Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

I thank you for that wise comment, Mr Deputy Speaker. The member for Dawson seems to be straying off the reservation. We will see whether or not he is able actually to put his vote where his mouth is next time the vote on a banking royal commission comes to this House. He could not quite manage it on the last sitting day of last year, but let's hope, for the sake of the electors of Dawson, that he is able to do it next time around.

The fact is that powerhouse economies around the world have corporate tax rates comparable with Australia's, ignoring imputation. Take into account imputation, compare us with countries that have rates a third lower, and Australia's corporate tax rate raises approximately what is raised by even the countries with the lowest corporate tax rates in the OECD.

Then we come to the government's argument that a corporate tax cut will boost growth. In order to knock down this argument you have to go no further than the government's own analysis, a paper released on budget night titled Analysis of the longterm effects of a company tax cut. You have to work through this paper fairly carefully in order to work out exactly what the government's argument is. First of all, let's start with the fact that domestic shareholders barely benefit from corporate tax cuts. As the Grattan Institute's John Daley has pointed out, local shareholders only gain if profits are reinvested rather than paid out. Our firms have pretty high payout ratios, so most of the $8 billion annual gain from a corporate tax cut will, in the first instance, go overseas.

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