Monday, 4 December 2017
Questions without Notice
My question is to the Minister for Finance, representing the Treasurer, Senator Cormann. Can the minister update the Senate on the implications for Australian economic growth, jobs and wages of the passage of major business tax cuts through both chambers of the US Congress?
I thank Senator Hume for that question. Yes, I can. A proposal of the Trump administration to reduce business tax rates in the US from 35 per cent to 20 per cent has now passed both houses of the US Congress. That makes the passage of business tax cuts in Australia more urgent because, if we don't, it will lead to less investment in Australia, lower growth, fewer jobs and lower wages. Of course, a vote against our proposal to reduce business tax rates for all Australian businesses to 25 per cent—let me say it again—would be a vote for less investment in Australia, lower growth, fewer jobs and lower wages. And it would be on the head of the Labor Party if in Australia we ended up with less investment, lower growth, fewer jobs and lower wages.
Senator Cameron interjecting—
Yes, it would also be on the head of Senator Cameron if he continues to vote against lower business taxes in Australia.
A vote against our proposal to reduce business tax rates for all Australian businesses closer to the OECD average now of 22.5 per cent would be a vote to wilfully damage the Australian economy and jobs. That is because it would be a vote to put Australian businesses at a competitive disadvantage. Australian businesses are competing for investment with businesses from around the world. Of course, Australian businesses are competing in export markets around the world. With the US legislating to reduce its business tax rate to 20 per cent, many more businesses will be able to attract investment away from Australian businesses. Attracting investment away from Australian business means lower growth in Australia, which means fewer jobs and lower wages. It means those businesses in Australia will be less successful than they otherwise would be. Of course, a vote by Labor to stand in the way of business tax cuts will be a vote to wilfully damage the Australian economy.
The United Kingdom used to have a business tax rate of 30 per cent. Now it is down to 19 per cent and on its way to 17 per cent by 2020. Ireland had a tax rate of 12.5 per cent for some time and Canada 15 per cent. France is proposing to move from a business tax rate of 33.5 per cent to 25 per cent. The President of France is hardly a right-wing extremist or some sort of IPA free marketeer. The President of France used to serve in a socialist French administration, as recently as the last administration, as their minister for the economy. He is pushing for a reduction in the business tax rate from 33.5 per cent to 25 per cent. The US is down to 20 per cent. Singapore is 17 per cent. The OECD average, as I have mentioned, is 22.5 per cent. Our business tax rate is too high by international standards. To leave it where it is would hurt our economy, investment and jobs.
Can the minister please enlighten the Senate: what would be the consequences for the Australian economy, Australian jobs and Australian wages if the parliament did not legislate the Turnbull government's proposed business tax cuts?
Opposition senators interjecting—
Let me say it again very slowly for Senator Cameron. The consequence of the Australian parliament not legislating a lower business tax rate would be less investment for Australian business, it would be lower growth in Australia, it would be fewer Australian jobs and it would be lower Australian wages. It would be on the Australian Labor Party's head. We're having a lot of conversations about citizenship here today. Senator Cameron's home country of the United Kingdom actually reduced their business tax rate down to 19 per cent and it is on its way down to 17 per cent. Guess what happened to tax revenue? Tax revenue from business taxes has skyrocketed in the United Kingdom since they reduced their business tax rate. Additional investment, stronger growth and additional jobs are created on the back of a more competitive business tax rate—that's what is driving significant increases in corporate tax receipts in the United Kingdom. Go and have a look, Senator Cameron.