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

I am pleased to speak on the government's Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, which will boost the Australian economy, creating prosperity and jobs for hardworking Australians. And I'm pleased to see the Minister for Small Business here in the chamber. It is his complete, utter and entire focus—isn't it, Minister?—that we will create more jobs for hardworking Australians and make sure that businesses can do their very best for our nation.

This tax plan is about encouraging employers to invest in and grow their businesses, which ensures greater job security for workers, more employment and higher wages growth. By reducing the company tax rate, our government will give businesses the certainty they need to plan for long-term growth in Australia. This will unlock so much untapped potential for private sector investment, allowing us to better compete globally.

A high corporate tax rate ultimately hurts hardworking Australians, with the companies' tax burden falling on employees through lower real wages growth. With a tough global economic environment, the task falls to the Liberal and National coalition government to implement ambitious policies to boost our nation's economy. We have already passed—earlier this year—the first part of the enterprise tax plan, which lowered the rate for 3.2 million small and medium-sized businesses, employing over 6.5 million Australians, but we cannot stop there. This bill will extend that tax reduction to the remainder of Australian businesses before the rate is dropped to a more internationally competitive rate of 25 per cent in 2026-27. This will be the lowest corporate tax rate since the mid-1960s. And don't we need that! Don't our businesses and our workers need that. Australia has gone from having the ninth-lowest corporate tax rate out of developed economies in 2001 to having the equal fifth-highest today. That's a very disappointing result, which is why we are working hard to turn it around. It means that if a business is looking at identical projects in two countries, each with exactly the same return on investment, it will choose a country other than Australia because of our higher corporate tax rate, which is not the outcome that we want. Indeed, Treasury modelling has found that our current tax system is a drag on the economy. Based on this, we know that a more efficient tax system would help grow the economy, creating opportunities for all Australians.

This is part of our national economic plan. Along with our enterprise tax plan, the coalition government are opening up new markets in our region for Australian exporters through comprehensive free trade agreements. This is particularly important for our farmers. My mum and dad are farmers, so I know full well how important is lowering tariffs and charges on our agricultural products overseas. Education also is one of our major exports from Australia. I have Flinders University right in the heart of my electorate of Boothby. It's a very fine educational institution, and it's trying hard to grow its share of the international student market. The government are also investing $70 billion in productivity-enhancing infrastructure across Australia. I have been very lucky to see the results of some of this with the Darlington upgrade and the extension of the Tonsley rail line up to Flinders University, which is a key part of Flinders University's plan to build new student accommodation, in particular, to attract more international students. We are also, as a government, delivering on a comprehensive 20-year defence industry plan, which is critical for my home state of South Australia, and we're implementing significant reforms to improve competition and choice for Australian consumers. We have secured record funding for our schools and our hospitals. We're protecting Australia's revenue base through some of the world's toughest anti-tax-avoidance laws—we're cracking down on those companies who try their hardest to not pay tax here in Australia.

These policies are already delivering for the Australian people. Recently we've seen the highest rate of jobs growth in 10 years, along with the highest business confidence in 10 years. It's no coincidence that the last time we saw such promising figures was when Mr Howard was in government, along with Treasurer Peter Costello, who provided fantastic economic leadership for our nation. We had some very fine National Party leaders at the same time as well, didn't we, Minister for Small Business?

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

Indeed we did!

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

It is no coincidence that these figures bear a great degree of correlation. Some 240,000 jobs were created over the past financial year, and job advertisements are up by over 13 per cent. The latest jobs data reveals that 210,800 full-time jobs have been created in the past six months alone. This is the strongest full-time jobs growth since records began 40 years ago. It's a very impressive outcome, isn't it, Minister?

Mr McCormack interjecting—

Full-time employment growth is outperforming part-time growth, which is very positive news. In total, over 736,000 jobs have been created since the coalition government came to office, and over 80 per cent of these have been full-time. Add to this the fact that wages paid to employees rose by 1.2 per cent in the June quarter, retail trade rose 1.2 per cent and manufacturing output is at the highest level in 15 years and we can see how our coalition government policies are enhancing and accelerating our nation's economic recovery. Without a doubt, we can say that these achievements are a credit to and the result of strong Liberal Party and National Party government of the nation.

The national accounts data released last week reinforce the trend we've seen picking up under the coalition. Real growth in the economy was 0.8 per cent in the June quarter, more than double the 0.3 per cent in the March quarter. Based on these figures and other indications, the government will likely achieve a better than budgeted final year outcome for the underlying cash balance for the previous financial year. The largest contributor to growth in the last financial year was household consumption, which increased by 0.7 per cent in the previous quarter to be 2.6 per cent higher than a year ago. The government's investments in productive infrastructure are also creating solid growth, with new public final demand rising by 2.1 per cent, driven by an 8.6 per cent boost in government investment. Our $75 billion infrastructure investment will be used to build roads, railways, water infrastructure and other strategic projects, one of which is the grade separation of the rail line near Westfield Marion, in my electorate of Boothby, a problem that has been in existence for some 40 years. I am really pleased to have been able to deliver that for my local community.

Our defence industry plan is delivering for the economy, particularly in my home state of South Australia. Defence investment was up 26.3 per cent in the last quarter thanks to my government's prioritisation of the defence industry and national security.

When we take into account that this is only the beginning of implementing our National Economic Plan, that's when we can begin to realise and understand the sheer volume of untapped economic potential that my government is unlocking. But while the government unlock the economics of opportunity in Australia, our achievements are placed at risk by those opposite, who want to tax Australians into oblivion once again. While under the coalition all Australians are sharing in the benefits of this economic growth, those opposite, the Labor Party, would levy $150 billion of new taxes on Australians, with families and small businesses to bear the brunt of this tax pain. Under their tax plan, no Australian is safe. Everyone is in the sights of Labor's unprecedented tax grab—families, singles, retirees and, in particular, small businesses, which are the economic engine room of the nation. Under Labor's tax plan no Australian is safe; they really aren't.

The grim reality of a Labor government will be tax upon tax upon tax to pay for their insatiable appetite to spend the money of hardworking Australians. They are going after workers, savers, home owners, professionals and the small business owners of Australia. Let's have a look at few of Labor's policies. Their permanently higher top marginal tax rate will take about half of every dollar earned above an income level that is now just over twice the average weekly earnings—a wage which many middle-income-earning Australians aspire to. They have proposed a negative gearing tax grab on wage earners in middle Australia again. For example, a nurse on a wage of $50,000 a year who invests in property with $7,000 in annual net rental losses would under Labor face a whopping tax increase of 41 per cent. They have launched an attack on self-funded retirees with their planned ban on limited recourse borrowing arrangements. They have proposed to introduce a tax policy on trusts, which, again, is an attack on small businesses. The policy singles out as Labor enemies stay-at-home mums, students, doctors and accountants, hitting beneficiaries on $37,000 a year the hardest.

Labor would scrap and reverse our Enterprise Tax Plan, increasing taxes on the 3.2 million Australian small businesses that employ 6.5 million Australians. It is a lot of employees that these small businesses are responsible for, and most of them are, by definition, low or middle-income earners that the small businesses are supporting.

I'm interested to know whether those opposite really think that the politics of envy is going to propel them into government. While they stoke division and resentment in the Australian community they are doing our nation a disservice. There was a reason for the historic failure of socialism. When you're in government, if you pursue equality of outcome instead of equality of opportunity, the people suffer. The people in our community who are best able to contribute to our success as a nation will either lose their incentive to work hard to be successful or they'll leave Australia altogether to go overseas to work hard and be successful. We don't want a nation that's encouraged to be mediocre and to stagnate.

Labor's policies will ultimately make it much harder for Australians to get ahead, but, you know, we're quite used to that from those opposite, unfortunately. It's been disappointing to see those opposite step back from their previous positions, where they did support cutting tax rates and encouraging our businesses to grow so that they were productive and employing as many Australians as possible. But, as we know, the Australian people are much smarter than those opposite give them credit for, which, I think, is why we see them not gaining much traction, particularly in this area.

The Australian people know which party they can trust with the economy. They know that the Liberal Party and the Nationals, the coalition government, will not keep dipping into their incomes and their savings. We're here to support hardworking Australians, our small and medium businesses, our bigger businesses and the thousands and millions of Australians that they employ. Our government is committed to growing the economy and helping fund the services that Australians rely on now and into the future. I'm pleased to commend the government's bill to the House.

Brian Mitchell (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I do rise to support the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, but I really must respond to the member for Boothby. What a lot of rot from this alumnus of the IPA—that bunch of neo-Liberal right wingers who still believe absolutely in the failed policies of trickle-down economics. They somehow believe that if you give more money to the top end of town and give more money to the corporations and the CEOs, somehow, it will magically trickle down to the rest of the population. It hasn't worked in America for 40 years. The middle class in America has been gutted. It is non-existent now because of the failed policies of Reagan and Thatcher, and this mob over here wants to see them imported into Australia. We have one of the greatest societies, one of the greatest economies and one of the greatest countries on earth built on egalitarianism and built on a sense of a fair go. It was built on a fair industrial relations system and a fair sense of equity of income, and these guys want to tear it down because, somehow, they look at America and they actually like what they see. They like to see the middle class gutted, they like to see the billionaires become multibillionaires and they somehow think that's good for the rest of us. It hasn't worked. It just hasn't worked. The evidence is before your eyes.

The member for Boothby was talking about high taxes—what a cheek! I mean, the government has come into this place actually proposing higher taxes for Australians earning up to $87,000 a year, tax cuts for people earning more than $180,000 a year and tax cuts for corporations of up to $50 billion over 10 years.

Mr McCormack interjecting—

It is $50 billion in tax cuts over 10 years. I will take the minister's interjection. Yes, I accept what he's saying. Well, it is $65 billion actually, when you take the total. Some $65 billion in tax cuts to corporations over the next 10 years is the government's grand plan. Why? Because they say it's going to be better for the economy. But their own figures show that if you give $65 billion back in tax to the big corporations, the net result for GDP—for growth in this country—will be an incredible, magnificent, rocketing 0.1 per cent over 10 years. That's their grand plan for economic growth in this country. There will be $65 billion in tax handouts to big banks and corporations and 0.1 per cent growth in GDP. What an absolute joke! They think they're the best economic managers that this country has to offer. I've got news for them: evidence says otherwise.

The member for Boothby—a goldmine of ridiculousness—said that if we don't give tax breaks to big corporations they will all lose the incentive to be here. That somehow there will be this big flood of companies leaving Australia because they will lose the incentive to be here. They will go somewhere else with their business. What a load of rubbish! There are countries in this world that charge companies a lot more tax than Australia. They manage to keep their companies and they manage to keep their corporations. Business will stay wherever they can make a profit, and every business knows that there are good profits to be made in Australia. It's a stable economy, it's a stable political system, and people have relatively good incomes. Despite the efforts of those opposite who want to cut incomes, cut penalty rates and increase taxes on middle Australia, Australia is a good place to do business. I'm pleased that the minister acknowledges 25 years of uninterrupted economic growth thanks to the policies implemented by Labor under Hawke and Keating.

We all love a tax cut. I love a tax cut. Who doesn't love a tax cut? But you have tax cuts when you can afford them. How this mob over here can say: 'Oh, we can give $65 billion to big corporations and banks, but to pay for it we're going to take $3.8 billion over the next five years off universities. We're going to take billions of dollars out of schools. We're going to take money out of hospitals. We're going to take money out of infrastructure.' Honestly, the people of Australia want services and goods. They want a standard of living. They know they're not going to get it from a $65 billion handout to corporations and banks.

Now let me get to the substance of this bill—having dealt with the member for Boothby's ridiculous contribution. I note that the bill comes before the House in an amended form following amendments moved by Labor in the Senate which were successful. The changes initiated by Labor will require a review of this bill's safe-harbour provisions after two years to ensure that there are no unintended consequences. That's important because, even with the best of intentions, we don't know where this is going to go so we need to review it after two years. We're pleased that the Senate agreed and that the government agreed to implement those amendments.

This bill makes some significant changes to the way companies act when trading insolvent. It provides breathing space for responsible change in corporate structure or business practices to enable a business to get through tough times. Today, it's an unfortunate reality that announcing an intention to enter voluntary administration can be, in effect, the kiss of death for a struggling business. You go into voluntary administration in order to try and keep your business going, but that signals to the market that somehow you're in deep trouble. What happens of course is that suppliers stop supplying and customers stop buying. Voluntary administration is supposed to send a signal to the market that although a company is struggling, it's salvageable. Unfortunately, the very act of entering into it can set off a chain of events that can make matters worse, and that's an outcome in no-one's interest except the vultures who swoop in to devour the entrails. We see that happening all the time: companies go into voluntary administration and some joker comes in and swoops it up at a cheap price and carries on the business. That's not fair.

Currently, companies must stop trading as soon as the directors believe they may be insolvent. That makes sense. You shouldn't be able to trade and take on new liabilities when you suspect that you don't have the means to pay your existing bills. But it's a rule that is so inflexible that, arguably, it can do more harm than good. This bill seeks to allow some flexibility with conditions, and the conditions are important. With safe harbour, this legislation will create a safe harbour for company directors from personal liability for trading while insolvent. A key condition is that directors must be honestly and diligently taking a course of action that is reasonably likely to lead to a better outcome for the company than the immediate appointment of an administrator or liquidator. The intent is sound. We all would much rather see a struggling business get back on its feet than close its doors.

Labor's amendments, which the government has agreed to incorporate, will see the safe-harbour provision reviewed after two years to ensure there are no unforeseen consequences. That's a sensible measure, bringing together both flexibility and accountability. Importantly, safe harbour is not available where the company is failing to meet its obligations to pay its employees, including superannuation; where the company fails to meet its tax reporting obligations; and when a person fails to provide an administrator or liquidator with certain required information, such as a company's books.

So, while supportive of this bill, I am disappointed, however, that it fails to deal with the issue of phoenixing. Phoenixing occurs when a company's directors strip cash and assets from a company, liquidate the company and then reopen for business with a different ABN and different signage. Closing the business down in such a manner strips employees of their entitlements and creditors of their ability to sue for payment. Phoenixing rips off creditors and staff, but also the wider Australian community. A report earlier this year by the University of Melbourne and Monash University said that phoenixing companies, which cost the Australian economy billions of dollars a year, is too easy, too cheap, lucrative and largely invisible. PricewaterhouseCoopers estimated the cost to the economy at a staggering $3.2 billion, simply from companies that go bust and then start up again, having wiped off their obligations to their employees and their creditors.

I do note the news from this week, where the government has been dragged, kicking and screaming, into finally taking action on phoenixing, four months—four months!—after Labor unveiled our own policy to tackle dodgy directors. Since May, this side of the House has been calling for the introduction of company director ID numbers, which make it easier for authorities to track the spivs who kill their companies and start up again. Director IDs are backed by the Productivity Commission, the Australian Institute of Company Directors and the Australian Small Business and Family Enterprise Ombudsman. It's taken the government four months, but it's reluctantly come on board—although not all the way. We note that penalties are still too low and that the government has failed to introduce an objective test for transactions that deprive hardworking and innocent employees of their entitlements. So, I acknowledge the announcement this week, but it's a shame the government had to be dragged into making the decision rather than coming to it early. And it's a shame that it did not take the opportunity to include antiphoenixing provisions in this bill.

Part 2 of this bill sets out new provisions to stop the enforcement of ipso facto clauses that are triggered when a company enters administration. An ipso facto clause creates a contractual right that allows one party to terminate or modify the operation of a contract upon the occurrence of some specific event. Currently, such rights may allow one party to terminate a contract because of the financial position of the company, even though the company is still meeting its obligations to that party. So, for example, if a company has a short-term lack of liquidity which leads directors to appoint a voluntary administrator, an ipso facto clause might allow a major supplier to cancel their contract even though the administered business is still meeting all its payment obligations to that supplier. Cancelling supply may then starve the business of the opportunity to continue to trade while it restructures, which then brings on a liquidation which may otherwise not have occurred. So the operation of such clauses may in fact destroy the ability of the business to restructure, destroy the value of the business and prevent the sale of the business as a going concern.

The regulation power under this bill includes an anti-avoidance mechanism to enable the government to respond to possible contractor agreements that are drafted or prepared in a way to circumvent its provisions. Regulations can carve out certain contracts from the application of these clauses. This amendment will not stop parties from terminating a contract with a company for any other reason, such as a breach involving nonpayment or nonperformance, so those rights are protected. This legislation, in theory, gives business, and particularly small business, a fighting chance of making its way through a tough time, utilising fresh eyes and fresh ideas and without stigma.

Of course, prevention is better than cure. Ideally, we should be doing more to encourage businesspeople to receive practical training in finance, employment responsibilities, resilience and adaptability. Stronger businesses are in everyone's best interests. Carl Gunther, New South Wales Head of Restructuring and National Turnaround Lead notes:

Whilst legislative changes proposed by government are a key element to reform, ultimately early intervention by company directors when indicators of financial distress arise is the best form of defence to claims of insolvent trading. Director's reluctance to call for help continues to result (sadly) in the high volumes of insolvencies in Australia and until this changes no amount of legislative reform will make a difference.

So it's pertinent to note that those opposite are making such training harder by cutting back on TAFE and continuing to encourage the failed privatisation of the training sector. We urge them in all sincerity to give a good, hard look to what they are doing to the TAFE and training sector in this country. Too many paid-up students have fallen victim to failed private organisations, and I still shake my head at a system that allowed Careers Australia to vacuum $40 million out of its own accounts, send them offshore and then, just months later, close the business down, claiming it had no cash. So today's legislation is a start, but we need to dig deeper.

This bill may indeed change the face of Australia's corporate culture. It may even give experienced directors more confidence to join start-up boards. Time will tell. We are cautiously optimistic, but our final position will be evidence based. The results of the review in two years will be instructive. This legislation is about business, and Labor is a friend of business—especially small business.

Mr Littleproud interjecting—

No, the chicken hawk can laugh, but Labor really is a friend of business and small business. The fact is we know small business is the engine of employment in this country and we are friends of small business. You can't go around calling corporations small businesses. It's just a nonsense. You can't go around calling Westpac and Commonwealth Bank small businesses.

We know small business runs on tight margins and we know times can get really tough, which is why we have an open mind about the merits of the legislation. Australia is home to 2.1 million small businesses and Tasmania home to 37,000 of them, a number of them in my electorate. They employ around 100,000 Tasmanians. They are vital, especially in regional communities like mine. I know it's almost a rite of passage for small business to criticise government, but the real threat to small business is big business, and it's time this government got on the side of small business and stopped protecting their big-business mates.

David Littleproud (Maranoa, National Party) Share this | Link to this | Hansard source

It gives me great pleasure to arise this afternoon and speak in favour of this legislation, because it is the government's responsibility to set the environment and infrastructure around its people—not to get caught up in its lies but to put the environment and infrastructure around them to allow them to innovate, to grow and to invest. That's a government's responsibility. That's what we did back in March when we passed the first tranche of this legislation, passing tax cuts onto small businesses. It's quite interesting that the member for Lyons, the champion of small business, proclaims to know and understand it all. I challenge him and those opposite to understand and know what a small business is. Many on this side, including me, own a small business, have to pay the wages and the electricity, have to understand how to keep it open. Real representation is to understand what economic levers need to be pulled to ensure we get the growth and get the engine room of this nation moving. That's what we did back in March.

But no. These great champions of small business stood in our way and tried to stop it. The hypocrisy of them to come in here and say they are the champions of small business is nothing short of laughable. The reality is we are making the legislative changes. We are pulling the economic levers that are driving growth for small business. There are over 3.2 million small businesses that will take advantage of all of these cuts that we'll be undertaking. But it also ensures that we are going to get now a next level of investment.

Those opposite don't understand the flow of capital. We have to be competitive. When they take off their tinfoil hat with its simplistic understanding of economics—when they understand we are part of a global economy—they will have to understand that we are competing in a global economy and that that's a good thing for this nation. We have to be attractive to actually compete and attract the capital that we need to invest and to continue to see, whether it's a small business or a large business, that they are the engine room that employs people. Those opposite want to take umbrage at trickle-down economics and all that it may or may not be, but let me tell you: we are starting to see the benefits of this so-called trickle-down economics as we are pulling these levers right here and now. There were 240,000 new jobs created. That is real economic growth in our nation. We are seeing exports exponentially increase, particularly in the agricultural sector. There has been an increase of over 18 per cent in agricultural exports because of the environment we are putting around the Australian people. We are putting them in an environment where they are now part of a global economy, lo and behold.

Those opposite are yet to understand that we are part of the world and that it's a good thing because we have what the world wants here, and it's important that we engage the world. It's more important than ever that we engage the world, that we are part of it and that we compete in it. You have to have a competitive environment to be able to be part of that global economy. We've done that with the trade agreements with South Korea, Japan and China. We continue to work on trade agreements in Indonesia and opening up greater export opportunities that are putting real wealth in the pockets of people across this nation, and particularly in my electorate of Maranoa, where we're seeing significant growth because of the trade agreements in the agricultural sector in particular. We are seeing people getting real returns. Four or five years ago they got $1.50 per kilo for their beef, and now they're getting $4 or $5 per kilo. That's an exponential increase in their income that flows through.

Talking about trickle-down economics, what happens is that it trickles through the economy when people have more disposable income. Those opposite wouldn't understand, but, when you are a small-business owner and you have an industry like the agricultural sector in your community, you need it to be strong because then more money comes into the business. If you invest in small business and business in this community, they reinvest through more employment and through greater competition. That's what this nation is about. It's about understanding how we fit in a global economy but also how we fit locally and how we can get money to trickle down not only to the Brisbanes, the Sydneys and the Melbournes but to the Romas, the Charlevilles and the Longreaches of this world. No matter your postcode, you are just as precious and just as important in this nation. That's something we should always protect, and that's why we must put an environment around our Australian people to allow them to prosper, to grow and to undertake it.

We must not be the big hand of government and think that we can spend our way out of this. This is the simplistic nature that the Labor Party continue to hold onto. They believe that, as soon as there's trouble, the only way is to spend our way out of it—to be the big hand of government. The reality is that we all have to pay for it at some point, and that's what they forget. They have a never-never scheme where they kick the can down the road. Unfortunately, the generations to come—my three young boys—will be the ones that will have to pay for that legacy of economic vandalism that we've seen time and time again from the Labor Party. They are not understanding how we fit in the world and how we need to have a competitive environment for the people we are here to represent.

If you have faith in our nation and its businesses, they will reinvest in our nation, and we will be where we need to be in our international rankings. When you look at our international tax competitiveness, we were formerly the ninth lowest, and now we're the fifth highest. The reality is that our competitive nature in a global economy has slipped exponentially. If you think that we are not competing with other jurisdictions with respect to tax, it's all about profitability—as the member for Lyons talked about, if they're making profits they're happy, but if they get bigger profits that's when they'll invest. It's understanding how business works. Unfortunately, those opposite haven't had a lot of experience in running businesses. They've been union hacks and political hacks, but they haven't had the responsibility of paying wages, paying electricity bills, paying their rates, understanding what it is to run a business—the responsibility not only to your staff but to your community. That's what we bring to the table in terms of pulling the economic levers that are going to generate the growth. We understand that, if we make the investment in our country, it will give an investment back—a great return.

These measures around international tax competitiveness are so important around the flow of capital. I've been an employee of a major corporate. I'm not saying that all of them are the most socially responsible, but the reality is that they are an important employer in this nation. They are a very important employer in this nation. As someone that has been employed by them and has seen retrenchments over time of some of those people I've worked closely with, I can assure the House that those businesses are no different to small businesses. If they cannot have the competitiveness that they need, they won't reinvest in their businesses and they won't reinvest in the human capital of each and every Australian in order to give them the opportunity to have a job.

There is the simplistic notion of class warfare, where big corporates are bad. Yes, they've got some work to do on some issues. But the reality is that we have to put the environment around them to ensure they are internationally competitive and that we attract the capital flows we need—and deserve—to continue to get the employment that we have to have in this nation. Lo and behold, funnily enough, the people who are employed by those corporates also pay tax. The reality is that the simplistic notion of class warfare that the Labor Party unleash at every opportunity just does not work. It is simplistic; it is politically great for them, but the reality is that our nation suffers. We as a nation are at a tipping point. We are $500 billion in debt. We have to pull the right economic levers now to ensure that we put in place a framework that drives growth for this nation.

It is also around infrastructure priorities that will increase the productivity of our nation. You do not have to look far for that. We are making a significant investment in roads and rail and telecommunications. The NBN will be rolled out across my electorate of Maranoa—nearly 43 per cent of Queensland—by 2018. These things are the tools of the 21st century, the tools we will need in order to take advantage of the trade agreements that we have put in place. There is the $220 million that we have put in place for the mobile phone blackspot program—again, tools of the 21st century that we need in order to take advantage of and engage in the global economy. We must understand that we are part of a world that is there to embrace us. It is an important thing that people in rural and regional Australia understand better than those opposite.

Before I was elected, I went out to a little town called Alpha. I visited a lady who had been in drought for the last six years. I went and did a feed run with her. We were driving around in her ute. She was getting a little emotional about the fact that she had not seen her husband for nearly 18 months because he was off working 700 kilometres away. I said to her, 'Do you really think there's a future in this?' She looked me in the eye and said: 'Mate, I don't even know your politics, but the only person who is important to me is the trade minister. When it rains, I know that all the work I've done over the last five or six years is going to be worth something to me. The cattle are going to get us out of this, and my husband is going to come home to me.' That was somebody in the depths of despair. She had been to the bottom and was still at the bottom. For her to acknowledge and understand our place in this world and the importance of the environment we put around our people is something I will never forget. That is the understanding that the Australian people have. If we empower them to do what they need to do then we will get the investment and the growth that we need.

We can also talk about inland rail—a corridor of commerce from Melbourne to Brisbane. It is going to open up regional Australia far more than ever before. We are going to get our products to the world more quickly. We have what the world wants. In fact, if you want to put the importance of trade agreements to the fore, we have a population of about 24 million people and we produce enough food for 75 million people. If we do not have trade agreements, we as a nation will not have rural and regional Australia.

You can couple that with the tax incentives that we have provided to small businesses. There are 25,000 small businesses in Maranoa that took advantage of the first tranche of this, which those opposite opposed. Those opposite opposed small businesses being able to get on and reinvest in their communities and in their businesses. Those are the types of things that have a real impact. We must understand that capital flow is so important—whether it be the family farm or at the corporate level. That is where real trickle-down economics comes to the fore. Those opposite should not be scared of that, because it works. And we are seeing that transcend now.

In all the data that is coming through, our growth is starting to get to a tipping point where the decisions that this government has made are having an exponential benefit in terms of where this nation will be in 10 or 15 years time. It is about the continuing investment that this government has proudly undertaken in the business environment and infrastructure. If you do that, if you make that case for investment, you will see private investment flow.

I'll give you an example: the Toowoomba bypass, a $1.6 billion investment that's being put in place now that will get the products of Maranoa to the world quicker, has been matched by the Brisbane West Wellcamp Airport. We now have an Australian export hub on our doorstep, where we have weekly cargo flights taking Maranoa product around the world, because we are putting the connectivity in place. There has been private investment: the owners of Wellcamp, private people, made that investment in the people of Queensland and regional Queensland, because we made the initial investment in the Inland Rail and the second range crossing. That's an important step to understand: if you have faith, if you have confidence, in the Australian people, they will respond. And the Wagner family, quite proudly, did. We should be proud of Australians—proud that, when we put the environment and infrastructure around them, they respond. And when they respond, that is a good thing for our nation. Never before have we seen such investment in the electorate of Maranoa, into connectivity: $500 million into the Warrego Highway, and into Inland Rail, $8.4 billion.

This is about connecting us to the real world. I plead with those opposite to put aside the politics, understand our place in the world and understand the importance of how we can interact with the world and how we can take advantage of the competitive advantage that we have with the world's best product. But we have to have an open mind. We have to understand that there is no quick or easy fix on this. You can't spend your way out of this. You have to have sensible policy that will ensure that we empower the people of this nation to go to the next level.

I'm proud to stand here supporting a government that understands small business, that understands the economy and that understands that, if we get these economic levers right, we will make this nation the nation that it deserves to be.

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

It's my privilege to follow the member for Lyons, in particular, who I thought made a very characteristically useful and considered contribution a little while ago. Even with the member who just spoke, there were parts of what he said—about trade in particular but other things as well—on which I find common ground. But we, on this side, obviously oppose this bill that we're talking about now, for the reasons that have been outlined so well by the member for Lyons, the member for McMahon and indeed all of the speakers on this side of the House.

If you were looking for one bill to sum up, in one piece of legislation, the approach of those opposite, this is it. In this one bill, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, we have all of the warped priorities, all of the Thatcherite fantasy, all of the trickle-down economics, and all of the wasted money and the fiscal vandalism which have characterised the last four years, and all of the showering of largesse on the top end of town while lecturing middle Australia about debt and deficit disasters. This is a $65 billion ram raid on the budget, which is to be handed directly to multinational corporations and the big four banks at the expense of people who work and who struggle in this country.

Those in this government—if you can believe it—through their policies tell us that they believe that multinational corporations pay too much tax, that people under $87,000 a year pay too little tax and that people get paid too much to work on Sundays. That is the summary of the economic policy of those opposite in this Turnbull government. You couldn't make this stuff up. In their arrogance, they want the Australian people to believe that they can't find $3.8 billion for universities, but they can find $65 billion for big companies in this country; they can't find a billion dollars to maintain the pensioner energy supplement, but they can find $65 billion to give to big business; they can't find the $17 billion for schools; and they can't find the $2.2 billion for GPs and allied health, or the $3 billion for apprentices and TAFE and vocational education, or the $1.6 billion they're cutting out of infrastructure, or the $500 million they're cutting out of the Indigenous Affairs portfolio, or the $300 million they're cutting out of dental, or the $171 million they're cutting from hospital services for veterans, or the $44 million a year they're cutting from homelessness funding.

They can't find any of that; that's too hard to find. That's all too expensive, but they can find $65 billion to give to big business in Australia, and that's what this bill is all about. It does say it all about those opposite; it ticks every box. It's unfair, for the reasons I've just outlined. It's unwise because it won't deliver the growth that we need in this country, the right kind of growth; indeed, it won't deliver much growth at all. And it's unaffordable, particularly at a time when those opposite have made such a mess of the budget that we have record gross debt in this country—high debt, growing, not a peak in sight—under those opposite, and they want to pretend that they are superior economic managers. There's never been more debt on the Commonwealth budget than there is today, and it's growing and there's no peak in sight.

We oppose this bill because, when we have weak growth, this is not the answer. We oppose this bill because, when we have skyrocketing debt, this fiscal vandalism will make the situation worse, not better. We oppose this bill because, when we have more and more people feeling, with some justification, that the rules of the economy are written to benefit others at their expense, this is a recipe for more division in our economy and in our society.

Let me go to some of the details of the claims that those opposite make. The first one, of course, is that this is the only way that we can get growth in our economy. When the government says that, it reminds me of that Johnny Lee song we were talking about before. The member for Herbert and the member for Lindsay were talking about that Johnny Lee song, which talks about 'lookin' for love in all the wrong places'. This government is looking for economic growth in all of the wrong places. There's a lyric in that song which reminds me of the Treasurer. Johnny Lee sings:

Playin' a fools game hopin' to win;

and tellin' those sweet lies and losin' again.

That is the best summary of the economic approach from those opposite and the commentary from the Treasurer about economic growth. This is a government looking for growth in all the wrong places.

They want you to believe that the only way to grow the economy is to hand tens of billions of dollars to multinational corporations—a lot of that will go overseas—or to the big four banks, which get about $10 billion of that $65 billion, or by letting the wealthiest Australians choose how much tax they pay via trusts or by giving the biggest tax concessions to those who need them least. The government will have you believe that that's the only way to grow the economy. They just don't get it.

We understand on this side of the House—all of us do—that growth comes from working people having the money to spend and invest and from us deploying tax dollars in an intelligent way where they can do the most good to boost productivity and boost inclusive growth in our economy. Growth comes from giving people a stake in the growth that they help create, rewarding their efforts and their enterprise, ensuring people can participate meaningfully in our economy and in our society. It does not come from lower wages or higher taxes on working people or these tax cuts that we're discussing in this bill. Those opposite are from an alternative universe, where they think that, if you give $10 billion to four banks, to four companies, a $10 billion tax cut, miraculously, those banks will employ more people. The same goes for multinational corporations, where a lot of that tax cut benefit goes overseas.

We do have very serious challenges in our economy, and key among those is the growth challenge. We are all in the car for the right kind of economic growth, but in the national accounts in the last week or so we had some very disturbing figures that showed that we have weak annual growth, falling living standards and flatlining wages—all in that one data release from the ABS. We have annual growth with a one in front of it. The Treasurer wanders around expecting a pat on the back and a round of applause for annual growth with a one in front of it—1.8 per cent. Our economic growth over the year is lower than in Canada, the USA or New Zealand. It's lower than the OECD average. It's been less than two per cent annually for three of the last four quarters. That is the worst result since the global financial crisis.

Real net national disposable income per capita, the best measure of living standards, fell 1.4 per cent in the last quarter. Living standards are going backwards, and wages are flatlining. Average compensation per employee fell 0.1 per cent in the last quarter. Wages went backwards in the most recent national accounts. And economic growth is obviously still well below what we need to cut unemployment, put upward pressure on wages and boost demand in the economy.

Beyond those troubling national accounts figures, the workers' share of national income is at record lows and underemployment is at record highs. I'm conscious that a new set of data has come out while I've been on my feet, which I'll read with interest, but the trend for underemployment has been horrible: there has been record underemployment. People who need more work or more hours at work can't find them. The people-facing part of the economy is suffering. This bill and the government's approach to the economy will turbocharge those challenges, not address them. They are part of the problem, not part of the solution.

On the government's own figures about growth, the growth dividend from this bill we are discussing today—the $65 billion tax cut for big business—will be negligible at best: one per cent over 20 years. We're talking about one per cent in 20 years time. Those opposite go on and on about how this is crucial, this is the key, this is the secret sauce when it comes to getting growth in this economy. We are talking one per cent in 20 years. That's $2 a day in wages per person in 20 years time, on the Treasury modelling. That is what we're talking about here. This is their one-point plan. That will be the miraculous outcome of this one-point plan—so many bucks for so little bang.

The tax cuts in this bill are unfair for the reasons I've described and are unwise. They won't get the growth we need and they're also unaffordable. This is a $65 billion ram-raid on the budget. It's the single biggest piece of fiscal vandalism of the Abbott-Turnbull government. We have this mess in the budget, despite the fact that the government is actually raising something like $77 billion more in taxes in 2017-18 than was raised in 2012-13, the last year of the Labor government. Tax to GDP, which is the measure that we rely on to see how much tax is being paid in the economy, is higher for every year in the forward estimates in the most recent budget than it was in any year under the former Labor government. This government is taxing more than the former Labor government did and yet still we've got net debt at record levels for the next two years. We've got a deficit for this year 10 times bigger than was predicted in Joe Hockey's first budget. We've got half a trillion dollars in gross debt. That is the first time that has ever happened in Australian history: half a trillion dollars in gross debt! And gross debt doesn't even peak. It blows out to $725 billion over the medium term with no peak in sight. Gross debt continues to rise. The interest bill is about $5.5 billion, or $220 for every man, woman and child in this country. The coalition is racking up gross debt $1.4 billion a month faster than Labor, in good global economic conditions. We racked up debts lower than this government during a global financial crisis. Think about that. Debt is being racked up faster when we've got pretty good global conditions now than it was in the life of the former Labor government, which dealt with—successfully, I'm proud to say—the biggest synchronised downturn in the global economy since the 1930s. Think about that. It is a pretty extraordinary achievement for those opposite to rack up debt faster in good conditions than Australia did during the global financial crisis.

There is a whole range of numbers which go to the core of the incompetence of those opposite and the hypocrisy of lecturing people about debt and deficit disasters—all of those sorts of things—at the same time that, on their watch, debt and deficit have blown out substantially across all of those measures. No matter which way you carve it, the numbers don't lie. Gross debt, net debt, debt per person—on all of these measures, those opposite have made a mess of the budget. They would like us to pretend that handing $65 billion to multinational corporations and the big four banks in Australia will somehow be the answer to all of our challenges, when we've got anaemic growth and sky rocketing debt and deficit. This bill will be part of the problem and not part of the solution.

Under this government, you can understand why more and more Australians feel deeply frustrated that, no matter how hard they work, the economy doesn't work for them. They just can't get ahead no matter how hard they work. They do the right thing and try and provide for their families but they feel like the rules of the economy—with some justification—are written to benefit somebody else at their expense.

On this side of the House, we want the rules of the economy to accord with our values: we grow strongest when we grow together; if you work hard, you should be rewarded for it; if you fall behind or fall down, we will be there to help you up. That is a summary of the economic approach this side of the House takes to the Australian economy. That's why we have been announcing all these policies.

I give credit to the Leader of the Opposition, the shadow Treasurer, the shadow Assistant Treasurer and all of the colleagues. The policies that we've been announcing are so important to ensuring that the rules of the economy accord with our values. They are part of a larger purpose: to ensure that we can have inclusive growth, that we can have reward for effort in this country, and we can have a decent social safety net for those who fall down or fall behind.

The previous speaker, the member for Maranoa, and indeed a number of the speakers on that side of the House, are fond of saying in the media that our position on handing $65 billion to multinationals and the big four banks is somehow based on some kind of politics of envy or some kind of class war. But that argument, the argument they put over and over and over again, rests on a really tired, old, dishonest absurdity that pretends that the only way to maintain cohesion in this country is to give the biggest tax breaks to those who need them least or pay people less to work on weekends or give tax cuts to the top and tax hikes to the bottom or to shower largesse on the people who need it least in our economy. Theirs is a recipe for more division. It's damaging to the budget, to the economy and to society.

It's far more divisive to hack at the safety net or let the wealthiest people choose how much tax to pay or hand over tens of billions of dollars in company tax cuts at the same time as they lecture middle Australia about tightening their belts. This country is looking for economic growth. That growth will be found in decent incomes so that people can save and invest and provide for their families and in a new government which prioritises the actual drivers of growth and productivity and which recognises that the best growth in this country is people-powered and from the bottom up. Growth won't be found in this $65 billion tax cut or in the trickle-down economics that it represents. (Time expired)

David Coleman (Banks, 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. We're talking about tax. Let's start with the comments of the shadow Treasurer on this matter in no less a publication than his Hearts & Minds, a somewhat grandly-titled publication of 2013. He started out by saying:

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

And he is right. When the shadow Treasurer said that in Hearts & Minds back in 2013, he was right. He's often wrong—he's usually wrong—but, on this matter, he was right. He said:

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.

And he was right about that too. It's not overly complex when you think about it. If you're a company and you have a choice to invest in different places around the world, are you going to favour places where you have to pay a very high rate of tax or are you going to favour places where you pay a more competitive rate of tax? It's pretty obvious and it's set out in a very lucid fashion by the shadow Treasurer in Hearts & Minds. The opposition leader has also spoken at length on this issue. He did so in 2012 when he was the Assistant Treasurer. He spoke to ACOSS about company tax, and had some wise words for the ACOSS audience assembled on that day back in March of 2012. He said:

… corporate tax reform helps Australia's private sector grow and it creates jobs right up and down the income ladder.

…

Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living.

A very sensible analysis. He said:

And because reducing the company rate is an economic growth instrument—

he was right about that too—

reducing the corporate tax rate … is also an investment in the Australian people—including people who might now be on welfare and require the services of ACOSS members.

Helping companies to grow improves employment and is good for the economy and is good for those workers for whom new jobs are created. That was a very, very sensible position for the opposition leader and shadow Treasurer to take.

But, of course, now we see this very, very transparent campaign to demonise any large company as somehow bad for the nation. The terms 'big end of town' or 'top end of town', you will be interested to know, have been used in the parliament in the last year more than 300 times. That suggests an ongoing campaign by those opposite to try to convey the idea that large companies are bad for Australia. But the reality is that large companies employ about 4 million Australians including thousands and thousands of people who live in my electorate. I don't find, certainly in my community—and I suspect the same would be the case around Australia—a sense that people want large companies to exit our shores. To the contrary, what people want is for large companies to invest in Australia and to create the millions and millions of jobs that they do. That's appropriate, and that's why this government is so supportive of policies that create competitive company tax rates.

Of course we have already passed the first round of the enterprise tax bill, which was opposed by those opposite. Those opposite say that if a company has revenue of $2 million or more, it is a big company which should not receive corporate tax relief. That's what those opposite say. Those opposite think that if a company has turnover of $2 million, it means that it makes $2 million of profit. But, of course, it doesn't, because most companies might have a profit margin of maybe five per cent or six per cent—something like that. So a company that's turning over $2 million might be making about $100,000, which is about the average household income in Australia. Those opposite say that is a large company that should not be entitled to corporate tax relief, and they voted against it. They voted against tax relief for a small company in suburban Sydney with $2.1 million in revenue. That is just the reality.

Emma Husar (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

Not in western Sydney.

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

They think that is the right thing to do. They think that a company with $2 million of revenue is a large company that's not worthy of tax relief. The member for Lindsay was interjecting saying 'not in western Sydney' they don't have those companies, but, actually, we have thousands of them. A company that turns over $2 million in revenue is a very small business, but those opposite literally think that that is a large company and they voted against relief for a company with $2 million in revenue. It is an extraordinary policy, and it really does speak to the anti-investment, anti-success agenda of those opposite.

The Leader of the Opposition recently said that in Australia there is a sense that your success in life is predetermined by your parents' income. That's just wrong. Every person in this place, and the vast majority of people around Australia, would say that their success in life has been overwhelmingly determined by their own efforts. That's what we believe on this side of the House. We believe very strongly in promoting innovation and investment and, basically, in backing people who get out there and make things happen. In the absence of that, the economy doesn't grow and we have a weaker economy and a weaker society. The strength of Australia—one of its many strengths—is the fact that people do take risks, people do invest and people do get out there and make things happen. That is why we are so supportive of corporate tax reform—to encourage people to invest more in this wonderful country.

The enterprise tax plan part 2 that we are discussing today will bring tax relief to those businesses with turnover of more than $50 million. Those opposite have already voted against the enterprise tax bill No. 1. Presumably, they will now vote against enterprise tax bill No. 2. It is important to know that there are 3.85 million Australian employees who are employed in companies that will benefit from these provisions. They will benefit because the company will have greater incentive to invest in Australia. Those opposite say that shouldn't occur. They say that it's a giveaway to companies—which is instructive in itself because it implies that all of the money is the government's for the government to decide what to do with, when, in fact, the money has been generated by these companies and not by the government. The government is the one taking the money, not the other way around. We say: let those companies keep more of the money they have generated so that they can reinvest more in our society and create more jobs. That is self-evidently a good thing to do.

But it is important to reflect on the policies of those opposite when it comes to tax. It is the most anti-investment, anti-innovation agenda we have seen from the Labor Party for many decades. I want to briefly run through the list of all the problems they would present for investment in Australia if they were to become the government. One of the things that those opposite propose is that any form of investment in Australia be subject to a 50 per cent increase in capital gains tax when it is sold. Labor say they want to do that because of issues to do with the housing market in Sydney and Melbourne. But they propose that capital gains tax be increased by 50 per cent for absolutely everything. So if you invest in a factory, a farm, a technology company, a warehouse, if you help a friend by investing in a small business—a cafe, a small restaurant or whatever—you will pay 50 per cent more tax under Labor's so-called housing affordability policy.

This is a very important point. If somebody wants to build a factory in Western Sydney, of which there are many thousands, to create jobs in Western Sydney, why should they pay 50 per cent more tax? That is an extraordinarily bad policy. It has nothing to do with housing affordability. I would absolutely welcome from anyone in the opposition an explanation of the link between housing affordability and increasing by 50 per cent a tax on investment in a factory, a warehouse or any other job-creating area. Nobody in the opposition has ever articulated such a link—because there isn't one. The policy is that, to address housing affordability, capital gains tax will be increased by 50 per cent. But no-one in the opposition has ever explained why they decided to extend that to factories in Western Sydney, warehouses in regional Queensland and farms in Western Australia. On all of those things, when sold, there is a requirement to pay 50 per cent more tax under Labor's housing affordability policy. If someone would like to articulate why they have done that and how it is related to housing affordability, that would be very welcome. But they won't do that, because there is no link. The reason for this policy from those opposite is that it raises more revenue—which would mean the government would have more money. That is why they want to do it. It has absolutely nothing to do with housing affordability.

Another issue is Labor's policy with respect to negative gearing. Labor's policy is that people investing in an investment property should not be able to claim the cost of interest even though that has been possible in Australia for more than 100 years. For more than 100 years, you have been able to claim the cost of interest when investing in investment properties; that actually applies to any investment, although much of it is investment properties. Labor say you should not be able to do that. And then they say this will have no impact on the market, that all the people who invest in properties will continue to do so. They say the fact that property investors will not be able to claim an interest deduction will not have any impact on rent, because they will have exactly the same rental income; they will not increase rents even though the total cost of owning the property will be higher because they no longer have the ability to make use of negative gearing. So Labor say there will be no increase in rents under negative gearing, even though they acknowledge that the person who owns the investment property will have to pay more. The person who owns the investment property will have to pay more, but Labor say the person who owns the investment property will not pass on a dollar of that cost to any renter in Australia. That is an extraordinary and absurd policy, and that is why it is so important to continue to articulate in a very precise way the cost of that policy.

They also want people who earn $180,000 to pay one in two dollars to the government. If that isn't a disincentive to work hard, what is? That is an extraordinary impost.

They also say that the hundreds of thousands of Australian businesses who make use of trust structures and who have done so for many decades should not be allowed to do so. They say that it's only going to be affecting a very modest number of people. They say they have modelling from the Parliamentary Budget Office on this issue of how many Australians will be affected by Labor's policy of effectively abolishing the use of trusts by small business. We say: release the modelling. The Parliamentary Budget Office would be perfectly fine with those opposite releasing the modelling on what their attack on trusts will do to the small business sector. The Parliamentary Budget Office isn't stopping the Leader of the Opposition from releasing that modelling. The only person who is stopping the Leader of the Opposition from releasing the modelling is the Leader of the Opposition. He should do so. He should be very, very frank and say, 'This is the exact number of the hundreds of thousands of small businesses in Australia who will be affected by this attack on trusts.' They have the number and they have the modelling. It has been provided by the PBO. They should put it out there in the public domain if they are so confident in it.

From those opposite we hear an extraordinary litany of attacks on aspiration and attacks on investment, whether it's on negative gearing, capital gains, trusts, not supporting company tax cuts or attacking investment on a range of levels. They have an antisuccess, anti-investment and antigrowth agenda. On this side of parliament, we are unashamedly pro growth and unashamedly supportive of business investment. We will back businesses to invest in this country and to employ millions of Australians. We have already got the runs on the board with the first tranche of these enterprise tax cuts. This is a very important second step, and it should be supported by all members in the House.

Greg Hunt (Flinders, Liberal Party, Minister for Health) Share this | Link to this | Hansard source

I move:

That the debate be adjourned and the resumption of the debate made an order of the day for a later hour this day.

A division having been called and the bells being rung—

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Madam Deputy Speaker, to suit the convenience of the House, we are happy to call the division off. A division is not required from our end.

Question agreed to.