of this bill amends the Income Tax Rates Act and progressively extends the lower 27½ per cent corporate tax rate to all corporate entities by 2023-24. The corporate tax rate would then be cut for all corporate tax entities to 27 per cent from 2024-25, 26 per cent from 2025-26, and 25 per cent from 2026-27. Schedules 2 to 4 make consequential amendments to the income tax laws to reflect the extension of the reduction in the corporate tax rate to all corporate entities.
This government has made no secret of its campaign to provide these tax cuts for big multinational corporations while people on low to middle incomes in Australia are struggling to make ends meet. You need look no further than the disastrous $65 billion company tax cut to see just how the Turnbull government likes and treats its mates in big business. According to Treasury modelling, the government's company tax cuts will generate 0.1 per cent—not one per cent—economic growth in Australia and will generate next to no jobs. This is the Treasury's own modelling. It shows that there is no economic benefit at all from these tax cuts. So you would have to ask the question: if you are about jobs and growth in this country, why are you doing this when there is no demonstrable benefit at all for our economy? The reason is those on that side of the chamber want to do all they can to back big business at the expense of hardworking Australian tax-paying families, workers and pensioners. It is about who they line up with and who they support. This policy and this bill clearly demonstrate that.
Some of the companies that will benefit from this, in fact, some of the biggest beneficiaries from this will be the big four Australian banks. And haven't they done a wonderful job over the last decade in providing quality services for Australian workers, their families and pensioners, restoring confidence in the Australian banking industry, taking care of Australians and ensuring that they are treating them with the respect that they deserve? We've seen scandal after scandal in the CommInsure scandal and the wealth management scandal that all the banks have been involved in. Most recently, we saw the allegations levelled against the Commonwealth Bank of Australia by AUSTRAC in respect of potential breaches of Australia's anti-money laundering and terrorism financing laws. Yet these are the people that this government wants to give and believes deserve a tax cut in the nature of five per cent over the course of the next decade.
What this government should be giving the banks isn't a tax cut; they should be giving them a royal commission. We should be getting to the bottom of what's going on in the banking sector and why the average Australian has been ripped off by the banks over the course of the last decade. Many Australian families have suffered much pain and indignity at the hands of the banks. Again, I notice that the shadow minister, in introducing his comments to this bill, didn't quote any small businesses. It was all about what big business associations want with these tax cuts, but not small businesses, because there are plenty of small businesses that have been done over by the banks in this country. They want a royal commission. They want their voice to be heard, their situation to be aired, and justice and compensation delivered. They're not going to get it from this government. What they are going to get from this government is a multibillion-dollar handout for big business in the form of a $56 billion tax cut over the course of the next decade.
Never mind the fact that the budget is in a perilous state, that the deficit is increasing year on year and that debt in Australia is increasing year on year. What happened to the so-called budget emergency? That's all forgotten about. With this particular measure, initially they said ripped about $56 billion out of the budget. Under questioning from the shadow Treasurer in question time, they admitted that it was closer to $64 billion. How is that money going to be replaced? Where is that money going to come into the budget to ensure that we're funding a decent education system so that we give kids the opportunity to get a decent trade and go to university? How are we going to be able to fund the additional healthcare services and aged-care places that we are going to need as our population ages?
The view of those opposite is, 'Don't worry. Don't worry. Trickle-down economics will kick in. We provide these tax cuts for big multinational corporations. They earn more money. Guess what? They start investing more and employing more.' The Treasury's own modelling demonstrates that that's not a cogent argument. That's a false argument. There is no economic benefit in these tax cuts at all. They won't deliver additional employment. This notion of trickle-down economics is utter rubbish. It simply does not work.
You only need to ask an auto worker or a middle-income service worker in the United States what they think about trickle-down economics, which the Reagan administration and the Bush administration specialised in. They've got nothing out of it. They haven't had real wage increases in the United States for the last 30 years, because of trickle-down economics, and this Turnbull government wants to introduce these policies here, into Australia.
Wages growth in Australia is struggling. For private sector agreements approved in the March quarter, wage rises fell to 2.7 per cent, and they fell to 2.4 per cent in the public sector. Wage rises in the private sector haven't been so low since 1991. Across both private and public sectors, wage increases have only been around 2.7 per cent. They've dropped from 3.1 per cent in the December quarter. We've got underemployment and an increase in casualisation, and living standards are stagnating. Apprentice numbers have collapsed. It's harder than ever for a young Australian to enter the housing market, and this government's plan to help people battling to get into the housing market is to provide a big tax cut for some of the big banks that have made it harder for people to get home loans.
The housing market in the area that I represent is out of control. It's gone through the roof. That's the case in Sydney and Melbourne. This government just wants to ignore the fact that many young Australians simply won't be able to enter the housing market. They simply will not be able to afford to own their own home unless they have rich parents, and that's the view of the Prime Minister: you should just get your mum and dad to give you a leg-up and to help you out with a deposit on a home. Well, ask a single mum living in Western Sydney with a couple of kids who's working on weekends who's about to have her penalty rates cut about whether or not she can afford to give a leg-up to her kids. Ask a family working in south-west Sydney who are struggling to make ends meet about whether or not they can afford to just hand on a deposit to their kids.
Again, if the government were serious about tackling some of the inconsistencies and the inequity in the housing market, they would tackle negative gearing and capital gains tax discounts, because the overwhelming majority of those tax concessions go to the wealthiest Australians. In fact, 70 per cent of the benefits of the capital gains tax discount go to the top 10 per cent of income earners in this country. That fact alone says everything about what is wrong with the Australian housing market at the moment, why it's an investors' market and why young families can't afford to buy their own home.
And the government want to give a tax cut to the big banks that are fuelling and financing that. It comes on the back of their strategy of giving millionaires a $16½ thousand tax cut in the last budget but making someone that's on less than $64,000 a year pay an additional $320-odd in tax.
We've seen that low-income workers who work in the hospitality sector and who work on weekends stand to lose up to $77 a week through the cuts to penalty rates, supported and cheered on by this government. In the electorate of Kingsford Smith, there are 11½ thousand retail and hospitality workers who stand to lose money and receive a pay cut because of that decision of the Fair Work Commission.
I was pleased to recently meet with a group of hairdressers, some from my community, who are fighting the fact that their industry is next on the chopping block. Their industry association is now using the precedent that was set by the penalty rates decision in the hospitality and retail industry to flow it on to other industries, including hairdressers. We warned people that this would occur, that it wasn't just confined to those industries. They're seeking now to flow it on to hairdressing, and you can bet your life that it will continue to flow on and that, despite what this government said, yes, nurses and, yes, emergency service workers, those people in vital occupations that rely on shiftwork, will be in the firing line in the future. There's no doubt about that if this Turnbull government gets its way and if its philosophy of taking money from hardworking Australians by cuts to penalty rates and other conditions is met.
In conclusion, this bill represents everything that is wrong with this Turnbull government in terms of its twisted priorities. Not only does it take about $60-odd billion out of the budget at a time when we've got an increasing budget deficit and increasing debt in this country but it also ensures that the biggest businesses, many of whom are unworthy of a tax cut, receive that tax cut. They won't pass it on in the form of new investment—