Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Hansard source

I just described to you how it boosts cash flow. You still don’t get it. Sit closer to the shadow Treasurer and discuss Laffernomics and try to understand how, by reducing taxable income of a business and by reducing their tax bill, you actually increase their cash flow. Now, that will actually work. Abolishing or cutting the rate of income tax down towards zero will not boost revenue but this will, in fact, boost small business cash flow, bring forward small business investment intentions and encourage some investments that they might otherwise not have undertaken.

While we are on clever economic arguments, the Leader of the Opposition said today, ‘Will the plan announced today crowd out private investment?’ During the peak of the mining boom the growth in private investment was 14.2 per cent. In the MYEFO, released late last year, growth was projected to be 5.5 per cent for 2008-09. In the updated economic and fiscal outlook, the UEFO, it was projected to be just a half a per cent and for 2009-10 it was projected to be minus 15.5 per cent. I do not think there is a problem with ‘crowding out’ here. There is a problem of a global recession depressing investment intentions in Australia. We announced a $42 billion stimulus, including specific measures to boost investment, and what did the Leader of the Opposition say? He said, ‘I’m really worried about this because it might crowd out private investment.’ He kind of accepts that there is a global recession, but he does not really accept that there is a global recession. He kind of accepts that there is a slowdown in Australia but he does not really accept it because he thinks we might crowd out private investment. And then he went on with ‘cash splash’ and derogatory comments about the stimulus we are providing—which has been supported by just about every business organisation in Australia.

I will now go through one or two of the statements that have arrived in the last few minutes. During question time I talked about the support of the Australian Industry Group. What have the Business Council of Australia said today? They said:

The Rudd Government has acted quickly and responsibly to limit the impact of the global recession on Australia. In the face of a rapidly deteriorating global downturn, this is a government that stands ready to act.

And they went on, full of praise. And the New South Wales Business Chamber, the National Farmers Federation and Master Builders Australia also strongly support this government’s investment plan. So there you have it. We have all the support coming from the business community but yet more opposition coming from the Liberal Party and the National Party. (Time expired)

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