Senate debates

Monday, 20 August 2018

Bills

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017; Second Reading

12:20 pm

Photo of John WilliamsJohn Williams (NSW, National Party) Share this | | Hansard source

In the absence of Senator Steele-John, who may be on his way, I thought I would jump the gun, if I can put it that way, and speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. What does this bill do? Basically, it plans to reduce business taxes by growing tax cuts. We've already got the business tax cuts for small business—$10 million to $50 million turnover. The bill will grow those tax cuts up more and more as time goes on so that, come 2030, we'll have a tax rate of 25 per cent. It's a hard message to sell. Labor are very good at saying, 'The government's going to give tax cuts to the big banks,' et cetera. We've already billed $6.3 billion of tax over four years to the banks.

Photo of Helen PolleyHelen Polley (Tasmania, Australian Labor Party, Shadow Assistant Minister to the Leader (Tasmania)) Share this | | Hansard source

That's what you're doing.

Photo of John WilliamsJohn Williams (NSW, National Party) Share this | | Hansard source

Senator Polley is shaking her head. Let's take the Commonwealth Bank, who got a tax cut from 2025-26 onwards. Who would that go to? I wonder how many million Australian workers have superannuation funds invested in that very bank. It would go to building their super and retirement more. That's where it would go.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

What?

Photo of John WilliamsJohn Williams (NSW, National Party) Share this | | Hansard source

Senator Cameron says, 'What?' Is he trying to tell me that industry super funds and retail funds don't have superannuation investments in our banks? Give me a break! Of course they do. That's a silly thing to imply, Senator Cameron. Of course they do. So Labor is obviously well against increasing the superannuation and retirement benefits for those workers for when they come to retire.

As I said, schedule 1 of this bill amends the Income Tax Rates Act 1986 to progressively extend the lower 25 per cent corporate tax rate to all corporate tax entities by the 2023-24 income year. The corporate tax rate will then be cut for all corporate entities for the 2024-25 income year to 27 per cent, for the 2025-26 income year to 26 per cent and for the 2026-27 income year and later income years to 25 per cent.

What happens if we're not competitive with our company tax? There've been plenty of arguments in this place about foreign investment, but the fact is foreign investment is good. I just don't like it when they buy a fully established farm. That's the one thing I disagree with about foreign investment. If they're going to buy farms and develop them and grow the exports and grow the jobs and grow the GDP and grow the tax take for Canberra, then foreign investment is very good. One of the controversial issues is buying our land, but, if they go to the Top End of Australia and want to develop land, they should go their hardest—that's my attitude. The fact is foreign companies have invested in Australia for centuries. For example, look at the mining sector and the huge wealth it's brought our country, the people employed, the taxation to Canberra and the benefits to all the families when they're employed in the mining industry. Who does the development? Many of the big companies, of course. One of those multinational companies now is BHP, originating in Broken Hill, and what a great job it's done. So foreign investment is certainly in Australia, and it has been here for so many years. The problem is that, if we do not remain competitive with our business rate, those big companies are going to say: 'Why invest in Australia? If we invest there, we've got to pay 30 per cent tax, but, if we invest in other countries, we pay a lot less tax.'

Let's have a look at some of the other countries' tax rates, the ones that are already in front of us. Australia must reduce our company tax rate to remain internationally competitive, as I said. In recent years, a large number of our international competitors, including Canada, Singapore, the UK, New Zealand, Norway, Israel, Japan, and France, have reduced their company tax rates. In December 2017, the US slashed business tax rates 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 fiercely competitive global markets. It's as simple as that.

We know full well that politics is being played here. It's on the record far and wide that Mr Bill Shorten has said that company tax cuts are good for our country. Shadow Treasurer Mr Bowen has said the same: cut the tax rate. I think Keating also pushed very hard to cut the tax rate when he was Treasurer. Some of the modelling we've seen is amazing. Treasury predict that, if the company tax rate is cut by what is requested, the economy will grow by one per cent. Given that we're a $1.3 trillion or $1.4 trillion economy these days, one per cent growth is an enormous amount of money and a lot of jobs created. As we say on this side of the chamber, the best way for living standards to improve is not to rely on social security but to get a job. We are trying to promote foreign investment, more jobs, more growth and better living standards for all Australians, but there will be a lot of debate about this very bill we're facing in the Senate now.

I won't take up my full time, so I give Senator Steele-John notice of that, but when you reduce company tax, where does the money go? It goes back to shareholders. Many of those shareholders are in the $2.3 trillion, $2.4 trillion—I see they're even quoting up to $2.6 trillion now—of superannuation funds that recently came under the spotlight of the royal commission. Too many snouts are in the trough of that big amount of money and are slicing money out of it. Billions of dollars have been taken out of those funds. Here is an opportunity to put more money back into their retirements.

On that, Mr Acting Deputy President Whish-Wilson, seeing that you are in the chair: when the superannuation legislation came into existence many years ago now—I think it was about 1993—there were no criminal laws attached to it whatsoever. If you rorted, defrauded, stole, or siphoned money out of a super fund, you didn't face criminal charges. That is appalling. In September last year we brought legislation to this chamber to introduce criminal laws for trustees and directors of superannuation funds, who would face charges of wrongdoing, theft, fraud—you name it—and it didn't proceed to a vote, because we didn't have the numbers. Given what we have found out from the royal commission, I hope that the Greens and Labor do not oppose those criminal punishment laws—a $420,000 fine for individuals and up to five years jail—when they come before this chamber next time. I imagine Labor opposed them in the first place to protect their industry super fund directors and trustees, but given what the royal commission has said now, they would not want to oppose those laws again, or the headlines would be, 'Labor and the Greens protect criminals'.

I have gone a bit off the track of company tax here, but I referred to building up superannuation and hence went to that subject. I support this legislation. I support these company tax cuts, profit to shareholders, profit to people for their superannuation, better retirement, and being competitive when it comes to foreign investment, especially foreign investment, when people overseas are saying, 'We can't invest in Australia; their company tax rate is too high.' I support the legislation, and I thank the chamber for its time.

12:28 pm

Jordon Steele-John (WA, Australian Greens) Share this | | Hansard source

Across every part of this nation there are essential services, from housing to education to the NDIS, that are chronically underfunded. Millions of Australians are struggling. Thousands—in fact, tens of thousands—go to sleep every night wondering when next they will have a roof over their heads. My office is swamped by calls and emails and messages from those in the disability community who need access to the NDIS, who need good service and yet do not get it because there are not enough staff at the agency. I hear from people struggling to get by on Newstart, because it has not been raised since the year that I was born, some 24 years ago. We must ask ourselves the question: why is this so? As we so often hear, Australia is one of the most wealthy nations in the world, and yet there is such poverty; there is such suffering; there is such a struggle for so many. The answer to that question is that it's because big corporations and big businesses and wealthy individuals do not pay their fair share of tax. They do not contribute fairly to those services that are needed to support people and promote community. Consequently, we must ask ourselves the question: why is that so? How do they get away with it?

If The Daily Telegraph, if Andrew Bolt, manages to dig up one case of a welfare recipient who is seen to have done something wrong then, bang, it triggers a welfare review. So why is it that so many corporations, so many individuals, get away with paying less than their fair share? It is because they donate to those within this chamber. It is because they syphon off their wealth and funnel it into the back pockets of the Liberal Party and the Labor Party and the National Party to make sure that we here in this place craft for them not a taxing contribution system but a tax avoidance system, a system by which they are able to accrue our national wealth for their personal gain, see it come to them as a great golden horde and sell the Australian people the fantasy, the outright lie, that our wealth, by their virtue, might someday trickle back to us. That corruptive influence, that toxic relationship between the big end of town and Australia's democracy is on full display today as we are asked to contemplate the idea of gifting another $60 billion to Australia's biggest corporations. It's an absolute disgrace—a gift given, a ransom paid for the price of re-election.

It does not need to be this way. The Australian people demand that we here do better, that we speak out against this toxic relationship, that we break it down, that we return to the service of the Australian people, that we stop the endless flows of money. It is possible. We know the way, and yet the legislature refuses to act. I have lost count of the times that my Greens colleagues and I have put forward legislation to this place that would have ended that relationship, that would have stopped the flow of big money. I have lost count of the number of times that my colleague Rachel Siewert has made the argument to this chamber that if there is a cent to spare then it must go to those living below the poverty line in the welfare trap, in the poverty trap, in the desperation trap that is Newstart, and yet this chamber does nothing. One side seeks to make it easier for the billionaires, for the industry titans, for the Rupert Murdochs and Gina Rineharts of this country. They seek to give them even more. They seek to rationalise, to naturalise their greed, while the other side of the chamber mumbles mutely. 'Should we have an increase to Newstart?' we ask. 'Ah, let's review it,' say the once great Australian Labor Party. It is a disgrace.

I speak against this bill tonight on behalf of the millions of struggling Australians who need the attention of this chamber, who deserve the attention of this chamber, so much more than those this bill seeks to help. I speak tonight on behalf of the people who are not able to make the business dinners, to give the donations and to offer the free media network time that seems to be so necessary if they are to get the attention of either side of this place. I speak for them. The Australian Greens speak for them. As long as there is one of us in this place, they will have a voice in our democracy. I thank the chamber for its time.

12:36 pm

Photo of Brian BurstonBrian Burston (NSW, United Australia Party) Share this | | Hansard source

I rise today to speak on the government's Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This bill seeks to amend the Income Tax Rates Act 1986 to progressively extend the lower 27.5 per cent corporate tax rate to all corporate entities by the 2023-24 financial year and further reduce the corporate tax rate in stages so that by the 2026-27 financial year the corporate tax rate for all entities will be 25 per cent.

As the Senate knows, my support for this piece of legislation has turned out to be quite significant with regard to the make-up of the crossbench. It was with a heavy heart that I announced my resignation from Pauline Hanson's One Nation party. I now represent New South Wales in the Senate as a member of the United Australia Party. I would like to take the opportunity to advise the Senate of the events that led to this.

As part of a so-called team, the three Pauline Hanson's One Nation senators had negotiated a significant package that was in the best interests of all Australians in return for support of the company tax cuts for all Australian companies. We shook hands on a deal, and I thought that was that. On Monday, 1 June, I received a call from Senator Hanson that she was considering pulling our support for company tax cuts for all Australian companies. I advised her that I was not comfortable at all with going back on a deal we had made and that we needed to discuss it further at a face-to-face meeting with Senator Georgiou later in the week, as we had scheduled. I was shocked to read the following day, on the front page of The Australian newspaper, that our policy position had changed yet again—I think the common phrase is 'flip-flop flip-flop'—and that we now opposed the legislation. When we met later in the week, as previously scheduled, Senator Hanson asked me if I still supported the legislation and if I would vote for it. I informed Senator Hanson that I would. I was then told that I was sacked as the Pauline Hanson's One Nation party whip. Born and raised from humble origins in the Hunter Valley, my father taught all his sons that, once you shake hands with somebody, that's it. A few weeks later, I was saddened to be asked by Senator Hanson to resign from the party and from the Senate for sticking to my word. It had become clear that my relationship with Senator Hanson was irrecoverable and that the best way forward for me to represent the best interests of the constituents of New South Wales was to resign from the party. I also want to emphasise that the deal on company tax cuts between the government and Pauline Hanson's One Nation party was always on the proviso the company tax cuts passed the parliament. Comments made by the government's key negotiator, Senator Mathias Cormann, in the media recently confirm that the deal still stands.

I firmly believe that this legislation, which progressively reduces the corporate tax rate from 30 to 25 per cent for all corporate entities by 2026-27, is in the best interests of the country. We must ensure that Australian companies remain internationally competitive. I remind the Senate that the proposed rate of 25 per cent, which doesn't come in until 2026-27, will still just leave us in the middle of the pack compared to our international competitors.

Many OECD countries have also reduced their company tax rates. In the UK budget of 2015 the government announced legislation setting the corporate tax main rate at 19 per cent for the years starting 1 April 2017, 2018 and 2019, and at 18 per cent for the year starting 1 April 2020. The US has also cut the rate of company tax from 35 per cent to 21 per cent, which has in turn seen its unemployment rate drop to 3.9 per cent.

According to a report from the OECD, the average corporate tax rate amongst the 35 countries listed is currently 21.94 per cent. So in 2026-27, if this legislation passes, our corporate tax rate will still be more than three per cent higher than that average rate. If the trend of lower company tax rates continues around the world, our rate of 25 per cent in 2026-27 may well be still one of the highest in the OECD.

As a senator representing New South Wales in this chamber, I note that according to recent figures published in the media there are 1,622 companies in Australia earning over $50 million. Of that number, 739 of them are based in New South Wales. That's over 45 per cent of Australian companies and their employees that would benefit from this legislation that are based in the premier state—my state.

I would also like to take this opportunity to say to Senator Hanson and Senator Georgiou to honour the deal we made with the government and pass company tax cuts in full to help companies and their employees based in their respective states of Queensland and Western Australia to remain internationally competitive.

12:43 pm

Photo of Steve MartinSteve Martin (Tasmania, Independent) Share this | | Hansard source

It has been reported for generations that Australia's economic prosperity has ridden on the sheep's back and mining booms. I would also like to add that it has been Australia's entrepreneurial spirit to harness not only our rich natural resources but also the blood, sweat and tears of Aussies that have built the likes of BHP, Qantas and Rio Tinto that have grown into globally recognised companies with revenues in the tens of millions.

As the Hon. Mathias Cormann has regularly commented, there are about 4,500 Australian businesses that have a turnover of more than $50 million a year, and they employ about four million people. These impressive figures, like past agricultural and mining successes, have brought with them economic prosperity for all Australians, not just the entrepreneurs, and that is the envy of millions around the world. I would like to thank hardworking Australians and Aussie businesses for making this country a great one, where people with dreams can aspire to have even greater dreams.

We have heard so many times over the past week or so how Australia needs to change for our big businesses to remain globally competitive. It doesn't take a pass in economics 101 to realise that Australia needs to reform its business tax legislation to keep its comparative advantages, to continue on the path of economic growth and to build the BHPs, the Rio Tintos and the Qantases of the future. That is why the United States, Britain, Canada, Singapore, New Zealand, Israel, France and Japan have reduced their company tax rates in order to remain globally competitive. If we don't change, we'll be left behind.

Even some of the Australian Labor Party's top leaders have recognised the need for that change. In 2011 the current leader, Bill Shorten, recognised the need for change when he said:

… more capital means higher productivity and economic growth and leads to more jobs and higher wages.

Former Prime Minister Julia Gillard even went as far as to say, in 2012, that if you're against cutting company tax then you're against economic growth. And even the doyen of the Australian Labor Party, former Treasurer Paul Keating, said, as far back as 1993, that the simplest and most-effective way to encourage Australian companies to work for Australia is to lower their tax burden. The Hon. Penny Wong said, in 2012:

We understand that the cut in the corporate tax rate is important to increase productivity, to promote broadbased economic growth and to encourage more investment and jobs across Australia.

Their economic sensibilities were right then, and they are right now. Labor will be right to put party politics behind them and support a policy that they have been on the record as supporting. The policy needs to come before politics. The bottom line is that if Australia's rate stays at 30 per cent then the country will have one of the highest tax rates in the OECD. That does not make economic sense no matter what your politics. That is reflected in the International Monetary Fund's World economic outlook, which states that Australia's gross domestic product will be cut by one per cent if Australia doesn't do something in light of the United States cutting its own tax rate. Treasury modelling released at the 2016-17 budget estimated that our tax cut would increase the size of the economy by about one per cent.

So, it does make simple economic sense for the bill—the policy—to be passed. We need growth, not stagnation. More money in the economy can only mean more opportunities for all. In my first speech I also recognised the need for change when I stated:

In Tasmania, words like 'growth', 'investment', 'productivity' and 'competition' have tended to be used to describe a seemingly far-off dream.

I also recognised Tasmania's and Australia's need to keep its close relationship with China and other export markets to keep growth, investment, productivity and competition a reality. The principles of growth, investment, productivity and competition that I spoke about in relation to Tasmania in my first speech are also the backbone of the Enterprise Tax Plan bill. In reality, there are 14 businesses in Tasmania with a turnover greater than $50 million that this bill will affect. That doesn't sound like a huge figure, but remember: Tasmania has a population of about 520,000 people. So, we are well and truly punching above our weight, and our businesses, big and small, are doing more than their fair bit. But like the hundreds of small to medium businesses that have benefited from the lowering of tax rate to 25 per cent to inject more revenue into the economy, these businesses should be able to enjoy the fruits of a lower tax rate to stimulate competition, employ more people and shine on the global stage.

Just like mainland Australia, Tasmania has also enjoyed the fruits of primary industries. It has also ridden on the sheep's back and experienced mining booms. Just as importantly, Tasmanians have made Tasmania a place also envied by international and mainland visitors. Our merino fleeces have fetched record prices in Europe. Tasmanian minerals, forestry products, and food and wines are attractive to more and more international markets. The world is now coming to us as more and more tourists enjoy the clean and green delights of the island home, and they enjoy the avant-garde attractions like the Museum of Old and New Art in Hobart.

We owe it to our exporters, such as salmon producer Tassal Group, shipbuilder Incat and Copper Mines of Tasmania, to keep taxes lower. While the passing of the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 is touted as benefiting companies that earn more than $50 million annually, it is not just about the big end of town. The flow-on effects to regional areas will be immense. It will give big companies the confidence to undertake mineral exploration, invest in new plant and equipment, and employ more Australians. This bill, when it comes down to it, is about growth and jobs. For Australia to continue to go beyond 26 years of continued growth, we must stay internationally competitive. Our business tax rate cannot stay at 30 per cent if Australia is to continue on a path of growth and greater prosperity for all, as the countries we compete against have lower taxes. Our tax rate needs to be at 25 per cent to stimulate the economy for all Australians.

In recent history, Tasmanians have witnessed firsthand the effects of businesses not staying globally competitive. Coats Paton, once the largest woollen mill of its kind in the Southern Hemisphere, closed its Launceston doors for the last time in the mid-1990s, with hundreds of jobs gone. Mines have come and gone on the west coast with fluctuating resource prices, and the Australian Weaving Mills factory in Devonport closed in 2013, with the loss of around 150 jobs. But they are not just jobs; they are people, they are families—our jobs, our people, our families. And there are businesses indirectly in the firing line of the pain caused by jobs going offshore. Interestingly, though, Tasmania is enjoying an economic boom, with developer Errol Stewart recently telling me conditions are the best he has seen in 25 years or so. We owe it to Tasmania to keep riding that economic wave of success.

A lot has been said lately about the aspirational goals of Australians, and it appears to me to be illogical to have a lower tax rate for small and medium businesses and not for big businesses. Where is the incentive for a small or medium-sized business to become the next Qantas, Tassal, Rio Tinto or BHP? Passing this bill will give companies confidence to invest and grow as technology advances beyond our wildest dreams. Free trade opens up more markets, and globalisation brings better and fresher opportunities for our children. I want our children, whether they live in a Tasmanian regional centre such as Sheffield or the superaffluent suburb of Sandy Bay in Hobart, to have the same opportunities to experience a world focused on not just agriculture and mining but also the technological changes, global visions and entrepreneurial spirit that can create an even richer, more clever society.

I don't want the Senate to miss the opportunity to pass this bill. Our economy, our workers, our people, our businesses and, most importantly, our children and our future deserve it.

12:54 pm

Photo of Tim StorerTim Storer (SA, Independent) Share this | | Hansard source

I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. My position on the Enterprise Tax Plan is simple and straightforward. The evidence does not support the contention that the proposed tax cuts would provide the immediate boost to employment and growth that the government claims. In addition, there is no evidence that bringing forward the remaining tax cuts already legislated for companies with a turnover of $50 million or under would provide a significant increase in wages or employment, and I will return to that issue later. I will also oppose any attempt to link the tax cuts to any other initiative that may occur during the discussion of the bill today and in voting on it in the days ahead, regarding coal-fired power or any other matter.

My focus on this, as it is on all other legislation that comes before me, is on the future: the future of the economy and, even more importantly, the future of our families. As a South Australian, I am a passionate advocate for the businesses of my state. Business is the backbone of the economy, and I will do all I can to encourage business growth and prosperity. Arriving at my position on the proposed company tax cuts in this bill was difficult indeed, but I got there using the same principles I would apply to business decisions—that is, by looking at the evidence and treating the proposals on their merits, not as an opportunity to bargain with the government to achieve some other trade-off.

By way of background, it's worth reminding ourselves that the budget is in poor shape to withstand the possible shocks that an uncertain world may visit upon us. Look at the immediate global reverberations from the currency crisis in Turkey, just as a recent example. Gross government debt is more than half a trillion dollars. Interest payments are around $1.5 billion a month, or $18 billion a year. Employment has been improving, but wages are stagnant and official data suggests families are still dipping into savings to pay essential bills. In these circumstances, the government is asking the Senate to endorse the disbursement of at least $36 billion to corporate Australia over close to a decade into the future. On the government's own commissioned figuring, the improvement in employment a decade from now from such a tax cut would be barely perceptible, and wages would increase by a mere 0.4 per cent.

To inform my decisions, I have spoken and continue to speak with a wide range of stakeholders and economic experts, many of them directed to me by the government itself. Our current budget deficit and debt demand that these tax cuts not proceed. Our present tax system is insufficiently robust to support a medium-term fiscal strategy of budget surpluses, on average, over the course of the economic cycle, as has been pointed out by many esteemed economists. My conclusion remains that the legislation is too narrowly based and that the benefits are too small to outweigh the cost.

The evidence is, for example, that there would be a much quicker boost to growth and jobs through greater investment in infrastructure, investment that would have clear intergenerational as well as more immediate benefits. In addition, the actual results from the 2015 tax cuts on businesses with under $2 million in turnover have been reviewed by independent economic consultancies, and that shows that there's been a marginal increase in employment, from 2.1 per cent to 2.6 per cent, for firms above the threshold. Firms beneath that $2 million which received the tax cut were having a marginal increase in employment, but there was a very limited increase in wages growth for those firms, from 4.84 to only 4.88 per cent. There was an increase in investment for those that had received the tax cut, from 1.53 per cent to 2.45 per cent; however, that rise was relatively modest. This evidence was provided by AlphaBeta economics advisers on the survey of Xero accounting firms—those firms that had received the tax cut in the 2015 legislation from 30 per cent to 28.5 per cent. I have seen estimates that accelerating the tax cuts already legislated would cost the budget another $2 billion on the forward estimates. Based on the evidence and the situation in terms of our overall debt and deficit position, we cannot afford it, and I don't believe there is evidence that it would produce substantial economic benefits.

It is not that I am opposed to tax reform, or even to corporate tax reform, but it must be more than just the piecemeal proposals being presented by the government if it is to be of genuine benefit to the community and the budget. A tax cut in and of itself is not tax reform. The Henry tax and transfer review of nearly a decade ago did support a company tax cut, but only as one of 149 recommendations. It was one of seven principal feature reforms, including a uniform resource rent tax, many of which have not been put in place.

I note the acknowledgement from the Australian Chamber of Commerce and Industry that the current tax system 'is becoming unaffordable and no longer fit for purpose'. Quite so. I have been told that the political environment is such that it is impossible to achieve comprehensive tax reform. I disagree, and history suggests otherwise. The economic conditions in the mid- to late 1980s—double-digit inflation and unemployment—could hardly have been more trying, yet the economic reform plan of those years became law. The tariff cuts of the early nineties were introduced in the midst of Australia's last big recession. The GST and allied reforms were promoted at a time when both the Prime Minister, Mr Howard, and his government were deeply unpopular, yet the coalition won the subsequent election, in 1998, and two more to boot. What it took was courage, political skill and the will to promote public discussion, rather than political leaders hurling largely unsubstantiated epithets at each other.

I have been heartened by the response to my decision on the company tax previously, not just from ordinary voters but from a number of professionals who have expertise in the field. It is clear there is a recognition that the tax system is no longer fit for purpose but that any attempt at reform needs to be broad based and surrounded by inclusive discussion, rather than focused on a single initiative without benefits to the general community. In all this we must keep a close eye on the state of the budget—with 'significant error bands', as the Treasury secretary noted, outside of the current forward estimates—the economy and the future prosperity of the nation as well as the wellbeing of our citizens.

As I've said before, large tax cuts for big corporations and foreign investors mean less money for teachers and nurses in my home state, and less money for roads and public transport in South Australia and in Australia generally. They also mean less money for research and development, for advanced manufacturing and for building the jobs of tomorrow. Therefore, I oppose this legislation.

1:02 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, noting at the start that one of the roles of government is to create a framework that encourages industries to invest, because when industry invests—whether it's a small mum-and-dad business, a medium-sized business or a large international prime—it's that investment, the risking of capital, that creates the opportunity for men and women here in Australia to have a job. More jobs, more investment and more industry, as demand goes up, are what leads to wage rises. They are what leads, with more people in work, to a tax base that enables Australia to support the things that we think are important to our quality of life, whether they be education or health or national defence. It all comes back to the government putting in place frameworks that encourage companies to invest.

Part of the coalition's strong track record in this area over a good decade or more has been its understanding of the drivers, of how businesses see upside and downside risk. Sometimes business will invest because there's an opportunity. In my home state of South Australia we've seen Arrium, with debts of $2.8 billion and 3,000-odd jobs at risk, sold to Liberty OneSteel, who decided that there was an opportunity there for them to invest. And that investment has turned around a whole community. Some 5,500 direct and indirect jobs are now going to be preserved. That new energy in the town has resulted in other companies, in areas as diverse as renewable energy and pilot training, deciding to relocate to Whyalla, because they see that the town has a future, because a company has chosen to invest. And that investment has large flow-on benefits for the economy. This was a unique circumstance of a company that was in trouble and an investor who had a good international background in the steel industry making a decision to invest. But the point is that their investment has turned around the sentiment and the economy in a town and given those people a future. It's leading to increased demand in real estate. It's leading to increased opportunities for work and, therefore, jobs growth et cetera.

Another area where companies choose to invest, which again comes back to frameworks that the government has set, is the defence industry in my home state of South Australia. For years people have talked about defence industry policy, but it wasn't until we had the first principles review and the government adopted the framework where we said industry is a fundamental input to our defence capability and so we will look at long-term partnerships with industry to grow their presence in Australia, their workforce, their capability, because that underpins our defence capability—it was when that incentive was put there—that companies decided to invest. Rather than seeing significant projects go offshore, because that's where companies said they wanted to produce them, we've seen companies invest, we've seen some companies in South Australia double the size of their workforce, we've seen multiple companies increase not only the size of their workforce but the number of graduates and tradesmen they're taking on, and we've seen their engagement with our schools to create opportunities for young people and motivate them to study STEM, to study trades, and to get into engineering and naval architecture.

All of these opportunities come from investment by business, and government has to create the framework whereby businesses will say, 'This is a good spot to put our capital at risk.' Whether they're a mum-and-dad business mortgaging their own home to run a business, or whether they're a global conglomerate that has shareholders that it's accountable to, people are putting capital at risk when they make an investment decision, so they will be looking either for a unique market opportunity, like Whyalla, or for a government program that provides a clear incentive, like our defence industry policy. They will be looking to make an investment decision where they will get a return, so that the mum-and-dad business can say, 'You know what? We can grow our business, we can employ more people and we will keep our home,' and the global player or the larger company can say, 'We are going to deliver a better return to our shareholder.'

The issue with tax is that if a company doesn't have a unique opportunity, or if there isn't a specific program like the defence industry one, and they have a choice of investing that money here in Australia or somewhere offshore, and the tax regime offshore means that the capital they have placed at risk is more likely to return money for the shareholders in that company, it's no surprise that the board will take the decision—which in many cases they are bound to do by law—to maximise the return to the shareholders. They will go to the places where the company has the chance to grow. As we've seen with Whyalla and the defence industry in South Australia, a growing company is an employing company that provides training opportunities, higher wages and career paths for people in the community where they are. So the government needs to provide a framework that will encourage companies to put their capital at risk here in Australia and lead to those benefits here, not in some place offshore.

I'm going to run through a number of countries overseas that have looked at this and said, 'Yes, we need to lower our company tax rates', because they've come to the same conclusion. I'll touch on some of the academics who have looked at this. The IMF and others have studied economic behaviour around the world and have pointed to the fact that lowering company tax rates is good for the economy, in terms of stimulating economic growth, and that the benefit is greatest for people, often in low-paid jobs, in terms of employment opportunities and wage rises. I know those opposite often deride that concept, but I'd ask people listening to this debate to remember that that derision is purely opportunistic and political. When they were in government, their economic spokesperson—the now Leader of the Opposition—back in 2011 in particular, was one of the strongest advocates for lowering company tax rates for all the same reasons that the government is putting forward in this enterprise tax plan now.

What's happening overseas? Our international competitors—Canada, Singapore, the UK, New Zealand, Norway, Israel, Japan and France—have all reduced their company tax rates. In December of last year, the US slashed their company tax rates from 35 per cent to 21 per cent—a huge change. The IMF warned that the US corporate tax cuts would cost Australia's economy, our GDP, around one per cent and threaten the sustainability of the Australian tax system unless Australia responded. What we're seeing here is that international bodies who are credible in the area of economics are saying that the actions by foreign countries, like the ones listed, are not a neutral thing for Australia. It's not as though we watch and go, 'That's nice for them, but it doesn't impact us.' It does impact us. There's actually a double hit to this, in that the actions of other countries which incentivise companies to put their capital at risk elsewhere, rather than in Australia, have a negative impact on Australia's economy.

At the same time, the lack of decision here in Australia and the lack of support from the opposition, from the Greens and from some of the crossbench for this tax plan means that we not only have that negative impact but also miss out on the growth that the IMF, the OECD, Treasury, universities around the country and, indeed, the Labor Party when they were in government have all said will follow. We're actually hurting Australia's economy—and, therefore, Australia's population—twice, because opportunities are going offshore and we're not gaining the opportunities here. If people are concerned about who we can trust, how we can have hope and if there is a career future for our children and our grandchildren, you need to be looking to governments that will actually put in place a framework that encourages business to invest, because it is that investment that drives opportunity. The government have been consistent in our belief that, if we lower the tax burden on companies, we will see an increase in jobs.

What we're talking about here today is the second part of a policy position that the government have had on tax. In the first part, we have seen tax relief going towards small business. The impact on our economy has been significant, with 400,000-odd jobs created in the last 12 months. Since the government was elected, over one millions jobs have been created. Unemployment is at a 25-year low. Even if you are sceptical about employment figures, how they're calculated and the thresholds, look at them from another perspective—the fact that the number of people on welfare is at a 25-year low. That means people are moving off welfare and into employment. The majority of the jobs that have been created in that period have been full time. They have been real jobs. We see here in Australia a very practical example of the fact that tax cuts to employers mean that there will be more opportunities, more work and more hope for Australians about having a job.

In Canada, one of their tax experts, Jack Mintz, has said that repeated studies show that at least two-thirds of company tax is shifted onto labour through higher consumer prices, wage cuts and lay-offs. That lines up with our own Treasury analysis that says the burden is passed on predominantly to shareholders, consumers and employees. So you come back to this fact: if we don't pass this package, we're harming Australia's economy and, therefore, the people of Australia in two key ways. The opportunity goes to those countries overseas, and our lack of opportunity here means there's a double whammy.

The Tax Foundation in the US found that, for every $1 rise in state and local corporate tax collections, real wages fell by $2.50 five years later, and that the reverse is also true. Wages rise $2.50 for every $1 reduction in state and local tax incomes. So those opposite, the Greens and those on the crossbench who are not supporting these measures are saying that they're supporting downward pressure on wages and they're supporting fewer job opportunities and, therefore, less hope for people, whereas those who are supporting this package are saying: 'Based on the facts at hand, we are supporting upward pressure on wages. We are supporting the creation of new opportunities for training, jobs and careers.'

Warwick McKibbin, a former board member of the Reserve Bank, said the gain from the enterprise tax plan set out in the budget would be about $160 billion over the 10 years of the plan. That's economic activity that occurs. That means that there are individuals employed, and we know that the best form of welfare is a job. The flow-on effects to children and to the family dynamic of having a household where people are working are almost immeasurable in terms of the benefit to children and to society. But we've also got that very clear economic benefit: the $160 billion over 10 years. That means more people enter the consumer market, more people enter the real estate market and more people are employed in the retail sector. That means more tax for the government, which then goes into things like health, education and defence.

This is a framework that the government is seeking to put in place that looks at the root cause analysis—what drives growth, what drives opportunity or what undermines it? The enterprise tax plan that the government is looking to put forward is a framework that drives growth and drives opportunity. And despite what they said in 2011, when they understood the position that the government is putting forward now and, in fact, advocated for it quite strongly, those opposite are opposing it now for purely rank, political, opportunist reasons. And Australians should judge them harshly for the fact that they're putting politics ahead of the people of Australia, in terms of opportunity.

More globally, the OECD has also argued that corporate taxes are the most harmful type of tax for economic growth and that the boost to living standards from lowering company tax would be much more significant than from other tax measures. That's what we think, that's what universities think, it's what the IMF thinks, it's what Treasury thinks, and it's what the OECD thinks. And, as I've mentioned several times, it's what the opposition used to think when they were in government. Shadow Treasurer Chris Bowen used to say:

… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

That's what they used to believe. I would encourage people listening to this debate and those on the crossbench to ask the question: if all the experts around the world believe it, if Labor used to believe it when they were in government, and if the evidence points to the fact that it will be good for the people of Australia in terms of creating investment, jobs and training opportunities, why would you not support it? Why would you not support a framework that will benefit the people of Australia?

Instead, what do those opposite believe now? According to Treasury modelling, the cost of Mr Shorten's announced new taxes on the Australian economy will be $164 billion. The plan we're putting forward would actually result in more money for the economy. The plan that those opposite are putting forward would strip even more money than that out of the economy—less economic activity, less demand in the retail sector, less demand in real estate. It would actually harm Australia.

The enterprise tax plan is a critical step for Australia as we seek to move away from the years of the mining boom, as we seek to grow opportunities in Australia off the back of things like our investment in defence industries—that framework we've created to encourage companies to invest here—and as we look at things like the National Space Agency, to encourage Australian companies to be able to step up and take a larger share of one of the fastest areas of high-tech growth, and therefore employment opportunities, in the world. Why do we think companies would come here to do that work if they can go somewhere else in the world where they will get more return for the company, which allows them to accelerate their growth and their investment in R&D and innovation? If we want things like defence industry to have spin-offs into other sectors, and if we want the Australian Space Agency to be successful, we actually need not just the primes to come here—those who build, for example, the ships or other assets—but also the R&D—the smart people and the creation of IP. We need those opportunities for young Australians, and they will only come if we have a framework that makes Australia an attractive place to invest. So we've sought to do that.

In May 2017, we passed laws that provided a company tax cut for companies with an aggregated turnover of up to $50 million. It's a good start. That helps around 3.2 million businesses, employing over 6½ million workers. But we can't stop there. In fact, even those tax cuts, and therefore those businesses, are at risk if those opposite should ever come into office. We need to also make sure that those companies have the incentive to grow. We don't need them to perversely limit their growth because they don't want to go into a higher tax bracket. We want those companies to grow and become successful—not just small businesses but medium and large businesses—here in Australia. And that will only come when we recognise that this is tax relief; it's not a tax cut per se. It's their money. They've put capital at risk, they've raised it, and we want them to continue that activity. We want them to put more capital into research and development, into training, into employing more people and into paying higher wages.

Those opposite should go back to what they believed in 2011. The Greens and the crossbench should support this plan, because this plan provides hope and a future for Australia.

1:22 pm

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

I rise to talk about the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 put up by the government, but first let me clarify a few points that were expressed by Senator Burston today in the chamber.

The agreement, first off, was that One Nation were supporting the corporate tax cuts. Then, on reflection, the budget which was handed down in May showed that there was not going to be much money in the budget surplus by 2020—only about $2.2 billion. The personal tax cuts are going to cost the people of Australia $144 billion when they're introduced, and the corporate tax cuts that One Nation actually supported—we voted with the government—of up to $50 million are going to cost around $35 billion to the economy. On reflection, if the corporate tax cuts were to be passed, they would cost the economy in total $80 billion. That would mean that the Australian people would be at a loss of $224 billion in revenue. That concerned me, and hence my phone call to both Senator Burston and Senator Georgiou on 1 June to indicate to them my concerns about this and my belief that we should actually pull out of the corporate tax cuts. They both agreed. Actually, I've still got a record of that telephone conversation—nine minutes—with Senator Burston. He had no disillusion with what I was asking and totally agreed with me.

He also made reference to the fact that I sacked him as whip because he would not vote against the corporate tax cuts. That was not the case whatsoever and was never in the discussion. Peter Georgiou was actually in my office at the time. Senator Burston was taken out of the position of whip because he was not doing the job and not reporting back. I remember clearly that I was down here to ask a question and didn't know whether I had the call and Peter Georgiou rang me on the phone and asked whether I had it and I said, 'I don't know.' That's why Senator Burston was taken out of the position of whip. And I asked him whether Peter Georgiou would be all right as whip, and he said, 'Yeah, that's fine by me.'

I'd just like the truth, not the conjured-up lies that are made in this place. The reasons behind Senator Burston withdrawing his support for the corporate tax cuts is that he saw the writing on the wall that he was not going to get preselected as No. 1 on the ticket in New South Wales, so he gave me grief and gave the party grief and pulled support for the corporate tax cuts, thinking that I would actually relent and that I would actually endorse him to get his support. Hence when he received a letter from me asking him to resign from the party it was because he was chasing after the Shooters, Fishers and Farmers Party to join their party, which they refused him, and he was seeking other parties to join. Then, finally, he was endorsed by the Palmer United Party on the Friday before he walked into this chamber and stated that he was an Independent. So, again, he couldn't be up-front with people. But that's the way it is.

But the whole thing today is about the corporate tax cuts and my reasons. I've listened to a lot of the debate with regard to the government's company tax cuts from both sides of this house and from the crossbench. Let's look at the speculated impact it may have on our country with regard to further investment and jobs. We have been told by the government that dropping the business tax rate to 25 per cent will create jobs and increase wages. But of course tax is just one factor in creating jobs. The government wants us to follow suit with the company tax cuts in America. Otherwise, they say, we will miss out on investment. But are they also following suit on reducing energy costs that are crippling our manufacturing industries and small businesses?

The USA has reduced its company tax rate from 35 per cent to 21 per cent, not taking into account the added individual state company taxes that equate to a further two to 12 per cent, depending on which state you are in, giving an average of 26 per cent overall. A couple of months ago I went to Ireland as part of a delegation and I asked the member for parliament there, 'You actually have a 12½ per cent tax rate?' They said yes, and they said, 'For the multinationals—if you can get them to pay.' If you put out there that you're actually wanting to reduce it because the rest of the world is reducing their corporate tax rates, then, to me, that is a race to the bottom, because if you drop your corporate tax rates here, when we can clearly not afford it, then another country in the group will reduce their rates to beat you. So, how much is this going to go on? We can't afford it in this country.

If we are comparing apples with apples we cannot overlook an important fact, which is that the USA has some of the lowest energy costs in the world, and this is why they have—and will always have—a clear advantage over us, regardless of how much we reduce company tax. If we truly want foreign investment in Australia, to create jobs, then we must target the real issue, which is energy costs. No political party other than One Nation is trying to stop the ever-increasing out-of-control energy costs that are impacting upon every home, business and industry in our country.

In my talks with the government I have been asking for tax reform in the area of natural gas and other hydrocarbons, because with the exception of one joint venture project, we're currently giving away our gas for free. The low return from petroleum resources owned by Australia is a consequence not of tax avoidance or tax evasion but of a poorly designed tax system introduced by Labor. Despite widespread acceptance of the need to get paid for gas taken from Commonwealth waters, Labor has been mute on this important matter. They spoke about it today in the debate on Senator Georgiou's bill. I guess it needs the huge donations from foreign owned multinational petroleum companies more than it needs to pay down Australia's debt mountain and create new and better jobs. Natural gas and associated products are owned by Australians, and we need to be paid for them by way of taxes on those companies that profit from them. If we can get payment for our gas through tax reform then we can invest billions of dollars in Australia and create more and better jobs for generations.

Government cannot create jobs but it can remove impediments through tax policy, which is the reason I take such an interest in tax bills. In my mind the government's tax cuts bill is about jobs, and jobs are the means by which Australians maintain their independence from government. All those people who wanted to be a fly on the wall in my negotiations with the government need to know only that jobs were uppermost in my mind. But what future does our next generation have when both sides of this House have failed in their duty to encourage and support our ongoing investment in Australian tradesmen and tradeswomen? For too long the major parties have seen immigration as the way to meet our need for skilled workers. The balance between creating skilled workers and importing the skills we need has been lost, because the major parties have lost focus and purpose.

Labor's record in relation to jobs and those in work is a disgrace. It was Labor who withdrew employer incentives for a wide group of apprenticeships in 2012 and destroyed pathways for skilled jobs, but that was not enough destruction: in the same year Labor caused the loss of 2,400 experienced TAFE teacher jobs, and TAFE enrolments fell by 50,000. Over 50 country towns with TAFE colleges suffered as a result of decisions made by Labor. It is Labor who argues that hundreds of thousands of foreign students with work rights are not taking jobs from Australians in the 15-to-24-year-old age group.

Labor dudded Australian workers through enterprise bargaining agreements or EBAs. These EBAs have seen hundreds of thousands of workers get lower hourly rates than similar but non-unionised workers. Penny Vickers stacked shelves at night at Coles when she challenged the 2011 enterprise bargain agreement with the Shop, Distributive and Allied Employees' Association. She challenged the deal made between her union and Coles, because she was worse off under the union negotiated agreement. In February this year Coles offered 77,000 low paid workers a new deal because of Penny Vickers, not because of her union. It was Labor that opposed One Nation's amendment, which would have seen penalty rates restored to those who had lost them under unfair EBAs. Labor says one thing but does another, and in my mind that makes them untrustworthy. Labor wants to use tax policy to promote class warfare in this country. I will never support tax policy that promotes class warfare.

I want everyone to have a chance in life to learn and to work. For too long we have seen the decline of apprentices regardless of what trade. TAFE colleges across the country have shut. Employers fear for the ability to pay wages for a trainee over a period of years when they may find themselves at times unable to draw a wage. Under my proposed apprenticeship pilot scheme program I want to give 1,000 Aussies an opportunity for a trade and a future. Under the proposal the government will pay the employer 75 per cent of the first year's wage, 50 per cent of the second and 25 per cent of the third. In this way the government partners their education and training as they do for anyone who may attend other educational schemes, including university. The program is intended to give those Aussies who live in rural and remote areas the first bite of the cherry in taking up apprenticeships on offer. It is important that we address the high youth unemployment outside of the cities, and give encouragement to the youth to stay in their towns with their families rather than moving to the cities looking for work.

The proposed and partially legislated tax cuts for companies have next to no support in the Australian community. Of course, sales are not profits, because expenses like the cost of goods sold, wages, energy costs, interest on borrowing et cetera need to be deducted before profits can be calculated and tax liability determined. One Nation supported the tax-rate cuts for businesses with up to $50 million in turnover, despite knowing that any threshold for the tax cuts would encourage businesses to restructure. It's common knowledge that the government wants the 25 per cent tax rate to apply to all business. The government's case for tax-rate cuts for all business is weak. Nothing the government has said has changed my mind.

So what has happened to get my support for the tax-rate cuts for businesses with sales above $50 million? The government has rightly been criticised for the failure to make these tax-rate cuts part of a package of wider tax reform. When the government came knocking at One Nation's door looking for support for removing the $50 million sales threshold for tax cuts, I decided to take the opportunity to start tax reform in relation to Commonwealth-owned natural gas. It is well known that there has been huge investment by foreign-owned multinationals in gas located in the 2,400 kilometre North West Shelf geological formation, which lies off the coast of Western Australia. Less well known is that Australia will receive through the taxation system next to nothing for our natural gas, while foreign-owned multinationals will make billions from the sales of this gas each year.

The government and Labor shake with fear at the prospect of foreign-owned petroleum multinationals campaigning against their candidates at the next election if they take steps to reform the tax system applicable to gas and other hydrocarbons. Both major parties are unwilling to develop a bipartisan plan to get foreign-owned multinational gas companies to pay for our gas so that we can all benefit, in the way Norway and other countries have done. One Nation last year announced its policy to place a royalty on gas in Commonwealth waters to revoke long-held licences that could go into production but are not being used, and to get gas reserves for Australia at a low price so that electricity and gas prices would fall dramatically. One Nation is shocked that Japan's government makes nearly $3 billion a year by placing an import duty on our gas and we get a few hundred million. I have sought to get the government to reform the tax system in relation to Commonwealth-owned gas in return for support for tax cuts, but the government has rejected placing royalties on gas taken from the Commonwealth. It has also rejected a serious overhaul of the petroleum resource rent tax system, which has created a wall of unearned tax credits that see these companies able to ensure they will never make a profit on which tax is payable. Nevertheless, some changes have been negotiated which will see limited reform of the PRRT system, and some of these changes have already been leaked to the press by the government. If there are any changes to the PRRT in the reduction, it's because of One Nation and our push on the government. And if they actually open up these retention leases, which have been held by some companies for over 30 years and never utilised, it is because of One Nation—because we put pressure on both the National Party and the government to actually start doing something about it so we get royalties and more money flowing into this country.

I will not support this bill. I'm getting criticised for it but, as more comes out, and the public are aware of what the cost is going to be to this country and for future generations, a lot more people are now saying no, they don't want these corporate tax cuts. My negotiations with the government also have been that the banking royal commission must be paid for by the banks, and there must be a compensation fund to pay people who have lost their properties and face devastation because of the banks. There are many areas that we need to clean up, and I will go on and on about this until it is done—until the government realises that we are losing so much money from our resources in this country to multinationals that come out here and rip it off.

Of the revenue that we have, 75 per cent is paid by the PAYE taxpayer, those people who have to pay their taxes. They don't get the deductions and they hand over their money. But corporations and other multinationals in this country, those that do pay their taxes, write down everything they possibly can. We need to have a thorough look at our taxation department. They are overworked and they are reluctant. They can't go after a lot of the people they need to. As I said, 75 per cent of our revenue base is from the PAYE taxpayer. Twenty-five per cent comes from corporate tax. Of that corporate tax, 98 per cent is paid by Australian companies and only two per cent by multinationals.

This has been my argument in this place since I was in the other place in 1996, 1997 and 1998. It as about the multinationals paying their share of tax in this country. You are in fear that we're going to lose our sovereignty. No, they come out here because it's a good deal and because we have a safe place. We have the resources, and they can get on and get the job done, not like in a lot of these countries that are faced with terrorism. They come here because they know it is the best place.

And yet we have done free trade agreements that allow them to bring in their own workers. Here we have multinational companies that are employing staff overseas in call centres. They are using their pay as a tax deduction here in Australia. It's disgraceful. You talk about wanting jobs for Australians. I don't see it. I don't see it from either the Labor Party or the coalition.

We have got the best country in the world to prosper like we did in the 1960s and 1970s, and in the1950s, after the war. But we are sliding into this quagmire, this swamp, because you're reluctant to do anything, because you're in fear that you're going to lose the multinationals. What are you losing? Absolutely nothing, because they don't pay their tax here.

Where are you going to find money? Our ever-increasing welfare bill is up now to $187 billion, and it's growing. You've got that many migrants coming into the country that we can't afford the infrastructure, the nursing homes, the hospitals or the schools. Yet you still want to throw out and give these tax cuts. I want to see Australian companies get their tax cuts. They need relief, by all means, but do it in a well-managed way, and don't do it so that we're going to hand on a hell of a debt, a bill, to future generations that they will never be able to pay back.

What will happen is that you're going to have countries like China coming and asking for the money, and ending up with our resources—our ports, our airfields and our land—as they have done in Sri Lanka and in Greece. You think it's not going to happen, but it will happen because of bad management, poor government and the lack of decent opposition in this parliament. You'll only get good government if you have a good opposition, and the Labor Party's not it.

1:43 pm

Photo of Amanda StokerAmanda Stoker (Queensland, Liberal Party) Share this | | Hansard source

In the Liberal-National party coalition we believe, among other important and worthwhile things, in a stronger economy—an economy that supports its people, one that provides the building blocks for aspiration and for achievement. But what makes a stronger economy? What gives an economy the life it needs to support a country in this way? We need to be competitive. If an economy is not competitive, it is not alive. It's not supporting the people who depend on it. A healthy, vibrant, plentiful economy is essential to the quality of life I know everyone on this side of the chamber wants to see all Australians enjoy.

Even a basic economic education reveals the production line nature of producing an effective economy. Let's start at the beginning. High company tax rates repel investment. It causes international investors to take their capital and the resultant jobs to countries where it's cheaper to operate. The flow-on effect is that Australia doesn't receive the investment it needs and the income from the businesses that would have operated here. Australians are not employed by these investors. Subsequently, unemployment rises and, as demand for labour falls, so too do wages. Hardworking Australians, who we are in this place to represent, are worse off when we have high company tax rates. The government's enterprise tax plan would see by 2026-27 a 25 per cent company tax rate implemented for all companies, the lowest rate since the 1960s. It's a fully funded plan that seeks to accommodate, for the long-term, coalition company tax cuts to promote growth, jobs and innovation in our economy, which will help all Australians reach their Australian dream.

High company tax rates strangle our economy and prevent it from achieving the things that are needed for Australian people. The coalition government is attempting to let the economy breathe again, to revive it from the top down and to let the benefits flow to all Australians. That's because we have some of the highest company tax rates in the world. We need only look to our friends in Canada, the UK, New Zealand, Norway, Israel, Japan and France to see the benefits of maximising competitiveness to revive the economy. In December 2017, our closest ally, the United States of America, lowered their company tax rate from 35 per cent to 21 per cent. Britain reduced its tax rate to 19 per cent and is tracking towards 17 per cent by 2020. France is moving to lower its tax rate from 33 per cent to 25 per cent by 2022. These are all countries that we must observe and learn from. They are also countries we directly compete with. The world is taunting Australia to assert its place once again as a competitive nation.

Speaking of our friends across the seas, the Tax Foundation found in the United States that for every $1 that the company tax rose, for every $1 collected, real wages fell by $2.50 five years later. That's not an equation that works for workers. Back at home, 2016 Treasury analysis provided that a 25 per cent business tax rate here would mean the average yearly earnings of full-time working Australians would increase by $750. The uncomfortable reality for some is that high company taxes hurt employees—not big business, not the banks and not the multinationals but the average Australian worker. The Labor Party knows it too. That's why so many Labor members of parliament are on the record, recently and in the past, supporting reductions in the corporate tax rate. When companies have to pay more tax, they can't invest, they can't grow, they can't create the labour demand that's necessary for wages to rise and workers are not paid higher wages. It really is that simple.

Many struggling families are depending on this parliament to deliver for them. How can we possibly say no? Corporate taxes are the most harmful type of tax for economic growth. That's not me talking; that's the OECD. It's part of the reason why our government is working to reduce them. Canadian tax expert Jack Mintz put it this way:

… companies do not bear the taxes they pay but people do.

On this side of the chamber, we understand that. Approximately nine out of 10 Queenslanders work in a private sector role. These businesses and their employees want to see these company tax cuts passed. Small- and medium-sized businesses particularly want to see them passed. These businesses don't operate in a vacuum, just as economics doesn't. Combined, small- and medium-sized businesses contribute around half a trillion dollars a year. That would only increase if company tax rates were lowered. If big business can afford to invest more, small- and medium-sized businesses benefit as their major customers and suppliers. We know that trade between small and big business is worth more than $550 billion a year. The head of the Council of Small Business recently called for full implementation of the enterprise tax plan, because 'we want to see business succeed, we want to see them get the cut, because they will put the money into us'—'us' being small business. All sectors of our workforce are calling for this plan. We can't let the politics of envy, the politics of populism, stand in the way.

Labor incessantly rails against what they call the big end of town and the multinationals, but they never talk about the way these businesses help small business. They never talk about the way encouraging investment by big business in Australia helps small and medium-size businesses get along. According to the Small Business and Family Enterprise Ombudsman, the vast majority of Australian businesses are small businesses. They account for 33 per cent of Australian GDP, they employ over 40 per cent of Australia's workforce and they pay around 12 per cent of total company tax revenue. Reducing their burden should be supported by all right-thinking politicians. And we shouldn't forget the way that small business will benefit when we help all businesses by lowering their tax rate. As the ombudsman observes:

A healthy small business sector is a prerequisite for a growing economy with high employment opportunities.

The people in our community who need opportunity most—the people who have been on the unemployment line for too long, the people who have been desperately searching for work—they are counting on us to deliver those employment opportunities, counting on us to keep creating jobs.

This government has set the conditions to create over a million jobs—brand-new jobs for this country, and over 75 per cent of them full-time. Why would we stop now? It is in this very real sense that small business counts. Labor's refusal to support this relief to businesses small and large, but particularly to small business, really reflects the fact that the sectors it is most likely to support are not small business. It doesn't care for the largely un-unionised small business sector, because the flourishing of small business is of no value to Labor's union masters.

The US Tax Foundation has highlighted a range of benefits associated with lowering corporate tax, and it's valuable to repeat them here. They include cutting the corporate tax rate, which will have the impact of promoting higher long-term economic growth. The Australian community keeps begging for politicians to look to the long term and to abandon short-term populism but to do what is needed and not necessarily politically easy but in the long-term interests of this country. So, when we have evidence like this we simply must listen. The same institute has demonstrated that cutting the corporate tax rate will improve competitiveness for those who adopt it. It will lead to higher wages and living standards. It will boost entrepreneurship, investment and productivity. It will lower the tax burden on low-income taxpayers and seniors. It will attract foreign direct investment, which will create more jobs for Australians. It will lead to lower corporate debt and reduce compliance costs.

With all of those benefits, it's remarkable that anyone would stand in the way. Australia could be experiencing these benefits within the year if the enterprise tax plan is implemented. This government wants to see the economy and our society thrive in these ways. On this side of the chamber, it's what we work every day to achieve. But, regrettably, those on the opposite side of the chamber are working towards increasing the tax burden, limiting investment, reducing Australian jobs, lowering wages and strangling our economy. Previous Labor governments didn't strive to do this. Even former Prime Minister Julia Gillard said:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.

She's not the only one from Labor's team who has said words to that effect over and over in past years. No doubt she would be disappointed to see a Labor government, if elected, imposing around $200 billion worth of new taxes on households and workers, demonstrating that they are, in fact, against economic growth and jobs.

Mr Shorten himself expressed the view that cutting the company tax rate increases domestic productivity and domestic investment. It wasn't that long ago that he had a comment as adamant as this, but now one can only assume that the flip-flop to oppose this proposal is purely about obtaining political advantage. It's an attempt to short-sightedly turn one Australian against another using the most base of emotions, envy. He's seen an opportunity to divide and grabbed it with both hands. What a disregard for the people who would have otherwise seen and felt the benefits of this policy on their dinner tables and in their pockets, instead of seeing their wellbeing used as a class warfare tool, as a bargaining chip to advantage his union mates! Now Mr Shorten stands in the way of investment and growth and higher wages, and what makes it worse is that he knows it. Let us all call on him to stop and instead support a policy that will aid Australian people and their businesses.

As a result of well-thought-out, balanced and intelligent economic policy, Australia's economy is only growing under the coalition government, and our tax plan will increase the size of the economy, clearly highlighting how this government goes from one economic strength to the next. So we want to continue to encourage investment and innovation, growth and employment. We are doing just that with this company tax plan. Of course, we have already delivered on the Personal Income Tax Plan, we have opened up new markets through free trade agreements, we have invested $70 billion in productivity by enhancing infrastructure, we are delivering on a comprehensive 20-year defence industry plan, and we are securing record funding for schools and for hospitals. I could keep going on, but there's really no need, because the coalition government's achievements in securing our future and creating jobs for Australians are absolutely plain. This will support our people and our economy as we manage the transition to a modern and competitive domestic business environment. The only plan, though, that Labor has is one of obstruction and a commitment to funding and creating black holes that would be the envy of Stephen Hawking.

Small and medium-sized businesses contribute well over $22 billion in company tax every year. At this scale of business, every dollar saved goes back into growing the business, contributing to exports and employing more people. This enterprise tax plan is all about giving small and medium-sized businesses what they need, including greater trade with bigger businesses. The benefit of reducing the tax burden on small and medium-sized businesses is the positive message of encouragement that this government sends every day that all businesses are important to growing our economy.

So I encourage the Labor Party and the crossbench to get behind this plan and help the Australian people. It's time to recognise the naked politicking of the politics of envy for what it is and to get behind the growth of our economy, the creation of jobs, and the investment in the next generation of Australian workers and their prosperity.

1:58 pm

Photo of Derryn HinchDerryn Hinch (Victoria, Derryn Hinch's Justice Party) Share this | | Hansard source

In 2016, the Turnbull government went to the federal election promising tax cuts to Australia—personal tax cuts, which they've got, and company tax cuts. They narrowly won government and last year tried to make good on the company tax cuts, even though the Labor opposition, the so-called friend of workers and small business, wanted to block any cuts to any business with a turnover of more than $2 million. The then senator Jacqui Lambie and I got that threshold up to $10 million. Senator Hanson, from One Nation, and I improved the figure to $50 million. That is the figure the government voted for as, I'll admit, an interim measure, and they promised, through Senator Cormann, to bring on a big tax cut for bigger businesses this year.

I made it quite clear that I would not, that I could not, vote for a company tax cut for the big four robber banks when they were facing a royal commission into their rapacious, nefarious behaviour. In March I went on Sky News and offered a compromise. I told Samantha Maiden that I would vote for company tax cuts, to 27½ per cent and eventually to 25 per cent, for all Australian companies with a turnover up to $500 million.

Photo of Scott RyanScott Ryan (President) Share this | | Hansard source

Order! It being 2 pm, Senator Hinch, you will be in continuation when the debate resumes.