Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Hansard source

) ( It is a great pleasure to be following the member for Lilley in this important debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. It's a debate about tax, but, at its heart, it is a debate about the economic priorities we face in this country. Those of us on the Labor side understand that the single biggest economic issue that we have to tackle in this country today is the growing inequality between those who have and those who do not, between those who represent those who have and those of us, on this side of the House, who want to see a fairer Australia for all Australians. We know that the big economic levers that need to be pushed include giving working Australians a wage rise. It is time. Australia needs a pay rise. We know that we need to ensure the corporates are paying their fair share of the tax burden. We know that governments have to invest in social capital, particularly in our schools, in early-childhood education, in technical and further education and in our universities. Social capital is critical in addressing growing inequality.

But we also know that we need to invest in traditional infrastructure as well, economic infrastructure that is going to make a difference, particularly to regions that are struggling. The NBN is critical in this, providing the railways of the 21st century, wiring up every house and business in the country not only to the markets of their town and the country but to the markets of the world. We also know that, if we're going to address growing inequality, we have to do something about the growing inequality between capital-city Australia and those of us who live in regional Australia. It's my sad duty to inform the House that this bill, and this government, is failing against each and every one of these measures.

It is often said that budgets are about priorities. The priorities on display in this budget are very clear. Big business gets a tax cut, high-income earners get a tax cut and ordinary workers earning above $21,000 a year get a tax increase. If you're a worker relying on penalty rates, you get an extra wage cut because of the government's support of the cut to penalty rates. We are heading in the wrong direction. We will be opposing this bill, and we have opposed elements of the previous and related bills, because we do not believe that the answer to Australia's economic woes—to the growing inequality between those who have and those who don't—is to give the wealthiest and the big businesses in this country a $60-billion unfunded tax cut.

I've mentioned the growing inequality between regional Australia and capital-city Australia. I'm not surprised that there are not many members from the regional electorates of the coalition benches on the speaking list to talk in favour of this bill. You won't find a supporter of this bill in regional Australia for the very simple reason that it delivers little to them. If you look at the benefits that are going to flow from this bill and you do a geographic comparison between who wins and who gets nothing out of it, it is stark. I've had some data prepared which looks at the number of incorporated businesses that will benefit from this bill before the House in the capital cities versus those that are outside the capital cities. It might surprise you to know that the number of businesses in the area of Greater Sydney that are going to benefit from this legislation in the next financial year is 20½ thousand. For the rest of New South Wales, it's a little over six thousand. That's almost a factor of four to one—20-odd thousand to a little over six thousand. And we estimate that by 2026-27 there will be a quarter of a million businesses in Greater Sydney that will benefit from these unfunded, unaffordable tax cuts, compared to a little over 60 thousand businesses in the rest of New South Wales—67 thousand. In the state of Queensland, we see a similar pattern: a very large number of businesses in Greater Brisbane, compared to the rest of Queensland. In fact, right around the country there are big gaps. If you look at some of those places in regional Queensland—I happen to have the data for the City of Greater Brisbane: over 6,500 businesses are eligible to benefit from this legislation before the House. But if you go to an electorate like Capricornia, a little over 260 businesses stand to benefit. If you go down to New South Wales, in the electorate of Page it is a little over 230 businesses; over the road in Eden-Monaro, a little over 316 businesses. Down in Corangamite, it is 195 businesses.

The picture we can paint here is that we have members representing regional Australia from the coalition parties who are coming into this House and voting in favour of legislation that does nothing to benefit the businesses and constituents of their electorates, but does a hell of a lot to ensure that the big businesses in the capital cities of this country will benefit and to deny the government the revenue to fund the very services that are needed in rural and regional Australia to address growing inequality. They are cutting their own throats by voting for this bill. Mark my words, Mr Deputy Speaker, when we vote in favour of a $65 billion unfunded tax cut, things will follow. In the next budget we can expect the government to be bringing bills into this House which will introduce cuts to the very programs that are absolutely essential to address growing inequality in this country—that is, further cuts to vocational education, further cuts to university spending and further cuts to school education; further cuts to the social welfare safety net that is so important in some of these struggling rural and regional communities; and more disasters in the rollout of the NBN. So there are consequences for those regional MPs who vote in favour of this bill. Not only does it not deliver a benefit to their electorates but it puts in place a structure which is going to ensure that they are going to have to come in here and support further cuts to the social safety net and the social capital investment and the hard capital investment that their communities so desperately deserve and, importantly, so desperately need.

There are lots of reasons that this bill does not pass any sane test. It's not going to address the huge economic challenges around growing inequality in this country. But let's put that aside for one moment and see whether it will address the tests that the government has set for itself. We can see—as the member for Lilley has pointed out, and as the deputy governor of the Reserve Bank said at the National Press Club yesterday—this will have a negligible impact on growth in this country. In fact, on the government's own figures, there will be around one per cent of economic growth in 20 years time. This is a government that can't even get the modelling for growth accurate over the forward estimates, so we can take with a pinch of salt its estimates and its modelling for what growth is going to look like, as a result of this one measure, in 20 years time. We know that it's not going to do anything for wages either. If we accept the government's own figures of $2 a day in 20 years time, we can take that with a pinch of salt. It can't even get the modelling for wages growth right over the next two years; how can we accept any modelling it's done on wages growth over the next 20 years? By the standards that it has set for itself, this legislation is not credible—except and save for the one proposition that was put quite forcefully by the member for Lilley. We can set aside this idea that the bill is going to lead to wages, jobs and growth. There will be negligible impact on jobs growth, negligible impact on wages growth and no impact on economic growth. So, what's the purpose of it? Clearly, the purpose of this bill is to fix up their mates. It is a $65 billion tax cut for some of the wealthiest companies in Australia, the sole purpose of which is to fix up the mates who so ably and keenly support those on the other side.

A lot has been said about the need for us to have a competitive tax base, for us to be competitive with other jurisdictions in terms of economic investment. We've had a look at this and we've had a look at what is not only being said in Australia about the impact of taxation policies on business investment in Australia. We had some interesting statements from the assistant governor of the Reserve Bank yesterday at the National Press Club who argued that this sort of tax measure has a negligible impact on a business's inclination to invest in Australia. She said:

When businesses make decisions about where to locate—the tax rate does presumably matter, but so does the business environment, the institutional framework, the rule of law, the macro-economic outlook and where the resources are. There's a broader business environment to consider and those advantages haven't gone away.

She makes it quite clear what the Reserve Bank thinks of the government's argument that this measure is essential to boost growth, job creation and investment in this country. Never could there have been a clearer statement from the Reserve Bank of Australia that the government's argument in favour of this bill is absolutely bogus.

To the issue of comparing our tax rates to other countries around the world. The United States Congressional Budget Office put out a paper earlier this year saying that the statutory corporate tax rate is one of the many features of a tax system that influences corporate behaviour and that, because of their broader scope, average and effective corporate tax rates are better indicators of a company's incentives to invest in a particular country than the headline corporate tax rate. That is to say that, yes, you can look at the headline tax rate, but it is often the case that the majority of companies are paying that headline tax rate. The paper points out that the headline tax rate of 30 per cent in 2012 was equivalent to an average tax rate for Australia of around 17 per cent, and, in fact, the effective corporate tax rate for businesses in this country was around 10.4 per cent. This is the advice that the independent Congressional Budget Office is providing to the US Congress about how they should set their tax rates at a level which would make them competitive with Australia. It's not the 30 per cent headline they're looking at; it's the average tax rate of around 10.4 per cent. For all the reasons set out by the member for Lilley, we think that average is too low. In Australia we have a revenue problem, and it's why we cannot afford this unfunded, unconscionable corporate tax rate at this time. It's not what Australia needs. It is going to drive us backwards and not forwards.

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