Tuesday, 16 October 2018
Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018; Second Reading
That this bill be now read a second time.
The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 will provide further tax relief for small and medium businesses in Australia.
This bill will continue our work of delivering a stronger economy and supporting the more than three million small and medium businesses employing around seven million Australian workers.
It will bring forward by five years already legislated tax cuts for small to medium companies and unincorporated businesses.
Under schedule 1 of this bill, companies with a turnover of up to $50 million will benefit from the tax rate being reduced from the current rate of 27.5 per cent to 26 per cent in 2020-21 and 25 per cent in 2021-22 and subsequent years.
This will benefit around 940,000 small to medium-sized companies (with turnover of up to $50 million), employing around 4.8 million Australians.
Schedule 2 of this bill will provide an enhanced tax discount for sole traders and other unincorporated businesses which have a turnover of up to $5 million. The unincorporated tax discount will increase from its current rate of eight per cent to a 13 per cent discount in 2020-21 and to 16 per cent in 2021-22.
This will benefit around 2.35 million unincorporated businesses (with turnover of up to $5 million), employing around 1.8 million Australians.
Schedules 1 and 2 bring forward the final tax rates by five years. This acceleration of tax relief will allow these small and medium businesses to plan on the basis of the new tax rates and realise the corresponding benefits earlier.
This bill is an investment in Australia. It is part of our plan that is delivering a stronger economy.
We believe in the more than three million small to medium businesses in Australia employing seven million workers.
Reducing their taxes will allow them to invest, grow and hire more Australians.
Since the coalition came to office, more than one million jobs have been created, including more women, more young Australians and more older Australians in work.
In the last financial year, more than 100,000 young Australians got a job—the largest number on record.
This is a great outcome and is an example of the real impact of a stronger economy and good macroeconomic policies that are being introduced and led by the coalition government.
We cannot be complacent when it comes to the economy, and this bill will ensure that small and medium businesses can continue to drive further economic growth and job creation.
Full details of the measure are contained in the explanatory memorandum, and I have no hesitation in commending this bill to the House.
It is not urgent for this House to suspend all other business to give $2 billion to companies that have a turnover as high as $50 million. We can have a debate in this House, if you want, about what counts as a small business. That's something that the Greens would be up for, because we've been arguing for it for some time. We've been putting forward a series of measures to assist small business, including tax cuts. But what is being proposed here is something vastly different. The government now wants to redefine small business so that a business that earns up to $50 million is somehow going to count as a small business and therefore be worthy of a tax cut—and a fast-tracked tax cut at that.
We're talking about businesses like the St Kilda Football Club. It's not my team, but I'm not singling them out for that reason. The St Kilda Football Club has a turnover of just under $50 million. Does anyone seriously suggest that a big player in one of the national leagues in this country somehow counts as a small business that needs a tax cut because its viability, in some instances, is threatened? If you want to have a debate about which companies in this country are worthy of getting a tax cut then let's have that debate. But we don't need to fast-track it. I want to hear everyone from the government and the Labor Party, who are enabling the government to do this, stand up and explain why a company with a turnover of $50 million deserves a tax cut that is going to come at a cost of $2 billion a year to the budget. That is $2 billion a year less that's there to lift Newstart. That is $2 billion a year less to go to schools. That is $2 billion a year less to go to renewables.
But instead what we're seeing here is that, because we're getting closer to the election, the government is bowling up elements straight out of the trickle-down economics playbook and the Labor Party is signing up to it—and not only signing up to it but saying, 'How can we quickly get this through the parliament?' And, as sure as night follows day, the closer it gets to the election and the more that it looks like there is going to be a change of government—which I welcome because this mob has lost the right to govern—the more you are going to see Labor adopt the Liberals' trickle-down economics agenda. This is a prime example of it, because not only is Labor saying, 'Let's sign up and give tax cuts to $50-million-a-year businesses'; they're saying, 'Let's rush it through parliament so that we can avoid scrutiny.'
The trickle-down troika of Labor, Liberal and big business is at it again. Labor, Liberal and big business: the only threesome where it's everyone else in the country that gets screwed! That's what we are seeing happening here in this parliament. We are seeing today a call that it is somehow so urgent that we debate this that we have to put other matters off the agenda. I'll tell you what is urgent, because we're speaking here to the suspension motion at the moment. There are children on Nauru who are trying to kill themselves because of what this government, with the opposition's support, is doing. There are children there who have resigned themselves to dying. I'm speaking exactly about the suspension motion, because the government here, with Labor's support, is saying this is the most urgent thing we could be debating today and I'm saying it is not. There are other matters that this parliament could and should be debating.
If we're having a debate about the prioritising of the agenda, which is what this is—and I'll come to the substance of the bill when we get into the second reading debate, because it seems that Labor and Liberal are about to roll over and say, 'Let's smash this through parliament as quickly as we possibly can.' The question is what else should be on the agenda today. I will tell you what should be on the agenda today. If Labor and Liberal want to show cooperation, come in here and move suspension orders and reorder business, they should be asking why children are dying on Nauru; why it is that the AMA and thousands of doctors are saying that every day counts and that there are children that are now on the verge of death; and why we have reports that a 12-year-old girl set herself on fire. That is what is urgent. That is why we should be suspending standing orders. That is what the people want us to focus on. But no; we are back here saying that, in this bipartisan way, the best thing we can do is give companies that earn $50 million a year a tax break.
When inequality is at a 70-year high in this country and we know that wages growth is stagnating, we should be having a debate in this place about the best way to spend the $2 billion or so a year that this is going to cost. What is the best way to spend $2 billion to close the gap between the very rich and everyone else? Is it to lift Newstart? Is it to be supporting an increase to the minimum wage? Is it to be saying we need to rewrite our industrial relations laws to give people greater rights to bargain at work? What we should not be doing is fast-tracking and avoiding the usual debate and scrutiny of a tax cut to big business simply because an election is looming on the horizon.
So let's have this go through the proper process. The Treasurer could not even be bothered to speak to this suspension motion and explain why it is urgent that this all has to be done today as opposed to tomorrow or next week. The government cannot even front the parliament and say, 'Here's the reason why we need to reorder all business, stop debate about everything else and drop everything so we can focus on this.' Why? Because there's no argument. This is simply taken straight out of the Thatcher/Reagan/Trump playbook. 'We've got to cut taxes for all businesses.' They've worked out that they think they can get a wedge through and get the opposition to support it, so it's like, 'Well, let's just strike while the iron's hot,' presumably. It's all politically motivated. The Treasurer could have stood up and said, 'There's some urgent reason why it has to happen today,' but no, there's none. They're just asking for support to rip a couple of billion dollars out of Commonwealth revenue, and the Labor Party is about to give it to them.
This debate today and this forthcoming election should be about how we can secure the revenue we need to fund the services Australians expect. If we turn this into a tax cut arms race, if every time the Liberals say, 'We're going to cut taxes,' Labor jumps up and says, 'Where can I sign? Let me cut taxes,' then this country is going to run out of money to fund the services that people expect and we'll go down the road of becoming a US-style society.
Mr Frydenberg interjecting —
So if we want to have the debate about how to support small business, then bring it on, because the Greens have a very proud record. We'd been out there arguing for small business tax cuts for some time and we're pleased to have secured them. We've been putting forward amendments to the small business and unfair contract bill. We've been arguing for prompter payments to small business. We've been putting forward the case for small-business-commissioner bills. We've been arguing—in the face of opposition from this government, mind you—for many years for changes to bring back the effects test. We've been arguing for all those things for some time, so we're very happy to stand on our record.
I want to hear the definition. I want to hear the case, put forward by everyone in this place, in accordance with the normal process, about why a company that has a turnover of $50 million a year suddenly deserves a tax break. Where did that number come from? Why $50 million? If the government had picked $40 million would Labor have signed up with $40 million? If they'd picked $30 million would Labor have signed up with $30 million? We've had no suggestion that this is somehow urgent. The Treasurer can't even bring himself to speak in support of that. But we do know it will have a hit to the budget.
I want us to have a debate, and to have this debate go through the usual process, about why it is that a tax cut for a $50 million turnover company is more important than lifting someone out of poverty by lifting Newstart. I want to hear from Labor and Liberal about why giving a tax cut to a $50 million company is somehow more important than lifting the minimum wage and closing the gap between the rich and everyone else in this country. I want to understand why it's more important to give money to that than to give money to schools and hospitals, because if this bill passes there will be less money available for schools and hospitals.
I suspect this motion will succeed, because there's one thing that we've learned: on economic policy, on adopting—
neoliberalism, Labor and Liberal are indistinguishable. And we are going to see more of this trickle-down troika of Labor, Liberal and big business the closer we get to the election. Well, I and the Greens will stand proudly for at a more equal society. (Time expired)
Question agreed to.
The Labor Party will support this Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 and will facilitate its passage through the House. As we indicated on Friday, the Leader of the Opposition and I, and the Labor Party, do support lower tax rates for small and medium enterprises. The government changed position and said that these tax cuts should be brought forward, and we were happy to facilitate that change of position. You wouldn't know it from the Treasurer's tweet following the announcement of the Labor Party's position. It was hardly the most constructive or welcoming or considered tweet. He said: 'You can't trust Labor when it comes to small business.'
I'd hate to see what he would have done if we'd opposed his legislation, if we'd come out and said, 'Small and medium enterprises will have the same tax rate regardless of whether you vote Labor or Liberal, but under a Shorten Labor government businesses will have access to the Australian Investment Guarantee as well, which is accelerated depreciation.'
Mr Frydenberg interjecting—
We're trying to help you here, Treasurer. I'd hate to see what you'd do if we were being unhelpful.
He's only got one speed, the old Treasurer, and it's not a very edifying one. Under a Labor government businesses will have access to the Australian Investment Guarantee, which will mean that they can write off 20 per cent of their investments in their first year, over and above existing depreciation, which is tax relief on the condition of investment. We say to Australian businesses: 'We'll work with you. We'll provide you with tax relief. We want to make that tax relief conditional on investment, when it comes to the Australian Investment Guarantee.'
The other difference between the Labor Party and the Liberal Party is that this is very much plan C for the Liberal Party, because their plan A was to give big businesses a tax cut. They're doing the small and medium-sized enterprise tax cuts only because they failed to get their big business tax cut through. Why did they fail to get them through? Because of opposition from this side of the House and, most particularly, this side of the Senate. The then Treasurer, now Prime Minister, said that this was his great economic plan. He brought down the budget and said: 'It's not like all those other budgets that treasurers like Peter Costello, Wayne Swan and Paul Keating used to bring down. This one is different. This one is a plan, unlike all those other budgets.' I'm not sure of the logic that went into that statement. But that was his big plan, his plan A, his only plan. His one-point economic plan was big business tax cuts—$17 billion to the banks, with 60 per cent of it going offshore. Having failed to get that through, they have now moved to this plan. We all know that if they ever get the opportunity to implement plan A—to return to their original intention and come back to plan A—they will do so. But, at this stage, the Labor Party and other parties have succeeded in blocking that plan.
The other key point of difference is that the government has thrown out any semblance of or attempt at fiscal credibility and any attempt at showing that they are compliant with their own budget rules. The member for Rankin and I have put in place budget rules for the Labor Party, as is our job, and we will comply with them. We don't hold the government to those budget rules. They are rules that apply to us. We just ask the government to comply with their own budget rules. That's all we ask: for the government to actually comply with what they have said is their approach to the budget. This has been a rolling farce and they can't even get their alibi straight. I grant the new Treasurer some leeway, a bit of slack, because he is new to the job. I accept that he is the third Treasurer I have faced and it will take him a bit of time to get into the swing of things. I won't hold him to account for everything he says in his first couple of days, but he came out and said, 'We don't need to offset new spending and tax reductions, because the economy is growing and we are going to pay for it out of growth.' Maybe he wasn't aware of the budget rules, which are printed in the budget papers, saying:
Then we had the finance minister come out and say that the budget rules still applied. He said, 'I don't know where all this speculation comes from.' Well, it comes from the Treasurer, who has basically thrown the rule out. Then—my personal favourite—the Prime Minister went on Insiders and said that we have rules but 'there are exceptions to the rules and the government reserves the right to exercise that discretion, but they are the rules'—that is: we have rules but we will choose when we break them! We've seen those rules broken with these tax cuts. I accept that there can be a debate about whether rule 1 applies, because it is a tax cut and not spending, but there is no debate about rule 2, that overall impacts in the shifts in receipts and payments in the economy will be banked as an improvement to the budget bottom line. Well, it is not improving the budget bottom line. It is going to these tax cuts. So the Liberal Party is exposed on the point of fiscal credibility.
Mr Wallace interjecting—
Mr Tim Wilson interjecting—
Statler and Waldorf have woken up at the back there. TheMuppet Show act 2 is here. There they are, Statler and Waldorf, joking away. They have come alive. Welcome to The Muppet Show. It is good to see you, Statler and Waldorf. The fact of the matter is that the Labor Party's budget rules show that we will have bigger budget surpluses over the forward estimates and over the medium term as well. We can do that because of the tough decisions we have taken, including the decision we took to delay the Australian Investment Guarantee by a year—
Mr Wallace interjecting—
Mr Tim Wilson interjecting—
Show no mercy, Mr Deputy Speaker! The Labor Party's fiscal rules make it very clear that we will be providing bigger budget surpluses over the forward estimates, as will be crystal clear when the member for Rankin and I outline the fiscal bottom line during the next election campaign. But it will reflect bigger budget surpluses because of the decisions we have made.
We actually think there is a problem. Without being overly alarmist about the situation, Australia is exposed. We have the second-highest household debt in the developed world. These are uncertain international economic times. The international environment is very benign at the moment, but that won't continue forever. We need to be building the policy buffers so that governments can respond to these uncertain times, and that means bigger budget surpluses than the ones we are projected to have under this government's budget.
We believe you can do that. You can provide small businesses and medium-sized enterprises with tax relief. You can make important investments in health and education, which is important for this side of the House, in particular—particularly our recent investments in schools and in preschool. You can make important social investments in things like the superannuation wellbeing of Australia's women. You can afford to do those things if you're prepared to make tough decisions, as we on this side of the House have done. But you can't do that if you're not prepared to make those tough decisions, as this government has simply failed to do.
This is the latest change in position from the government on tax. We're used to it now. We've got the now Prime Minister, who was Treasurer, who's had state income taxes, an increase in the GST, big swingeing personal income tax cuts and then smaller income tax cuts. Of course, this now Prime Minister, the then Treasurer, has not accepted and kept to one persistent and consistent economic position on tax for his entire term as either Treasurer or Prime Minister—not one, for his entire term. This is just the latest thought bubble. And we've seen plenty more thought bubbles today from this Prime Minister, who's in desperation mode about a certain coming event on Saturday—but that's a different matter for another time. It just goes to show that there is nothing consistent about this Prime Minister's approach.
We are prepared to facilitate this debate. We have said that we will facilitate the debate through this House and through the other house, because small and medium enterprises deserve the certainty to know that these tax cuts are locked in. But they deserve to know more than that. They deserve to know that an alternative government will provide them, as well as big businesses, with more tax relief through the Australian Investment Guarantee, if they agree to invest in Australia. They deserve to know there is an alternative government that is prepared to pay for it and have bigger budget surpluses.
But part of the problem is: the Prime Minister simply doesn't understand the basics of the budget. He says that tax cuts don't make the budget worse. Well, they do. They actually do increase the budget deficit or reduce the budget surplus; it's a statement of fact. We recognise that. We recognise that tax relief can be appropriate, but it has got to be part of an overall budget strategy. We actually do that by delivering on the tough decisions. The Prime Minister makes a virtue of not doing that. He makes a virtue of ignoring the fiscal reality. He is throwing money at all the political problems of the government.
Today we've seen a humiliating backdown by the Treasurer on the GST distribution. The week before last, I called for a guarantee to be written into the GST distribution legislation. The Prime Minister and the Treasurer got themselves in a lather, started hyperventilating and said it was 'unnecessary' and 'unworkable'. They said it meant we were selling out the people of Western Australia. I was told I was selling out the people of Western Australia—terrible! Terrible, it was! It was a 'calamity', the Prime Minister and the Treasurer said! We stuck to our guns. And, a couple of days later, the state and territory treasurers unanimously agreed with us. Dominic Perrottet, the Treasurer of New South Wales; Tim Pallas, the Treasurer of Victoria—all of them, Labor and Liberal, from Tasmania to Western Australia, agreed with federal Labor's position. And what has happened today? The Treasurer of Australia has agreed with that position. It's another humiliating backdown by the member for Kooyong, the Treasurer—a humiliating backdown when it comes to GST distribution. And it's a humiliating backdown by the Prime Minister. It underlines my point: there is nothing these guys will consistently stand up for and believe in. They will do what it takes from day to day.
But we, as a constructive alternative government, will facilitate the passage of this legislation and ensure that every Australian business has the same rate of tax, regardless of who wins the next election. Australian businesses will have access to the Australian Investment Guarantee under a Shorten Labor government as well.
Opposition members interjecting—
I'm waking you up from your deep slumber from the boredom that comes from listening to the member for McMahon—the deep boredom that comes from regurgitating the whole, tired, pathetic talking points that give no weight or substance to the nature of the Commonwealth. I'm helping you, not hindering you.
It is a great privilege to get up and speak on this bill. When we think about who pays tax in this country, we think about the millions of Australians who wake up every day, get themselves out of bed, brush their teeth and feed themselves and their families breakfast, and go to work and make a stick of it. This bill is turning around to those millions of Australians and saying: 'We back you. We are going to support you. You are the foundation of our country. You are the foundation of its success. If you're prepared to have a go, we're prepared to back you every step of the way.'
We know there are millions of SMEs across the country; there are seven million people who work for them across this great nation. There are 668,000 in Victoria—millions of workers for companies of less than five million people. In the wonderful electorate of Goldstein, there are 22,117 SMEs. These are people, who, through initiative, endeavour and entrepreneurial spirit, come together to provide the opportunities for them and their families but also their fellow Australians. Because of the consequences of strong economic management by this government, by this Prime Minister, both as Prime Minister and as Treasurer, by managing the books carefully, by making sure we get people off welfare and into work—from tax consumers to tax contributors—we have been able to turn around the budget circumstance that we inherited from our political opponents. This is not just to slow the rate of growth of debt, not only to get us very close and within earshot of surplus for the first time in a decade; but it has also given us the policy flexibility to turn around to Australians and say, 'We get it. You've been doing it tough for many years, repaying the debt and deficit legacy of our political opponents'. Now is the time we turn around and say, 'We want to support you to realise your full ambition, your full capacity, to take Australia to its next wage of growth'. And that's why we're bringing the tax rate down for small and medium businesses to 25 per cent, because only people pay taxes. You can talk about companies, you can talk about international corporations or multinational corporations, you can talk about any other type of legal structure you want, but in the end there are only people who inhabit this country, and they're the ones who pay taxes.
Now, 25 per cent is a great start. I made no ambiguity throughout my political career; I would like to see it go further. Not because there are reasons of international competitiveness; although, there are. I would like to see it go much lower, because in the end that would be good for stimulating our economy and growth, but this is a fantastic start. More critically, we are able to bring it so far forward so people can have the opportunity to back themselves; they can take that extra cash and put it straight into employing more people, buying more equipment and backing themselves.
Of course, this is across a backdrop of many measures that this government has taken, where we have backed those who want to have a go. We, of course, have the $20,000 instant asset write-off, something that is used across the board in the Goldstein electorate and the nation, where people have been able to bring spending forward and invest in growing their business, their enterprise and their opportunity.
Now, of course, we see this in the Goldstein electorate every day. For example, at a simple retail business like Sports Conscious in Church Street in Brighton, Andy Stuart-Menteth has 10 employees. He said: 'The impact of this tax relief for small business creates a feeling the government actually cares about us; that incentives, investment and confidence matter. In retail small business we feel the key to success for us is providing good honest service. By incentivising our bottom line we're able to invest more in our employees to reach this goal, to serve Australians. The endowment effect in small businesses is immeasurable and all of us tend to re-invest in our businesses as a way of increasing their long-term value, but of course so they can go on and employ more people. This initiative is welcomed by someone who feels that small business is the heartbeat of everything that makes Australia a wonderful country.' Andy, good on you. You're part of making this great nation. You're part of employing the people who can then go and support themselves and their families. Andy, you're part of the future and continuing story of this great nation.
To The Owl & The Baker in Centre Road, Bentleigh: Nathan and Andrea have eight employees. Andrea said that a tax cut means she can employ an extra full-time employee. This can provide much-needed stability for other employees who work casually, placing less of a burden on them. Good on you, Andrea! Good on you, Nathan! That means, again, that you're not just backing yourselves but backing all those other people who want to have a go. It means more people are off welfare and that more people are contributing to the system and carrying the costs of our society.
Then, of course, we've got Gateaux by Marc Frissard in Hampton Street, Hampton. Marc Frissard has approximately 10 staff—Marc is the chef and owner, and Luana, or Lulu, is also an owner and the manager. There are Dylan, Kevin, Sam, Fiona, Kayla, Ashlea, Sylvian, Sancha and Kathleen. This bill backs all of them too, because they're able to get on with the job of producing the coffees and the cakes in Gateaux to meet the needs of the good people of Hampton.
So what we have in this bill is a measure that's in the best interests of this country. It has the capacity to contribute so that everybody can make their fair contribution. I say to the parliament that I'm supporting this bill because it's in our best interests as a nation, and that's why everybody else should support it too.
We on the Labor side enthusiastically support tax breaks for small business. We enthusiastically support what's being proposed in this Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018, because it means that 99 per cent of Australian businesses will get the same amount of tax relief under either side of this parliament. But in the event that Labor is elected, under a Shorten Labor government they will also get access to the Australian Investment Guarantee. When the small business people of Australia go to the polls at some point in the next six to eight months, they will do so knowing that Labor has a superior offering on small business than that of the Liberal Party, the so-called friends of small business.
When the shadow Treasurer and the Leader of the Opposition announced that Labor intended to support this bill on Friday, I happened to be at a local small business in my electorate: Rose Patisserie run by Abbas and Fatima. I was there with the state minister for state development, my friend the member for Woodridge, Cameron Dick. When we visited Rose Patisserie, at the same time as we were announcing our position, we could tell Abbas and Fatima that we are enthusiastic supporters of small business. We do understand that small business has the potential to create a number of jobs, not just in my community but, indeed, in all of the communities around Australia. If they have the potential—if they are properly supported, not just by government but by local people buying from local small and medium-sized businesses—then they have the potential to transform communities and to make an amazing contribution to the community in which they work, and in which they operate and run their businesses.
This bill will bring forward the reduction of the company tax rate for companies with income of less than $50 million. The rate will be reduced from 27½ per cent to 26 per cent, and then to 25 per cent for the year 2021-22 and ongoing. This will benefit something like 3.3 million businesses employing 6.6 million Australians. It will cost $3.2 billion over the forward estimates, and the difference over the medium term is about $10 billion.
I do think it says it all about the sorry state of those opposite that, when we announced Labor's intention on Friday to support the legislation that the government is putting forward today—having announced our intention to vote for these bills—the Treasurer's first inclination, his first reaction, was to bag the Labor Party. I think that after two months of this Treasurer and this new Prime Minister they do have a lot of form; they are obsessed with Labor and obsessed with what Labor is doing. You would think that on this occasion, having indicated our support for the small business tax breaks they're proposing, they would take a break from their usual practice of bagging the Labor Party. But they are incapable of focusing on anything other than the political ploys of the day. In that respect, small business is in many ways an afterthought for those opposite. When you read the newspapers around those couple of days where this was being announced, on the Thursday and Friday of last week and into the weekend, there were all these anonymous sources from the Liberal Party saying that what this is all about is wedging the Labor Party. It's not about looking after those 3.3 million small and medium-sized businesses. This is about wedging the Labor Party. It's all about creating a difference between the parties to take to the election. It was really quite extraordinary that creating a political difference seemed to be the highest priority of those opposite.
We are not in that caper. When this was proposed on the Thursday—when the government substantially shifted their position on the Thursday—within 24 hours we indicated our support. We convened the relevant meetings, we had the relevant consultations and discussions in our show and, within 24 hours, the Leader of the Opposition and the Shadow Treasurer were able to stand up and say that we enthusiastically support what is being proposed here. I think the small-business people of Australia do understand as well. In addition to the political ploy that was attempted by those opposite, I think people in small business also understand that, if the Liberal Party had their way, this money, this $3.2 billion, would be flowing instead to big business in this country, to the big banks and the foreign multinationals.
That was their policy. Those opposite say that's rubbish. It was actually their policy. It was the policy in the budget. It's in the budget papers. Mathias Cormann actually said on Insiders that plan A was to give a big-business tax cut. It's only just dawning on those opposite that their policy for some time was to give a tax cut to big business in this country. Anyone who's wondering about the state of those opposite need only listen to this commentary from up the back. 'Nobody told us we had a big-business tax cut in the budget'. Weren't you listening? It's just absolutely incredible.
On Sunday Mathias Cormann, the finance minister, actually said that everybody knows what their plan A was. Plan A, of course, was that big-business tax cut, which would have seen $85 billion flow to the biggest businesses in this country, including $17 billion to the four big banks alone. We opposed that. We proudly opposed those tax cuts for big business and we prevailed. On this side of the House we're making a habit of winning the economic arguments. We're making a habit of winning the arguments over fairness and over responsibility. We know and the Australian people know that plan A, plan B and plan C of those opposite are to always give the biggest tax breaks to those who need them least. The difference between the two sides is that we have actually always said that, when you've got a budget in bad nick, as it is now, where debt has doubled under the life of the Liberal government, you need to be responsible with public dollars and you need to give tax breaks where they can do the most good. We've actually said that all along. We've always prioritised small business over big business, and those opposite cannot make the same claim.
As I said, within 24 hours of the government substantially shifting their position, we hadn't just said that we would support what's being proposed; we said how we would pay for it. We would make room in our alternative budget by shifting our Australian Investment Guarantee back a year so that we could afford to pay for what is being proposed here. We're now into the sixth day since the government announced this change of policy and we still haven't heard how those opposite intend to pay for it. We've been treated to this ridiculous spectacle of the finance minister of this country trying to pretend that the money for these tax breaks for small and medium-sized businesses doesn't come at a cost to the budget. It is an absurd proposition when we know it costs $3.2 billion.
I'm at great risk now because I'm about to admit to having been an avid watcher of the Pyne & Marles show—as everyone was! I was watching Pyne & Marles on Friday—we all were—and Christopher Pyne, the member for Sturt, actually said, 'Well, it costs us $3.2 billion and it's money well spent' at the same time as the finance minister was saying, 'It's not a spend; it doesn't come as a cost to the budget because it's tax forgone.' Is it any wonder that the Prime Minister of this country describes his own government as a muppet show when they can't even agree whether $3.2 billion for small and medium-sized businesses comes at a cost to the budget?
I know that's outed me as an avid watcher of Pyne & Marles, but that's what the member for Sturt said on his own show on Friday.
If on that side of the House they can't even agree as to whether this comes at a cost to the budget, is it any wonder that national debt has skyrocketed on their watch? When those opposite came to government, gross debt was $280 billion. It's now $541 billion. When they came to office, net debt was $175 billion. It's now twice that. With good global conditions, favourable economic conditions and moneys rolling through the door, they've still got debt that has doubled on their watch. When you see this bizarre spectacle, this argument about whether or not these tax breaks come at a cost to the budget, you can understand more.
As I said, small business and medium-sized business will get the same tax cuts under Labor and Liberal. Under Labor they'll also get the Australian Investment Guarantee, and under Labor those tax cuts for small and medium-sized businesses will not come at the expense of our schools and hospitals and will not see skyrocketing debt skyrocket even further. That's because our approach, for some years now, has consistently been to do three things: to make the tax system fairer, to pay down debt and to make room for the things that we, as a society, should truly value—things like preschool for three-year-olds and four-year-olds; things like proper, needs based funding for our schools; things like proper investment in the hospitals of this country. That is our approach to the budget: to make room for those things that we, as a society, truly value.
Because we've taken that responsible approach, because we've struck the best balance between fairness and responsibility, we have the capacity to give small and medium-sized businesses the tax breaks they need and deserve. We have done the work—and it's a tribute to the member for McMahon, the Leader of the Opposition and others—to make it possible for us to invest in small business; to invest in our schools, hospitals and preschools; and to do the right thing by the Australian people. Those opposite can't make the same claim.
If that's Labor's way of being bipartisan in its approach, it's a very, very interesting way of showing it. I could stand here and talk about faults and criticise those opposite for the way they conduct themselves in relation to all things tax, but I won't do that, because I'm here to tell a good story. I'm here to tell about the impacts that this much-needed change will have on the small businesses in my electorate of Fisher. They've demonstrated to me time and time again just how important it is for small and medium-sized businesses to be able to pay less tax.
I have to say, I can't let this opportunity pass without commenting on the speech by the member for Melbourne, who would, it seems, enjoy nothing more than seeing Australians living in humpies under candlelight. The Greens just do not understand the concept of business, whether it be small, medium or large, and will not be happy until all businesses are driven into the ground. But that is not the approach that this government will take.
There are 18,651 small and family businesses in my electorate of Fisher. The Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill would bring their company tax rate down to 25 per cent five years earlier than is currently legislated. Mr Deputy Speaker, I know it will be of great interest to you that I have formed the Fisher Business Council to advise me on what our 18,000 small businesses need to succeed, and to help make Fisher the place to be for education, employment and retirement. My Fisher Business Council have helped me recognise that on the Sunshine Coast we need these tax cuts now. We had a meeting of the Fisher Business Council just last Monday night, and Michael Shadforth, who is the President of the Caloundra Chamber of Commerce, the largest chamber of commerce in Queensland, discussed with me how in his view—and I share that view—we have a growing number of businesses on the Sunshine Coast who are dynamic and on the cusp of very great things. What they need is a helping hand. What they need is a bit of a hand at the moment so that they get to keep some of their money.
Those opposite don't seem to understand. The Greens, in particular, have no concept that what we are talking about here is allowing small to medium-sized enterprises to keep more of their money. It's not my money. It's not your money, Mr Deputy Speaker. It's not Labor's money. It's not the government's money. It's their money. It's the small and medium-sized enterprises that break their back day after day, working hard, to provide for their families and their employees' families—advanced manufacturing companies like HeliMods, for example, run by Will Shrapnel. They need more revenue to invest in their capacity to export, to open up new markets and to bring much-needed overseas income into our community.
In a very different sector, growing local speech pathologist service, Chatter-boxes, owned by Kylie Martin, also have an urgent need to invest. With the NDIS coming to Fisher and the Sunshine Coast from January 2019, Kylie needs more office space to accommodate her growing number of speech pathologists, and she needs additional funds to invest in further staff who will provide other new therapeutic services. This bill will reduce their tax rate. It will reduce the tax rate for small to medium-sized enterprises and it will also reduce the tax paid by unincorporated businesses five years earlier than is currently legislated.
In this place, when we talk about small and medium-sized enterprises, we get hung up on company tax rates. Whilst that's very important, we can't forget our unincorporated businesses. I ran an unincorporated business for years, as a carpenter, as a builder and then as a barrister. We can't forget these small businesses—the microbusinesses—that, for whatever reason, don't think it's worth their time or investment to set up as a company. Those businesses will also be the beneficiaries of these tax cuts. To be able to bring those tax cuts forward by five years will be one of the outstanding accomplishments of the 45th Parliament, and I'm very proud to be part of it.
Last week I visited Maleny and spent time with Tony Gill and his partner, Jane Caraffi, at their business Art on Cairncross. Tony has big plans for the art sector on the Sunshine Coast. He has ambitions to turn the Sunshine Coast into an arts hub, and good luck to him. But, in order for him to do that, he needs to be able to pay less tax. This is a worthy goal. This is something that enables the government to say: 'You know what? We support you. We back you to the hilt. We believe in you. We want to take our hand'—the government's hand—'out of your pocket, and we want to bring that forward as soon as we possibly can.'
The Greens have a problem with that. Labor's obviously sniffed the political breeze and decided that they want to jump on board, but small businesses know that you cannot trust Labor when it comes to tax. You cannot trust them because they are just as likely to override this or turn this around if they ever get on the Treasury benches. You will pay more under Labor. You will pay more taxes. They've got $200 billion of tax stored up waiting for the Australian public. Small business, the LNP government is your support, and we will continue to back you to the hilt.
In DC Comics in the 1960s there was a fictional place called Htrae which was the home of Bizarro World, a place in which everything was backwards. It feels like we are in Bizarro World today, as we look at a government behaving like an opposition and an opposition behaving like a government.
Over the course of the last five years Labor have been stable under the excellent leadership of Bill Shorten, the member for Maribyrnong, and we have been producing a suite of important economic policies that will take us to the next election as the most policy-focused opposition in a generation. We recognise that Australia faces significant challenges. While our unemployment rate is stuck at around 5½ per cent, countries like Germany and the United States have unemployment rates now below four per cent. If we had their unemployment rates, hundreds of thousands more Australians would have jobs.
Australia has a wage problem, with real wages essentially flatlining over the course of the last five years. Productivity growth has continued at a solid clip—not the racing pace of the 1990s, but we've had productivity growth. Yet it hasn't flowed through to workers. Australia has a 'real wage under-hang' in which workers haven't shared in productivity gains. We have challenges of the diversity of our industries, with the Harvard Atlas of Economic Complexity ranking Australia surprisingly low, in terms of the diversity of what we can do. We need better investment in research and development and skills in order to boost that.
As Jim Chalmers, the member for Rankin, has repeatedly pointed out, Australia faces the challenge of government debt. It's rising now at a more rapid pace than it did under the global financial crisis, when Australia took on debt to save 200,000 jobs and tens of thousands of small businesses. There was a time when we needed to take on debt. It is a tribute to the member for Lilley and the Rudd and Gillard governments, the work that was done in order to save the Australian economy from recession a decade ago. Yet now here we are, a decade on from the crisis, and debt per person in gross terms has gone to over $20,000 a person. Even in net terms, every man, woman and child in Australia has next to their name net government debt of more than $14,000.
Labor will support this bill today. We will support the small and medium-sized business company tax cut. But we'll go further than simply backing in the government. We will show how to pay for it. We'll do that by delaying for a year the introduction of the Australian Investment Guarantee. That is a policy which allows more rapid write-off of assets for firms, large and small, making investments over $20,000. The Australian Investment Guarantee is very good policy. Analysis by Victoria University suggests that it gets three times the bang for buck that a large corporate tax cut delivers. Labor's policy is grounded in the research that's been done overseas, looking at the value of immediate expensing to the US economy. Indeed, those commentators who have looked at the impact of the tax reforms that have passed the US Congress under President Donald Trump suggest that most of the benefit of that comes from the immediate expensing measure.
Labor is committed to the Australian Investment Guarantee just as we are committed to the instant asset write-off for small firms. We've supported the government's reinstatement of that instant asset write-off. But we're willing to defer that Australian Investment Guarantee measure by a year—because we are the party of fiscal responsibility. We are the party that recognises that you can't simply wave your arms around and say that you've got fiscal rules and say 'economic growth will cover it all' in the way that Treasurer Frydenberg has attempted to do. Labor also has a strong story for supporting small business. I will take the House to a handful of the measures supported by Labor, but not yet supported by the coalition, that will benefit small business. These are measures that have been championed by the member for McMahon and the member for Brand as the newly appointed shadow minister for small business.
Labor will ensure that independent mechanics have access to the data they need to fix modern cars. They would get that data on commercially fair and reasonable terms in a way that's been recommended by the Australian Competition and Consumer Commission. Most Australian mechanics are independent mechanics, but without getting access to the data they need to fix modern cars they will go to the wall. Labor is committed to giving them access to that data. The coalition is committed to a process which may, some time down the line, produce a result for independent mechanics. It's just not good enough.
Labor is committed to a mandatory code for auto dealers, to assist them with the power imbalance they face with the large multinational manufacturers. We've seen too many instances in which the small and family-owned businesses that sell new cars find themselves over a barrel in their dealing with multinational manufacturers. Again, this is an issue to which the Australian Competition and Consumer Commission has given careful scrutiny. It's based on that that I committed Labor, at the conference of the AADA, to a mandatory code that would govern their dealings with multinational manufacturers. I pay tribute to Milton Dick, the member for Oxley, for his championing of the cause of independent auto dealers.
Labor is committed to a mandatory code governing the relationship between dairy farmers and milk processors. We recognise the power imbalance in that situation, most egregiously demonstrated—as the member for Hunter has pointed out—when Murray Goulburn retrospectively asked farmers to pay money back. We're committed to that mandatory code to benefit that sector of the small-business community.
Labor believes that the ACCC should have a market studies power so that, of its own volition, it can use investigatory powers to explore anticompetitive conduct in any industry where it sees small business getting a raw deal.
We're committed to a policy of access to justice in which small businesses could go to the Australian Small Business and Family Enterprise Ombudsman and seek a no-adverse-costs order at the outset. Then they'd be able to take on the big end of town, knowing that, if they lost, they'd pay their own legal costs, but they wouldn't have to pay the bill of the sharp-suited QCs on the other side. They wouldn't have to potentially face bankruptcy for taking on the big end of town for anticompetitive conduct. I pay tribute to Michelle Rowland, the member for Greenway, for her work in putting together Labor's access-to-justice policy prior to the last election. It is a policy that enjoys the support of the Senate. The Senate has committed to Labor's access-to-justice policy. If only the government would allow it to be listed in the House, small businesses could get that access-to-justice policy, backed by Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman.
But the coalition only really have a one-point economic plan for boosting growth in Australia. They are still, in their heart of hearts, committed to a big-business company tax cut—a big-business company tax cut which would send $3 out of every $5 offshore, a big-business company tax cut that would reward the big banks, who are facing a royal commission into their unprecedented scandals, with $17 billion in company tax cuts.
Labor haven't supported that big-business company tax cut, and we will not support that big-business company tax cut. We simply believe the economics don't stack up.
If you needed any more proof that we are in Bizarro World, we are seeing from former Treasurer Costello a critique of the Liberals' approach to tax reform. He said at the 2018 Economic and Social Outlook Conference:
I can promise you anything for 2026. The one thing they know is that they are not going to be in government in 2026.
It may be Bizarro World, but I'm sure many Australians are relieved to hear Peter Costello firmly predicting the demise of the coalition before 2026. I think many Australians would welcome that moment coming even today. If the Prime Minister were to hop in the car, drive down to Government House and call an election, it wouldn't just be those on this side of the House who'd be pleased. Many Australians would say, 'It's about time that this Bizarro World was sent on its way.'
Labor believes that we should close multinational tax loopholes. We're committed to closing the debt deduction loophole that currently sees multinationals able to ship money offshore to foreign subsidiaries. We believe in improving tax transparency by requiring large private firms with over $100 million turnover to be brought within the tax transparency net.
We're committed to a beneficial ownership registry so we can find out who really owns Australian firms. Labor believes that, when it comes to tax havens, if you're doing business in a tax haven, you should have to disclose to shareholders as a material tax risk those dealings.
We believe that, if you want to be tendering for government work over $200,000, you should disclose your country of tax domicile, because Australians should know where a company is domiciled if it's attempting to tender for government work. Only Labor can be trusted to get tough on tax havens. Only Labor can be trusted to crack down on multinational profit shifting.