Trevor Evans (Brisbane, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This is another key plank of this government's plan for more jobs and greater economic growth. It sits very comfortably side by side with our multinational tax avoidance laws, which sadly those opposite opposed but which nonetheless have clawed back almost $3 billion and counting so far in tax from multinationals. Our reforms so far and our economic plan are paying dividends, as seen in the recent economic data. In the first half of this year, we've had some of the fastest jobs growth in decades, and over the past 12 months we have seen almost a quarter of a million new jobs created, four out of five of which have been full-time jobs. That is the type of economic response that we hoped to achieve from our economic plan and from the first phase of our enterprise tax plan, so it is pleasing to see those early economic results. We hope to see more good economic news and better days ahead as we continue to pursue our economic plan.

I stand here in this parliament of and from Australia's small-business middle class. That is significantly as a result of the economic plan that we took to the last election, at which I was elected to ensure this government could pursue that economic plan and our election commitments. Our plan stands in stark contrast to the lack of a plan on the other side of this House. Our plan is cognisant of the ever-changing nature of the global economy. We're talking about big trends here—globalisation, digitalisation—trends and forces which Australia cannot, and probably should not, even attempt to hold back.

This is about updating our tax environment so that our local businesses can be as competitive and as flexible as they need to be in this new world. We know that at the most basic level Australia is relatively uncompetitive, compared to other Western nations and other nations around the world, when it comes to our corporate tax rates. The UK-based Oxford University Centre for Business Taxation found that Australia's corporate tax competitiveness on headline and effective tax rates was ranked the sixth worst out of 33 OECD countries, and the seventh worst on effective marginal tax rates.

The US administration have obviously outlined their corporate tax plan to bring their headline rates down to 15 per cent, but they're not the only ones. The UK is now sitting at 19 per cent, and has declared that it's heading to 17 per cent. Singapore is already at 17 per cent, and rates are also lower across most of Europe. Even the French President, Emmanuel Macron, has announced he intends to extend the planned French tax cuts, which reduces their corporate tax rates first to 28 per cent and then down to 25 per cent—very similar numbers to those that we are talking about here.

Without our ability to match international tax rates, Australia is unable to attract as many new businesses, to attract as much investment, to attract as many new jobs. If we're not competitive, international investment and companies will look past our advanced manufacturing industries, our highly-specialised services industries, our world-class education system and our productive and highly-skilled workforce. I will talk a little bit more on the importance of competitiveness later.

Regardless of the boost to competition, a tax cut is also fundamentally a boost to the economy. We know, through history, that every time Australia's had a corporate tax rate cut, our economy has grown. Higher-paying wages and more jobs for future generations should be the main objectives of every government, but we can't do that unless we have a company tax rate that allows us to compete globally and allows our businesses to reinvest and hire more employees.

This bill obviously follows the Treasury Laws Amendment (Enterprise Tax Plan) Bill that we delivered earlier in this term of the government. This is about the remainder of the government's plan to cut the company tax rate over many years to come. This government successfully passed those previous cuts to the company tax rate for small and medium businesses with an aggregated turnover of up to $50 million earlier this year, just after the budget. That's a good start. It impacts around 3.2 million businesses around Australia who employ over 6.5 million workers, but we can't afford to stop there. Under this bill, the turnover threshold to qualify for a lower tax rate will be progressively raised to cover all companies by 2024-25 before the company tax rate is reduced to 25 per cent for all companies by 2026-27.

The enterprise tax plan is a long-term vision for tax reform. It's a 10-year staggered approach. Therefore, it provides certainty to business, especially those looking to invest over a longer planning horizon. The government will lower the corporate tax rate to 25 per cent by 2026-27 for all companies. That will be, when it's achieved, the lowest corporate tax rate in Australia since the mid-1960s.

Australia has gone, over the space of many years, from having the ninth-lowest corporate tax rate amongst the advanced economies down to the equal fifth-highest, currently. While there's those who believe that Australia can't afford to make our business taxes competitive, the obvious point looking forward over the long term is how we can possibly afford not to be competitive and viable. That's why this government works so hard to get the first stage of this enterprise tax plan passed, and that's why we believe that the full enterprise tax plan should be implemented.

The lower corporate tax rate will improve the competitiveness of Australian businesses and generate more business investment. Economic modelling in Australia has fairly consistently found that the current tax system is a negative drag on the economy. Doing nothing is not an option if a more efficient tax system will help to grow the economy. Higher levels of business investment boost the productivity of Australian workers, reflecting improved output from using new tools, business systems and other capital. This improvement in productivity will drive increases in real wages. That's why it is so important. In the short term, the government's package of reforms across company tax and small business will support the transition to a more diversified economy and the creation of new and better jobs, especially in the non-mining sectors of the economy.

At the same time as reducing the corporate tax rate, the government is ensuring that businesses pay their fair share of tax by introducing tougher rules targeting multinationals, which I mentioned at the beginning of this speech. But where does the other side of the House stand on this? I suppose one has to be thankful that Labor's hypocrisy on these matters is readily observable, languishing as it does on bookshelves and in discount bins across Australia and acting as a constant reminder of their hollowed-out principles. If we cast our minds back to the shadow Treasurer's paperweight, he said:

But 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.

For a very long time this used to have bipartisan support in this parliament. We all aspired to cut Australia's corporate tax rate. For example:

Any student of Australian business and economic history since the mid-eighties knows that part of Australia's success was derived through the reduction in the company tax rate.

That is a direct quote. That is what the Leader of the Opposition, Bill Shorten, said in March 2012 when he was in government. Here is another quote:

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.

I could keep throwing quotes out there. Rudd, Gillard, Rudd, Latham, Crean, Beazley, Keating, Hawke—the list goes on. They all agreed. Even the member for Lilley promised to cut the corporate tax rate. Admittedly, he did promise that at a time when he also promised the country four economic surpluses that never quite eventuated either. The point is that some of the most eloquent arguments that have been made in this place for cutting taxes were made consistently over all of those years by the Labor Party. But they have now walked away from that consistent legacy spanning decades.

I think it is really important for us to reflect not only on the motives of an opposition leader who would say one thing when he was a minister with real responsibility and another thing when in opposition and, presumably, digging for populist votes. I think it is important for us to reflect on the significance of what it really means when one of Australia's major political parties just decides to crab walk away from what has been a longstanding bipartisan principle of Australia's economic approach. They are walking away from what has always been a key plank of Australia's economic plan—a bipartisan plank, as I said. They are walking towards populism and the politics of envy, which were supposed to have been eradicated when the Labor Party reformed itself back in the 1980s to make itself fit for office again. What we have is a Leader of the Opposition—possibly, in his mind, a younger Bernie Sanders or a jogging Jeremy Corbyn—who is all rhetoric, all envy, but no real solutions. In my view, the Leader of the Opposition is like an economic witchdoctor: his cures are worse than his fictional illnesses. He will smash small business, he will smash small business trusts, he will tax hardworking Australians, he will tax everyone hoping to use the property market to set themselves up for the future and he will ensure that the most militant unions in this country can disrupt our worksites once again.

Labor, in this debate, is on the side of the politics of envy. The government is on the side of aspiration and economic opportunity. The tax debate thus far gives the game away for the opposition. They have consistently used the catchcry '$60 billion in handouts to big business and multinationals'. I am happy once again to use my speech in this place to try to bust some of those sensationalist lines that they have been using with respect to tax reform. If we break that silly phrase down word by word, we can expose the mistruths behind it. For starters, there is 'handouts'. As I said, I come from a small business family and a small business background. Tax cuts for businesses aren't handouts. It's not a handout to let some hardworking business owners out there keep more of the money that they've earned through selling their customers their own products. It's their own money, fundamentally.

In relation to that $60 billion tag, that is, of course, a figure obtained by using the 10 years over the forward estimates and beyond of budgetary impacts. We can talk, I suppose, about what that really means in practice. What we've legislated in this parliament so far and what we intend to legislate through this bill is for small businesses and medium businesses only, at this stage, to get the benefit of the tax cuts over the short term, and then for that to roll out over a long-term plan to larger businesses. What we have legislated for in this parliament is for small and medium businesses only to keep about $1.6 billion of their own money. That would grow to about $2.3 billion of their own hard-earned money in this financial year, rising to $2½ billion the year after that, $2.8 billion in 2019-20 and so on. As I mentioned, the tax cuts that this government has managed to achieve so far aren't going to big businesses or multinationals at all. They are going to those small and medium businesses. I'm proud to say that, given my small-business background.

The bill before us is about a longer term plan that will let the entire economy benefit from better competitiveness. There will be multiple elections between now and when any tax cuts would apply to big businesses where, if the Labor Party want to, they can test their preference for higher business taxes. We can see whether Australians, fundamentally, at those future elections, want higher or lower taxes. Over time, this government very much wants all remaining businesses, medium and then large businesses, to benefit from increased competitiveness. That's the point of this bill. After all, that used to be the bipartisan aspiration of this place. I can certainly tell you that the people in Brisbane who work or want to work in larger medium or even big businesses deserve more hours, more jobs, more opportunities and more chances of promotion into the future. So, if the Labor Party at some stage between now and two elections time, when these tax cuts would take place, want to draw themselves up a hit list of businesses or industries which they think are bad and therefore deserve higher taxes, they can do that at some stage over the coming years. But, until then, they should back off the politics of envy. They should back this bill like this government is backing businesses and hardworking Australians.

Both sides of politics used to say that there needed to be a long-term plan to reduce corporate taxes in this country, for the sake of all Australians. The Labor side of politics is now trying to walk both sides of the street on that. The long-term plan that everyone talks about and has always talked about is this bill. This bill deserves support. Hardworking Australians and hardworking businesses in Australia deserve this boost. I support this bill.

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

The people of my electorate of Burt sent me to this place to represent their best interests, and the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 has nothing to do with the best interests of my electors, let alone the nation, whatsoever. This corporate tax cut is not a plan for jobs and growth, as the government has continually tried to allege, in any way whatsoever. In fact, it's almost the opposite, and now it has this great new phrase about how 'better days are ahead'. Well, the only better days ahead that will confront this nation will be when we have the election of a Labor government. Jobs and growth are not what will be created here at all. The whole premise of what the government is trying to create here at this time is based on what we know as trickle-down economics—something that has been fundamentally shown to not work at all, in any way, by economists around the globe. Maybe it's not that surprising that a conservative government is relying on an economic strategy from decades and decades ago that has since been shown to not work in any way whatsoever and will have no positive impact on what we need to have happening in our economy right now.

The thing that we need to look at when it comes to these policy ideas and when it comes to the approach of the government is: what are we also giving up? What are the priorities that the government are setting out by establishing this tax agenda? It's interesting to see what approach this sits next to. In addition to deciding that they want to reduce the amount of tax that is going to be charged to corporate Australia—to large taxpayers—they've also decided that it would be a neat thing to not help those people who rely on Sunday penalty rates and to not oppose cuts to those rates. Instead they thought: 'That's okay, we'll let that go through. We'll let the lowest-paid Australians cop it in the neck and be paid even less, and while we are at it, we'll increase the amount of tax that they have to pay as well by increasing the Medicare levy at the same time for all people.' Instead of looking at those who are most able to afford to pay, they decided to attack those who are already being attacked when it comes to penalty rates. For those trying to make sure that they can get ahead further by getting a higher education, they will charge them even more to go to university, making it even harder for people to get ahead and to provide for their families.

It is an interesting contrast, when you think about it. They want to give a tax cut to big business that is going to cost the budget bottom line over the next decade over $36 billion. That's $600 million in just the next four years. I haven't done the proper maths, but that's about four or five surveys that you could conduct for that in the next four years. I'm worried what the government might do with that. But let's think about this. The government has come out and said: 'We are doing this to create economic growth. We are going to create jobs by having this tax cut.' Yet, there is absolutely no evidence to back that claim up. In fact, the Australia Institute is saying there's no evidence to suggest that lower rates will increase economic growth. The Grattan Institute has released a report that shows that this will have no positive effect on the Australian economy. The government is committing to a tax cut that's going to cost over $36 billion over the next 10 years when they are yet to deliver or explain any plan about how they are going to get the budget towards a trajectory of getting into the black. All this government has done, now in its fifth year of government, is preside over budgets that are making debt higher and our deficits worse. And their plan is to give a massive tax cut to make the budget situation even worse, when there is no evidence to suggest that this will actually help economic growth. At the same time, they are making the lives of ordinary Australians even harder by increasing the amount of tax they have to pay. For those that are relying on penalty rates, they are not helping or supporting them either.

One of the other arguments that the government likes to talk about is this notion of international competitiveness. They say that we need to cut the corporate tax rate for large businesses to ensure that we are an internationally competitive economy. I don't know if they've looked at any of the statistics, but there's clearly no problem in attracting international investment into Australia right now.

As we've seen, the Tax Foundation looked at this. They looked at our tax competitiveness and where Australia ranks in the OECD. When you take this into account, as this government clearly fails to understand when it comes to international competitiveness for investment, the headline tax rate is not the issue in question. You would think that, of all people, this Prime Minister, a former investment banker, would understand that the headline corporate tax rate is not, on its own, the issue that needs to be looked at when it comes to foreign investment. There are so many other rates of tax, costs and other factors that need to be considered—exchange rates even—by a foreign investor when it comes to working out if they want to make an investment in this nation. The headline tax rate is not the issue. Look at our competitiveness around the world, as the Tax Foundation did. When you take all of this into consideration Australia is ranked seventh among the 34 OECD member countries. We're not down in the thirties, we're not in some uncompetitive doldrums; when it comes to international competitiveness for foreign investment, we are at the top—as is plainly evident in any of the statistics that are published about how we manage to finance our growing economy in this nation.

That really highlights the problem and it shows how this government is really only driven by ideology and trying to pander to their on pre-selectors and supporters when it comes to the agenda that they're driving on taxation. The other thing that's clearly been ignored by this government when it comes to decreasing the rate of company tax is the impact on Australian shareholders and Australian investors. One of the things you need to think about is: who does this fundamentally benefit in any event?

Normally you might expect that companies pay company tax and that dividends, if they pay them, would be taxed in the hands of the recipient at the recipient's tax rate. However, in Australia we have this uniquely great thing called the dividend imputation system, which gives shareholders a credit for the company tax deemed to have been paid on that individual shareholder's behalf. What does that actually mean? For an Australian investor, this simply means that the amount of tax that is withheld on behalf of dividend recipients is reduced. So come 30 June—tax time—those shareholders only have to top up the tax liability based on their own income assessment. However, foreign shareholders stand to benefit from this great proposed tax cut for corporations because they will see the full benefit passed through to them.

There is no actual benefit for the local shareholder; it is all for the foreign shareholder. And, as I have just outlined, we don't have a problem with foreign tax competitiveness. Given the situation we are facing with unemployment rates around the country, especially in my home state of Western Australia where we have seen the mining construction boom come off the boil, we are trying to make sure that we are getting more and more people into employment. When you look behind the employment figure, you see that participation rates are a problem. We have people who want more work. But who's the government trying to support? Foreign shareholders. 'That's great, government. Thank you so much so much,' says the ordinary man on the street in the federal electorate of Burt, let me tell you.

When it comes down to these tax cuts, when they are properly assessed and considered, they are not helping people here in Australia at all. They are not going to make a difference to our economy. They are not going to create jobs. They are not going to help the people who need it most. It stands in contrast to the way that this government has approached pretty much everything it has done. It just goes to show—and it should be a reminder to everyone when they are thinking about these corporate tax cuts that the government is putting forward—that this government prioritises giving a tax cut to big business. This is a tax cut for big business. It is not a small business tax cut. This is a big business tax cut!

The government wants to give big business, foreign shareholders, a tax cut. At the other end, it wants to take away people's penalty rates, cut funding to schools and make it harder to go to university. It wants to increase the rate of taxation on ordinary working Australians and, to top it all off—and I'm sure the member for Fremantle, who is behind me, will agree with this point—it is doing nothing whatsoever to fix the GST situation for Western Australia. All it is doing is cutting taxes for foreign investors and big business. It is doing nothing for ordinary Australians. That highlights the wrong priorities of this government. It shows that they are doing nothing to support the people who need it most in this country.

What is the purpose of government? What are they doing? Why are they here? You really can't work it out, other than to say it is to help their big business mates. They are a shemozzle. As astounding as all of this is, it is not that surprising. That is why we cannot support this legislation.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

I am pleased to be speaking this evening on our enterprise tax plan that will boost the Australian economy and create prosperity and jobs for hardworking Australians and the business owners who employ hardworking Australians. The tax plan is about encouraging employers to invest and grow their businesses. We know that employers are the backbone of our economy. They generate income for our fabulous nation and ensure job security for employees. With more employment and high wages growth, we will see more people achieving the safety and security in their employment that they need for themselves, their families and our community.

By dropping the company tax rate, our government will give business the certainty that it needs to plan for long-term growth in Australia. This will unlock so much untapped potential for private sector investment and it will allow us to better compete for investment globally. The idea is simple. With businesses handing over less of their revenue to the government, they will have more money to invest in themselves and their staff, and capital for purchasing machinery and equipment. By doing this, they will increase their output, which means more jobs and more hours of work for Australian workers.

A high corporate tax rate ultimately hurts hardworking Australians, with the company tax burden falling on employees through lower real wages growth. With a tough global economic environment, the task falls to us, the Liberal-National coalition government, to implement our ambitious policies to boost our nation's economy.

Debate interrupted.