Monday, 20 August 2018
Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017; Second Reading
In March, I went on Sky News and offered a compromise. I told Samantha Maiden I would vote for company tax cuts to 27.5 per cent and eventually to 25 per cent for Australian companies with a turnover of up to $500 million. I would not, and could not, include the banks. That offer has been on the table for the evangelical tax cuts spokesman, Senator Cormann, for months and months. In those months, we've seen day after day of disgusting evidence proving why the major banks should not be rewarded. We've seen proof of how they have cynically, deliberately defrauded their own customers, even taking money from deceased estates—stealing pennies from dead men's eyes, as Mick Young would say.
I've said before that when I arrived here, two years ago as of next week, some learned, earnest and respected people—like the Treasurer, Mr Morrison, and the finance minister, Senator Cormann—told me about a key word in Canberra. That word was 'compromise'. As the Prime Minister found out again over the NEG and emission targets over the weekend and again today, 70 per cent of something is better than 100 per cent of nothing—that's what they told me. As I said, my $500 million compromise has been on the table for months. I'm offering an amendment to that effect later tonight. It could bring tax relief to more than 4,000 Australian companies. I've even told the government that I would vote with them if they bring on an amendment to bring forward the deadline for the cuts to kick in for companies with turnovers of up to $50 million.
I'm trying to help them find a way through a hostile Senate crossbench. I'm not a Luddite, I'm not an isolationist and I'm not xenophobic. I believe we must have lower company tax. They have dropped to 20 per cent in some of our trading partners and even lower than that in others. They are down to 17 per cent or 19 per cent in Singapore. Those cuts have also been reflected across the EU. The most publicised drop, which has prompted the government's moves, has been in the United States. Sadly, that has not led to huge pay rises for workers. Much of that bonanza has gone to share buybacks and increased dividends. I fear the same could happen here.
The Prime Minister was the one who infused the company tax issue into the Super Saturday by-elections. I believe he made two political mistakes. Sitting governments virtually never win seats back from the opposition in a by-election—not once in almost 100 years. By-elections are always seen as a way to punish the government at the time. The usual excitement is to see by how much. On Super Saturday, the Prime Minister, as I said, made two mistakes. First, he said the by-elections were virtually a popularity contest between him and Bill Shorten. He also said it would be virtually a plebiscite on company tax cuts. That went down well, didn't it?
I've told the government that they should support my compromise. They should support the cuts for companies with turnovers of up to $500 million. Take the proposed cuts from banks and other big Australian companies to the general election next year if you're so proud of them. If you are re-elected on that platform, obviously we on the crossbench will have to have another look at it. Also, don't feed me the two-tier bulldust argument. You voted in favour of a two-tier system when you voted for the $50 million cut-off. A company turning over $51 million misses out now. That's called a tiered system.
It's the same with personal taxes. If you're earning $100,000 you may pay one tax rate while somebody on $101,000 pays a different tax rate, or something to that effect. And I should say, if you think my resistance to company tax cuts is because of some antipathy towards company tax cuts or towards all tax cuts, then think again. I think I was the first crossbencher to back the revolutionary personal tax cuts announced by the government in the last budget. The truth is that out there in the real world the voters do not believe that more tax cuts should be given to the robber banks. They also don't believe that those multinationals who are not paying their fair share of tax in this country should get a tax cut.
In conclusion, if the evangelical Senator Cormann really believes all of this, then take it to the ballot box. I dare you. Meanwhile, remember my argument: 70 per cent of something is better than 100 per cent of nothing. Grab it while you can and get yourself out of the smelly cage you have built for yourselves.
I rise to make my contribution to the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. We bring this piece of legislation forward because we believe that Australia, as a nation, needs a competitive tax regime for all business. Senator Hinch just talked about a graduated scheme that we have in place at the moment. I wasn't here when all of that legislative framework passed the parliament, but it has been a process of 'achieve what you can while you can'. I acknowledge that the parliament has progressively passed tax cuts, first for companies with a turnover of up to $10 million and then for companies with a turnover of up to $50 million. But fundamentally the government believes that putting in place a Ten Year Enterprise Tax Plan gives companies certainty for the future. It allows them to attract, in a global market, the investment capital that they need to grow their businesses and to grow the Australian economy, which will then result in increased tax revenues into the Australian Treasury, which will allow us to guarantee the funding for health services, education services and disability services—all those essential services the government needs.
Senator Hinch talks about not wanting to give the banks a tax cut, but what Senator Hinch is talking about is having a punitive company tax system, which we don't have in this country. Now, I agree with Senator Hinch that the banks have done some completely heinous things, but we shouldn't be punishing them for those things through the tax system. We should punish them through the regulatory framework, and we've done that. This government has passed a number of pieces of legislation and continues to regulate to manage the behaviour of the banks. That's demonstrated by the recent $700 million fine that was laid against the Commonwealth Bank for their behaviour. That is the way you deal with the bad behaviour of any corporate enterprise, not via the tax system. The tax system is not about regulating behaviour. It is not designed to be a punitive system based on whether we think you're good or not. It is about having a competitive global taxation framework, given that—regardless of whether we like it or not—we live in a global economy. Therefore, to attract investment capital into the Australian economy, we need to have a globally competitive tax framework that puts any business or sector that wants to invest in the Australian economy in a situation in which their returns will be competitive.
Senator Hinch quite rightly said a few moments ago that there have been changes to tax regimes all around the world to reduce the rate of tax that companies will pay. As we stand right now, we are not competitive in that global sense. The point of a Ten Year Enterprise Tax Plan is to progressively bring the Australian company taxation regime into a competitive framework with the rest of the world. It's not as if, under that framework, the big banks are getting a tax cut tomorrow. It takes time for those tax cuts to be phased in as the economy grows and as the health of the budget returns.
From the rhetoric that we've been hearing over recent weeks you'd think it was all going to happen tomorrow and that there was some sort of huge handout. In fact, during the Braddon by-election, all we heard from the Labor Party was about giving $17 billion to the big banks. We're not giving anyone anything. We're allowing people to keep more of the money that they earn in the sense of the profits that they make. That's what we're doing. We're allowing businesses of any size to have more of the money that they earn as profits, so that they can reinvest that back into their businesses, and, yes, some of it will go to the shareholders.
In the context of the banks, I think something like 80 per cent of that will go back to shareholders, which will go to mum and dad investors. It will go back into superannuation schemes that will benefit all Australians all around the country, because all of the major superfunds, whether they be private or even the industry funds, are all invested in these major companies. That money will go back to the benefit of Australians in their superannuation retirement funds. There is a benefit of this process to the broader Australian community and that's what it's designed do. It's designed to make Australia globally competitive over the next decade, so that Australian business can attract the investment capital that they need to continue to grow.
We've already seen and heard from small businesses, and I visited quite a few of those during the recent Braddon by-election. They were telling us the benefit of having more of their money, so that they could reinvest it back into their businesses. They were very, very keen to be able to make those investments, so that they could grow their businesses more quickly. They were very keen to be able to employ more locals into their businesses, as the other policies that this government has in place started to generate new opportunities for them.
One of the businesses that's become quite prominent in the conversations in this place over recent months is Penguin Composites. We've heard from John van der Woude, who is looking to employ more locals, who wants to be able to reinvest back into his business and who was misled by the member for Braddon as to the tax rate that he might pay being a business that has a turnover of up to $10 million.
During the campaign, the member for Braddon came out and said that there would be no rollback of legislated tax cuts. She said that a number of times in an attempt to make small businesses in Tasmania think, and particularly small businesses in Braddon, that they would be on the same tax rate under Labor as they would be under the government. The problem with what she was saying was, she either didn't understand Labor's tax policy or she wasn't telling the truth, because the Labor Party's tax plan is to increase the legislated tax rate that currently exists from 25 per cent to 27.5 per cent. So every small business with a turnover of up to $10 million in Braddon, in Tasmania and across the country, is going to pay a higher tax rate under the plans of the Labor Party than they will under the coalition. We have already legislated tax cuts down to 25 per cent.
The Labor Party use this tricky language of saying, 'We will accept the tax cut that's enforced at the time of the election', in an attempt to dupe small business into believing that they will pay the same tax rate but they won't. The Labor Party will legislate to increase taxes for small business, and it is dishonest of the member for Braddon to try and portray the fact that that's not the case. She tried very hard to do that. In a very deliberate speech that she made at the chamber of commerce function in Ulverstone, in a prepared statement, she quite clearly tried to suggest to the audience that there would be no rollback of legislated tax cuts. She was wrong. Fortunately, the Tasmanian Chamber of Commerce, the Burnie Chamber of Commerce and Industry, the Devonport Chamber of Commerce and Industry, and the Central Coast Chamber of Commerce and Industry saw through her misleading statements and they marked against her for that, as they should have. Quite clearly, the Labor Party policy is to roll back the legislated tax cut that has already been passed by the government. Ms Keay said: 'There will be no repeal of legislated tax cuts for small business. I get that you need certainty, and you'll get it.' These were prepared remarks in a prepared speech—but it was a lie. It simply was not the truth. The Labor Party are going to roll back the legislated tax cut that already exists for small businesses with a turnover up to $10 million, increasing the rate from 25 per cent to 27½ per cent. Ms Keay needs to do better. She needs to be honest with the businesses in Braddon, as do all the Labor members in Tasmania, when they try to use this tricky language to mislead businesses. Fortunately, business in Tasmania is onto them and understands that there will be an increase in tax.
One of the other things Ms Keay said at that particular event was that she'd enjoyed the last two years getting to know a bit about business. It's good that she admitted that she didn't know much about business. It's actually refreshing that she's made that admission. But what really demonstrated her complete lack of understanding of business, particularly in the seat of Braddon, were some comments that she made that only 10 businesses on the north-west coast would benefit from tax relief.
Ms Keay doesn't understand that larger businesses also employ people in Tasmania. For example, Wesfarmers are a major business that operate across Australia, and in Tasmania they employ 3,817 people. But, because their registered office is in Western Australia, Ms Keay doesn't believe that the tax cuts for business will have any impact in her electorate. Of course, Wesfarmers operate Coles stores, which are in almost all the major communities in Tasmania. When Wesfarmers are making a profit, they can reinvest back into their supermarkets and their stores, doing upgrades, which provides a capital return and opportunities for tenders for local small businesses. MMG in Rosebery has its registered office in Melbourne, but it employs 411 people in Tasmania. It is the lifeblood of the town of Rosebery. And, of course, those big mining companies reinvest back into exploration to continue their businesses and to grow their businesses and to extend the life of the mine, which they do very successfully and have done for decades. Ms Keay doesn't understand that them having more of their profits to reinvest back into the business makes a difference. She doesn't get it.
Even with our local newspaper—which, up until recently, was owned by Fairfax and has its registered office in Sydney—she doesn't believe that that business and the employees that work for it can gain any benefit. Of course, the more profitable that business is nationally, the more sustainable it is locally, so there are more opportunities for local cadet journalists and for a strong communication of news and events through the local community. Ms Keay has admitted she's spent two years learning something about business, but she clearly doesn't understand what it actually means.
As I've said a number of times, even though Labor in government profess to understand what is good for business, the problem is that, for purely political purposes—for purely crass, political purposes—they're seeking to oppose this legislation. In government, Mr Shorten said:
Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.
He said that in the House of Representatives in August 2011. In March 2011, Mr Shorten said:
… lowering the corporate rate for smaller businesses only—
as the Greens were then proposing—
creates an artificial incentive for Australian businesses to downsize—
which goes to the point that we were making with respect to Senator Hinch's comments earlier. He said:
In worse case scenarios some businesses might actually lay people off to get smaller—and the size based different tax treatment would create a glass ceiling on business workforce growth. Instead we want a level playing field regardless of the size of the company.
These are things that the Labor Party used to believe, and now, for political expediency, they're not prepared to even say that. Former Prime Minister Julia Gillard said:
If you are against cutting company tax, you are against economic growth.
So I guess Labor are against economic growth. That's not what's the government's about. We're looking to grow the economy. We're looking to grow tax receipts so that we can secure those essential services like health and education. She went on:
If you are against economic growth, then you are against jobs. And, if you are against economic growth and jobs, then you are also against increasing wages …
So all of the things that Labor said in government, the things that they said they believed in, they're prepared to walk away from now purely for crass political expediency. They're not prepared—as the government is—to consider a responsible, 10-year economic tax plan that brings in these measures progressively and allows industry and business to plan, as the economy grows and as the budget is brought back to surplus successfully by this government. They now just want to descend into simple, crass political rhetoric. And I saw it in the polling booths in Braddon, where they tried to play off people's concerns about the behaviour of the banks against funding for health and education.
They lied to the Tasmanian people about cuts to health, when the health funding has actually increased in Tasmania by 42 per cent over what it was under the Labor Party. They lied to the Tasmanian people. The good thing, though, is that people actually saw through it. I had people ringing me up saying, 'We're sick of seeing Labor's lies on TV.' In fact, some people even rang me and said: 'We've got to watch the ABC, because we can't put up with the ads on Channel Seven. We just need to turn off the Labor lies.' That's what they said to me.
We have put in place, and we would like to put in place, a strong economic plan for this country—having brought the budget back to surplus a year earlier—that allows businesses to keep more of their money, to invest in their businesses and to grow their businesses, which will grow the economy, grow jobs, and place upward pressure on employment. I saw and heard that during the Braddon by-election. I was talking to an employee in a business and we were talking about the skills shortage in his particular trade. And he said to me: 'We know; we understand. If company A needs somebody in my trade at the moment, they're going to effectively steal them from company B. So we need to train more people, and our bosses know that, but they also know that we can actually ask for more money.' That price pressure in the employment market is already starting to occur. It is starting to occur in Braddon. The employees know it, and they're talking about it.
But, of course, Labor don't want to know. All they want to do is talk the economy down. They want to oppose any measure that might grow the economy, and they want to continue to put down those key businesses that are going to be an important part of the growth of the economy, making it stronger, employing more Australians and putting upward pressure on wages for the benefit of the broader community. I commend the bill to the Senate.
I, of course, along with the rest of the Greens, will be opposing this legislation. The Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 sacrifices massive amounts of taxpayer revenue and gives it to some of the largest corporations in the country. We've heard continual repetition by various speakers from the government of the assertion that providing these tax cuts to big corporations would somehow lead to wage growth and employment growth. The simple fact is that there is almost no evidence of that. There is, instead, a very large body of evidence to the contrary, most notably and most recently in the United States, where very large tax cuts have not led to wage growth and employment growth at all. What they have led to, as always happens, is growing calls to make up the cost by cutting back services to those in the community who are least well off.
This is a measure that, quite rightly, many government MPs are keen on seeing dropped and not proceeded with by their own party because they know that it is not supported by the majority of the electorate, and the electorate is right not to support it. Many government speakers have also, understandably, pointed to past comments by Labor Party leaders and ministers in support of doing just what this legislation does. And it's reasonable for the government, when it's trying to make its case, to point to the Labor Party and say, 'Well, they've said the same thing previously.' That merely points out that the Labor Party, at least at the time, also bought into this myth that giving big tax cuts to the big end of town would somehow create jobs and increase wages for those who are least well off rather than just give money to those who are more well off.
Whether the Labor Party's shift is because of short-term political opportunism now that they're in opposition or whether it's a sign of a genuine philosophical shift within the party, I don't really know. Certainly, you don't need to be as old as I am to be very cynical about either Labor or the Liberals saying one thing in opposition and then doing the opposite when they get into government. That is all the more reason why the Australian public is looking more and more to choices other than the two traditional parties of the political establishment. There is a growing amount of public support for candidates and parties outside of those two established political power blocs that have been basically trading power between themselves for over a century now in Australia.
The simple fact is that this legislation will deprive the Australian public of tens of billions of dollars that could otherwise be invested in better funding for schools—funding increases that have already been removed or reversed by this government. That money could be used to provide better health care, particularly in regional areas. It could expand the resourcing of the public health sector. It could be put into dramatically expanding public and community housing to deal with the significant number of homeless people and the significant number of people under extreme housing stress due to insecure housing in our community. It could, of course, go towards increasing the rate of Newstart, which has not shifted in real terms in nearly a quarter of a century—leaving more and more people in absolute poverty. It could also support people on pensions and other sorts of allowances.
We all know—and, hopefully, the economics of this is not disputed at all—that, if you put significant amounts of money, such as the tens of billions of dollars we're talking about here, into increasing the payments for people on social security and increasing the income of people on low incomes who really don't have discretionary income, then that money would flow straight into the economy. There is no better way to more directly stimulate the economy and to more directly generate jobs and economic activity than to ensure that poverty is addressed. What the Greens would like to see is a genuine commitment from either Labor or Liberal to tackle poverty. That is not just an ethical issue and a social justice issue; it is a clear economic imperative. Reducing economic inequality not only strengthens your social fabric but also enhances employment and adequate wages for people on lower paying jobs. That's the direction in which we need to be taking our economy.
In a separate debate earlier today, I spoke about how both Labor and Liberal have basically been driven to swallow the Kool-Aid when it comes to the false promises of neoliberal economics. Whether Labor's shift on this issue is a sign that they're shifting away from their previous commitment to a fundamentalist free trade, 'let the market rip' type of approach which has been shown not to deliver, or whether it's just political short-termism whilst they're in opposition, we'll just have to wait and see. But it's all the more reason why you need other voices in the House of Representatives—to ensure that, if we do get a change of government, there are people there to keep that new government honest, keep them to their promises and make sure they don't switch back, in the way that they've done so many times before, when they finally do win power, should that happen.
The vote coming up fairly soon about whether or not to finally pass this legislation is important. I'm sure various people and the commentators up in the press gallery will be unpicking the political ramifications of it. Don't worry. There isn't actually anybody up there; they're all somewhere else. I'll just gesture up in the direction of the press gallery. It would be a rare day that someone from the press galley actually turned up in the press gallery to watch the Senate. Nonetheless, the press gallery will no doubt go over the political meaning of this legislation and what it means for various people in the government and their opportunities for promotion or demotion. I don't care about that and, to that extent, I can certainly assure the government that the Greens' position on this has nothing to do with the short-term politics of this situation and has everything to do with our consistent approach to significantly changing the economic direction of this country.
We need to transform our approach to one where an economy delivers for all of us—not just for the big end of town, with the rest of us hoping that somehow some of it might magically trickle down. That is now a massively discredited approach. The Australian public knows it. I think more and more people in this parliament know it, but either they're so beholden to the big end of town and the big donors that they can't shift away from it or they don't—or perhaps that and they don't—have any clear ideas about where they need to shift to.
The Greens do have clear ideas. We put them forward in great detail at the last election. We'll be doing an even more comprehensive economic package leading into this election, because the Australian public are in desperate need of change. They need clear alternatives to the two parties of the parliamentary establishment that have failed to deliver for them over and over so many times. That is all the more reason why this bill should be voted down, and, to put everybody out of their misery, it should be voted down at the second reading stage so we don't have to go through any committee stage and look at amendments toing and froing and we don't have to continue any of the speculation about political ramifications.
The public need certainty on this. They need it out of the way. They need to know that at least some of the revenue coming from big business is actually available to be spent on services. And let's not forget that, when we're talking about corporate tax, one of the big aspects of this that really hasn't got the attention it deserves in this debate is: how many of those corporations are not paying the amount of tax they should be at the moment? Let's focus on making them actually pay their fair share now. That is where we have the real opportunity for economic gains, for revenue gains and for a fairer economy that will deliver for all of us.
I thank Senator Bartlett for his contribution, because it is important that senators and, indeed, the Australian public get a view of economic policy from the bottom of the garden. There's no starker contrast than the irresponsible economic views and attitudes of the Australian Greens on the future success and progress of this country than through this bill and through the lens of this bill.
I'll keep my comments relatively brief because many, many people have spoken on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. But there are two points I want to make. The first is the very real economic reality that we face as a nation with regard to the critical need of having an internationally competitive corporate tax rate. That's the first point. The second point is—and this is a bold prediction—heaven forbid, if Bill Shorten and Labor become the government in this country, my bold prediction is that Bill Shorten and Labor will quickly embrace corporate tax cuts for two reasons. First, it's in their DNA—and I'll come to that shortly—and, second, because Bill Shorten cannot escape the economic reality of the internationally competitive corporate tax environment that we face.
So let me just talk briefly about the need for Australia to maintain its internationally competitive tax rates. The reality is that the rest of the world is moving to reduce corporate tax rates, not by a little bit but by a significant amount, including the Canadians and the Singaporeans. In the United Kingdom they've reduced it to 17 per cent. New Zealand, Norway, Israel, Japan and, indeed, France have shifted their corporate tax rates from 33 per cent to 25 per cent. The most critical issue of course is what action has been taken in the United States to keep their corporate tax rates at a competitive level. It's been well talked about—that the shift from 35 per cent to 21 per cent has probably been the single-most important factor that has motivated us to respond here in Australia.
No action by Australia means that we will have one of the highest corporate tax rates in the OECD. What does that mean? That means there will be a flight of investment out of this country and yet another significant barrier to investment coming into our country. And that will have, that must have, an impact on the availability of employment opportunities for Australians now and also into the future. This particular economic initiative can't be seen and should not be seen in isolation. By not proceeding with this particular economic initiative, what we seek to do is undermine that very real and demonstrated success that the Australian economy has been enjoying in recent years.
Let me talk briefly about what that economic success has been. That's not to say that there aren't tensions. That's not to say that there aren't unrealised opportunities in the Australian economy, but we must constantly be moving forward with reform and not moving backwards, and certainly not stalling. What we know is that at the last election the coalition took a very strong and clear plan to deliver jobs and growth, and that's exactly what has been delivered across the Australian economy over the last few years. According to the ABS, our economy has grown by one per cent in the March quarter to be 3.1 per cent higher than it was a year ago. This is the strongest annual growth rate in around two years and is above the long-term average. Australia is again leading the major advanced economies of the world, bettering the average growth of the OECD and all G7 nations. Importantly, the March quarter national accounts validated the budget's forecasts and confirmed the economy was strengthening as a result of those initiatives contained in the budget. The figures show growth was broad based with all components contributing to growth in the quarter, including household consumption, new public final demand, and net exports. So, this plank of economic reform is as critical as the previous initiatives that have been embraced by this particular government—this coalition government.
Taking no action has consequences. It has been predicted both by the IMF and by the Australian Treasury itself that a lack of action on corporate tax cuts will reduce Australia's GDP by one per cent. Opposition to this initiative is putting a handbrake on economic growth, will make the economy smaller and, in doing so, will deprive Australian businesses and Australian families of much-needed employment and economic growth opportunities. Taking no action has consequences. My bold prediction is that even if Bill Shorten is elected—and that doesn't have to be the case—he cannot escape the very real economic reality that is facing this country in terms of the need to have internationally competitive tax rates.
Briefly, I just want to turn to my second point. That is why this initiative is as much in the DNA of Labor senators as it is in the DNA of coalition senators. Before I do that, let me just make this important point: when you look back through Australian history, and particularly through its economic history, it has been the persistent maintenance of convictions around economic policies—whether it was floating the dollar or the independence of the Reserve Bank—with governments standing steadfast in their desire and their ideas for economic reform, that have led to such prosperity in this country. The coalition's decision to stand by this issue is a triumph of values and principles over expediency. The expedient reaction would have been to abandon this initiative because there's a perception in the community that it's not popular. Well, sometimes the community will reward you for being clear about your values and clear about your principles. On this issue, I'm absolutely convinced that Senator Cormann and the Treasurer, Scott Morrison, will be vindicated on this.
Why is it in the DNA of Labor? Because Labor has said so, Bill Shorten has said so and Chris Bowen has said so. You have heard it many, many times. But I do think, at this final stage of the debate— (Quorum formed) I thank Senator Cameron for his generosity in wanting to give me a bigger audience for my contribution this afternoon. Briefly, let me just end with these few quotes. They're important because you can't escape the truth. Labor are as committed as the coalition to this issue, but they don't have the courage of their convictions. That is the point of difference. The coalition has the courage of its convictions in regard to pursuing economic reform for the long-term benefit of the Australian economy; the Labor Party lacks conviction. What did Bill Shorten say to the House of Representatives on 23 August 2011? He said:
Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.
It is in Labor's DNA. He also said on 30 March 2011, this time to the Australian Council of Social Service:
Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living … reducing the company rate is an economic growth instrument, reducing the corporate tax rate … is also an investment in the Australian people—including people who might now be on welfare …
Those are the words of a man who would like to be Prime Minister. Labor can play the politics, but they can't hide from their previous statements. Finally, before I end my brief contribution, what has the alternative Treasurer said? Chris Bowen, the man who would like to be Treasurer, said in 2014:
As the alternative Treasurer, I'm telling you that I think it would be a better thing if Australia's corporate tax rate was more competitive …
He also said:
I'd like to see it lower over time. I think we've had 14 years of having the corporate tax rate stable. That's too long. Over time, I'd like to see it lowered.
I think the time is now. He also said in his publication Hearts & Minds in 2013:
… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.
He also said in his book:
We do, however, need to be concerned if our company tax rate is on the higher side of the world's advanced economies. At 30 per cent, our company tax rate is now above the OECD average … it is how the rate compares to that of our competitors that counts.
In case it has been lost on Bill Shorten, Chris Bowen and Labor senators, the corporate tax rates of our OECD competitors are now lower. That should be cause for action, because they have said that that would be the reason to act. There's only one point of difference in this chamber tonight. The coalition party is prepared to stand on its principles and convictions when it comes to economic reform, and Labor senators are prepared to abandon their previously held convictions, and undermine economic growth and, in the process, wages growth for ordinary Australian workers and families.
I was listening closely, as I often do, to Senator Smith's contribution. It is true that Senator Smith is a person who acts on his convictions. But I ask the coalition to consider this: it may be that your convictions are, on this occasion, wrong—that the economic ideas that were important to you in the 1980s, the 1990s and maybe the first decade of the 2000s have in fact been superseded by new, additional information.
One of the things that we do know about economies now, that we didn't know then, is that the distribution of wealth within an economy matters. It matters a great deal in terms of the ability of that economy to sustain ongoing levels of growth. It hinges on the distribution of prosperity within the community. It's this overall failure on the part of the coalition to understand this critical piece of information that leads them to bring a position before the Australian public again and again that isn't supported by the evidence and, indeed, isn't supported by the public.
Senator Smith is part of a government that recently went to a by-election in Braddon, went to a by-election in Longman, went to a by-election in Fremantle and went to a by-election in South Australia and was unable to prevail in any of these contests, many of them being contests that pundits thought they ought to be able to win. In fact, based on the experience in Longman it should have been very difficult for Susan Lamb to retain that seat. But instead, by proceeding in a methodical way to set out the differences between the Labor approach to taxation, and to corporate tax in particular, and the Liberal approach Susan Lamb was able to obtain support. The same thing happened in Braddon.
I heard Senator Colbeck in the chamber earlier this evening complaining about the fact that Labor supporters were on the booths talking to people about the choice that they were facing, because it was clear that on the booths in Braddon when faced with a choice between providing tax cuts to corporations, big banks and big multinationals and providing services—education services, health services and support for people in hard times—people were very clear about what they preferred. I was there on the booths in Braddon. I didn't call out when Senator Colbeck was talking about that, but I spent a day on the booths in Braddon, and it was obvious to me that this is not a community of people who could automatically expect to do well from the global economy. They rely on us to manage the economy and to steward the economy on their behalf, so that they get their fair share—
People do want to do well. Thank you, Senator Duniam, for pointing that out. People do want to do well. But they understand that we do best when we provide support to all of our community to stand up for one another. We do best when we don't leave people to fail, when we don't leave them alone when things get tough. All of that is dependent on having a government that has the resources to do the things that the community needs it to do. The problem with the bill before us this evening is that it strips resources from government in the most egregious way. To date, no-one on the government side has explained how that stripping away of resources is going to be managed from a budget perspective.
We have a very, very narrow surplus that will be achieved in the first part of the next decade, according to the budget projections. It would only take a tiny shiver to run through the global economy to knock those projections out of the water. Indeed, many reputable economists have looked at the budget projections and drawn the conclusion that the wages growth that they are predicated upon, the commodities prices that they are predicated upon and the tax revenue that they are subsequently predicated upon mean that they are wildly unrealistic. There is already a cloud over the surplus projected by this government. The idea that you can strip away billions upon billions of tax revenue from the government budget, handing it back to multinationals, is barely credible. It is barely credible. It has yet to be explained.
We are very concerned about the impact of this bill on the budget over the medium term. The government has gone on and on and on about the need for budget repair. You will recall that this is the government that made debt and deficit its major election campaign issue. We don't hear so much about debt and deficit anymore, and we certainly do not hear about the budget emergency.
Let's have a look at what is actually going on in terms of the numbers, because they are genuinely worrying. The deficit for this financial year has blown out by more than six times. It was $2.8 billion in their first budget; it is now $18.2 billion. These are numbers that most people can barely compute. Most normal people look at a number like a billion and don't understand it. But what they do understand when we talk about billions and billions of dollars is that it means that, when you turn up at the emergency department, there just might not be someone there to treat your child if your child is sick; or that, if you need elective surgery and you're not in a position to fund it privately, personally, it might be 18 months, 24 months, until you receive a service. These are actual problems. They are abstract numbers in the billions, but they impact on people in very real ways.
Why is it that the government, which carried on so much about debt and deficit and about a budget emergency before the last election, wishes to place even further pressure on the budget?
Where is the emergency? It's not here this evening, because apparently this government believes that it's reasonable to put through legislation which will return billions upon billions to multinational corporations. There has been a lot of discussion about how returning billions to multinational corporations will allow them to generate greater levels of profit, and, in turn, these profits will be returned to the community in the form of investment. That investment will apparently then produce jobs, and apparently these jobs will be high-wage jobs rather than low-wage jobs. There are a lot of assumptions in that chain of logic. I've heard coalition senators stand up in this place and speak again and again about the consequences for wages that will flow from cuts to corporate tax. There is no evidence base for this. You only need to examine the logic that underpins this argument to see how ridiculous it is. If you really think that every extra dollar of profit will be put aside and ring-fenced for investment in Australia then you're absolutely mad. There is no evidence that that is so, and it is particularly the case for the multinational corporations that would be the beneficiaries of this tax cut.
In the United States, they've actually got direct experience of this. Tax cuts have gone through. There is no evidence that wages are increasing. What there is evidence of is massive share buybacks. I put on my phone a Google search for share buybacks because every single week there is another major US corporation pursuing share buybacks on the strength of the corporate tax cuts that have been offered. These things don't do anything to create new jobs. They don't create any new jobs whatsoever. Again, some people have offered some tortuous, circuitous argument about how at some future point the additional capital may produce some additional investment that may produce some additional jobs that may drive the demand for labour that may drive wages up. Does anyone believe that this is actually happening? It's certainly not happening in the United States.
The most significant thing that has happened in the United States is that the tax cuts that were offered in the form of depreciation for investment have been effective in driving additional investment. It's that logic which underpins the alternative approach that is being offered by Labor. We have offered incentives for businesses that wish to invest—not a broadscale tax cut smeared across every single industry and every single business in the country, but a specific tax cut offered to those businesses that choose to invest, that choose to invest in ways that will produce new opportunities for Australian workers. That is a rational use of our fiscal capacity. If we've got some headroom, that is a good use to which to put it—stimulating investment that will actually support Australian jobs. But the plan before us this evening doesn't do that. It provides a benefit unilaterally. It doesn't matter whether you're a big multinational, it doesn't matter whether you're a bank and it doesn't matter whether you're a small business—this government wants to bring taxes down to deliver billions and billions in tax cuts, and it's just not something that the economy can afford. It says a great deal about the economic priorities of the government, because they've spent a great deal of blood and treasure pursuing this particular initiative. They've gone to by-elections in the last month where they've persisted with this proposition, which is manifestly unpopular with voters. And it's unpopular, as I said before, because people understand that it won't do very much for them. But it's also unpopular because it says a great deal about their priorities.
Wage growth is at record lows. There've been many opportunities over the last 12 months in this chamber for the government to intervene and support wages. They could have intervened on a number of occasions with the Fair Work Commission. They could have supported Labor propositions to restore penalty rates after the shocking decision to strip away penalty rates and the level of penalty rates on Sundays. But they've chosen not to do that, and it's remarkable that they have, because the circumstances faced by Australian families are very, very severe indeed. Australian families face rising costs, rising electricity prices, rising rent in many instances and record high underemployment. But the government has had absolutely nothing to offer.
We've got a longstanding concern about wages growth. We've brought that concern to this chamber on many occasions. Economists like Andy Haldane in the Bank of England have on numerous occasions raised their analysis about the dwindling bargaining power of workers and their representatives. It's not an accident that wages growth here and in other places is stalling. It is a product of the structure of work and the laws around work itself. And this government, rather than facing up to that reality, rather than doing something to assist workers, has instead sought to intensify the pressures on working people and to limit the ability of working people's representatives to bargain on their behalf.
The thing is, budgets are always about priorities. Budgets are about choices. This government has had it wrong every time. They've pursued big-business tax cuts. They've pursued tax cuts for high-income earners. They've ensured that low-income workers—people in that very modest income bracket just above $21,000—get increased taxes. And they've allowed penalty rates to be cut without lifting a finger. But I don't think that they are the priorities that the Australian people expect from their government.
We've got our own priorities on the Labor side, and we've prosecuted them consistently over the last five years. I might add, given the turmoil of this week, that we've done so with a great deal more consistency than the coalition has been able to summon to pursue most of their interests. We have sought to fund our schools, we have argued for proper investment in infrastructure and we have argued that, to do these things, we will require a fair tax system. We have made the case, people will recall, for reform to superannuation. We have made the case to level the playing field for homeownership. We knew that there were revenue issues there, but we also knew that it was not fair that first home buyers would walk into a room facing a substantial disadvantage compared to those people walking in with a plan to make an investment. We have sought to cap the deductions people could obtain from managing their tax affairs to just $3,000. If you've got $3,000 to chuck at your accountant, that's quite enough. People ought not to obtain an advantage merely because they can afford to pay for very high-quality tax advice. We should all be on a level playing field when it comes to dealing with the ATO, and the fact that people paying for their tax were also able to obtain a deduction for it was simply unfair.
We've boldly pursued reforms to discretionary trusts to deal with the issue of income splitting. That was something people told us not to touch. They said it was too hard, and we pursued it anyway. Yes, there was a scare campaign. But, if people on the other side want to talk about conviction, I'd point you to the Labor shadow Treasurer and I'd point you to the shadow economics team, because we on this side of the chamber—and in the other place—have consistently brought forward bold ideas, well prior to an election, so that people understood what it was that we would take to them, and so that people understood how it was we would fund our promises. It's a great deal more than what's been offered by those on the other side, who've persisted with this particular bill before us this evening, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, without in any way, at any time, explaining to the Australian public the costs that they would incur as a consequence of the tax cuts that are proposed.
This is not just about Australians living now This is about fairness between people now and people in the future. We have to get the policies right for future generations of Australians. If we don't have the revenue to pay for essential services like Medicare, people will lose out. If we don't deal with issues for first home buyers, we will see a generation of young people locked out of homeownership forever. If we aren't able to properly fund schools or TAFEs or universities, we will deprive young people of the resources they need to successfully participate in the economy and contribute to the economy. If we don't fund important infrastructure, we will deprive economic actors of the infrastructure that they need to do business well, to succeed here and globally. And, frankly, if we don't deal with climate change, we'll all be sorry. We've seen the most extraordinary scenes over the last 10 days in particular, but really over the last five years—a kind of denial about one of the most pressing economic concerns, no concern or interest in addressing this, and, in fact, a reckless inability to see the risks that are before us.
This government has its priorities all wrong. It's here tonight asking us to pass a corporate tax cut, when issues around infrastructure, skills, hospitals and schools all require urgent attention. But they haven't been on the agenda for the government tonight, and they haven't been on the agenda for the government for the last five years—and it's really getting quite embarrassing.
I rise tonight to contribute to this debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Let's firstly look at what this bill intends to do. This is the coalition's vehicle to implement the next stage of its proposed corporate tax cut package: a package that will cost taxpayers around $15 billion each and every year from its full implementation. The government continues to say that this is baked into the budget and that it's accounted for. But I can tell you from our experience in the inquiries in relation to this matter that credible economic experts out there are concerned about the cost to taxpayers of this particular package, particularly given that if we do have a significant economic shock to the system at some point in time—and let's face it, we live in uncertain times with uncertain global players—then we are going to be in a perilous situation in terms of our fiscal position.
We know that in terms of cost this package blows out beyond the forward estimates. In our view, it's an unfunded budget wrecking ball, as I've indicated. At the same time that the Liberal-Nationals are fighting for more tax cuts for the top end of town and $17 billion for the big banks, we've got wage growth at historically low levels. Even the Treasurer has accepted that stagnant wage growth is one of the greatest threats to our economy into the future, but he has refused to do anything about it. They stand idly by while penalty rates are cut for hundreds of thousands of already-low-paid, often disadvantaged workers. The workforce is becoming more and more casualised, and the gig economy is growing, affecting job security for individuals and families. The cost of living is going up—medical expenses, private health insurance, energy bills, grocery bills and education. And, under the coalition's watch, the budget has already blown out, crashing through the half-trillion-dollar mark for the first time in history.
Despite this, the No. 1 priority of this government's agenda is still giving their big business mates a tax cut. That's on top of the personal income tax plan that they rammed through the parliament in June—a plan that gives 80 per cent of tax cuts to the top 20 per cent of income earners over the next seven years. The government rammed that legislation through by guillotining debate in the Senate, by confusing the crossbench and by silencing Labor. And let the record show that One Nation helped them to do it, just as One Nation might still vote for this bill—who knows?—a bill that gives $17 billion to the banks. That is the same amount that the government is ripping out of schools across the country—$17 billion. History shows us very clearly that Senator Pauline Hanson often says one thing in this place and then proceeds to do another, often to the detriment of Queenslanders—the people in the very state that she purports to represent.
So, whilst the top end of town gets a tax cut with the blessing of One Nation, all taxpayers have to pick up the bill for the Liberal-Nationals' burgeoning debt. Analysis shows that the Personal Income Tax Plan could cost Australians more than $10 billion in interest, or around $415 per person. To add insult to injury, workers on low and middle incomes will be expected to pay the interest on billions of dollars of tax cuts going to those people who need them the least.
It's increasingly apparent that the Liberal-Nationals have given up on trying to fix their abysmal record of fiscal management. Let's just recap, for the record. They've abolished the budget repair levy. They've ignored Labor's calls for tax transparency and for closing debt deduction loopholes—something that I have talked about in this place before. The Liberal-Nationals have ruled out negative gearing and capital gains tax reform—both policies that predominantly benefit the wealthy. They passed bigger tax cuts for the top end of town and ran a protection racket for the big banks while they ripped off everyday Australians.
Since the Liberal-Nationals came to power, net debt has doubled and gross debt has crashed through the half-trillion-dollar figure, as I have said. Both these debts are growing faster under the Liberal-Nationals than they did under Labor. Modelling tells us that gross debt will remain above the half-trillion-dollar mark every year for the next decade. This is despite Australia currently experiencing the best financial climate since the GFC—26 years of continuous economic growth. Let's not forget that it was the previous Labor government that had the responsibility of dealing with the GFC and that, in those toughest of economic times, it was the Labor government that got the big calls right and set us up for the recovery path that we are now on.
I know that the Liberal-Nationals like to make people think that Labor would be a higher taxing government. I've spoken on this issue in the past and I think it's relevant to talk about it tonight as well. That, in fact, is far from the case. I want to take a minute, once again, to talk about this, because I know there are people listening tonight to this debate—it's an important debate—who think that the coalition has a record of being low taxing when in government, when, in fact, the opposite is the case. I'm indebted, as always, to the research done by Stephen Koukoulas, the well-known economist, who first drew my attention to this issue. Let's take a look at the 10 highest taxing federal governments since 1980. If you look at the top 10 years since 1980 that we had the highest tax to GDP ratios, and if you look at the governments that were in power at the time, you will find that during eight out of the 10 years in question we had Liberal governments in place.
That's exactly right. In 2004-05, the ratio of tax to GDP was 24.3 per cent; in 2005-06 it was 24.3 per cent; in 2000-01, 24.2 per cent. In fact, the top seven years out of the top 10 were all Liberal administrations. You have to go to the eighth year to find a Labor government down at 23.3 per cent. That was back in 1986-87. Then you go to the Liberals again. They are the ninth on the list. The No. 10 on the list of 10 top years of tax to GDP ratio was a Labor administration, 1987-88, at 23.2 per cent. Interestingly, if you were to look at the next highest, you'll find it in this year's budget—the 2018-19 budget—where we see that the ratio of tax to GDP is 23.1 per cent. So they're back on their form.
What's most extraordinary when you look at this particular research—and what a lot of people would probably do a double-take on—is, if you were to flip the analysis and look at the 10 lowest tax to GDP ratio years since 1980, 10 out of the 10 years where we had the lowest level of tax as a proportion of GDP were under federal Labor governments. That's right: the lowest tax to GDP ratio years since 1980 all took place under Labor governments. The Liberal-Nationals talk the talk, but it's not borne out by the facts.
Despite their old debt and deficit rhetoric, the Liberal-Nationals are making things worse for this country, not better. While Australia's financial outlook is already improving, thanks to more favourable global conditions, one might wonder if a reduction in the headline rate of company tax is the best way to go, given the IMF, in its World economic outlook, January 2018 update, says, in relation to what's happening in the US, that, despite an initial sugar hit to the economy:
Due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards.
So, when it comes to Australia's modelling, the Treasury's modelling indicates that the tax cut will boost GDP by just one per cent in 20 years time, an average increase of just 0.05 per cent a year. It's always somewhat misleading to compare Australia's situation to the US when it comes to corporate tax, because we have a rather unique system of dividend imputation and we don't have state corporate taxes, so it's something of an invalid comparison.
At the same time, we're seeing CEO pay rates approaching the pre-GFC levels. A report that was released in March by the Australia Institute revealed that the CEOs of the top 100 companies in Australia were paid an average of $5.2 million in 2017. Bank CEOs took home around 100 times more than the average Australian. This prompted Australia's Treasurer during the global financial crisis, Wayne Swan, to say:
The gross distortions in CEO pay relative to average worker earnings strike at the heart of economic inequality in Australia.
My colleague Dr Chalmers in the other place has talked about this issue, particularly in relation to Goldman Sachs. I'd like to say here that there's little to no evidence to suggest that corporate tax cuts will lead to more jobs or higher wages. I will return to this point later with regard to what big businesses in Australia are promising.
We do have some evidence that business investment in Australia is at high levels, despite the fact that we have a comparatively high headline corporate tax rate. I think it's important to note here that looking at the headline tax rate is somewhat misleading, and I've made that point on a number of occasions. When multinational companies are looking at whether or not they're going to invest in Australia, they don't just look at the headline rate of tax. They look at a whole range of factors to determine whether or not they're going to make a decision to invest in our country. They look at the stability of our economic system, they look at the level of infrastructure that we have in this country, and they'll have a much more detailed examination of our taxation system to see how it all fits together. The headline rate has its place, but it doesn't tell the whole story as to whether or not a particular country is going to be suitable for investment by foreign companies.
We say that there are better ways to deliver benefits to businesses, and that's why we announced our plans for an Australian investment guarantee. This is a plan to deliver more targeted relief. Under our proposition, businesses can immediately expense 20 per cent of new assets up-front. So, rather than having a nebulous change to the company tax rate—a very blunt instrument—let's look at ways that we can provide immediate relief to businesses to assist them to invest in their businesses, which has a more direct impact on the creation of jobs. Our plan also goes to delivering balance depreciated in line with normal schedules from the first year and rewards businesses for investing in Australia versus tax breaks for multinational foreign investors. And it costs about an eighth of the Liberal-National plan, so it delivers more bang for the buck.
It's not just Labor that has come out with some new positions and been talking about good policy. It's interesting to note that some other parties have endorsed the Australian investment guarantee. Australian Chamber of Commerce and Industry CEO James Pearson said:
Business welcomes this commitment from the Opposition—it's good policy …
What's particularly positive is the proposal to make this a permanent feature.
This is important as policy certainty and policy consistency is critical for business.
The Energy Efficiency Council said:
A new Federal Labor policy that gives an immediate tax deduction to businesses that invest in energy saving equipment would help slash energy bills …
That's something every Australian would be interested in knowing about. This is very sound policy. It's had endorsements from other interested parties and business representatives. I also note that Mr Peter Strong of COSBOA has welcomed the Labor policy. He said:
… it would make it easier for Australian businesses to invest and grow. The fact that this measure is available to all businesses, big and small, is also very positive as it will help small businesses directly as well as encouraging larger businesses to invest in the products sold by small business.
This is a ringing endorsement of the approach that we've adopted, in comparison to the fiscally reckless approach adopted by those opposite. It's important in this debate to outline that there are better ways to deliver benefits to taxpayers, but we know that those opposite have been asleep at the wheel. The Liberal-National party's ambivalence on this issue is hurting workers.
Earlier this year, I had the opportunity to visit the union picket line at Longford in Victoria in relation to the ExxonMobil dispute, and I heard firsthand from workers who couldn't get a fair deal on wages from a company that hadn't paid tax in Australia in years. In fact, the next day, under questioning in our corporate tax avoidance inquiry, ExxonMobil revealed it wouldn't be paying tax in Australia until 2021, making a total of eight financial years that this company will have paid no tax in this country. It might be legal, but it certainly doesn't pass the pub test, and I know that many average Australians who pay their fair share of tax are outraged by that. This evidence and the Labor-led report on corporate tax avoidance back up Labor's point that we need more transparency in Australia's taxation system. When companies dodge their tax obligations, it impacts on the government's ability to fund crucial infrastructure and services such as roads, rail, hospitals and schools. We know that this government looks after the top end of town and turns a blind eye to corporate tax collection loopholes.
In conclusion, I want to once again take the opportunity to thank Susan Lamb and congratulate her on her re-election to the seat of Longman. During the course of my doorknocking with Ms Lamb, we heard lots of concerns about these tax cuts for the top end of town. The Australia Institute's research shows that Queensland will receive very little benefit from the Liberal-National plan. Only eight per cent of companies set to benefit are based in my home state of Queensland. The majority of companies that benefit from this tax plan are in New South Wales and Victoria. We need a Labor government to restore the balance between rich and poor across the country.
What a time to be debating the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017—a proposal by government to award corporations in Australia $80 billion worth of tax breaks over 10 years. What a time to be standing up and debating that proposal when the world and this country are facing massive challenges. The two great challenges that are facing Australia and, as a matter of fact, the world are accelerating environmental degradation and the decline of the capacity of the ecology of our planet to sustain life, including human life, and rampant wealth inequality. The decline in the capacity of our ecology to sustain life is embodied, most notably and seriously, in the massive disruption to the planet's climate that we are currently seeing because governments and parliaments are allowing corporations to use the atmosphere as a giant dumping ground for CO2. And we are seeing rampant wealth inequality because governments and parliaments are too interested in lining the pockets of people who are at the higher levels of big corporations in this world and are not interested enough in providing high-quality public services to the people who really need them.
Now, if you look at human history and at the crumble of civilisations that we know of throughout human history—and I don't use the word 'collapse', because civilisations crumble slowly rather than collapse overnight—they all, and I do mean all, have two defining factors in common. Those two factors are environmental degradation and wealth inequality. Those are the two factors that cause civilisations to crumble. We shouldn't be so arrogant as to think that we are somehow immune from that today just because we've got a civilisation that is high in technology in many parts. Just because it's a civilisation that has led to an explosion of human population around the planet, just because it's a civilisation that gives all of us in this place the most comfortable of lives, don't think we're immune to the forces of history and don't think that we're not doomed to repeat the mistakes of the past. That's why debates like this are so important. What we're seeing is the theft of the commons. What we're seeing is a massive transfer of wealth from people to corporations and to those people who make the highest levels of profit and generate the highest levels of wealth from increasing corporate power.
As I said, those two sides of the same coin—ecological degradation and rampant wealth inequality—are caused by the same thing. They are caused by parliaments giving up too much power to corporate boardrooms. That's what they're caused by. If we want to address those two great challenges of our time, we have to act to rein in the power of the corporates. We have to stop the theft of the commons—that wealth that actually belongs to all of the people of the world and all of the people of Australia. We need to make sure that it delivers for the people of the world and the people of Australia, and it's just not delivering at the moment.
So here we are, debating $80 billion of tax cuts to the big corporates in 10 years, engaged in a global race to the bottom. Let's just play this out for a minute. What happens here is that the corporates run around the world and say, 'Look over there. Their tax rate's lower.' So certain countries drop their tax rates. Then they run around to the next bloc of countries with the highest tax rates and they say, 'Look over there. You've got the highest tax rates. Everyone else has got lower tax rates.' Well, game it out; it's not hard. We all end up with very lower or no tax rates on corporations. And I've heard the argument that has been put by the government here; Donald Trump has just lowered the US corporate tax rate. Well, so he has, stupidly, lowered the US corporate tax rate. That's no argument for us to do the same in this country.
What we're debating here is trickle-down economics. I'm telling you now that, since Ronald Reagan coined that term back in the 1980s in the US, there have been people in that country and around the world—the people doing it the toughest—who are still waiting with their hands outstretched, waiting for the first drops. And do you know what? They're never going to feel them, because all these corporate tax cuts are sucked up by the top end of town. The people who are going to make the most out of these corporate tax cuts are the shareholders, the institutions that own the shares in our big corporations, the CEOs and the top-level employees of the big transnational corporations. Yes, that's right—the same transnational corporations that are not paying enough tax as we stand here today in Australia, because they're rorting the petroleum resource rent tax. We've heard about ExxonMobil not planning to pay any tax until 2021. I will confidently stand here today and say they're not going to pay any tax in 2021 or 2022 or 2023 or into the future, because they will run rings around governments of the future from corporatist parties who think that the answer to everything is to look after the corporations.
The answer to everything is not to look after the corporates. In fact, the answer to everything is to reverse some of the power transfer and the wealth transfer that has taken place in this country and through liberal democracies around the world over the last 50 years and get some of the power back for the people. Get some of the power back for the parliaments. That's what we need to see, not lying down with your legs in the air, asking the big corporates to tickle your tummies, which is, of course, what the LNP are doing here—and of all the weeks! It is the week where leadership speculation is rife. We could be looking at Peter Dutton PM by the end of the week, if you believe some of the stuff that has been going on in this building this week inside LNP caucuses and the LNP party room.
Of course, here we have the Prime Minister, the merchant banker Prime Minister, who wants to look after his corporate mates, who wants to show them that he can deliver for them. So he is pushing ahead with this legislation when he knows that he doesn't have the numbers to get it through. So you have got to ask yourself: are we debating this tonight as part of an internal play inside the Liberal Party to allow Malcolm Turnbull to hang onto the job that he has wasted since he took it over a couple of years ago?
What Australia needs is quality public services. What the Australian people want is quality public services. And do you know what? If you want to pay for quality public services, you've got to get the money from somewhere. I remember when we had a budget emergency back in the day. I remember Mr Abbott viciously prosecuting the argument that we had a budget emergency. You don't hear so much about the budget emergency now, when the government wants to give away $80 billion over the next 10 years to its corporate friends, its mates in big business and, more importantly, its major political donors. Make no mistake: this is a quid pro quo. This tax cut is saying to the big corporates, 'Donate politically to the LNP so that the LNP have got a fighting chance to win the next election, so the LNP can outspend everyone else on the upcoming election campaign.' The LNP want those donations. It's the big corporates that are the reservoir for those donations for the LNP. But you've got to give a quid pro quo in the corporate world, in the world of big business and big politics—that nexus where big business, big money and big politics come together. And the quid pro quo is $80 billion worth of corporate tax cuts in exchange for political donations from the big corporates to give the LNP a crack at winning the next election.
As I said earlier, at the end of the day this is about whether or not you believe in trickle-down economics, and I use the word 'believe' advisedly, because trickle-down economics is nothing more than an ideology. Trickle-down economics is nothing more than blind faith, because there's no substance to it at all. Let us look at who the losers are in this massive transfer of power and wealth that we've seen over the last half a century—this transfer from the parliaments, which are here to represent all people, into the pockets and the boardrooms of the big corporates, which are here to represent the profit motive and those people who already have wealth enough to own shares or work for those corporations. The two big losers are the people doing it toughest and the environment that sustains all of our lives on this little bit of rock orbiting the sun.
If we don't get this right, the ramifications are absolutely horrendous. I mean, wake up! We've got the National Energy Guarantee being watered down day by day in front of our very eyes. There are 80 bushfires burning in Australia in the middle of winter. It's cold across most of the country, but the bushfires are burning. This is the climate disruption that the Greens have been warning about. This is the climate disruption that millions of people in Australia have been warning about. This will cost everyone. If we don't address it, it could cost us everything. We are going to see mass displacement of humanity around the world. We are going to see sea level rises that dislocate hundreds of millions, if not billions, of people by the end of the century. We are going to see giant swathes of this planet rendered uninhabitable. When the people start moving in their hundreds of millions, their billions, where are we going to put them? What are we going to do with them? Are we just going to leave them to die?
This is a direct result of parliaments handing over power to corporations and not reining in corporations, allowing them to continue with what, in corporate speak, are called externalities, where they can continue to plunder fossil fuel resources as if they were infinite when in fact they are finite, and where they are allowed—in fact, encouraged—by parliaments to continue to dump greenhouse gases into the atmosphere as if the atmosphere were infinite when fact it is finite. There's going to come a reckoning, senators, colleagues. Whether it be in our political careers or not, I can't tell you, but there will come a reckoning, and, when the history of these times is written, those that stayed in the pockets of the big corporates are going to be outed for what they are—cowards, friends of the rent-seekers and participants in the theft of the commons that is going on.
So, when you think about this legislation, when you think about the need to run quality public services, when you think about the need to build quality intergenerational public infrastructure, when you think about the need to revolutionise our transport systems, when you think about the need to transition out of fossil fuel extraction and into renewable energies, when you think about the need to provide quality education for all, with universal access, and when you think about the pressures on our health system and the need, expressed by so many people so often, to run a quality public health system—when you think about all these things—you need to make choices. You need to make choices about how you are going to raise the tax revenue that allows you to do those things and the many other things that need to be done to ensure a fair future for our kids and our grandkids. What we're engaged in now, in handing over this power and wealth to the big corporates, is not only a theft of the commons but an intergenerational theft.
When I talk to my kids at home and their friends, they just shake their heads. They are actually despondent or depressed about their future. They can't see a way they're going to be able to own a home. They can't see a future that's not massively disrupted because of the climate crisis. I genuinely believe that we are at risk of inflicting a condition called solastalgia on an entire generation. Solastalgia, a diagnosable psychological condition, in lay terms is anxiety brought about by environmental change. We're infecting a whole generation and setting the preconditions for a generation that, believe me, is not going to look kindly on the things we're doing today—like this proposal to give the big corporates tax cuts of $80 billion, which young people know should be used to provide better quality public services, to engage in the correction of the housing market so that young people actually have a reasonable crack at owning a home in the future, to create a framework that puts a price on carbon so that the big corporates can't continue to pollute relentlessly and emit ever more greenhouse gases, and to require corporations to act in an environmentally sustainable way. They look at what this parliament does—at proposals like this, to give $80 billion over 10 years to the big corporates, many of whom are not even paying their fair share of tax at the moment—and they despair. They are looking for leadership. They're looking for someone to do something about it.
I genuinely hope on behalf of our fragile ecology, which supports the life of every single person on this planet. I hope in the interests of fairness and equality, not just today but on an intergenerational basis, particularly for those young people who are looking at the body politic today and despairing that we simply don't understand what we are doing and that we are driven by greed far more than we are driven by a desire to do the right thing. We need to give those young people some hope because, I'm telling you now, they are rapidly losing it.
I rise, like my Labor colleagues, to oppose outright the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. I think it has been very clear for some time now that federal Labor is absolutely opposed to these big business tax cuts going through. We've fought them from the very beginning, when the government first introduced this bill and talked about these tax cuts, and we will fight them to the bitter end.
There are a number of reasons that collectively we will be opposing this bill. Principally it's on economic grounds but it's also on the basis of the social impacts that this bill would have on Australians. I do want to talk about those impacts in this contribution but I also want to speak about one of the other reasons that, as a Labor senator for Queensland, I will be opposing this bill, which is the very limited benefits that this bill and the big business tax cuts it seeks to usher in will have for my home state of Queensland.
Beginning with that, today an article in the Brisbane Courier-Mail highlighted exactly why this bill has so little to offer my home state of Queensland. Based on research by the Australia Institute, which was built on figures from the Taxation Office and the Department of Finance, the article in today's Courier-Mail said that only eight per cent of the companies that stand to benefit from this bill and the tax cuts that it ushers in are based in Queensland—eight per cent of the businesses. And that's assuming that we believe the government's arguments that anyone will benefit from these tax cuts. As I will say later in this contribution, I think it's highly dubious to say that there will be any benefit whatsoever arising from these tax cuts, either to businesses themselves or to the broader economy and Australians in general. But, even if we allow the government the indulgence of saying that this bill and the tax cuts that it ushers in will have some economic benefit, only eight per cent of the companies that stand to benefit from these tax cuts are based in Queensland.
As I have often said in this chamber, on this issue and on other issues, whether it be labour hire, poor regional communications, poor regional infrastructure, or cuts to hospitals, schools and training in the regions, you really do have to wonder why it is that the LNP—being the party that holds by far the majority of Queensland's federal lower house seats and that is the dominant force in the Senate coming from Queensland—continues to support policies like this which have such limited benefit to our home state of Queensland. Surely, if our LNP senators and our LNP members of parliament from Queensland were actually doing their job in standing up for residents and businesses right across Queensland, they would be joining with Labor, opposing this bill and opposing the tax cuts that will overwhelmingly go to big businesses headquartered in Sydney and Melbourne and the states that those cities fall in.
It actually gets even worse when you break down these figures by federal electorate. This is something that I undertook some time ago, and I commissioned some research from the Parliamentary Library, based on statistics from the Taxation Office and the Australian Bureau of Statistics. It was very revealing to see how many businesses, based in various electorates across Queensland, will actually stand to benefit from these tax cuts. Mr Acting Deputy President, if only eight per cent of the companies that will benefit are based anywhere in Queensland, it won't surprise you that so few companies based in regional Queensland stand to gain anything whatsoever from these tax cuts.
For starters, I will just focus on the most marginal federal electorates in Queensland. Again, even if the LNP members that hold these seats don't actually agree with the economics which show that this is not something worth doing, or even if they don't agree that it's a bad thing for society to keep heaping money towards big businesses at the expense of ordinary people—even if they don't accept those arguments—the sheer politics of this proposal from the government should tell them that voting against it is the right thing to do. The electorate of Herbert is based on Townsville and is a marginal seat, held and represented very strongly by Cathy O'Toole. There are only 11 businesses headquartered in that electorate which would gain anything from these tax cuts, if they do go through. In the electorate of Forde, which covers parts of Logan and the northern end of the Gold Coast—where my electorate office is based—there are only 10 companies which would gain anything from these tax cuts. In the electorate of Capricornia, centred on Rockhampton and across Central Queensland, only eight businesses would gain from this tax cut. In the electorate of Leichhardt, which takes in Cairns and Cape York, seven companies would benefit from these company tax cuts. In the electorates of Dawson, based in Mackay and the area between Mackay and Townsville, and Petrie, the electorate on the north side of Brisbane, six businesses in each electorate would gain anything from these tax cuts.
I might just pick up something there. The fact that there is such a limited benefit to those two electorates may be why we've seen very vocal comments opposing these company tax cuts from the LNP members representing these electorates. Some time ago, when this bill was listed for debate, the member for Dawson, George Christensen, as is his wont, was out there in the media, and reports were surfacing about things that he'd said in the National party room querying whether the government should continue to support these tax cuts. To me, it was coincidental that he made these comments only days after I'd been in his electorate, advertising to all and sundry that only six businesses based in his electorate would actually gain any benefit from these tax cuts. We know old George Christensen, the member for Dawson, is nothing if not weak willed; a little bit of pressure forces him to come down to Canberra and have the wobblies. But we always know that he'll actually back the government when it comes to the crunch anyway.
More recently, the member for Petrie, Luke Howarth, was in the media. In fact, I was doing an interview with him on Sky News, that high-rating program where we sometimes get together and talk about politics. After the Longman by-election train wreck, Luke Howarth was one of the very first members of this government to query whether the government should be persisting with these company tax cuts. He was saying that they should bring them back into this house, get them knocked over and then move on. I suspect that both Luke Howarth and George Christensen have made comments against these company tax cuts because they know that so few businesses based in their electorates actually stand to gain anything.
Longman is a seat that has been talked about a lot lately, because of the by-election that was held there, and we, on the Labor side, make no apologies for having made the company tax cuts absolutely pivotal to that campaign. We were out there telling every single resident and business in Longman that the company tax cuts would have very little benefit there and that they would be paid for by more and more cuts to local services. The reason we were confident in doing so is that the figures from the Parliamentary Library showed that only three businesses based in the electorate of Longman would gain anything from these company tax cuts.
But, of all of these statistics about Queensland electorates, my favourites are the statistics about the electorate of Dickson. We've been hearing a lot about the electorate of Dickson in recent days, and I suspect we'll continue to do so, because we all know that the member for Dickson, Mr Dutton, is sharpening up the knife ready for a change of jobs. He's ready to take on the leadership because he knows that, under Mr Turnbull, this government is stuffed. He knows that, under Mr Turnbull, he's going to lose his seat. Guess how many of the businesses based in the electorate of Dickson will gain anything from these company tax cuts? It's a big, fat zero. Not one business based in the electorate of Dickson, held by Mr Dutton, will actually gain anything from these company tax cuts. Not one business based in the electorate of Dickson will have its taxes cut as a result of these tax cuts going through.
Whether we're talking about Dickson, with no local businesses gaining anything, or Capricornia in Central Queensland, where the huge number of eight businesses will gain something—and that's if you accept the government's argument that anyone will actually gain anything—there is so little benefit for anywhere in Queensland that you have to wonder why it is that LNP senators like Senator McGrath and others keep coming down here—Senator Smith, you're not from Queensland, but we'd think about taking you, maybe! You have to wonder why LNP senators keep coming down here and rolling over for members, like the Prime Minister, Mr Turnbull, based in Sydney. Those electorates may gain something from this, but there's nothing in this for Queensland.
Yet again, it's another instance of the LNP selling out Queensland, just as they have on many other issues, whether it be failing to do anything about labour hire and casualisation of the work force, particularly in regional Queensland, whether it be failing to do anything about regional infrastructure and regional communications in Queensland or whether it be the cuts to hospitals, schools, TAFEs and pensions that they're agreeing to to pay for these company tax cuts. Why does Queensland have such weak members of parliament from the LNP? They just consistently turn up in Canberra, take their instructions from the Prime Minister and other Liberals from Sydney and Melbourne, and then, in the process, completely shaft the people of Queensland. Unless they start waking up to themselves, there's no doubt that a lot of them are going to face exactly what the LNP copped in Longman, and that is a massive rebuff and a massive plunge in their primary vote, and many of them are going to be looking for new jobs after the next election.
The research that I cited from the Australia Institute, which came out in TheCourier-Mail today, also showed that, of the eight per cent only of businesses based in Queensland who would stand to gain anything here, nearly half of them are in the finance, insurance and super sectors—