Tuesday, 26 June 2018
Questions without Notice: Take Note of Answers
That the Senate take note of the answers given by the Minister for Finance (Senator Cormann) to questions without notice asked by Senators Keneally, Sterle and Collins today relating to corporate taxation.
The first thing I have to say, in taking note, is here we again have Senator Cormann with another triumph of ideology over the facts. Ideology is just being backed out nonstop, incessantly, by this senator in complete contradiction to the facts.
Senator Cormann denies the fact that Republican Senator and presidential candidate Marco Rubio had rubbished the claims that corporate tax cuts would lead to an increase in wages. Senator Rubio referenced the experience in the United States, which recently also slashed corporate tax. He said:
In fact they bought back shares, a few gave out bonuses; there's no evidence whatsoever that the money's been massively poured back into the American worker.
That's the reality in the United States. That's also the reality in Canada, where the tax cuts did not result in more jobs, did not result in more investment. What it did result in was share buybacks, money going into the pockets of individuals and massive salary increases for the executives of the corporations in Canada and the US. That's exactly what happened.
What Senator Cormann needs to understand is that there is no invisible hand of the market out there. This nonsense that we hear all the time that the market will self-regulate, that the market will balance—what a load of rubbish! For the Leader of the Government in the Senate to stand here, after we've seen the global financial crisis, after we've seen the behaviour of corporations around the world, and defend that sort of behaviour and argue that that's the market at work is an absolute nonsense.
Senator Cormann just gets up and goes into top gear; he just talks and talks and talks. Unfortunately, not much of it makes much sense. It might make a bit of sense to the ideologues in the rabble of a government that sits across the other side of this chamber, but it doesn't make much sense to the pensioners across the country who have watched the attacks by this coalition on their pensions. It doesn't make much sense to the underprivileged and those that are in need of support in this country, who are being attacked by this rabble of a government. It doesn't make much sense to the workers out there that are being denied their capacity to negotiate with their employers for a wage increase.
For Senator Cormann to get up here and say: 'Well, you know, if we give more money to big business and if we hand $17 billion to the banks, everything's going to be okay. There'll be more jobs. There'll be more investment,' is absolute nonsense. That is not what's happened, and that's exactly why the Business Council of Australia refused to sign off on a commitment that they would create more jobs or that they would invest more. The Business Council know that that is not what happens. The Business Council know that, if you give these tax cuts to businesses in this country, the bulk of it will go back to individual shareholders and go back to the executives of the companies. It won't flow through to ordinary workers, who would end up going out and would need that money to spend. The money will go to the banks. The money will go to the big end of town. The money goes into banks. The money goes into family trust funds. The money goes into all of the areas that will not create more activity in the economy.
If you want to actually get the economy moving, you'll give more tax cuts to the low paid, you'll look after pensioners and you'll look after people that need the money, the people that will go out and spend that money to create jobs and create economic activity. This triumph of ideology by Senator Cormann over the facts defies reality; it defies what's happening out there. What happened in the global financial crisis? Workers lost their houses. Workers lost their jobs. That's the market at work. (Time expired)
What the Senate has just heard is more unmitigated nonsense from Senator Cameron. In fact, Senator Cameron's one true statement in this parliament in all of his time here was when he rightly accused his fellow colleagues in the ALP caucus of being lobotomised zombies. Remember that? Senator Cameron was saying that nobody discusses anything in the Labor Party caucus. He said that they were all lobotomised zombies; they took whatever the then ministers said as true.
Senator Cameron, I often confess to this parliament that I'm not terribly bright, but I can work out the enterprise tax plan. Senator Cameron perhaps hasn't caught up with this yet, but many international competitors, including Canada, Singapore, the United Kingdom, New Zealand, Norway, Israel, Japan and France, have reduced their company taxes. The US slashed business tax from 35 per cent to 21 per cent. If the Australian rate remains stranded at 30 per cent, Australia will have one of the highest tax rates in the OECD, making it harder for Australian companies to compete in a fiercely competitive global market. International investors will take their capital and the resultant jobs to countries where it is cheaper to do business.
What the ALP and the lobotomised zombies on the other side want to do is create jobs in the United States, in Norway, in Israel, in France and in the United Kingdom. As I say, you don't have to be terribly clever to work this out. If a company has $100 million to spend on building a factory to make widgets and is going to make $10 million profit as a result of it, and when it looks around can see that it's going to pay 30 per cent tax in Australia on its profit but only 21 per cent in the United States and less in other countries—they can build the same factory, they can make the same widgets and they would make the same profit, but they'd pay more tax in Australia—where is this international investor going to go? Clearly, not to Australia. Clearly, they will go to a country where it is cheaper to make the widgets and get the same profit, because they will pay less tax and more money to their shareholders.
The ALP policy is all about transferring Australian jobs to overseas countries. I don't understand why the ALP doesn't work this out now. Mr Shorten used to understand that, because it was only a few short years ago that Mr Shorten was advocating for lower corporate taxes for this very reason. He then understood that you can't compete in a very tight international market where you are charging international investors more than your competitors, and so Mr Shorten was very vocal in those days in promoting this. In fact, that was about the time, as I recall, that Senator Cameron made his famous description of his colleagues in the ALP caucus as being lobotomised zombies. I assume that, when Mr Shorten was advocating for lower corporate taxes, that the lobotomised zombies—Senator Cameron's term—simply sat there dumbfounded and agreed with Mr Shorten.
Mr Shorten thinks he can fool the Australian public with this politics of envy and with this, 'We'll give you everything you ask' approach that he's currently adopted. He thinks that that might win him a few votes at an election, but most Australians are not fools. They can see right through Mr Shorten and the fact that a few years ago he thought it was a good idea. The lobotomised zombies agreed with him a few years ago but now, because they think they see a political advantage, they've changed their approach. It won't work. The Australian people are not that stupid.
In a rare moment of agreement with Senator Macdonald, I do agree that he's not very bright, because, if the logic of his argument were correct, how is it possible that we've had 27 years of uninterrupted economic growth? How is it possible that, if we're in such dire circumstances, we need to match, in a Dutch auction, whoever's got the lowest tax rate to be able to live and be successful in Australia? The facts don't speak to that.
If I go back to Senator Cormann's response, he may well have a point that Rubio's an outlier in the Republican Party. He was a presidential candidate though. If you look at Bloomberg, 60 per cent of the tax cut gains will go to shareholders compared to 15 per cent to employees. Morgan Stanley analysts found that 43 per cent of the tax cut will go to stock buybacks and dividends and 13 per cent will go to pay rises, bonuses and employee benefits. Just Capitals's analysis of 121 Russell 1,000 companies found that 50 per cent of the tax savings will go to shareholders, compared to 20 per cent directed to job creation and capital investment and six per cent to workers.
On this side of the chamber, every week that we're not in parliament we meet with workers. I can tell you the story of any number of workers who are waiting for that permanent job, perhaps with the Port Adelaide council, where there are respectable pay and conditions enjoyed, but they're in the labour hire contingent, which has vastly different hours to those in the permanent workforce. There is no trickle-down effect coming to those people—not in the informal economy; it's a formal part of the employment sector—those without permanent jobs, those with casual jobs and those with part-time jobs. For someone who's applied for a job in my office or someone who works 25 hours a week at Coles stacking shelves—but would dearly like to get a well-paid job—this tax cut is not going to trickle down to them, and anybody who believes it believes in the tooth fairy or some such other fallacy.
There is a simple reality here: it's not in the best interests of companies to suddenly start handing out wage increases. The job of a vibrant union movement is to force companies to negotiate into fairer enterprise agreements. This government spends most of its time trying to destroy trade unions in this country when all trade unions do is provide that equalising equilibrium in the capitalist system. We and union representatives go in and fight for fairness, fight for wage growth and get that share back for the workers so they can look after their families.
I have never met a CEO who thought it his job to actually hand out a pay rise. Every CEO in this country would not be doing their shareholders a service if they suddenly said, 'We'll give them an extra 10 bucks an hour.' It won't happen. You know it won't happen. You're batting for your side of town: power, position and privilege. That's who you're batting for. Be honest about it. Own up to it. That's your job over there, and you do it very well. So don't pretend that you're looking after the working class or the middle class or anybody who's not in a position of power and privilege.
Senator Cormann has his mantra. He's unshakeable on his mantra. He says one thing and does another—always. He just keeps battering with that battering ram of his, but he's for position, power and privilege. He wouldn't know a worker if he fell over one. He certainly wouldn't know a casual worker on $18 an hour. If he believes that any CEO in this country is suddenly going to wake up tomorrow and say, 'I've got less tax to pay; everybody's got a pay rise,' he's dreaming—and we ought to tell him he's dreaming. But he knows he's dreaming. That's the really awful thing. Senator the Hon. Mathias Cormann knows exactly what he's doing here. He's batting for power, position and privilege, and he does not give much of a stuff about the working people in this country, whose wages growth is so low. That low wages growth feeds into all of the other parameters of our society. It feeds into all of the other negative aspects in our economy and all of the other negative aspects or outcomes in our society. We need a living wage. We need an increase in Newstart. We need an increase in so many areas so that people can get up in the morning, look after themselves, feed and clothe their families and enjoy a bit of respectability in an economy that's fair and shares the income around and doesn't hand it all to the big end of town, like this disgraceful tax cut will do. (Time expired)
The one thing I noted from listening to this debate and observing question time today is that Labor's form, as to repeating falsehoods in the hope that people believe them, is well and truly on show again today. The notion that keeping taxes higher or indeed jacking them up higher is going to result in higher wages for workers just doesn't stack up either. I don't know where this idea is coming from. In terms of the falsehoods being peddled, we heard it last week with the ABC being sold off by the government, we heard it at the election with Medicare being sold off and we're hearing it now with keeping tax cuts and reserving them for the big end of town. It's just nonsense. It makes no sense and it doesn't stack up to any level of scrutiny.
Last week we did have the good news in being able to hand some tax relief to hardworking Australians right across the country—something that the opposition opposed. Labor didn't want to see the fruits of people's labour being enjoyed by them—money back in their pocket; money for them to spend as they see fit. That is something that we on this side of the chamber believe is the right way to go when it comes to handling people's money—allowing them to spend it rather than the government taking it off them and spending it on big government programs. And this week we hold out hope that the Senate will pass the much-needed tax relief for business in this country, to put our country's businesses on a globally competitive footing so that they can compete with the countries that Senator Macdonald mentioned in his contribution a little earlier on and so that those businesses don't make decisions to move offshore or to reduce their employment workforces here. That's what we need to be doing. That's what this is about.
But it's clear that the opposition, instead of being focused on the people we represent in this place and the communities that elect us to this place, are more focused on the political games down here. They're more focused on the Canberra bubble than on, say, the electors of Braddon in my home state, who would be big beneficiaries of the enterprise tax plan if it's realised to its full extent. The proof of this, as Senator Cormann mentioned today, is the captain's call made by the Leader of the Opposition with regard to what they would do if they won the next election after these tax cuts passed the parliament—that is, they would bring tax levels back up for businesses with a turnover of at least $10 million and perhaps even businesses with a turnover of $2 million. It's astounding. Instead of maintaining this competitive tax environment, they're going to jack taxes back up for businesses with a turnover of around $2 million. There wouldn't be many small family grocery stores and businesses like that that would be missing out in being caught up in this tax rate.
Speaking of Braddon, I did a bit of research and was able to look into the businesses in the electorate of Braddon, which, of course, will be going to a by-election on 28 July—and I wish Brett Whiteley, that great former member and candidate, all the best.
He is very, very good, absolutely. But, in terms of the businesses that would be impacted by Mr Shorten and his captain's call to jack up taxes on small to medium businesses in Australia, there are 24 businesses in the electorate of Braddon alone that would get caught up in his plan to jack up taxes. One of them, Stubbs Constructions, a mid-sized business with 63 employees on the north-west coast of Tasmania, is something those opposite would class as a nasty big business at the big end of town. It has 63 local employees in Braddon. The managing director of that business has confirmed that, if the tax cuts were to go through and he and his business were beneficiaries of the tax plan, he would invest more. He'd employ more people; he has made that commitment.
On that point, there are 164 businesses statewide that would be penalised by Bill Shorten's captain's call to jack up taxes and penalise those people who take a risk and actually generate economic activity. We all know why he's doing this, of course. We've seen the would-be Leader of the Opposition, Mr Albanese, snapping at the heels of the current Leader of the Opposition He has decried the antibusiness and antijobs rhetoric and policies that Mr Shorten's pushing. That's why we have a captain's call; he's desperate. He's trying to lock in his position. He'll do whatever it takes to get a headline or get a vote, even if it is at the cost of jobs in places like Braddon and Longman. I've just talked about 63 jobs. I hope that whoever speaks next from the opposition—be it Senator Keneally—will guarantee those 63 jobs and implore the Leader of the Opposition to back down on this terrible policy he has announced today. (Time expired)
I rise to take part in this debate to take note of the answers provided by Minister Cormann to questions posed by me, Senator Sterle and Senator Collins. Many of the questions today focused on the Business Council of Australia. While Senator Duniam was so keen to hear about commitments written in stone and firmly given, he might have inquired of the Business Council of Australia, when it made a 'commitment'—and I use that in quotation marks—to the Senate were the Senate to pass the corporate tax cut: what will the Business Council of Australia do? They will—wait for it, folks—invest more. Not one job was committed to. Not one specific investment was committed to. There was not one project that they said would go ahead. They simply said, 'We will invest more.' If Senator Duniam is so concerned about the voters of Braddon and voters in his home state of Tasmania having that ironclad commitment, he should try to get a commitment out of the Business Council of Australia as to what they would do if they were given a corporate tax cut, because 'invest more' is not a commitment. It's just two words that really convey very little. They don't convey anything specific about what those companies will do.
When the BCA was asked in a Senate inquiry if it could name a country—just one country in the world—where a cut in the corporate tax rate had led to a rise in wages, do you know what it said? It said that it would have to take that on notice. The BCA has already declared itself the campaigning arm of the Turnbull government for the corporate tax cut. You would think that this campaigning arm, the Business Council of Australia, would have an answer to this very basic question: if you give a corporate tax cut, where does it lead to a wage rise? There is not one country in the world that the BCA can point to where a corporate tax cut has led to a wage rise for workers. We saw that played out again today in the answers given by Senator Cormann in question time.
What we know from the answers given by Senator Cormann in question time is that he completely rejects that there is any evidence whatsoever that shows that corporate tax rates only benefit shareholders and corporate executives. He rejects that. He says there is evidence somewhere in the world, apparently, that corporate tax cuts somehow benefit workers. But this flies in the face of the evidence that we see in the United States today. We hear over and over from this Turnbull government—from the Treasurer, the finance minister, the Prime Minister and speakers here today in this take-note debate—that Australia has to somehow cut its corporate tax rate because the United States has cut its corporate tax rate. If they want to cite the United States as an example we should follow, maybe we should look at the evidence of what is happening in the United States. What do we know of what is happening in the United States since they cut their corporate tax rate? We know that share buybacks are at a record high.
We also know that companies like Harley-Davidson, right after getting the corporate tax cut, cut their workforce. In fact, they shut down a plant and had a net loss of 350 jobs. And what did they do just days later? They transacted a share buyback of several million dollars. They had a net loss of 350 jobs, they bought back 15 million shares and they announced a dividend increase. This is what the evidence shows in the United States.
Now, I picked on Harley-Davidson because President Trump himself has held this company up as one of the gold standards—one of the great ones 'bringing the jobs back to America'. Well, they're not. The Trump administration has given a corporate tax cut. Who has benefitted? Shareholders and CEOs. Who has lost out? The working people of America. This is the example that the Turnbull government wants us to follow and these are the consequences of that action.
What we heard about today in question time was no less a person than Marco Rubio, a Republican senator—a former Republican candidate for President—who has told the truth to the American people. He has told them the truth. He said that when it comes to corporate tax cuts in the United States they have seen that the companies have bought back shares. They have seen that few have given out bonuses, and that, 'There is no evidence whatsoever that the money has been massively poured back into the American worker.' Well, if that is what's happening in America, you can only imagine what's going to happen in Australia: the same thing, because this government stands up for their mates—the big end of town. They stand up for the shareholders and they're not standing up for the working people of Australia.
Question agreed to.