Sharon Claydon (Newcastle, Australian Labor Party) Share this | Hansard source

I rise today to voice my deep concern with the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016—the Turnbull government's $50 billion ramraid on the federal budget for big business. When Mr Turnbull undertook his infamous 2015 coup, he told us that he would be different. He told us that he would deliver the strong economic leadership that had been so lacking under the member for Warringah. He told us that he would run a constructive parliament driven by the national interest. Since then, Australians have watched in dismay as the Turnbull government has devolved into chaos, unable to maintain a single idea for economic reform for more than a few days, let alone last the distance to legislate for it.

And no amount of government spin and bluster can counter the fiscal reality facing our country.

The 2016-17 Mid-Year Economic and Fiscal Outlook is sobering reading indeed. It shows deficits blowing out by another $10 billion over the forward estimates since the budget. It reveals that the deficit for this financial year has more than tripled since the government's first budget. And it exposes the fact that net debt has blown out by $100 billion since this government came to power. That is more than $4,000 for every single Australian. The myth that the Liberals are effective economic managers has been thoroughly quashed. They have trashed the budget, hiked the deficit and threatened the AAA credit rating that the former Labor government secured from all three major ratings agencies for the first time in our nation's history.

The second solemn promise Mr Turnbull made to the Australian people after his coup was that fairness would be at the centre of all of his government's decisions. Mr Turnbull said fairness would be 'absolutely critical'. Again, the Prime Minister has colossally failed to deliver. He has attacked jobseekers, pensioners and low-income families while giving millionaires a $17,000 tax cut. He has consistently asked low- and middle-income Australians to do the heavy lifting on budget repair while fighting to maintain tax subsidies for the big end of town. And he has belligerently refused to rein in excessive tax deductions for property investors, who are driving up house prices and stretching family budgets to breaking point.

It is no coincidence that Australian households overtook the Swiss to become the world's most indebted last year. To add insult to injury, the government's attacks on workplace conditions and its relentless attempts to shackle unions have contributed to stagnating living standards and record low wage growth. Even the Treasurer has admitted that this stagnancy in wages is one of the greatest threats to our economy. But that has not stopped this Prime Minister from backing in further wage cuts to some of the lowest paid workers in the country. The fact that the government is happy to stand by while 700,000 working Australians lose up to $77 a week due to those cuts to Sunday penalty rates is astonishing. Clearly, Mr Turnbull has been unwilling or unable to do the things ordinary Australians so desperately need. Still, Mr Turnbull has no credible plan for economic reform or, at least, no plan that he is able to get past the extreme right-wing masters in his party room.

In fact, the only idea that Mr Turnbull has had approved by the conservative cabal that runs the Liberal Party is a $50 billion handout for big business and the banks—the very plan that we are discussing here today. Make no mistake, this $50 billion corporate cash splash is an egregious waste of precious taxpayers' dollars that will deepen the debt, smash the budget and necessitate crippling cuts to vital public services. This is a gift to big business, but a rank betrayal of the Australian people.

It is particularly galling when you consider that the significant number of the largest companies operating in Australia have already found ways to reduce their tax bills to zero. In fact, the most recent ATO data revealed that 670 of the largest companies paid no tax—I repeat, no tax—at all in the 2014 financial year. That is more than one-third of all large public and private companies in Australia. This is shocking. Working Australians have every right to ask why they are being forced to pay the full rate of tax when the government is doing nothing to close the loophole that is available to companies.

It has been estimated that the Australian budget is losing $4 billion a year—possibly more—to multinational tax avoidance. A sensible government would be doing all it can to ensure that these companies are paying their fair share of tax, but this government is not—and far from it. Rather than calling big business to account, Mr Turnbull wants to give them a $50 billion reward. Those opposite have ruthlessly gone after jobseekers for debts they do not owe and threatened families with cuts they cannot afford. But when it comes to the billions of dollars in foregone revenue from tax avoidance, the government suddenly becomes spineless. We have seen too many times that we have a government that is soft on tax avoiders but tough on vulnerable Australians.

Those opposite have been trying to prosecute the preposterous argument that handing over $50 billion to big business is somehow a good thing for ordinary Australians. They have argued that it will be a massive boost to growth, creating a bounty of jobs and boosting everybody's pay packet. That is what the government purports. In fact, the outrageous hyperbole that we have heard from the conservatives about the miraculous impact of this corporate tax cut has been so far-fetched that it is a wonder the government is not trying to claim that it will also fix climate change!

Their own modelling shows the extent of their extreme exaggeration, showing that this growth and wasteful largess will only deliver a miniscule one per cent to growth. That is not next year or the year after. It is not even going to be in 2020. In fact, this tiny payoff will not be seen for 20 years. Even if Mr Turnbull manages to get the legislation through the parliament in full, which, frankly, it looks unlikely to do so, in the process it will cost close to $4 billion in extra interest payments on the debt in addition to the $50 billion that will be ripped from the federal budget. So those opposite are happy to threaten our AAA credit rating and plunge our country into even further debt on the hope of a one per cent boost in a generation's time. So let's be clear: on an annual basis, this is little more than a rounding up error.

The same Treasury modelling also reveals that these big business tax cuts will have a remarkably small impact on pay packets, given the brutal toll it will take on the federal budget. In fact, it shows that the boost to wages will be a disappointing 1.1 per cent. Again, this is not for next year or even in 10 years' time. No; workers will be waiting 20 years to get an extra $2 a day in their pay packets.

Conservatives and the business lobby have also suggested that a jobs bonanza will follow these tax cuts. To suggest that job creation is a direct and necessary outcome of cutting taxes is disingenuous at best and a wilful misrepresentation of corporate reality at worst. It is no secret that companies' primary loyalty must always be to their shareholders, not to Australian jobseekers. The pressure to increase dividends year on year is relentless. The more profit companies make, the more they can direct to their shareholders. And the more they reduce their cost bases by cutting labour costs or jobs, the more profit they make.

If there was a direct causal link between profits and job creation, it would follow that when companies record large profits a workforce boost would follow soon after. Let's take the banks, for example. They have benefitted from record high profits in recent years. So, according to the government's logic, we would have seen a parallel hiring frenzy. But this simply has not happened. Instead, despite record profits, banks have embarked on cost-cutting and restructuring exercises that have seen thousands of jobs culled. In the first-half period of the last financial year, Westpac, CBA and ANZ shed a combined 2,547 full-time jobs. Clearly, that makes a mockery of this government's argument. Of course, I would not deny that there will, indeed, be winners from this legislation; they just will not be the Australian people. The banks, foreign shareholders and, of course, big business will have reason to celebrate if this bill gets through parliament. The big four banks alone will get a $5.7 billion windfall. That is $5.7 billion of precious federal taxpayers' money handed over to the companies that have been racking up record profits on the back of a string of scandals and high-profile consumer rip-offs.

On this important issue, there could not be a clearer difference between Labor and the coalition. Labor thinks the banks need a royal commission. Mr Turnbull thinks they should get a tax cut, and he has been running interference for them for nearly a year now to protect them from any scrutiny. Even members of Mr Turnbull's own government have seen that this legislation is a slap in the face to the thousands of innocent Australians who have lost millions to the unconscionable conduct of the banks. Indeed, we saw reports recently that some have been putting pressure on the Prime Minister to carve the banks out from this multibillion-dollar windfall. While the banks would have breathed a sigh of relief when the Prime Minister came out swinging against this proposal from his backbench, ordinary Australians should be very concerned about where this Prime Minister's loyalties lie.

The government wants you to believe that Australia will become uncompetitive and that investors will flee if we do not proceed with these tax cuts. If this were actually the case, then you would expect to see a clear pattern of companies from countries with a higher tax rate avoiding their home territories and choosing Australia as a destination for investment. Conversely, you would also expect that companies from countries with a lower tax rate investing here in Australia would be few and far between. The data shows us, however, that nothing could be further from the truth.

A recent analysis by the Australia Institute found that a full 97 per cent of investment applications to Australia's Foreign Investment Review Board came from countries with lower company tax rates. By value, 71 per cent of applications came from countries with lower rates. Not only that, but when our tax rates rose to 49 per cent in the 1980s we saw investment grow, not decline. The Foreign Investment Review Board data demonstrates that there are many factors that drive investment. Tax is just one.

So if we are clearly attracting investment despite having higher tax rates—and the link between tax rates and investment levels is tenuous at best—why on earth would we embark on a revenue-slashing race to the bottom? If we do start to play the 'How low can you go?' game, where does it end? When a 25 per cent rate fundamentally fails to boost growth, do we drop it to 20 per cent, or 15 per cent? How about five per cent? Or do we forgo tax revenue entirely? There are many things aside from the tax rate that attract investors. A skilled workforce, a stable regulatory system and a low-risk business environment are just a few.

This government is throwing precious public money out the window, in our view, and it is doing so at the expense of many ordinary Australians. Students will be paying for this. Families will be paying for this. Cities will forgo vital infrastructure. Young jobseekers will be paying for these cuts. Of course, every single Australian will pay for it because of this government's ongoing attacks on Medicare, bulk-billing, the Pharmaceutical Benefits Scheme and hospitals. Make no mistake: if this government gets its way and this bill passes parliament, generations of Australians will pay the price.

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