Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Treasurer. Last night on Q&A, the former head of the Australian Industry Group and former RBA board member, Heather Ridout, described the government as cowards on economic reform and said its $65 billion company tax cut was 'polarising'. With company profits up 20 per cent last year but wages growth only at two per cent, why is the government pitting business against employees by giving the top end of town a tax cut and increasing taxes on ordinary Australians by $300 a year?

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for his question. I wasn't watching Q&A last night. That may come as a surprise to many Australians, and particularly those at the ABC! I'm sure they're disappointed. But I understand there were a number of guests on Q&A last night, and one of those was Chris Richardson. This is what he had to say about company tax cuts.

Honourable Member:

An honourable member interjecting—

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I was reliably informed! He said:

… the smaller the economy, the bigger the difference you can make through company tax cuts.

And he said:

If the world's money investment comes here and works here, then we are better off as a result.

And he said:

… two out of every three of those dollars would show up as higher wages.

That's Chris Richardson.

They may not be persuaded by that, so I think I'll go to Professor Holden, the good friend of the member for Fenner, fellow wedding guest and all the rest of it. I assume the member for Sydney didn't get an invitation to that wedding because she obviously is not as close to Professor Holden, but he made a very good point in referring to an excellent study from Germany. He said: 'Cutting the Australian company tax rate from 30 per cent to 25 per cent is not just good for business and workers. It also helps reduce economic inequality. Surely this reform is something that deserves across-the-board political support when it comes before parliament this year.' What Professor Holden found, referring to that study, is the people who would benefit from this would be women and people on lower incomes. That's not the work of the coalition. That is the work of a serious study done over 12 years in Germany, which was looking at tax changes in various state jurisdictions and federal jurisdictions over more than a decade. They concluded that, if you lower the tax burden on business, they respond and they invest more. They invest more in their company, they grow and they pass on.

A very important point is made about looking at what has happened to company profits over the last five or six years. It is true that, in that last 12-month period, when you look at the GOS, or gross operating surplus, which is the effective measure of company profits, in that last year, there was a strong improvement and that was off the back of commodity prices and for mining investment firms.

What the Leader of the Opposition seeks to represent is that this was broadly based across every business in the country. What he doesn't tell you is that, in the five years before that, the average growth in that figure was actually negative. For five years, hardworking small and medium sized businesses sweated it out in a tough economy, forgoing income themselves to pay their workers and keep them in jobs. The Leader of the Opposition comes in here, diminishes their sacrifice and says, 'It's worth absolutely nothing.' This is an opposition, a Labor Party, that sneers at small and medium businesses. (Time expired)