Thursday, 8 October 2020
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020; Second Reading
I rise to speak about the omnibus tax bill, the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020—the tax announcements that were made in Tuesday night's budget. The announcements in the bill do five things. First, they bring forward the stage 2 tax cuts and the associated changes to the low- and middle-income tax offset, the LMITO. They increase the small business turnover threshold for certain concessions to $50 million. They make amendments to the research and development tax incentive. They implement the temporary loss carry-back against previous profits measure. Finally, they introduce the temporary full expensing of depreciating assets—the instant asset write-off.
There are five parts to this omnibus bill, some of which we've known about for a little while, some of which we found out about for the first time less than 48 hours ago. We should note from the outset that it is unusual to be considering and passing spending of this magnitude and changes of this magnitude with very little notice. We should note at the start of the debate that it should have been possible to pass, for example, the income tax cuts that both sides of the parliament have supported for some time. Indeed, we've been calling for them since August of last year. We could have done that to give the ATO some certainty to implement the income tax cuts. Instead, I wrote to the tax commissioner yesterday to give him a formal assurance that we would be supporting those income tax cuts. We need to get those into the pockets of Australians and into the small businesses, shops and local economies of this country as soon as possible, and there is no reason that cannot be the case.
In terms of the specifics of the measures, I will go through them in turn. The first is the bringing forward of the income tax cuts. Obviously Labor supports those. They are not a panacea. They will not do everything that we need to do in the economy in terms of boosting spending power, which was already weak, before coronavirus. But they will help. They will make a difference to the Australian workers receiving those tax cuts. We are obviously prepared to support them, including the changes for low- and middle-income earners in the LMITO. Similarly, with the increase of the threshold for small businesses, we support that going to $50 million. We don't expect that to be especially controversial. The temporary loss carry-back against previous profits provision is something that we are supportive of and we have been calling for. It's not hard to imagine the good that this measure can do. You perhaps think particularly of small businesses in Victoria, but other parts of Australia are doing it tough. I spent the first part of last week in Cairns. Far North Queensland—as the member for Moreton knows, as does the member for Griffith, having been from there, is doing it really tough. Some of those businesses will benefit from having the capacity to carry back their losses so that they can smooth out the tax liabilities over a couple of good years—and the year 2020, which none of us could possibly describe as good. So we support that, too.
There are two that we will support, but ideally we would have had a bit more time to go through them. The first is the research and development tax incentive. In this measure there's $2 billion going back into the system that those opposite were proposing to cut $1.8 billion from. At that level, we are pleased to see that some of the campaigning and some of the pressure that the sectors have put on and that Labor, in our consultation, has been part of as well, is seeing that money restored. I acknowledge the minister and the assistant minister at the table. There's a lot of complexity in those R&D measures. They have a chequered history, I think we can probably agree. Changes to the research and development tax incentive have been on the table for some time now, and there hasn't been a lot of agreement around those changes, not even, if I may say so, amongst the governing parties. There hasn't been unanimous agreement about the best way to go about it. Hopefully, what the government is proposing here is an improvement on the original system and also on the proposed changes, which have sat on the table for so long and not been supported by the Senate. We should acknowledge that it has had a chequered, controversial history.
As my colleague the member for Hotham, and the shadow minister for industry, Brendan O'Connor, have talked about repeatedly, we won't have the kind of economy that we want in the future unless we do better in terms of how we get bang for buck for our investment in research and development. We hope that what the government proposes here can be part of that effort. If that's not the case, if it turns out that there are unintended consequences or that there are difficulties that were unforeseen in the 48 hours or so since we got word that this would be in the budget, then obviously the government takes responsibility for any errors that have been made or changes that need to be made. It's a very complex area and it's very difficult to satisfy all of the players. On this side of the House we have a proud history of implementing some of these R&D measures. We are worried about some of the missteps in more recent times. We say that as we support this measure, but with those reservations expressed, and are now on the record.
The final one is the big one: $27 billion for one measure, spread out over a couple of financial years, but effectively a 12-month measure—$27 billion is a lot of money. Again, we've had only a couple of days to consider it. We acknowledge that there is an investment problem in our economy. That's been turbocharged by COVID-19, but it was there before, as well. We had incredibly weak business investment leading into the crisis, very flat business investment, which was partly a function of having 22 different energy policies in the last seven years—not a lot of energy policy certainty. In almost every boardroom that I go to, and there are a few of those, businesses tell me that energy policy uncertainty is a big part of that puzzle. This doesn't substantially get to that.
We've had a problem with business investment. We've said before, on this side of the House, that we took to the last election a policy to address this issue. It was a little bit like what the government's proposing, but the government has gone to 100 per cent write-off. We want that to succeed. We want that to be a measure which kick starts investment in the private economy, that's absolutely crucial. We won't get the right kind of recovery without business investment, without the private sector purring again, and ideally this will be part of it.
We don't want to hold up the progress of some of these measures and their capacity to do some good in the economy. We've said from the outset today that we will be supporting these measures. But we should note on the way through, in terms of this big measure, it's a temporary measure. Its intention is to bring forward some of that investment. We see where the government is coming from in some respects, but for such a big spend it is quite remarkable that they're not paying for a permanent change in the way that we incentivise business in this country. It would be remarkable if having spent $27 billion that what we're left with then is a big cliff when the incentive drops away. I'm worried about what happens then. I'm worried about the lack of vision for business investment beyond a 12- or 18-month period, particularly when the government is committing so much money to this.
Obviously there are a range of other potential issues with the way the government is going about that part of this package. Having had this for a couple of days, a bit like the R&D tax incentive, I think it's only fair that if issues emerge the government needs to own them and it needs to fix them, because we're committing an enormous amount of money in this package and the opposition's only had a couple of days to consider it. There are other issues as well around that part of bill but I won't detain the House with those.
Where do these tax measures fit into the broader picture of the budget? We've said that we support all five of them, including the loss carry-back provision. We are prepared to vote to get these through the House today and into the Senate as soon as possible. We do acknowledge that these are serious times. We're in the deepest, most damaging recession for almost 100 years. We've got a full-blown jobs crisis on our hands. Already almost a million Australians are unemployed and another 160,000 are expected to join the unemployment queues by the end of the year. That means we need to do what we can together to try and deal with that jobs crisis and with that recession. Incentivising business is part of that. We do need to get the private sector growing again. We do need to get them hiring again. We've been saying for some time that using the tax system is an important way to go about that.
It needs to be said that in a budget that racks up a trillion dollars in debt and has $100 billion in new spending—just eye-watering amounts of money, as the Treasurer has said before—it's remarkable that the government has found room to do some of these things but no room to do things like child care, social housing or local jobs programs for some of the hardest hit communities, including some of those represented by our side of the House. It's remarkable.
This bill is about what's in the budget, but Tuesday night was as much about what wasn't in the budget as anything else. Tonight, from this dispatch box, our leader, the member for Grayndler, will have more to say about that. But for now, I indicate Labor's support for these bills. I indicate, in part, our reservations on two of those: R&D and the early expensing. But there is the capacity for the government, who don't have a good record, frankly—they're good at announcing the big numbers, getting the front of The Daily Telegraph. They're good at that. They're not so good on the follow through. We saw that with JobKeeper and other measures. So we support this bill, but with the caveat and the recognition that, if they've got it wrong in one way or another, it wouldn't be the first time and probably won't be the last time. We need to acknowledge that, if errors have been made and not been able to be found in the two days that we've had these measures, that's on the government, and it's on the government to fix them as well. But we support the bill. I'll leave it at that.
[by video link] This budget is a trickle-down con, and these bills, which are being rushed through the House right now with, it seems, the support of everyone else in the House, are going to lock in the transfer of hundreds of billions of dollars, being taken away from the public purse and going to line the pockets of big corporations and the super wealthy. Let's be crystal clear about what these bills that are being rushed through by Liberal and Labor will do. They will take hundreds of billions of dollars that could be going to fund schools, hospitals, renewable energy and free education in this country and use it to give tax cuts to millionaires and the super wealthy and to deliver tens of billions of dollars a year to big corporations, which currently already pay no tax, to go and spend as they wish, without any constraint at all.
Let's go through these measures one by one. It's important to understand just how egregious this spending is. I want to place on record that it is extraordinary that, with only a couple of days notice, we are being asked to vote on bills that lock in hundreds of billions of dollars worth of spending. Yes, we are in a crisis, and, yes, we have a million people looking for work, but this government came in here and cut JobKeeper and JobSeeker and now turns around and says, 'We want to give millionaires even more money and we want you to rush it through parliament.' Well, no. The Australian people are looking to this place for leadership on how we are going to bring down unemployment—not to six per cent, as the Treasurer wants, but to full employment, where we have two per cent unemployment. We need to ensure that we are spending our money not only quickly but wisely. We need to spend it in a way that is going to generate full employment, tackle the climate crisis and tackle the inequality crisis in this country. Instead the government, with Labor's backing, is rushing through bills that are going to make inequality in this country worse, that are going to fast-track the climate crisis and that are going to help line the pockets of millionaires.
Why do we say that this is a budget that is going to help millionaires but not the million unemployed? It is very, very clear. These tax cuts are a trickle-down con. Under these tax cuts, what many people don't know is that, for middle- to low-income earners, you might get a boost this year of $1,000, but it runs out next year. Someone who is on $60,000 gets zero next year from this so-called tax cuts package, but a millionaire gets 2½ grand, and it stays forever and keeps on rising. Under this bill, millionaires get $2,500, the working poor get $250 and the unemployed get a kick in the teeth. This is a budget for the millionaires, not for the million unemployed, and Liberal and Labor are waving it through. These tax cuts go overwhelmingly to the top. There's a short-term cover for people who are on middle to low incomes, but that runs out after a year, whereas the higher income earners, including millionaires, keep getting it forever. What does that mean? It means that this multibillion dollar package, which is going to take away from money that could have been going to schools and hospitals, is going to be handed out in away that makes the millionaires and billionaires even richer. Next year, under this bill, 96 per cent of the tax cut package goes to the top 30 per cent of income earners, so the bottom 70 per cent of the population gets four per cent of the money. That is why this budget and these tax cuts are a trickle-down con and why Labor should not be waving them through.
The inequality gets even worse. Next year we know that 69 per cent of the benefits of the tax cuts go to men and only 31 per cent go to women. In a budget that leaves women behind, this bill and these tax cuts make the situation worse. We know the recession has hit women the hardest and women have lost jobs at a higher rate. Women have had to not only bear that high rate of job loss but carry the can in many instances for the increased caring responsibilities that come from people being in lockdown. Plus, many of the industries in which women work and will be looking to get back into as the recovery picks up are the ones that have been the hardest hit and might take longer to get back up. Plus, the government's further attack on education, universities and child care will make it harder for women to find their way back to jobs in those sectors.
And here we have a bill that makes the situation worse. Here we have a bill that's part of a budget that enshrines cuts to JobKeeper and JobSeeker. It will deliver tax cuts to men at more than twice the rate than to women. It gives 96 per cent to the top income earners and four per cent to the bottom 70 per cent. It is being waved through. The cost of this will be enormous because there is less money there for schools, hospitals, free education and public housing.
The Parliamentary Budget Office costed bringing forward by two years these tax cuts, which aren't, as I said, aimed at low- and middle-income earners but deliver the overwhelming majority of the benefit to the top income earners, including millionaires. What did the Parliamentary Budget Office say this would cost? They said that bringing forward the tax cuts in this package by two years would cost $28 billion. If the government used that money to help fund some public investment and borrowed to invest in some infrastructure for Australia, we could build high-speed rail down the east coast and over 300,000 new public housing units. With the amount of money being dished out at the moment we could be giving tens of thousands of people jobs. Instead, Liberal and Labor want to give tax cuts, including to millionaires. This is money that is coming out of the pockets of everyday people and going to the top.
In a recession, when one million people are unemployed, there is no justification for giving tax cuts to millionaires. There can be no justification for giving Clive Palmer and other millionaires a tax cut while there are one million people looking for work. It will not create work. It's not only unfair but bad economic stimulus. People like Clive Palmer and millionaires who have kept their jobs and their wealth throughout this recession will just pocket the extra $2,000 a year they get out of the public purse. If we lifted JobSeeker and invested to give people decent jobs on nation-building, planet-saving projects then people on lower incomes would take the money and spend it.
We have got now more than one million kids in families who have been pushed into poverty as a result of the government's cuts to JobSeeker. How can it be that in this budget there is money for a tax cut for millionaires and Clive Palmer but not enough money to lift JobSeeker and lift children out of poverty? That is what this bill represents. That is this bill that Liberal and Labor are fast-tracking through.
The cost of these tax cuts is going to be felt for generations. In the future years the cost of the tax cuts alone is going to be in the order of $50 billion a year when all of the stages of the tax cuts are baked in, according to the budget papers and according to estimates. That's $50 billion a year! For about half of that increase in debt we could fund 100 cent renewable energy, we could have free child care, we could have free education, we could build half a million new public housing homes and we could lift people out of poverty by giving everyone in this country an income that they could live on. That's what we could do for about half of the $50 billion that these tax cuts are going to start costing the budget every year. Instead of the government saying, 'We've got the money in the public purse. Let's use it to invest and to create jobs,' like they did after World War II and like the United States did after the Depression to get back to full employment, what is the government doing? It's not lifting public investment and it's not creating jobs; it is just giving it straight to the wealthy, and it's doing it with Labor's support.
This creates a very bad precedent. If we now have a situation where tens of billions of dollars can be funnelled out the door without even the most basic of scrutiny then this parliament is in a very distressing place, because what we are doing here today is going to tie the hands of what future generations are going to be able to do. As they deal with the climate crisis and as they deal with an inequality crisis, they going to be stripped of the ability for government to intervene and lead.
With this money—with these tens of billions of dollars that have been shovelled upwards through this budget—we could fund a green recovery. If you don't believe us, have a look at Boris Johnson over in the United Kingdom, who says that instead of subsidising coal-fired power stations and gas plants—as the government wants to do in this budget—let's have every house in the country powered by wind energy through a great big new build of offshore wind. It is possible to follow the lead of the Europeans, who've got their own green deal, or the South Koreans and to say that the way out of the economic crisis that we're in, the way out of the inequality crisis that we're in and the way out of the climate crisis that we're in is through a government-led plan of investment and action that will tackle all of these crises by investing in the industries that will make our climate safer and make our society more equal.
We should not be giving billions of dollars in a 'tax cuts to millionaires' package that's going to disproportionately discriminate against women and that's going to go to the top rather than to everyone else. Instead we should be asking these billionaires and the big corporations to pay their fair share of tax, and we should use that to create jobs through a recovery plan that grows work in our health and our care sectors, that expands our education sector rather than cuts it, that builds 100 per cent renewable energy in this country and that fast-tracks high-speed rail right down the east coast.
What is crystal clear from this budget and this bill is that, from now on, neither Liberal nor Labor can ever say to us, 'Where are you going to get the money from to fund things like 100 per cent renewable energy, free child care or free education?' because the money is clearly there. Right now—today—the government and Labor are funnelling tens of billions of dollars out the door, which is going to go to the pockets of big corporations and millionaires. That money would be better spent on a recovery plan that makes our society more equal, that grows our education and care sectors and that gets us to 100 per cent renewable energy while kicking off a manufacturing renaissance in this country by investing in the likes of green steel. That's what we could be doing with these tens of billions of dollars. Instead, the government's plan is basically to outsource the whole of the recovery.
The government is outsourcing the recovery plan to billionaires and big corporations. The investment and the asset write-off that's proposed in this budget is basically premised on a hope and a prayer that, if we allow big corporations to write off everything that they purchase, they will hopefully invest it in things that create jobs. That kind of trickle-down thinking hasn't worked in the past, and there's no reason to think it's going to work again this time, because there's every chance that big corporations will just see the tax write-off coming from the government and go and use it to buy cheap computers from China. There's nothing in this proposal that requires an increase in expenditure that will lead to more jobs or an investment in Australian-made products—no, the government is not doing that. It's just letting big corporations write the rules.
At the moment, one in three of our biggest companies in this country pays no tax, and this government's plan is to increase that to two in three. This bill will allow two in three of our biggest corporations to basically have no tax liability. At a time when the gas industry brings in around $50 billion a year in income but pays zero tax, we should be looking at ways of making the big corporations that have survived this corona crisis in rude financial health—and that have, in fact, increased their wealth through this—pay their fair share of tax to fund our schools, our hospitals and our health care. Instead, the government, with Labor's support, is saying, 'Let's raid the public purse so that we can give millionaires and big corporations a chop-out and hope that some of it finds its way back down.'
This is not the green recovery that we needed. We needed a green recovery, but this budget is all brown and trickle down. We should be standing up to this government. We should be scrutinising this multibillion dollar spend. We should be saying, 'Let's make this money go to the people instead of the billionaires and the big corporations.' The Greens will fight for the millions, not the millionaires. But the government and Labor, with this bill, are shovelling money upwards at an unprecedented rate, and it will damage us for generations. (Time expired)
I thank those who have contributed to this debate on the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020.
In summing up on this very important bill, schedule 1 of the bill brings forward tax cuts in stage 2 of the Personal Income Tax Plan from 1 July 2022 to 1 July 2020 and retains the low- and middle-income tax offset through 2020-21. As has been said, this measure will provide tax relief of around $17.8 billion over the forward estimates, which ultimately means more money in the hands of Australians. This will provide around 11.6 million individuals with a tax cut, compared with the 2017-18 settings. These tax cuts support low- and middle-income Australians with the majority of the benefit in 2020-21 being received by those on incomes below $90,000. Low- and middle-income earners will receive tax relief in 2020-21 of $2,745 for singles and up to $5,490 for dual-income families when compared with 2017-18 settings. Ultimately, this gives families the certainty that they can pay their bills and the freedom to spend that money. Greater consumption will also support businesses, which will flow through to increased hiring and business investment. This will support jobs and growth and help the economic recovery effort. The government's Personal Income Tax Plan contributes to a stronger and more resilient economy. This bill therefore accelerates the government's commitment to deliver lower taxes and a simpler tax system that benefits all Australians.
Schedule 2 to the bill provides temporary loss carry back, which allows companies with turnover of up to $5 billion to offset current tax losses against prior profits to provide a much-needed cash boost for firms that have been negatively impacted by the coronavirus pandemic and to support the use of temporary full expensing. Schedule 3 to the bill expands access to a range of small business tax concessions by increasing the aggregated annual turnover threshold for these concessions from $10 million to $50 million. The changes will cut red tape and give eligible businesses access to these additional 10 concessions for the first time. Schedules 4 to 6 of the bill implement our much-needed reforms to the research and development tax incentive. And, importantly, schedule 7 to the bill will support business investment and economic recovery by allowing businesses with turnover of less than $5 billion to deduct the full cost of eligible depreciable assets of any value acquired and first used or installed between 7.30 pm Australian eastern daylight time on 6 October 2020 and 30 June 2022.
This bill delivers tax relief at a time when it is needed most. I therefore commend this bill to the House.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.