Keith Wolahan (Menzies, Liberal Party) Share this | Hansard source

To be clear, I arrived in Australia when I was 10, and it's fair to say I did well at school but not so well that I knew that the corporate tax rate was that. And I'm pretty sure the corporate tax rate wasn't that when I left. It was done later and for a particular reason that has direct impacts on our country and what we do. Why does that matter? It matters not just now but into the coming decades for the sort of country we pass on to future generations.

We receive many documents and reports, but there is one that should stand out amongst all others—the Intergenerational report. The Intergenerational report has some very sobering numbers and graphs. On page 177, from memory, there is a graph that really jumps out; it is the graph on projected government spending at a Commonwealth level through to 2063—so the report looks 40 years into the future. That graph is adjusted for inflation—so it's on 2022-23 dollars. It tells you there was a spike in Commonwealth government spending during COVID-19; we all know that happened. But when you revert back to the Commonwealth spending per person in Australia it's at about $24,000 per person—not per taxpayer. Without any improvements in productivity, on 2022-23 dollars that will be at $40,000 per person. 'Without productivity improvements' is important because if we don't have improvements on productivity then our average and median wages will be the same or worse. What are they? They are $95,000 for the average wage and $65,000 for the median wage. How does that work for future generations if one level of government, not accounting for state and local expenditure plus all the other costs, is going to take $40,000 per person when the average wage is $95,000 and the median wage is $65,000? It is unworkable.

There are two main streams we as a nation and legislators have to turn our minds to. One is the spending side and the other is tax side. Briefly, on the spending side—that's not the subject of these bills but that matters too—the Intergenerational report says there are five line items that will have the bulk of growth. Three of them are in the care economy—part of that is a product of an ageing population—and the others are defence and interest on debt. Those five line items are growing more than any other. There is work for us to do, and we should do that in a constructive and bipartisan way where we can, particularly when it comes to the care economy, because we can all agree they are essential items of government expenditure but they can be done more efficiently. Where we can do that without politicising it, we should do it because it's in the national interest.

The other side of the Intergenerational report that matters is the tax side. There is a disparity in how we tax in this country, particularly on the corporate level. There is a disparity of power. If you are a small, a medium or even a larger domestic company that doesn't have a presence globally, or the resources of huge law firms and the big four accounting firms to help you produce a company structure so complex that it looks like a drawing from Mr Squiggleand, full disclosure, I helped write some of those when I was a junior mergers and acquisitions lawyer. Surprise, surprise—and I'm not breaching any client confidentiality—the company at the top wasn't here; it was somewhere else. They are often in an exotic location, like the Cayman Islands or somewhere else like that—or my homeland of Ireland, if you were to look at a company like Meta.

What are the consequences of that? The consequences of that are that we are treating companies that have a disproportionate level of power differently. The consequence is that that lost tax revenue—because the tax isn't being collected here; it's being collected at a reduced rate offshore by a sleight of hand, a trick—means we then have to turn to Australian taxpayers and Australian companies to raise more. For those who, through bracket creep, are pushing more towards the top rates, when you add other taxes, particularly on goods and services, we're paying more than half of our income as Australians on tax. That is unfair when companies are extracting those profits from here but paying 12½ per cent in Ireland or even lower in other countries.

The intent behind these bills is something that has bipartisan support and is something that we support. Wherever we can, whether it's through power or prosperity, we should acknowledge the human instinct and inevitability of seeing power and prosperity concentrated. The antidote to that is that we should turn our minds to principles and policies that see the democratisation of power and the democratisation of prosperity—not the socialist dividing up and allocating of it but the democratisation of it, which means that, through your own endeavours and your own choices, we make it a fair game and that those who work hard and compete hard will be rewarded.

Again, we live in a global world but, if you were to use the metaphor that many international relations scholars use of a billiards table, each of us as nation-states are spheres on that table. We are sovereign, and we have rules that are enforced. But there is a state of anarchy in between those billiard balls, and the incentive for larger multinational corporations to shift around the billiards table to those that have the lowest tax rate is one that we as a sovereign nation are entitled to address.

It's important that when we do that—and we have supported this—we acknowledge, at the same time, that it's not the only solution to reducing the burden that we put on domestic companies and domestic individuals. This government has broken its promises on domestic reform—domestic tax reform, in particular. The promise was made before the election—and promises matter; they should matter—that there would only be increased taxes on multinationals. That's what we're doing here, and we agree with that. But let's turn to the record of the government and what they actually did. They raised taxes on superannuation, they are taxing unrealised capital gains, they are increasing taxes on franking credits and they have ended the small-business tax concessions. On any measure, that is a broken promise. The social media tile that says they're only taxing multimillionaires is a nonsense, because it's not indexed. Through bracket creep, all Australians have been pushed forward into these higher tax brackets.

We know that those higher domestic taxes are going to do nothing to help with the cost-of-living crisis. They are going to do nothing to lift productivity growth as is required for us to fund the care economy and still do all of the other things that make our nation great and prosperous. They're not going to do anything to solve the delicate balance that we are leaving all of the work of achieving to the RBA, which is to bring inflation down and not collapse the economy. That's the highwire that the RBA are trying to walk. But it's very hard to do that when the government's pulling you in one other direction. You have to lean on the other like a seesaw that's out of balance.

These are important bills. They have our support, but that support should not be given by the coalition in a way that doesn't acknowledge the promises that have been broken and the serious work that has to be done on out-of-control spending by this government which is impacting the task of bringing inflation down now and doing nothing to fix that horror story that we see in the Intergenerational report of 40 years from now. We must all, as a matter of urgency, turn our mind to that.

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