Peter Whish-Wilson (Tasmania, Australian Greens) 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 Whish-Wilson today relating to proposed company tax cuts.

I want to get on the record that the Greens took a policy to the 2013 federal election for a tax cut for small businesses—businesses with a turnover of $2 million. That had been a policy since I'd started as a senator. Having run a small business myself, that was very important to me. And we achieved that. In here we all legislated for a tax cut for small business, and there was very little disagreement on that. Following that, we've had two additional tax rises for $2 million to $10 million thresholds and from $10 million to $50 million. The Greens have opposed both of those tax rises. We felt that it was justified to give some of the hardest working people in this country, in small business, whatever assistance we possibly could.

What we have here before us today is really clear. This is a government that has no evidence and no justification to support big handouts to the big end of town. I raised this in my speech last week—so I won't go through it in a lot of detail—and I noted that companies in Wall Street and on Nasdaq were clearly spending hundreds and billions of dollars of their windfall gains from their tax cut on share buybacks and returns to shareholders. A survey by Morgan Stanley of those two indexes, of some of the biggest companies in the world, showed that 44 per cent of CEOs said that they were going to buy back their shares or return money to shareholders.

Not only is this directly against the message the government are pushing in their justification, where they're saying that some of these benefits are going to flow to workers in wages, but it also totally undermines their theory that companies are going to take this tax gain and reinvest it back in their businesses, thereby stimulating economic growth, creating jobs, enhancing productivity and growing wages. If a company says, 'No, I'm not going to reinvest this money back in my business; the best thing for me to do is to put it back into my company's shares', which, incidentally, often helps the share price go up and helps their share valuations—and guess who that benefits; yes, senior executives and CEOs—and makes the very rational decision to suggest that they don't have the demand for their products, the business plan is in place, the pipeline of growth that the Prime Minister, the Treasurer and Senator Cormann continually refer to.

It makes a total farce out of their arguments that today a leaked document was given to The Australian Financial Review and commented on in the papers this morning. I challenge the government to table that document. Get in touch with your mates at the BCA and ask them for a copy of it. Clearly they're embarrassed that it's been leaked and clearly the implication was that they didn't like the results of that survey—hence they weren't going to release it. It clearly shows that only one in five CEOs had contemplated giving some of this money to workers in wage rises and that 80 per cent of the 130 CEOs surveyed said that they would consider using it for share buybacks.

So here we have a situation very similar to that in the US. What we have is a direct transfer of wealth from the Australian people—our revenue in government that we spend on essential services like our social safety net, investment in our children's future through secondary education and higher education and child care and preschool—to some of the biggest and wealthiest businesses in the world, who are saying: 'Thank you very much. I'll pocket that handout, and I'll do with it whatever I want.' Senator Cormann is happy with that. He made that clear in his response to my question today—'Let's leave it to companies to make that decision.' The decision that they are making makes a mockery of the key argument the Treasury secretary used at estimates to justify the modelling and the assumptions upon which their wage growth forecasts and their economic growth forecasts are predicated—that companies will reinvest this money in their business, thus enhancing productivity, driving up wages and enabling more people to be employed.

But company CEOs aren't saying that. They're going: 'Thanks very much. I'll buy back my shares. I'll return the money to shareholders. That's where I'll get the best bang for my buck, not reinvesting in the economy.' Of course there may be some investment from this tax cut back into the economy, but that's a very different thing to assuming that all that money is going to be reinvested in the economy. I would say, based on the survey results, that not much of it at all will trickle back to the workers, wages and reinvestment in the economy. That's why we need to vote down these business tax cuts. Senators who are undecided should please take note.

Question agreed to.