Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Hansard source

The member says 'a credible source'. I am waiting for the Treasury credible source—there aren't any. The Australia Institute finds that 97 per cent of the applications to Australia's Foreign Investment Review Board come from countries with lower company tax rates than Australia's—97 per cent. The company tax rates of the countries they are in are lower, yet they are coming to Australia. By value, 71 per cent of applications come from countries with lower rates. If it were true that just by lowering your tax rate business was going to flock in, then why is the money flocking in from companies that already have lower tax rates than us? The money should be going the other way, if that were true. New Zealand lowered its tax rate—it is a couple of points lower than ours—thinking that they might be able to attract Australian investment by doing so. At a recent press conference with Prime Minister Malcolm Turnbull, the New Zealand government, through Bill English, confirmed that it did not actually work. He said:

We think it is really important to signal that we want reinvestment in businesses, because that is what grows the jobs and grows the capacity.

So they lowered their rate to two points below Australia's, hoping that 'it would attract a large number of Australian businesses across the Tasman, but that hasn't quite happened.' So even New Zealand, which has tried this already, is finding that it has not worked.

We can also look at Australia's history. In the past, when Australia's company tax rates were adjusted foreign investment did not go the way that was expected. In fact, when the rate climbed back in the 1980s to 49 per cent, there was a rise in investment, not a drop. A lot of things attract companies to invest in a country other than their tax rate: the skills of their workforce and a whole range of other things to do with stability of government, for example—not something that we are seeing much of at the moment, unfortunately. There are a lot of things that attract companies to invest in countries with a full range of tax rates. The study by the Australia Institute also finds that Australia's stock of foreign investments is dominated by 13 countries. Some of those countries have higher and some have lower company tax rates. Nine of the 13 have lower tax rates than Australia's. Countries with the fastest growing investment in Australia include the United States, which has a higher tax rate than Australia. So this simplistic argument that foreign investment will flood in if you lower the tax rate from 28½ to 27½ and then in 10 years time reduce it to 25 is not supported by Australia's history or by the facts at the moment. It is just not supported at all. When we look at company tax alone in Australia, we are actually about equal fifth, but if you examine the whole implied tax take we fall to about 14th. So even the company tax rate itself is not the only issue that we need to be concerned about.

The question also is: will it create jobs? I said before that the Treasury modelling—not the Labor opposition modelling, not Labor running a scare campaign, not Labor making up facts like the previous speaker alleged, but the Treasury modelling—finds that the level of employment in 20 or 30 years time will be just 0.1 per cent higher than otherwise because of this $48.2 billion tax cut. That is not exactly a good result. It is not a very good result for $48.2 billion off the tax base. You have to remember that at the time the government is hoping to do this—if they manage to get it through the Senate—they are also cutting away at some of the poorest people in our economy. They are cutting family payments and energy supplements. They are backing a cut to take-home pay for workers in retail and hospitality. They are presiding over a reduction in the spending capacity of some of the lowest-income people in this country.

It is hard to see, even with trickle-down economics running through their veins, how cutting the spending capacity of the customers of business actually makes the business better off. How is it that you cut the spending capacity of a business's customers and that makes a business better off? It cannot. This linear notion that this government has that somehow you can cut the spending capacity of customers, wait for the business to be more profitable and then give their customers some money back does not make any sense. There is not a single business out there that would argue to cut the wages of their customers—not one. There is not one that would say, 'Yes—all those people that come into my shop on a Saturday or on a Friday afternoon, who work down at the pub—let's cut the wages at the pub. Let's give them less money to spend.' That is what this government is doing. This is a really weird concept that this government has: that you can cut the wages of the customers, provide a tax cut to the biggest businesses, most of which will go to the really big end of town—an incredible percentage of it will go overseas—and somehow that is going to make our economy stronger.

None of the figures support it. If that single figure alone about the jobs growth because of this plan says anything, it says that this does not work. A $48.2 billion tax cut to business, and in 20 to 30 years time there is going to be a 0.1 per cent increase in jobs in this country as a result of it. That really demonstrates that this absolutely will not work.

I do not think the government is going to get this through the Senate. In fact I think that the government will walk away from it. We have heard rumours that they will walk away from this signature piece, this one thing they have that is actually going to create, in their words, jobs and growth—this jobs and growth mantra—supported by this policy, which over 20 years may create 0.1 per cent increase in jobs. This is their centrepiece. This is all they have. After four years of claiming to be a government about jobs and growth, this is it. This is what they have. We hear from rumours all around this place that they are about to walk away from even this. We on this side of the House would think that that is a good thing. The figures indicate that this is not a positive thing for the economy. The facts indicate it. Experiences around the world indicate it. The fact that Australian investment does not flock to countries with lower tax rates indicates that. The fact that Australian businesses did not flock across the Tasman for a two per cent tax cut indicates that. This is absurd policy, and the sooner they walk away from it the better.

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