Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

In recent weeks, during the parliamentary sitting recess, I have travelled to many locations listening to and hearing directly from hundreds of small business owners. Every day I have been encouraged by the positive response to the tax cut we have already delivered for small business and the anticipation for the tax cuts to go further and to be extended to more businesses. The government's enterprise tax plan will deliver tax relief for 3.2 million small and medium businesses, which employ more than 6½ million Australian workers. They are at the forefront of this amendment before the House today. We all want more jobs. We all want better opportunities. We all want higher wages.

The government has accepted the Senate's amendments to the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016. Small and medium businesses with turnovers of less than $50 million a year are set to benefit from their tax rate falling to 25 per cent. It will deliver new job opportunities and increase wages. This amendment will enable businesses with a turnover of less than $10 million to receive a reduction in their tax rate to 27½ per cent this financial year—the lowest it has been for many, many decades.

Under our reforms, small businesses with turnovers of up to $10 million will also receive access to tax concessions, including immediate deductibility for assets costing less than $20,000 acquired before 30 June 2017—another tax simplification provision. Our plan is to cut taxes, put small businesses in the driver's seat and Australians in jobs. Above all, it is a plan to create new opportunities and secure Australia's future. It is small business, not government, which creates jobs and opportunities. This government is serious about energising enterprise. As a country MP, I think I am pretty fortunate. As local members we travel about towns, villages and communities in our large, diverse electorates, and locals will always stop us and let us know what is on their minds. They are very frank. They are very free with their advice. I am reminded, as ever, what inspired me to run for parliament in the first place: to work as hard as I can on behalf of my constituents and on behalf of my small businesses each and every day. It is the conversations and interactions with local people that inspire me to come back to this place and to talk up small business.

Opposition Members:

Opposition members interjecting—

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I hear the clamour from those opposite. They should also know how important small businesses are, as the engine room of our economy. When visiting Esme's cafe in Forbes in my electorate, Linda Rees, the owner, pulled me aside. She said she wanted to show me the instant asset write-off. She wanted to show me exactly how she had invested in her business: the new industrial dishwasher and the new stainless steel servery. She was considering selling the business and, indeed, she got so many more customers through the door she maintained the ownership of that business for quite a bit longer. Then, indeed, she did sell it for a higher price than she would have got had she not invested in the instant asset write-off. Now, on the brink of making the decision to sell the business and move on, the instant depreciation of new equipment helped Linda and helped Esme's cafe, to make the business more viable and to make it more saleable. Indeed, she got a higher price. Ask any Australian small business owner what they would do with a tax cut and you will learn about their ambition.

In Gumdale in Queensland, in the member for Bonner's electorate, Joy de Beer, who runs Take Away Bins—a skip and industrial bin hire business—told me how her business would have closed but for the tax cut that we have delivered. She said: 'The tax would have killed us. The federal government saved my business.' That is what she said in Queensland. She said, 'We would've gone under without the tax cut.' It is a never-ending story of putting the investment in their pocket. That is what the coalition is doing.

Tanya Simmons from Bennetts Steel in Wauchope, in the member for Lyne's electorate, explained how the extra cash in her pocket from paying less tax will help her hire more local trainees and apprentices. They design and manufacture a flat pack fireplace—the perfect addition to your camping and caravanning get away. It is local innovation at its best. This government is made of members who understand small business. We have run our own small businesses. We have not run them into the ground, like those opposite would. We have employed our own people. We understand that in business you have to take on risk to get ahead of the game and to get more customers through the door.

Another central tenet of this plan is changing the definition of 'small business' to a business with an annual turnover of $10 million, giving thousands and thousands more small businesses across this wide brown land the tax cut I mentioned earlier. It is a genuine plan for growth, to create more jobs and to create more opportunities for more Australians.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 amendments. We oppose this motion. The Treasurer has had a great revelation in the last few days. He has had an epiphany and he has revealed something to the Australian people. 'Budgets,' he has told us, 'are about choices.' I am not sure what he thought they were about before the last few days. They are about choices, and this government makes the wrong choices every single time. This week we have seen those choices laid bare, and we will see more tonight.

The government had part of their one-point plan for jobs and growth pass through the Senate. It is part of their one-point plan. It is now a fraction of a one-point plan that they have passed through the Senate. Out of their one-point plan, they got some of it through. This one-point plan is going to generate an economy one per cent bigger in 20 years time. What they did get through will cost over the next decade $24 billion. This week we heard the minister boasting that they have cost the budget $24 billion as they cut $22 billion out of Australia's schools. Those are the wrong priorities. They are the wrong choices for Australia's future that this government is imposing and will impose tonight. By the end of the decade, their corporate tax cut in the total package they are committed to, and have told us they will introduce any time now for the rest of the $50 billion, will cost the budget—wait for it—$14 billion a year. That is what they are boasting about. They say difficult decisions are necessary and they say tough choices are necessary. At the same time, they say they can afford to give this money away but they have to take $22 billion away from schools.

The same government this week told the Australian people that their housing affordability plan involves university graduates paying back their debt earlier, at $42,000 a year. Now, $42,000 a year is not a high salary, but this Prime Minister thinks that that is when you can start to afford to pay back your HELP debt. This is about wrong priorities. The government are increasing student fees by eight per cent, making graduates pay earlier, ripping money away from schools and sending the Catholic education system into meltdown due to their lack of consultation and their lack of policy nous at the same time as they are boasting about their priorities.

This is an important day in this parliament. I tell you what, Mr Speaker, 1 July will be an important day for Australia because that is when the choices made by this government will be made clear. Let's call it 'Choice Day' because this government's choices—the decisions this Prime Minister, this Treasurer and the entire government have made over recent weeks and months—will be made clear. On 1 July high income earners will get a tax cut as the deficit levy comes off. On 1 July Australia's workers who commit no crime other than working on a Sunday will take a pay cut due to choices by this government. On 1 July some businesses will receive a tax cut as well due to choices by this government.

Yes, budgets are about choices. Budgets are about priorities. Budgets are about values. The choice is clear in the contest of ideas between the two sides of this parliament. We will wage that battle in this room, in the other place and in the community. That is a battle we relish because we welcome this fight over choices and because we are proud of the ones we have made. We are proud of the choices we have made, as difficult as some of them have been, because we have put Australians first when it comes to homeownership. We have said we will reform negative gearing and capital gains tax. It is good for the budget, good for financial stability and good for homeownership. This government says it will do none of the above. This is a government whose one-point plan is now a fraction of a one-point plan, and they boast about it at the same time as making the wrong choices for Australia.

The Australian people have a very clear choice that will be laid out tonight as this government's priorities are there again to see. You can have a choice between a corporate tax cut or better funding for schools, but you cannot have both. You can have a choice of a government which believes the answer to low wages growth and record high profits is a corporate tax cut and a cut to penalty rates. If they think the answer to the challenge in Australia of low wages growth is to cut wages further, that says it all. If they actually think, when they sit down and look at the priorities and the values for the future, that they can justify a corporate tax cut when they lecture us about tightening our belts, when they lecture Australia's families and workers about the need for tough choices and when they boast about this resolution they are bringing into the House today, it says it all. It says it all about a Prime Minister on borrowed time—a Prime Minister who is clinging onto his job, so desperate for one Newspoll that is positive— (Time expired)

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I rise again to speak on these amendments to the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2017. The shadow Treasurer talked about 'Choice Day'. Indeed, it is Choice Day. Labor can come in here and they can vote for the Ten Year Enterprise Tax Plan. They can vote for lowering the company tax rate. They can vote for a redefinition of what a small business actually is. They can vote for jobs for Australians. They can vote for more hope and for more prosperity for Australians. Or they can continue to be obstructionist. They can continue to be negative. They can continue to run small businesses down. As I said before, in my summing up, when I go around I do not just sit in darkened little rooms, like the member for Fenner, and write stupid little press releases and not always get them quite right. What I do—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The minister will not use unparliamentary language.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Well, they are not very well written press releases, Mr Speaker, with all due respect. What I do is to get out and about—out and about, right throughout the electorates of Australia. In fact, I visited 24 electorates in recent weeks—24 electorates! I heard how companies and how small businesses want some relief. They want the 27½ per cent; indeed, they want the instant asset write-off. And that is something that the member for McMahon also once aspired to. In Hearts & Minds in 2013, in a chapter on promoting growth through cutting company tax, he said:

… Keating knew that the corporate tax rate needed to be cut to make Australia competitive, that capital and investment would flow to tax-competitive nations and that this was an important job-creation move. Today capital is even more mobile than it was then and it is important that our corporate tax rate is competitive.

Well written! The member for Fenner ought to take some lessons in how to write from the member for McMahon. He continued:

And the United Kingdom, facing a much tougher fiscal situation than Australia's—

bear in mind that this was 2013—

cut its company tax rate to 23 per cent in April 2013, to be reduced further to 21 per cent in April 2014.

And he also wrote:

At 30 per cent, our company tax rate is now above the OECD average … it is how the rate compares to that of our competitors that counts.

That counts—indeed, so true! And here is the pivotal moment. We talk about epiphanies and here it is—this is the member for McMahon, writing in Hearts & Minds in 2013. Are we all listening? This is good—you need to listen up to this! He said:

… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

Why, then, does the member for McMahon come to the dispatch box and talk about running businesses into the ground?

I put this: he just said to the House: 'Here is the challenge, here is the opportunity. Here is the choice. It's "Choice Day".' Back small business or go to the next election and say that you are going to increase tax. What is it? Will Labor repeal this when in government? Will Labor, if they ever get back into the government—and God help us, if Labor ever do get hold of the Treasury benches again—overturn reducing the company tax rate to 27½ per cent for businesses with up to $10 million in turnover? Will they overturn the decision to back small business, to make small business able to have a go, to make small businesses able to be their best selves, to make small businesses able to create jobs and to make small businesses of up to $50 million turnover able to reduce their company tax rate to 25 per cent?

Or will Labor, indeed, overturn that and go back to 30 per cent? What is it? What is it going to be? I invite the shadow Treasurer to come back to the dispatch box and indeed tell us what it is going to be. He is right: it is Choice Day. It is a big choice day. We have a choice to back small business to be able to create more jobs and more opportunities, thereby getting more Australians to work, or for Labor to oppose this by coming to the dispatch box and saying that after the next election they will increase small business company tax rates. There is the clear decision. The member for McMahon said, 'We will fight you all the way to the election.'

Well, we will! Indeed, we will fight you all the way to the next election, because we stand up for small business. We stand up for lowering the company tax rate and we stand up for more small businesses being able to take advantage of the instant asset write-off, to be able to invest in their capital equipment and in their businesses, and to be able to employ more Australians.

I would have thought that Labor, once the party for the worker, would also have stood up for the same things. (Time expired)

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I rise to speak on the amendments to the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016.

In July 2009, the member for Wentworth, in his first stint as temporary leader of the coalition, launched the coalition's debt truck. He said:

The debt truck is an important way of drawing to the reality of this debt. This is not a question of spin.

Speaking on the AM program, Mr Turnbull said that the country's debt levels would be 'dramatically' lower under a coalition government. Of course, at that stage, gross debt was around $100 billion. Now, as the member for Rankin has frequently pointed out, we are within 100 days of gross debt crashing through the half-a-trillion-dollars banner.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Fenner will resume his seat. We are going to cover some old territory, which I have covered with the member for Fenner before. I do allow some latitude, but he needs to be relevant to the matter before the House. He does not need to be relevant to something he has prepared on another topic. He needs to relate that material, and we have gone quite a way into it already. So the member for Fenner will need to relate his material to the substance of the question before the House.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Thank you, Mr Speaker. If you cut the company tax rate you will have more debt, and right now we have debt rising faster than it was during the global financial crisis. We have, from this side of the House, a series of constructive policies that would see Australia retain its AAA credit rating, such as Labor's negative gearing, superannuation and capital gains tax changes. From the other side of the House, we have a tax cut delivering $16,400 to millionaires, and we have a corporate tax cut which is going to cost the budget billions of dollars.

The argument we get for this corporate tax cut is that Australia has a peculiarly high company tax rate. Let's look to the evidence on that. In March of this year, the US Congressional Budget Office brought down a report on corporate tax rates in G20 countries. The report shows that on the statutory corporate tax rates, Australia is not at the top but slap-bang in the middle. Australia's statutory corporate tax rate is average for the G20. But the CBO then goes on to look at our average tax rate—that is, the amount of company tax paid as a share of corporate income. It found that was 17 per cent—the fourth lowest in the OECD. And we have recently had—thanks to Labor's tax transparency laws—the revelation that one in three big Australian companies do not pay any corporate tax. So this idea that Australian companies are being slugged a uniquely tough burden just does not stand up to the facts. The Congressional Budget Office finds that whether you look at statutory rates, average rates or effective marginal rates, Australia's company tax rates are average or lower than the G20.

The government's own modelling suggests that this delivers extremely little for the economy. Their own paper Analysis of the long term effects of a company tax cutfinds that in the first instance most of the benefits of a company tax cut flow overseas. As the Grattan Institute's John Daley has noted, benefits only flow to domestic shareholders if the profits are reinvested rather than paid out. Indeed, if US-based multinationals repatriate their profits then there will actually be a benefit to the US taxpayer from a cut to the Australian company tax rate. But the benefit to Australian households is tiny. The benefit to households, on the government's own modelling with the most credible scenario, is 0.1 per cent. It is not annualised; that is 0.1 per cent in total.

We are being asked here to support a budget-busting tax cut for big businesses—a tax cut which is coming at a time when this government has turned one debt truck into five debt trucks and is still driving them out the door. They have a convoy of debt trucks, as the deputy leader has pointed out, yet they still believe the right prescription for Australia is not funding Medicare or looking after schools but giving big company tax cuts for the big banks and the big multinationals and a $16,400 personal income tax cut to Australia's millionaires. When inequality is at a 75-year high, living standards are sluggish and underemployment is at a record high, this is the wrong prescription for the nation. (Time expired)

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

The shadow Assistant Treasurer talks about that great movie Convoy'So we crashed the gate doing ninety-eight. I says "Let them truckers roll, 10-4."' That is what Labor did when they were in power. It was the debt truck out of control. How hypocritical of him to come in here and talk about a debt truck, let alone a convoy. Labor has not produced a surplus since 1989, so I would not be talking about debt trucks if I were you, shadow Assistant Treasurer. I would not be talking about—

Mr Albanese interjecting—

Leave! Go an put another media release out about the member for Maribyrnong. It was a good one yesterday.

Labor's hypocrisy on the government's enterprise tax plan is a repudiation of decades of bipartisan support for small and medium sized businesses. On 3 June 2016, former Labor Party president Warren Mundine wrote in TheDaily Telegraph:

Past Labor leaders understood government can only create the conditions for jobs and enterprise to thrive. It's business that generates economic growth through investment and innovation. Federal Labor don't seem to get this.

They did not seem to get it when Warren Mundine wrote that in 2016. I would argue, as would those behind me, as would the small business community and as would many Labor leaders of the past, that it still rings true on this day—'choice day', as the shadow Treasurer said.

Many past Labor figures, figures in the Rudd government, commissioned Ken Henry to review the tax system. The final report, released in August 2008, recommended a tax burden on Australian business, focused on the need to support small business to grow the economy. Former Prime Minister Paul Keating, in a speech in Bankstown back in 1993—the member for Fenner likes to dig into history, so here is one for him—said:

We will need to grow companies committed to Australia, with workers committed to Australia.

Our success as a nation will depend upon our companies …

It was true then and it is true now.

Prime Minister Julia Gillard, in question time on 13 March 2012, said:

People who care about small business would care about delivering a tax cut to small business. People who care about small business would be interested in delivering an instant asset write-off benefit for small business.

So why does the member for Fenner, why does the member for McMahon and why does the member for Maribyrnong want to oppose that now? Why would they want to oppose giving it to more small businesses than just those with under $2 million turnover? Why wouldn't they want to give it to businesses with a turnover of up to $10 million? Why wouldn't they want to lower the company corporate tax rate to 27½ per cent for businesses up with a turnover of up to $10 million? Why wouldn't they want to get on board with the Ten Year Enterprise Tax Plan, so that eventually businesses with a turnover of up to $50 million could take advantage of a company tax rate of 25 per cent?

Greg Combet, in question time on 14 February 2012, said:

That is why we are introducing important reforms that will boost productivity, lift workforce skills and improve the competitiveness of the economy. How are we doing it? Labor wants to help companies invest, and one of the important ways of doing that is to cut the company tax rate …

That is what Greg Combet said. Wayne Swan is still in the building. He is still the member for Lilley. Back in March 2012 he was the Treasurer. He said:

That is why we are putting in place the big economic reforms to ensure prosperity for the future. That is why we on this side of the House want to cut company tax by one per cent …

Mr Thistlethwaite interjecting—

I have far more material. I have reams more material. I have gathered that material from real businesses and from real people running those real businesses in Queensland and in the ACT. It does not matter what state or what territory you go to, whether it is in Gippsland, whether it is in Melbourne—in your home town, Mr Speaker—or wherever it is, companies want the tax rate lowered. Companies want access to that instant asset write-off. Companies want this side of parliament to continue to back them, but they also want that side of parliament to back them. They cannot understand why that side of parliament just wants to be a roadblock in their pathway to success, in their pathway to prosperity, in their pathway to making sure that there are more Australians employed. That is what we want to do. We want to back a tax cut for small businesses. We know that small businesses always reinvest any money that they get, or almost always, into their business and into creating job opportunities for more Australians, sooner.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I rise to speak on the amendments to the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016.

The government's $50 billion handout to multinational corporations and the big banks says more about them and more about their budget than all of the spin, all of the glossy documents, all the political patch-ups, all the pre-rehearsed lines and all the market-tested slogans like 'fairness and opportunity and security' that we heard from the Treasurer this morning in that embarrassing doorstop interview out the front of this building.

As some of us were listening to him, we started to think, 'Where did he all of a sudden get this conversion? Where did he get this idea that, all of a sudden, fairness and security and opportunity were important things for people to aspire to in this country?' I remembered this article from April in The Daily Telegraph by Sharri Markson. It said:

The Daily Telegraph has learned the Liberal Party commissioned research firm Crosby Textor to help Mr Morrison formulate his second Budget, at a cost of more than $200,000.

An opposition member: Two hundred thousand!

Two hundred thousand dollars. When I thought about that, I thought, 'No wonder the budget's in so much trouble.' This is a Treasurer who spends $66,666.67 per word on a three-word slogan. It cost him $200,000 at Crosby Textor to learn, all of a sudden, to his great surprise, that people care about fairness and security and opportunity. This is a guy who learns about fairness from a focus group. On this side of the House, we do not need a focus group to know about fairness; we are here because we believe in fairness—it is the reason why we are here. You do not need a focus group to learn about fairness; you need a heart, and that is what is missing on that side of the House.

The government are on about these things today because the focus group told them to be on about them today, after they dropped $200,000 on that cynical political patch-up. That is why they are pretending now to care about Medicare and pretending to care about our schools. They are trying to distract from these big increases to the cost of living and all the rest of it. They have the nerve to talk about fairness when they want to take money from students in this country to fund a $50 billion tax cut. They talk about security when job security in this country has never been worse when it comes to underemployment and wage security—things like penalty rates. They talk about opportunity at the same time as they want to close off access, for kids from areas like mine and so many that we represent on this side, to university and to getting a decent start at school. For as long as this $50 billion tax cut is in their budget, for as long as it is their one-point plan, it will be the symbol of a government who shower largesse on the top end of town at the expense of people who work and people who struggle in this country.

We will get an update of the numbers tonight. All will be revealed in the next few hours. But we know enough about it and we know enough about them to know that it will be another shambles. It will be another shambles from an arrogant and out-of-touch Prime Minister and a divided and dysfunctional government. Theirs is a record that they want to run from, but they cannot hide. They have been asking for some years now—and this will continue tonight—the most vulnerable people in this country to carry the can for their budget failures, and that is why, no matter what they try and fix up and patch up tonight, we will still have the attacks on health and education and family living standards in this country.

The Treasurer has tried as well, in his typically and characteristically ham-fisted way, to redefine debt to hide from the fact that debt and deficit—this might be news to the Minister for Small Business—have blown out substantially under those opposite. You think of the deficit for this year alone. It was about $11 billion in their first budget; it is now about $37 billion—it has more than tripled on their watch. When you think about net debt, there has been a blowout in net debt for this year of about $100 billion. You think about gross debt. Gross debt is about to crash through half a trillion dollars in this country. And they wonder why the AAA credit rating is at such serious risk.

This tax cut is not about growth; it is about trickle-down economics at its worst, paid for by families and paid for by students. That is why everybody on this side of the House will oppose this tax cut, this corporate largesse, on behalf of people who work and people who struggle, who do not get a look-in from this government and will not get a look-in tonight.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

The member for Rankin was in the member for Lilley's office when the member for Lilley was the Treasurer. The member for Lilley stood at this very spot—he did not do a great job—and said during a budget night speech:

The four years of surpluses I announce tonight—

I mean, what an absolute joke! The member for Rankin probably had a hand in writing that speech—absolutely ridiculous. There is not as big a deficit, Member for Rankin, as the member for Lilley produced with you in his office writing his speeches and providing advice. I mean, really! Come on! Be a little bit fair dinkum.

I would like to quote now from the member for Fenner, because he has made some interesting remarks. I read his contributions very carefully, as do the readers of the Fairfax papers. He said in a speech delivered at the corporate tax and transfer pricing summit, reported on 18 November 2015:

… Bill Shorten and Chris Bowen—

Dr Leigh interjecting—

Please be quiet, Member for Fenner, so you can listen to what you wrote, because you might need to take this in:

… Bill Shorten and Chris Bowen have outlined Labor's long-term objective to lower Australia's small business tax rate to 25 per cent.

There you go—25 per cent. That is what we are trying to do, Member for Fenner. He continued:

We know this can't be done tomorrow with the deficit as it is … we've called on the Government to work with us on achieving that objective in the years ahead because we understand the corporate tax rate is part of the calculus that affects investment.

Then he was on Sky News, on AM Agenda on 21 March 2016.

Dr Chalmers interjecting—

Yes, he went on Sky, Member for Rankin. Kieran Gilbert was interviewing him—a good bloke, Kieran Gilbert. He quizzed the shadow Assistant Treasurer and said:

… if you look at the current situation in terms of the corporate sector, you've got 28.5 per cent for small business and 30 per cent for big business. It makes sense to get them on the same level doesn't it?

The member for Fenner answered:

Long term that would certainly make sense.

Well, this is long term, Member for Fenner. This is a 10-year enterprise tax plan. But in the short term we need to get the company tax rate down to 27½ per cent. We need to make sure that more small businesses are eligible, and that is why we are lifting the threshold of turnover from $2 million per year to $10 million per year. Labor does not always understand that just turning over, say, $5½ million does not mean you are taking that home. In many cases, some of the small business people opening their doors very early of a morning, closing them very late at night, going home, doing all the domestic things that small business owners and operators do and then getting stuck into the paperwork—

Opposition members interjecting—

They laugh over there, but they do not understand that small businesses might have high turnover but low profit margins. Indeed, some of these owner-operators are taking home less than the people they employ. How is that fair?

What we want to do on this side is give them a bit more money so that they can reinvest in their business if they so choose. Many of those small businesses do choose to reinvest in their business, and by doing so they employ more Australians, and that is a good thing. They employ more Australians. I would have thought that Labor—once spelt with a u and once a party that supported—

Opposition members interjecting—

I think it might have been, so you might just check your facts on that. Anyway, we will ask the member for Fenner to do an op-ed on that, perhaps—but eyether/eether. Labor, with a u or without—it matters not—talked about workers. It was supposed to be the party for workers. By opposing this very good legislation, this very good bill before the House today, Labor is showing that it does not stick up for workers. Labor is showing that it does not want small businesses to get some relief, ease some of the burden and be able to put on more Australians—to hire that young apprentice, put on that older Australian and give somebody a go, perhaps in their first start or perhaps to give somebody who has been long-term unemployed a crack at a job, because the best way out of welfare is by having a job. I would have thought that for this country's small businesses—the millions of small businesses across this country who employ 5½ million Australians—those opposite would have wanted to ease the burden, ease that pressure and enable those small businesses to employ even more Australians. We need those small businesses to be humming along nicely. We need them to be able to create more jobs for more Australians.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I and my Labor colleagues are opposed to these amendments. We are opposed because they represent a dodgy deal with the Senate crossbench, from a dodgy government. What they will do is see Australian workers, pensioners, students and families worse off, yet at the same time they are offering a tax cut to some of the biggest corporations in this country. So the government are going to say to Australian workers: 'We'll make life harder for you. We'll make it harder for you to make ends meet.' The government are giving students the one-finger salute by saying, 'We're going to make you pay more for your university fees to get an education in this country.' For students in our schools, they are cutting $22 billion from the schools education budget over the course of the forward estimates. And they are making families far worse off by cutting family payments. Yet, at the same time, they want to offer a tax cut to Australian businesses.

They have brought these amendments here with a threshold of $10 million, but as we will see this evening in the government's budget their clear intention is to raise that threshold over time so that that tax cut applies to all Australian businesses. Let's look at some of those businesses that will benefit from this government's tax cut. The mining and resources companies are clearly doing it tough at the moment! Some of those that are subject to the petroleum resource rent tax, in particular, are clearly doing it tough! They are clearly paying too much tax at the moment!

Then, of course, there are the big four banks. Australia's big four banks have made an art form out of ripping off their Australian customers over the course of the last decade. Well, they clearly need a tax cut, don't they! The banks have been in the media again this week because some of them have announced their half-yearly profits. This week we have seen that Westpac has announced a half-yearly profit of $4 billion, which is close to a six per cent increase in their revenue over the course of the last six months. A profit of $4 billion is clearly not enough money! And this government thinks that they deserve a tax cut. Then of course there are our great friends the CBA, the Commonwealth Bank of Australia, who went through the CommInsure scandal and who have gone through their wealth management scandal that resulted in nearly every single customer's file having to be reviewed not only by them but by ASIC as well. They made a half-yearly profit of $4.9 billion—again, close to a six per cent increase in their revenue. Clearly, the government believes that this is not enough; this simply is not enough. So it says: 'We'll give them a tax cut. We'll give those organisations that have been ripping off Australian workers, pensioners and families a tax cut. We'll make it life easier for them, but we'll make life much harder for Australian workers, families and pensioners.'

A policy like this would make some sense if it produced an economic benefit for the country. But those on the opposite side, like the Trump government in America, believe in this notion of trickle-down economics: if you cut taxes for corporations, everything will be all right and all of that benefit will flow down through investment and will trickle down to the average Australian worker. Well, it is complete rubbish. It does not work and it has never worked, but that is the twisted belief and the twisted priority of this government when it comes to budget priorities and budget planning. All that we will see is Australian workers worse off, real incomes cut, Australian pensioners worse off and Australian students worse off.

Treasury's own modelling on this tax cut produces little or no economic benefit over the course of the next decade and beyond. In fact, the benefit to the economy, in terms of GDP over the next 20 years, is less than one per cent and there will be no great effect on employment either. But at the same time they are going to cut $22 billion from the schools education budget over the course of the next decade. So here we have a $50 billion tax cut taking $50 billion out of the budget through a big tax cut for some of the biggest businesses in the country, which clearly do not need it, but at the same time they will take $22 billion out of the schools budget and make it harder for schools to make ends meet and for our kids to get a decent education. Those are the twisted priorities of this government, and that is why these amendments must be voted down.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I encourage, urge and implore the member for Kingsford Smith to listen very carefully to the Treasurer in relation to education in his budget speech tonight, I really do, and I urge all Labor members opposite to listen to the entirety of the speech, because it is going to talk about fairness. It is going to talk about making sure that our small businesses get the fairness they deserve. They deserve a lowering of the company tax rate. The member for Kingsford Smith used the typical Labor lines of demonising banks and demonising mining companies. They employ Australians too. They do. They employ them in regional areas. The member for Kingsford Smith should get out of Mascot sometimes and come over the Great Dividing Range. There is a whole wide world out there of small businesses, from garages in Gippsland to bakeries up in Capricornia. It does not matter where you go in this great country of ours, there are small businesses relying on the government to largely get out of the way, to give them a tax break; give them that instant asset write-off; make sure that we back them; make sure that we are talking positively about them; make sure that we are lowering the compliance burden; make sure that we are easing their red tape burden; but largely, Member for Kingsford Smith, get out of their way and let them do what they do best.

The member for Kingsford Smith talked about trickle-down economics. The member for Griffith went, 'Hear, hear!' The member for Griffith went, 'Yeah, that's right, trickle-down economics.' I do not hear anybody talking about trickle-down economics when I go out there and talk to small businesses. The ladies in the bakery are not talking about trickle-down economics and the blokes in the garages are not, but I will tell you what they are talking about. They are talking about jobs. They are talking about their own jobs. They are talking about their kids' jobs. And they are talking about their grandkids' jobs. That is what they want. Whether they are small businesses or not, they want to hear their government, their parliament, talking about them. They do not want to hear about trickle-down economics. They do not even talk to me about that. What they want to hear about is lowering the company tax rate, easing red tape, making sure that they can buy capital equipment and making sure that there is going to be job security. That is what they talk about. They do not talk about all this highfalutin economics stuff that the member for Fenner writes in his op-eds. They do not talk about that. What they do talk about is jobs.

That is why this policy, this bill, is so important, and I just do not why you do not get that. I just do not know, Member for Kingsford Smith, why you do not understand that, because it is about jobs. It is about making sure there is job security for the future, making sure that our small businesses, whether they are in your great electorate—and it is a great electorate; I know it is a great electorate. I know there are some fine constituents in your electorate. I know they do not all vote for my side of politics—I do know that. But even those who do not vote for our side of politics understand how important small business is. They understand that when you ease the tax rate for small businesses they employ more people, when you ease conditions for small businesses—as in red tape, as in bureaucracy, as in green tape, as in compliance, as in all the paperwork—they get on with the job of employing more Australians, whether it is in Kingsford Smith, whether it is in the Riverina and the Central West or whether it is in Capricornia, Gippsland, Rankin or McMahon; it does not matter. But they understand that it is all about jobs, not necessarily about trickle-down economics but about jobs.

That is the crux of this plan today. It is about good jobs, secure jobs, more jobs—good, secure and more jobs—because that is what this government is absolutely committed to: providing the economic conditions for our small businesses to get on with the task of repairing the economy.

Mr Stephen Jones interjecting—

Member for Whitlam, I do not know why you are standing up. You have not got the floor, and in your seat you should also be backing small business. You are pretty good at putting out media releases about regional Australians when you do not quite understand, but I tell you what—

Opposition members interjecting—

that is all you people ever do. It is what you did in government. It is what you are doing now in opposition. It is bureaucracy by press release. That is what you are doing.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I remind the minister that his remarks go through the chair.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Yes, Mr Chair, and certainly this small-business tax cut is so crucial. It is so crucial for our 3.2 million small businesses. It has a threshold up to $10 million turnover to allow a lowering of the company tax rate to 27.5 per cent. That is a company tax rate that will enable them to employ more Australians, to give that young Australian a go, to give that older Australian a crack at perhaps their first job in decades.

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, when the government have to put out the Minister for Small Business to defend a policy, you know they are in trouble. His greatest claim to fame when he retires and hangs up his boots will be stuffing up the ABS census. You know they are in trouble. This debate is about the eighties. The eighties are back, and you only have to look at this debate to understand it. When people say that the eighties are back, you can imagine the member for Riverina with a Flock of Seagulls haircut; you can imagine, maybe, the member for Gippsland with a Hypercolor T-shirt and cut-off jeans shorts. That would be a good revival of the eighties. But instead we have a sad and tragic revival of the Laffer curve and trickle-down economics, because this entire policy debate is based on these discredited economic policies.

The Laffer curve, the great brainchild of Ronald Reagan's economic guru, and trickle-down economics are two policies discredited in the 1980s and revived by this hopeless government, a government whose economic credentials are in tatters, with $500 billion in debt, triple the deficit, flat wage growth and a 75-year-high inequality rate. This is its economic legacy, which will be worsened even more by this embrace of the Laffer curve, which says that, if you cut taxes, you will see a rise in revenue. That was discredited in the eighties, and this policy will be discredited again.

The shadow Treasurer has put on record again that this policy not only will cost $48 billion but, by the peak, will cost the government budget bottom line $14 billion per annum. Goldman Sachs, the Prime Minister's own favourite merchant bank, has found that 60 per cent of the benefit will go to foreigners. In fact, the US Internal Revenue Service will be the greatest beneficiary. They will get $8 billion of the $48 billion. And who is the greatest beneficiary in Australia? The banks. The big four banks will get $7 billion of this $48 billion. What is the pay-off? What is the pay-off for this?

We had this rant from the Minister for Small Business: 'It's all about jobs. It's all about jobs.' He says we are betraying Australians because we are not talking about jobs enough. Their own modelling—their own highly optimistic modelling—finds, in 20 years time, a 0.1 per cent increase in employment. That is not per annum; it is overall: a 0.1 per cent increase in jobs. That is incredible. That is a rounding error.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

That is the full plan.

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Exactly. That is the full plan. This is half a plan, a quarter of a plan—a 0.1 per cent increase in jobs. And how are they paying for it? There is a $3 billion cut to our universities, a tragic cut that will have a massive impact on my region, and a $22 billion cut to school education.

The Treasurer said one correct thing this morning. He got one thing right. A broken clock is right twice a day, so he is halfway to his KPI. He said that budgets are about choices. Budgets are about choices, and this is what this is. This is a choice, a choice to cut education by $25 billion to fund a corporate tax cut, a corporate tax cut based on discredited economic theories, based on the Laffer curve and trickle-down economics, based on all those flawed economic policies. And what is the pay-off? A 0.1 per cent increase in employment.

I would submit, and most credible economists would agree with me, that pumping $48 billion into education or into productive infrastructure would have a much more meaningful impact on economic growth and jobs than this cut. But this is what we are talking about: a government that has lost its way. In 2015, those opposite had just knifed the Prime Minister. They needed some sort of economic centrepiece to run to an election on, and they had 'jobs and growth'. Their one policy on jobs and growth was this hopeless corporate tax cut that will have an infinitesimally small pay-off for the economy, at best; will heighten inequality; and will blow out the budget bottom line, all to reward their corporate mates. It will go down in history as another flawed economic policy from this flawed government.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

In an earlier offering the member for Fenner questioned the amount of tax being paid by our big multinationals, but he knows as well as anyone that the profits diversion tax legislation—I hope Labor supports it—is, hopefully, going through. He knows also that there is a crackdown on multinational tax avoidance. The Turnbull government's tough new laws provide the Australian Taxation Office with the powers and indeed the penalties that it needs to ensure the Australian people receive the tax owed to them.

Australian small businesses open their doors, pay rent, turn the power on—in South Australia sometimes they do not get that option, because of the Weatherill government there and its manic policies, which are quite unreasonable—and pay their staff. Small businesses pay rates and all the rest. Why is it fair that they are open for business and multinationals operating in Australia are not? That is why the Treasurer and the Minister for Revenue and Financial Services put out a joint media release on 6 April—

Dr Chalmers interjecting—

Member for Rankin, this is a good media release, unlike some of those written by those opposite. In the release the two aforementioned ministers said that the ATO has made significant progress and confirmed that it has raised $2.9 billion in tax liabilities against a group of seven multinational companies. That was money that was escaping the net when Labor was in power. That was money that was escaping the net when the now member for Rankin was providing advice for the then member for Lilley, the then Treasurer.

Indeed, the ATO is auditing 59 multinational corporations and hundreds of other companies to ensure that compliance with our taxation laws, including the government's new multinational anti-avoidance law, is followed through. The Treasurer said:

Our multinational tax laws are having an impact and we now have one of the toughest, if not the toughest, anti-avoidance tax regimes in the world. Multinational companies are being put on notice.

He continued:

The Australian people expect all corporations to pay the right amount of tax …

He is right, of course. Minister O'Dwyer said that it was important that everyday Australians pay their tax. They cannot avoid it, so it is absolutely right that any large corporation that is not paying the right amount of tax should be vigorously pursued by the ATO through the court system.

A special 1,000-strong task force within the Australian Taxation Office has been investigating the tax arrangements of a large number of companies, including multinational corporations operating in Australia. The ATO crackdown includes 71 audits in the large business area and covers 59 multinational corporations—this is underway—as well as hundreds of other companies being reviewed for compliance. According to the tax office, at least seven major national audits are expected to come to a head before the end of this financial year: four in e-commerce and three in the energy and resource industries sector. As a result of this, the tax office has confirmed that it has so far issued $2.9 billion in tax liabilities due for multinational enterprises. That is important. It is expected that some of these will be settled by the companies involved and others are likely to be litigated.

One way or the other, the money is owed to Australia. One way or the other, it needs to be spent on schools, roads, health facilities and all those important things. Australian companies pay tax; why shouldn't the multinationals? That is why this legislation brought into this place by this government and passed through the Senate is so crucial, so integral to making sure that companies are paying their fair share. The ATO has recently met with 175 affected taxpayers or their advisers about their structures and to ensure they are compliant with the requirements under this legislation. Combating tax avoidance, especially by multinational corporations, will assist in ensuring the government can sustainably fund the services that all Australians rely upon, that all Australians demand, expect and deserve. Labor opposed and voted against the legislation, would you believe? They are all talk when it comes to multinational tax—all talk. We have heard the member for Rankin do it. The government is getting on with the job of ensuring that multinationals pay the right amount of tax. I thought I would make those few points so that the member for Fenner, who raised this earlier, was advised of the correct legislation in the House.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

It has been a bravura performance from the Minister for Small Business. He has mentioned our friend the member for Fenner so many times that I was wondering whether they were having a fatal attraction moment. He talked so often about him that you get this Pavlovian response: every time the member for Fenner opens his mouth, the minister has to jump to his feet.

The other bizarre thing was the reference back and forth about National Party members and voters in the member for Kingsford Smith's seat. This made me think: what do you call a National Party member in Maroubra? An anomaly. I know the member for Whitlam would refer to them as tourists, but it is an anomaly. We have gone through everything. The reality is that this plan is thrashing around for purpose. This plan is thrashing around for reason. This plan is thrashing around for any attempt, anything whatsoever, to save the Prime Minister, to be able to demonstrate that something, anything, is being done. It is not being done with any economic thought in mind and it is not being done to actually improve the economy in any meaningful way. For example, those on the other side say: 'We need to do this to help companies. We need to do this to boost their profitability. We need to do this so that they can operate more efficiently.'

Mr Laundy interjecting—

Let me explain it to you this way, Member for Reid: look at where dividends have gone from 2014 to 2017. Dividends have gone from $40 billion to $70 billion—that is, $30 billion in three years. We need to put in a tax plan to be able to help those companies that are paying out to investors an extra $30 billion. The money is there. Are they spending it on better wage outcomes? No. What have we got? We have got record low wages growth. What else have we got? Record high underemployment. These companies are not handing it out in terms of employees. In fact, it will be interesting to see, in their own budget, what impact wages growth has on the budget. We will be interested to see that. Are these businesses that have billions extra in dividends investing? No. What is capex doing under your watch? What is the level of business investment in this country under your watch? Tanking. Absolutely floored. It is not that the money is being used for workers and it is not that the money is being used to improve the economy; it is going straight to investors. So what do these guys do? For those opposite, their great plan is to take a big chunk of money that would go into investing in, for example, the skills of future Australians—by putting it into education, TAFE, schools and universities—but, no, they are not going to invest in that. What they are going to do is take a big slice of federal funds and hand it to a bunch of investors who have already got $30 billion extra in dividend growth and then they are going to fund an even greater amount of money by taking if off schoolkids and giving it to investors. This tells you exactly what the values of those opposite are. They do not see an investment in education as a proper thing to do. No, that is bad debt. We do not invest in schoolchildren. What we will do is hand over all this money. As you have heard, as the member for Shortland rightly pointed out, where does the bulk of the money go? Eight billion dollars of it goes offshore. It is not invested here. It goes offshore. It goes away elsewhere.

This is what I am saying when I indicate to people that this is not a plan mired in improving the economic viability or the strength of the nation. No. This is not a plan for a longer term view about what we should be doing as a country. No. This is just an idea. This is thrashing around for something, anything, to save those opposite and to be seen to be doing something. But here is the thing: longer term, we lose out. We do not have that money for education, we do not have that money for infrastructure and we do not have that money to actually strengthen the economy. It will just go straight out the door. It will be forgotten like yesterday's headline. As a result, if we were to get this plan through, what would happen? They would go on to the next big thing and stuff that up anyway. The very thing that is being promoted as some way or some means of saving the Prime Minister will be forgotten in a heartbeat tomorrow. What we need is a longer term view about what is good for the country. We do not need the short termism that is being promoted by those opposite.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I thank all the members who have spoken in this debate; it has been a robust one. And it should be a robust one, because small business is important. Small business is absolutely vital to the economy. Whether it is in an area that is remote, regional, rural, suburban or metropolitan—right in the inner heart of our large capital cities—small businesses are vital. They are working each and every day to get on board with helping us to reduce the national debt; they are helping us to employ more Australians and they are making sure that they do the right thing by the economy. And we are doing the right thing by them, by levelling the playing field through section 46: goods and services tax on online purchases; making sure that companies which are trading into Australia and have a turnover of $75,000 are paying GST; unincorporated tax discount—that has been a good move too; the appointment on 11 March last year of Kate Carnell to the position of the Australian Small Business and Family Enterprise Ombudsman. There are those two words in there: 'family enterprise'. There are so many of our small businesses which are mum-and-dad operators—family businesses.

Then there are the unfair contract terms for small businesses; we are getting on board with that. There is the National Innovation and Science Agenda; there are so many things that we are doing for small business. I would urge and encourage anyone out there listening to this debate to search for 'small business'; it will take you straight to business.gov.au, which has so many tips for small businesses on how to create even further opportunities for themselves. Perhaps it is through our trade agreements that we have been able to broker with South Korea, with China and with Japan. Perhaps it is compliance and how we are simplifying the business activity statement from 1 July. Perhaps it is through the instant asset write-off program and how they can take advantage of that up until 30 June this year.

I urge and encourage everybody in this parliament to get on board with making sure that small businesses have the ability to back their own dreams. That is what it is all about. Australia's economy is strong thanks to small business. It is Australia's job to create a small business sector; it is not government. As I said before, 3.2 million small businesses employ 5.5 million Australians. The small business sector makes a huge contribution to our economy. We want small businesses to grow. We want to back them. They take the risks. We want to make sure that those risks are met with a lowering of the company tax rate and are met with all the good policies which are all incorporated and embedded in the Treasury laws amendment.

Small businesses make up 99 per cent of Australian businesses, contributing more than $380 billion to our economy. The federal government backs them. We get behind them through lower taxes, simpler paper work, help to purchase new capital equipment and access to new markets through those fantastic trade agreements that we have been able to manage. We want to keep small business in the driver's seat. Lower taxes enable small businesses to grow, to employ more Australians and to get more customers. This is the start of the Australian government's plan for small business, and those opposite should heed the words of some of their luminaries who in the past said such things as:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.

Julia Gillard said that as Prime Minister in March 2012.

Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.

That was said by the member for Maribyrnong. The member for Grayndler said:

… there is also the reform of company tax. We on this side of the chamber believe it should be reduced by two per cent.

He said that in June 2010.

So there we have it: Julia Gillard, the member for Maribyrnong, and the member for Grayndler, all getting behind cutting company tax rates. Then why do not those two aforementioned members who are still in this parliament get behind it now? With that, I move:

That the question be now put.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that the question be put.

The House divided. [13:14]

(The Speaker—Hon. Tony Smith)

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question now is that the motion moved by the minister be agreed to.