Murray Watt (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance (Senator Cormann) to a question without notice asked by Senator Watt today relating to company tax cuts.

Yet again here in question time today we have seen senior members of the Turnbull government take the side of big business over working- and middle-class Australians. We've seen this time and time again from this government, proving that it is on the side of big business rather than the average Australian. They've done it on penalty rates, by failing to step in and failing to back Labor amendments which would have restored penalty rates to the hundreds of thousands of Australian workers who depend upon penalty rates to pay their bills and put food on the table. We've seen this government do absolutely nothing about the stagnant wages that we keep seeing across most industries in Australia over its entire term of government, and we see this government do nothing whatsoever to help the hundreds of thousands of Australians, particularly in regional Queensland, who are suffering from the burst of labour hire, insecure work and casualisation. Time after time we bring examples of these kinds of things into this chamber and ask the government to do something about it, and time after time we see this government take the side of big business against working- and middle-class Australians. Now they're doing it again when it comes to company tax cuts. On top of ignoring the interests of working- and middle-class Australians around penalty rates, stagnant wages and casualisation—in addition to all of that—we see this government roll up and want to give a massive $65 billion tax cut to its friends in big business.

It's funny that the government should want to do this, because at the very same time they're always out there complaining about the amount of national debt, the deficit and how we've got to take tough action to rein these things in. So you would wonder how it is that the government can come up with the money to pay for a $65 billion tax cut to big business. Well, the way they're doing it is by yet again hitting working Australians, the people who are losing penalty rates, whose wages are stagnant and who are suffering from insecure work. This government is right now in the process of increasing taxes on working Australians by $300 per year, through increases to the Medicare levy and a range of other measures. It's also hitting the average Australian who has aspirations for their kids by increasing the cost of universities and cutting funding to universities to reduce the quality of education that young Australians receive. Even if you're not going to university, they're coming after you as well by cutting funding for apprenticeships and training. So on every front we see this government out there coming after working- and middle-class Australians, ripping money out of their pockets and out of the schools and hospitals that they depend on, to shovel it to its friends in big business with a $65 billion tax cut. This tax cut is bad for households, it's bad for the economy and it's bad in particular for regional Australia.

The National Party representatives we have in Queensland like to talk a big game about coming down to Canberra and sticking up for regional Queenslanders. We know they've been very distracted by all sorts of shenanigans in their own party over the course of this week, but here's another example of where they are bowing down to the Liberal Party as the Liberal Party comes after regional Australia. With a tax cut to big companies, the biggest companies in Australia, where do you think that money's going to land? I don't see too many massive corporations headquartered in Rockhampton, Townsville, Cairns or Gladstone. This is going to be a massive tax cut to big business on the North Shore of Sydney and in Collins Street in Melbourne, at the expense of regional Australians. So yet again we've got the LNP members from Queensland coming down to Canberra, saying they're going to stick up for regional Queensland and yet again putting up their hands to vote for big business in North Sydney and Melbourne getting a big tax cut.

The government says that this is going to increase profits and that's how we're going to get wages growth, but the ABC had a report based on Treasury modelling, the government's own modelling, which shows that, over the last few years, company profits have been higher than they have been at any time since the early 2000s. But what do you know? Over that exact same period of time, wages have been growing at a rate that hasn't been this low since the 1960s. So we don't need to speculate about what's going to happen if this tax cut gets through. We've already got the evidence there. Company profits have never been higher, or at least not for 10 or 15 years, and wages remain low. The evidence is in that this company tax cut will do nothing for ordinary Australians. It will not lift their wages. It will just shovel more money to big business in North Sydney and Melbourne at the expense of regional Queensland, and a lot of it will end up with overseas investors anyway.

Zed Seselja (ACT, Liberal Party, Assistant Minister for Science, Jobs and Innovation) Share this | Link to this | Hansard source

I've got to confess I made a new year's resolution and I think I'm going to regret it. The resolution was: every time the Labor Party tells a lie, I'm going to respond by telling the truth. I feel that it's going to keep me very, very busy, based on Senator Watt's contribution. I'm going to address two or three of the untruths that he said. He was just parroting, of course, his union masters: Sally McManus, from the ACTU, and other unions, like the CFMEU.

In Senator Watt's contribution—and we're going to call him out every time; we're going to call out Labor every time they tell a porky, whether it's in this place or anywhere else—he said casualisation is increasing. That's what the ACTU and the Labor Party say and it's what Senator Watt said. Well, actually, the rate of casualisation is not increasing; it's been steady for the last two decades at around 25 per cent. The Fair Work Commission agrees, noting that last year the level of casual employment had not significantly changed since the enactment of the Fair Work Act. So there's porky No. 1. Every time the ACTU or their puppets here in the Senate and in the House of Representatives repeat that lie we'll call it out. It's a lie; it's not true. The Australian people need to know that it's not true.

Another one that came from Senator Watt—again parroting Sally McManus, his union master—is that the use of labour hire is increasing. Not true! The proportion of people employed through a labour hire firm has been broadly stable at around one to two per cent over the past decade. That comes from the Australian Bureau of Statistics' Characteristics of Employment Survey. So you can believe Senator Watt, parroting Sally McManus, who says, 'The law doesn't apply to us'—the truth apparently doesn't apply to Sally McManus or to Senator Watt when he comes into this place—or you can believe the ABS, who say that in fact it is not true.

I will deal with another untruth put forward by Senator Watt in his motion to take note of answers, which was in many ways the more damaging lie, but I will just make one other point on casualisation. There were 400,000 jobs created last year, around 80 per cent of them full time. So not only has it not changed significantly over the last 25 years; we've got record jobs growth, and that record jobs growth includes 80 per cent—the vast majority—that are full-time jobs. That is outstanding news and completely debunks what was put forward by the senator.

I would point out that the other just as significant, and perhaps more significant, untruth that is being put forward by the Labor Party and Senator Watt is that you can keep taxes high and the economy will still grow. You can keep taxes high, according to the Labor Party, and of course it will have no impact on jobs and no impact on wages. Not one credible economist would agree with that statement—not one credible economist. The economics of this are clear: if you want to increase taxes, as the Labor Party does—$160 billion in additional taxes on mum and dad investors; more taxes on renters; and more taxes on mum and dad small businesses, effectively a tax on workers—what will it do? If the Labor Party's policies were implemented, what would they do? They would put downward pressure on wages and see fewer Australians in work. They would see businesses laying off workers. And now we get the suggestion, in today's questions from Senator Watt and others, that there should now be a tax on revenue. That is the implication of the line of questioning from the Labor Party. They are now suggesting one of two things. One is that, if you've got a lot of revenue, you should pay tax; it shouldn't be profit based. We believe that tax should be paid by companies on their profits. We believe that lowering profit based taxes on companies increases the number of jobs in our economy, increases wages and increases prosperity. But the other implication of what the Labor Party are suggesting is somehow that, if companies make losses, they shouldn't be able to offset them against future earnings. That again would have dangerous implications for our economy.

In conclusion, we're going to call out the lies. If Senator Watt and others are going to come in here and make up claims about casualisation of the workforce that are not true, we're going to put the facts on the table every time and call them out so the Australian people can see that they are simply hollow— (Time expired)

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

It just shows you how desperate the government is, for Senator Seselja to put up a straw man imputing that we're suggesting taxes should be levied on revenue rather than profit. That is just a measure of the desperation of the arguments here.

For me, it was disappointing to not hear anything of substance from the finance minister in question time in relation to this particular issue. In our questioning, we have raised very substantial issues of public policy, which are raised today in the very good ABC article authored by Emma Alberici. Some extremely important issues are raised, and what do we see from Senator Cormann? We see insults, derogatory epithets hurled at the Leader of the Opposition, and the suggestion that future government revenue is going to be impacted if we don't bring about these irresponsible tax cuts.

Let's look at the facts as they stand. There are some extremely valid points. I was hoping that the government might come up with some compelling evidence that justifies the tax cuts, which some would argue are somewhat reckless in our current fiscal situation. One would have thought that with the amount of money involved—$65 billion—there could be some compelling evidence put forward to justify them. But, no, nothing of that nature was put forward. In fact, the government's arguments are based on ideology and wishful thinking, not on the evidence that's before us.

Let's have a look at this. This is a government that does support the top end of town. They have abolished the budget repair levy, ignored our calls for tax transparency in closing debt deduction loopholes, ruled out negative gearing and capital gains tax reform, run a protection racket for the big banks whilst ripping off everyday Australians, and they're trying to raise personal income tax across the board, by stealth, through the Medicare levy—and Senator Watt has called them out on that issue.

At the same time, we are seeing wages growth at historical lows. The inconvenient truth is that, at the same time, we have company profits that have risen to levels not seen since the early 2000s, and we've seen business investment at historically high levels over the past decade. If the system was working, and if we were to put more money in the hands of companies, then you would have thought that wages growth would have been impacted by that. But we're not seeing that. We are seeing that the model is broken. To go down the track of huge and reckless company tax cuts for the big end of town, for multinationals, for the big banks, is quite a reckless approach. We are also seeing penalty rates being cut for thousands of already low-paid workers—often disadvantaged workers. The workforce is becoming more casualised, as Senator Watt has highlighted, affecting job security. The cost of living is going up with medical expenses, private health insurance, energy bills, groceries and education.

Under the coalition's watch, the budget is going from bad to worse. We saw in the MYEFO late last year that the $23.6 billion deficit remains eight times larger than the $2.8 billion deficit in the Liberals' first horror budget of 2014. Net debt has blown out by $80 billion, to $343 billion, since 2014. Economic growth is down, on the back of families struggling to pay their bills, and the Liberals' return to surplus continues to rely on the tax hike for middle Australia delivered in this year's budget.

The No. 1 priority for this government seems to be giving their big business mates a tax cut to the tune of $65 billion. Well, perhaps that's not quite true—perhaps their top priority at the moment is figuring out how to get the Deputy Prime Minister to resign—but let's say it is one of their top priorities. Why is it necessary for us to deliver huge company tax cuts for the big end of town when, at the same time, one in five of Australia's biggest companies have paid no tax for at least the past three years? The IMF report, which is quite interesting to see—and I have highlighted this fact—points to the negative impact of the US tax cut package on growth and says that it's projected to lower growth for a few years from 2022 onwards, according to the IMF World Economic Outlook. Labor will continue to lead the charge in cracking down on corporate tax cuts. We don't need tax cuts for multinational multimillionaires. (Time expired)

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

The professional homogeneity of those opposite is certainly on display today, and I think we can all agree that the problem with professional homogeneity is that is translates into uncritical groupthink worthy of dairy cows. I have never heard of such economic rubbish in my life. Clearly those opposite have never run a business, they've never owned a business, they've never employed another person, they've never put their house on the line and they've never lost sleep at night wondering how they were going to pay the wages of others tomorrow. What we see opposite is either an extraordinary display of economic ignorance or complete disingenuousness. It's got to be one of the two.

For those opposite to come in here and say that these enormous companies pay no tax and, therefore, there is no reason to lower company tax rates is the height of ignorance. Let's have a look at some of the companies that do pay corporate tax. The big four banks are extraordinarily large corporate tax players. The Commonwealth Bank pays $3.3 billion, Westpac pays $3 billion, NAB pays $2.4 billion and ANZ pays $2 billion. Those four companies alone employ over 200,000 Australians. Telstra paid $1.7 billion in corporate tax—and they employ 36,000 Australians. Rio Tinto paid $23 billion and they employ 26,000 Australians. Wesfarmers paid $931 billion and they employ 200,000 Australians. Woolworths paid $497 million and they employ 200,000 Australians. In fact, the top 10 company taxpayers in this country paid a quarter of all company taxes collected in the last 12 months, and they are responsible for an enormous proportion of employment in Australia.

So how could anybody with any economic nous, anybody with the ability to connect the dots from A to B, possibly suggest that a company tax cut would not benefit Australian workers? It is a completely false, ignorant and, as I said, potentially disingenuous statement. We say 'disingenuous' for a very good reason. It was not that long ago that their own leader, the Leader of the Opposition, Bill Shorten, said that 'reducing the corporate tax rate sees more capital flowing into our domestic economy, which will then flow onto workers in the form of higher wages, therefore improving standards of living'. This is your leader that said this. It wasn't our leader; this was your leader. Yet somehow you've managed to flip-flop, somehow you've managed to change your minds. I can only think it is political expediency, potentially in the seat of Batman, that has driven you to do so.

Similarly, the shadow Treasurer, Chris Bowen, has also previously stated—and I love this quote—that 'it is a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth'. This is your shadow Treasurer saying this, not ours. Yet you now have the audacity to walk into the chamber and accuse us of the economics of the top end of town. How extraordinary—particularly when we've seen the company tax cuts delivered to 3.2 million small and medium businesses last year actually taking effect. The verdict is in. That company tax cut has already given small and medium sized enterprises the flexibility to grow their business and to create more and better paid jobs. The results couldn't be clearer.

As my colleague Senator Seselja said 400,000 new jobs were created just in the last 12 months alone, and 300,000 of them are full time. We have had 15 months of consecutive jobs growth—that is the longest consecutive run of jobs growth on record. In January alone, 178,000 jobs were advertised. That's up 6.2 per cent, and the strongest monthly increase in eight years. These results are irrefutable. Despite an economy that's been disrupted by the transition from a mining boom, the laws of demand and supply are still the same: more jobs create better-paying jobs. Company tax cuts are an imperative.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The government's argument on corporate tax is equal parts sophistry and wishful thinking, and nothing demonstrates this better than a very careful unpacking of Senator Cormann's very glib response to Senator Watt that in Australia we tax profits, not revenue. Let's reflect on what's actually prompting this conversation. Analysis published by the ABC showed that roughly one in five of Australia's largest companies paid no corporate income tax over the last three years. This includes some companies that have been the most vocal in calling for a reduction in the headline rate of corporate tax. Not one of Australia's airlines has paid tax since 2013. Some of Australia's biggest investment banks, including Goldman Sachs and JP Morgan Chase, have not either, and neither have other financial institutions like BNP Paribas, American Express, Barclays bank and the Royal Bank of Scotland, as well as News Corp, Atlassian—supposedly one of Australia's big success stories—and a host of other companies.

Senator Cormann is absolutely correct in saying that Australia taxes profit, not revenue. But that is not the point. It is not the point being made by Labor and it is not the point, incidentally, being made by the ABC analysis. It simply is not credible to argue for a reduction in tax for a bunch of companies, many of whom haven't paid any at all for the last three years. How can you claim that a reduction in company tax is going to lead you to paying workers more or investing more if you are not paying any tax at the moment? It simply isn't credible. The argument that it frees up more cash simply doesn't work, because literally no cash is being expended on tax right now. If you have an accumulated tax loss, a reduction in the company tax rate doesn't affect how much money you've got to spend on other things today—not even a tiny little bit. All it impacts on is how many more years you've got before you need to start paying any company tax at all.

More than that though: Senator Cormann's line about taxing revenue, not profit, is a little disingenuous, to use the word employed by Senator Hume earlier. Let's be clear: for the most part, these companies are very, very healthy. They have a decent listing price. They are able to borrow at reasonable rates. Their executives get performance bonuses, and many of them pay out to their shareholders. In other words, they are profitable by any ordinary understanding of that term. But they don't pay taxes on those profits, because they have very expensive and very comprehensive legal advice which, incidentally, they are then able to write off as a tax expense.

The question for Senator Cormann and the government is this: do they really believe it is fair for these companies to pay even less tax than they do now? After two years of the Senate economics committee on which Senator Hume sits taking evidence about the practices of corporations in structuring their tax affairs to avoid tax, do they really think that these sharp practices are reasonable and ought to be continued?

We are trying to have a public conversation about how to fund the state and the services that every Australian benefits from, and Senator Cormann is palming the public off with glib answers that, frankly, belong in an accounting exam. As economists emphasise, companies don't make investment decisions based solely on the headline tax rate. Instead, companies look to things like roads, rail and other infrastructure, paid for by the Australian taxpayer. They look to the skills of our workforce, educated by the Australian taxpayer. They look to the reliability of our justice system, funded by the Australian taxpayer. If a company is not paying tax then the ordinary Australian is going to think that the company is a leaner, not a lifter. If the government seriously think that the best response to this argument is a technical accounting argument about the difference between profits and revenue, they are more out of touch than I could possibly have imagined.

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

I remind advisers that they are to remain in the advisers box and not on the floor of the Senate. I didn't want to interrupt Senator McAllister during her contribution.

Question agreed to.