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

I rise today to add my voice of dissent to this debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This is the government's $65 billion ram raid on the federal budget, a raid that will hike the deficit, deepen the debt and force vital services to be slashed. Those opposite screeched hysterically about the 'debt and deficit disaster' for months before the 2013 election, but you don't hear that much around these parts anymore. That's because they don't want to remind Australians about the damage they have done in the past four years to our national accounts, damage that far exceeds anything incurred in protecting the country from the global financial crisis.

In fact, they have hiked up the debt to a colossal half a trillion dollars, for the first time in Australian history, and very few Australians could even conceive of what half a trillion dollars looks like. Make no mistake: this Abbott-Turnbull government has trashed the budget and threatened the hard-won AAA credit rating that the formal Labor government secured for the first time in our nation's history. Now they want to rip a further $65 billion out of the budget for a corporate tax cut, with no evidence of any substantial impact on jobs or growth. Now let's be honest: there are only two ways the government will be able to fund this incredible corporate gift. They can sit back and watch the debt climb or they can continue their usual practice of gutting health, education and vital public services. It's an undeniable truth—every single dollar you rip out of the budget to give back to companies is a dollar you can't spend on health, education, infrastructure and the things we really need to drive jobs and growth.

Realistically, the government won't be able to find the cuts to make up for this breathtaking shortfall. Our budget is likely to continue mounting, while vital services get cut to the bone. This plan is reckless and it is dangerous, and there is no evidence that it will do anything but fatten shareholders' dividends and bolster already bumper profits. The big banks, which have a shameful rap sheet of scandals that have claimed thousands of Australian victims, will be rewarded—wait for it—with a $7.4 billion windfall. And an estimated 40 per cent of the money will head straight overseas to offshore investors and foreign tax authorities.

Labor agrees that our tax plan desperately needs repair, but we don't think we should do this by handing over billions of dollars to the big end of town. We want to see real reform and a fairer system that minimises wasteful tax breaks which disproportionately benefit wealthy Australians. We don't think it's right that some Australians are able to employ strategies that aren't available to millions of pay-as-you-go workers to dramatically reduce how much tax they owe. We want to do something about the excessive negative gearing and capital gains tax concessions that largely benefit wealthy property investors, the very same tax breaks that are driving up house prices and locking millions of Australians out of home ownership. We want to curb the practice of people using trusts to artificially split their incomes between family members in order to dramatically reduce their tax obligations. It's not illegal, but it is immoral. That's the sort of thing the government should be looking to curb.

For us on this side of the House, we also want to limit the amount of money that can be claimed for managing tax affairs. We think it's wrong that big companies pay a lower tax rate than lower- and middle-income Australians. We want to see some transparency, where businesses earning over $100 million are required to publicly disclose how much tax they pay. We want to shut down loopholes that allow multinational companies to shift their profits and avoid paying tax. But the government want to give them a further tax break. And, regretfully, each and every other one of these measures that would bring more fairness and more accountability to Australia's tax regime while saving billions of dollars has been opposed by the government. So let's be clear: Labor wants a fair tax system, and we understand the importance of budget repair.

What we don't want to do is levy a burden of debt and crippled services on future generations by handing $65 billion to the big end of town. Already, one-third of Australian companies pay no tax—I repeat: no tax—and the biggest multinational companies operating in Australia pay just over half the headline corporate tax rate of 30 per cent. Let's just pause for a moment to really think about this. This means that multinational companies earning billions of dollars are paying a lower average rate of tax than Australian nurses or Australian teachers. Most Australians would be appalled to hear this and would rightfully expect the government to rectify the situation. But, rather than fixing things, Mr Turnbull plans to make it worse by giving big companies a tax cut while he levies a tax hike on working Australians earning more than $21,000. In what world is that fair? What cruel and twisted priorities does that demonstrate?

The Turnbull government are shamelessly, transparently and single-mindedly focused on finding new ways to funnel public funds to the big end of town while fighting tooth and nail to protect the tax lurks and loopholes for the wealthy that do nothing to boost growth. They are a government at war with low- and middle-income Australians. They've trashed your services. They've cut your penalty rates. They're hiking your taxes. They've fought against your pay increases. And now they want you to thank them because they want to give your big business boss a tax cut. It's outrageous. This bill will rip $65 billion out of Australia's bottom line, take money away from pensioners and hurt jobseekers. It will mean less investment in health, education and infrastructure; it's going to force senseless cuts in our schools and universities; and it will require tax hikes for low-income workers. And for what? Very little.

Just consider the government's own figures that show this reckless cash splash will add a miniscule one per cent to growth, and it will take 20 years in order to achieve that. Even this anaemic result has been called into question. In fact, a report from senior research fellow at the Australian Institute, David Richardson, found:

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But what about wages? Conservatives have been telling us for years that profits from rich companies will always trickle down to the workers. Well, the government's own data—the rosiest modelling it could summon—says that workers can look forward to a one per cent boost to their pay packets, also in 20 years' time. It's hardly anything to crow about. Even this seems questionable. In the December quarter, businesses recorded a massive 20.1 per cent boost to their profits. So, what happened to wages in that period? Well, they actually went backwards by 0.5 per cent. So it's very clear that there's no guarantee whatsoever that wages will grow with companies' bottom lines.

The government also tells us that, when companies make more money, they put more people on. The experience of Australian banks in recent months would suggest otherwise. In August, the ANZ reported a $1.8 billion cash profit for the third quarter. In May, Westpac announced a $4 billion profit for six months. Around the same time, Macquarie reported a record $2.2 billion in annual profit, and the NAB boasted a first-half cash profit of $3.3 billion. If the government were right that large profits equalled increased job creation, you'd expect that these banks would have created a bumper field of jobs this year, wouldn't you? Well, you would be wrong—very, very wrong. In fact, together, Westpac, NAB, ANZ and Macquarie have actually cut 2,300 jobs in recent months.

But, of course, this makes perfect sense. Employers don't create jobs because they are making more money; they create jobs when there is a greater demand for their services. The reality is that businesses are under relentless pressure from shareholders to increase their dividends and drive efficiencies by cutting staff, not putting more on. Any CEO who went on a hiring spree just because he got a lower tax bill would quickly find himself on the wrong side of the hiring queue. This is a government that, despite touting itself as the party of business, demonstrates breathtaking ignorance of basic business imperatives. These grossly expensive tax cuts won't do anything meaningful for wages, economic growth or job creation, but they will deliver one thing in spades, and that is increased inequality. Michael Bradley put it well in the recent Drum article where he says:

That's all just a long way of saying that the small business tax bonanza the Government is selling is largely illusory. In the bigger picture, 45 years of trickledown experiments, promising that the rivers of money which have flowed to corporations and the rich will turn into 'jobs and growth' for all, have delivered one clear outcome: a massive and sustained increase in income and wealth inequality.

We know from the OECD that increased inequality is inevitably a stall on growth.

But you might say that this is all theory and speculation and that we can't possibly know what's going to happen unless we try. Well, luckily, this real-life experiment of the government's agenda has already been done in the American state of Kansas. It crashed and burned so spectacularly that it drove the state to the brink of depression. In 2012, the people of Kansas were told that cutting taxes for the highest-income earners as well as cutting the corporate tax rate would be 'a shot of adrenaline into the heart of the Kansas economy'. They were told that they would create 22,000 new jobs. They were told that business and investment would flock to the state, increasing the wealth for everyone. They heard that disposable income would be increased by $2 billion over the following five years. Sound familiar? Well, it should, because it's exactly the same spin that those opposite are peddling in Australia today, with exactly the same agenda.

So, what actually transpired? Rather than adding jobs, the state registered a net loss of 23,000 jobs when compared to the previous average employment growth rate. Meanwhile, nearby states with similar economies saw an increase in job growth. How about the promised population growth? That was another spectacular fail, as the population actually slid backwards. And, again, neighbouring states continued to grow at the average rate. Similarly, disposable income also went backwards. But there was an explosion in debt and deficit. This led to severe spending cuts as the government desperately tried to repair the damage they'd done to the budgetary bottom line. After four years of this unmitigated disaster of anaemic growth, deepening deficits and savage spending cuts, the people of Kansas said, 'No more!' By a two-thirds majority, the conservative legislator admitted the spectacular failure of their program and repealed many of the tax cuts that had created such havoc in their state.

Inequality isn't just a word or a metric. It is a dangerous and growing trend where wealth is increasingly concentrated at the top end of the income spectrum, leaving people on low and middle incomes struggling and creating generations of working poor. This is exactly what the Turnbull government is all about—ensuring that wealthy Australians and companies are looked after. Forget about the debt and deficit. It's ignored, as are the millions of Australians who will find it harder and harder to get by. This legislation is a heist and a con, and it should be comprehensively rejected.

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