Julian Hill (Bruce, Australian Labor Party) Share this | Hansard source

The response from those opposite in the chamber is absolutely typical. Any time anyone on this side gets up and talks about inequality and says the P word—poverty—they laugh. That is exactly what happens—every time. What is the government's response to inequality? Cut pensions, cut the wages of 700,000 mainly low-income workers, cut Medicare, cut school funding, fight to the death to protect tax breaks for the top 10 per cent, and give away $50 billion to big companies, most of which, we know, goes offshore to multinational shareholders or the big banks.

The final test you have to run these things past, of course, is: is it politically smart? In my view it fails the fiscal test, it fails the economic test and it will worsen inequality, but it is also profoundly bad politics. It is not our job to give political observations or advice to the government. In the scheme of things, if you want to stand over there and bash yourselves over the head in the face of community sentiment, then go for it. That is great. Why not? But, in another sense, all responsible legislators—whichever party we are from—should be concerned about this, because people are not stupid. There is immense frustration in the community with members of parliament and our performance. There is a feeling that politics is not acting in the best interests of the nation or everyday Australians. There is a feeling that the system is rigged to the benefit of the rich and powerful. And we have this kind of raid on our collective wealth—taking $50 billion, as the opposition leader has said, from the national ATM and giving literally billions away. This is your analysis; it is the independent analysis: if you do this, billions of dollars of this tax cut flow straight offshore to multinational shareholders and to the big banks. What evidence is there that that giveaway creates any new investment? There is none; it proves the point.

In my view, we are being sold a con to brainwash us into thinking that this race to the bottom is somehow inevitable—roll over, cop your medicine, cut the health system, cut the schools, skim money off the people who have least. Leave the middle-income earners paying far too much income tax while corporates pay less and less. What is nirvana? We take the rate to 25, then someone else goes to 20. So we go, 'We better go to 20,' and someone else goes to 15. Is it zero? Companies should pay zero? That would be nirvana, would it? In my view it is not inevitable. Domestically, this reminds me of that silly game, that damaging game, played by Australian state governments to outbid each other with bribes to lure companies from one state to the other to set up shop. There was no net benefit, it was costly to the taxpayer, and eventually a truce was declared. Conceptually, nations can do the same. It should not be beyond the wit of the international community and the developed countries of the world to say, 'Enough. We cannot keep this race to the bottom going, so everyone gets to zero. That is a nonsense. I do not think we are at the point yet where sovereign governments are prepared to say 'enough'. They are still in the thrall of the dying neoliberal god—except Donald Trump; that is an interesting side point, but we do not have time—cut tax, cut spending, live within our means, but with no concern for having the means to live.

There is some glimmer of hope, and I will close with this example. Some people get it. They are not stupid and I do not believe that, ultimately, sensible communities will support this race to the bottom on corporate taxes. In the last month, there is the example of Switzerland, home to 24,000 multinationals. There was a proposal put to voters by the Swiss government on 12 February to reform corporate taxation arrangements. It was put to voters and was rejected by voters. Sixty per cent of voters in Switzerland, when they had it in front of them, said no. There was a case for reform, certainly, in Switzerland of state and national tax arrangements. The government and business argued that without reform foreign companies would quit the country for other places—they would go to the Cayman Islands and to tax havens. But the voters saw through the proposal. They understood that, ultimately, someone has to pay—that the tax shortfall would always be borne through other taxes, such as income taxes or a GST, maybe. That will be the next thing: 'There is a deficit. We cut company tax and we have run out of money. Let's jack up the GST.' Someone will always pay, or there will be spending cuts. So, what happened? Well, they will think through it further, and life goes on in Switzerland. In fact, the global advisory firm, EY, that left-wing radical bunch of hippies, EY's tax advisory people, published a note in late February after the result. They said:

Despite the referendum and the resulting delay of tax reform, Switzerland remains an attractive business location with its highly skilled workforce, excellent infrastructure, and the overall attractive tax environment.

Of course, this debate is premised on the myth that somehow all the companies here pay 30 per cent. The average effective tax rate is about 24 per cent, and paying tax has become optional for so many of the large multinationals. Does anyone really think that if we had a proper crack at multinational tax reform somehow Google and Apple would shut up shop and go somewhere else, that they are not going to sell things here? Australia does not have to be pushed into this race to the bottom on company tax. If we could afford it in the current fiscal situation, great. But it is about choices. It is fiscally irresponsible. It would smash the budget and mean either tax rises in other areas—consumption or income—or massive spending cuts. They are the choices. That is what will happen. It is economically irresponsible with little to no economic benefit. It would worsen inequality and it is politically dumb, as people are not stupid. We should reject it.

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