Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

I endorse the comments of all my colleagues who have spoken in respect of the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 thus far. Just as I was about to walk into the chamber to speak on this matter, I came across—sitting on the top of a pile of my papers—an article that was published earlier this year. I want to quote it, because it is so relevant to what we are speaking about. It is an article written by an economics correspondent, Eryk Bagshaw, on 28 February this year:

Company profits have surged to record highs at the same time wages suffered their sharpest decline in eight years, new figures show, as the Turnbull government prepares to argue the case on Tuesday for a $50 billion company tax cut.

The three months to December 2016 saw a 20 per cent jump in profits, while wages fell 0.5 per cent - the largest decline since mid-2009, according to the Australian Bureau of Statistics Wage Price Index. Over the course of 2016, company profits rose 26 per cent.

The opening statement of that commentary sums up what this is all about and why it is so wrong. The $50 billion figure that was used in the article at the time has since changed, because of the government's budget measures in 2017, but the principle and the essence of what was being said remains true.

We have a situation where company profits are at record highs. Wages have literally stagnated, and yet the government is saying the companies need to be given a tax break. It simply doesn't make sense. And no rational person out there in the community will buy the government's argument that these tax cuts are necessary to stimulate the economy. It won't work because—as the member for Fowler has just made clear—trickle-down economics has proven to be an absolute nonsense. The only beneficiaries of trickle-down economics are the CEOs, and maybe some of the senior employees of companies, who are paid millions of dollars and whose income has increased over the last decade or so by millions of dollars each year—but certainly none of the broader based employees of those companies. The facts speak for themselves. Mr Deputy Speaker, I'm sure you're aware of CEOs that I'm referring to who are now being paid, in one case, tens of millions of dollars for their service, while the rest of the employees are lucky to get the minimum wage or so.

With this legislation, the simple message that goes out to the community is this: at a time when housing affordability is at a crisis, when wages growth is non-existent, when penalty rates are being cut, when higher education costs are increasing, when pensioners are being squeezed of every last dollar that they have and when we have an NDIS system that the government are struggling to fund, which helps some of the most vulnerable people in the community—at a time when the government can't help those people in desperate need, they are saying to the Australian public: 'We can help big corporations that are making some of their highest profits in many, many years.' Indeed, in this legislation there will be an extra $35.6 billion of tax cuts for big business over the years ahead.

We are talking in this case about big business. This is no longer the argument about the small mum-and-dad business. These are businesses that turn over $50 million a year or more. No-one can sincerely say that these are small, struggling businesses. When a business is turning over $50 million, it's a pretty big business in anyone's language. What is even worse about this legislation is that, when the tax cuts are granted to these companies, most of the money is very likely to go to shareholders who live overseas or who invest overseas. That's where most of the money will go. It won't even go back—putting aside the trickle-down economics—into Australian businesses or Australian homes that might in turn spend some of it in their own communities and therefore stimulate their local economies, and the country for that matter. It's very likely that most of the money will go offshore, and the statistics will just highlight that that is going to be the case.

Just as concerningly—I think it was only about a year ago—we saw reports from the taxation department about companies not paying tax in this country. And we saw that there were, I think, one in three companies in Australia that didn't pay tax. Again, these are large companies. One in three, roughly 33 per cent, was the figure for 2014-15. My understanding is that for the previous year, 38 per cent of those companies didn't pay tax. The government are saying that they want to offer a tax cut to a group of companies who, in many cases, are not paying tax in the first place. We're talking about companies that are either public or foreign with an income of $100 million or more, or private companies with a turnover of $200-plus million. These are the kinds of companies that are not paying their tax—1,904 of them.

Putting all that aside, as everyone knows, most companies and certainly any company that has a $50 million a year turnover would employ accountants—people who are smart at knowing how to manage the finances of the business they've been employed to look after. Those companies, quite legitimately and legally, find all kinds of ways to minimise their tax obligations. So the truth of the matter is that, whilst we might have a headline rate of around 30 per cent for companies right now, it's not surprising that in 2012—and that was the last year I was able to get the figures—the companies were paying a company rate of 17 per cent and an effective tax rate of only 10.4 per cent. We talk of companies supposedly paying 30 per cent, but in reality the average tax rate for 2012 was 17 per cent and the effective rate was only 10.4 per cent. That's what they paid, so let's get real about what companies are contributing to the economy and to the taxation revenue of the country.

Amongst those companies are some of the biggest income earners in this country. In recent years, we've seen the profits made by the four major banks. In the first half of this financial year, 2016-17, the four major banks have already made $15.6 billion in profit. Yes, they pay tax—I do not dispute that for a moment—but do they really need a tax cut in order for them to grow when they have made $15 billion profit already? If they do get a tax cut—and that will add to their profit—will they really use it to employ more people, improve their services or perhaps establish more branches around Australia? In the very years that they've been making these excessive profits, we have seen them do the exact opposite. I'm not at all convinced that these tax cuts will be used in a way that will benefit the broader Australian community by stimulating the economy, creating more employment and the like.

The truth of the matter is that these tax cuts are also driven by government ideology. Yes, budgets are about priorities, and we accept that, but they're also about ideology. The coalition government is driven by ideology rather than common sense and fairness when it comes to this matter. It has a budget that is already in crisis. Last year the deficit was $38 billion. This year the deficit is anticipated to hit nearly $30 billion. We have a national debt that's now topped half a trillion dollars. With all of those debts hanging over the government and the difficulty in getting its books in order, the Turnbull coalition government are saying to the Australian people, 'We have a budget in crisis, but we can afford to give $65 billion to big business'—and, in this case, specifically, $35 billion to businesses that have a turnover of $50 million or more. And it does this at a time when the government has taken an absolutely disgraceful stand on some matters. Firstly, with respect to penalty rates, not once did it stand up for some of the lowest paid people in the country. Perhaps somewhere between 650,000 and 700,000 people will be affected and worse off, in some cases to the tune of $6,600 a year, because of cuts; people who are already on the lowest levels of income. Not once has the government stood up for those people, nor did it stand up for the people on the minimum weekly wage in this country when that matter went to the courts for consideration.

This government shows no compassion and no concern for the people who need government support the most, yet it is prepared to stand up and support the people and the companies that don't need a government handout or government support in any way. We have seen that time and time again, regardless of whether it's to do with the shipping legislation, the minimum wage, penalty rates, the 457 visas or any industrial relations matter. We even saw it yesterday when we were debating the industrial chemicals legislation in this place. The government only hears the voice of big business, and no-one else. Whatever big business wants, this government thinks that's the right way to go. That is shameful and it should not be the case, particularly when, in many cases, those very big businesses that the government purports to support do not even have their bases here in Australia and do not make a full contribution to this country in the way they could and should.

I'm going to finish on a couple of other matters that are pertinent to my home state. Again, at a time when we have this government saying that it wants to give billions of dollars of tax cuts to big business, we have agricultural growers in my region who are simply asking for a pittance in comparison to what is being proposed here to support their industry. A year ago we had floods in the northern plains. As a result of those floods, some 50 different producers were directly affected and in most cases lost all of their produce. Their losses amounted to about $150 million. For them, that was all their income for the year. They've asked for some money to build levee banks along the Gawler River—which flows through their properties—which will, if there is a future flood, prevent them from losing their crops.

The state government has come on board with $9 million. The local councils—because there's a group of councils—have come on board with $9 million and are asking for $9 million from the federal government. That's all they're asking for—$9 million. When you compare that with the money that is being sought here, you can appreciate that it really is a drop in the bucket. The Prime Minister went out and saw those flooded farms a year or so ago, but he never got back to them and has never offered anything to them. That's a classic case of the government simply not hearing, not listening and not caring about people who really need some help and who are asking for something that is not unreasonable.

Lastly, on Friday, we will see Holden close its doors in the northern region of Adelaide—an industry that has been producing cars in this country for 69 years. Holden has become an iconic motor vehicle for Australians, and, for the region that I represent and which the member for Wakefield represents, it has been the foundation of the economy. It underpins the economy and has done so for the last 50 years or so. This government could not find the money to support this industry, which generated more tax revenue for the government than it was being asked to provide and which created thousands of jobs for the region, but it can afford, and can find the money, to support big businesses that don't need that support—which is absolutely disgraceful. That has resulted in the loss of tens of thousands of jobs across Australia. It just shows the foolish priorities of this government, the heartless attitude of this government and, quite frankly, the stupidity of this government in cutting off an industry sector that was returning more money to it than it was costing it.

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