Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

The question now is that the amendment be agreed to.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

I'm very glad to speak in favour of this bill, not because I have some sort of ideological propensity for lower taxes or companies getting more money or, indeed, giving up a never-ending stream of good-news stories to key constituencies. I stand here to support this piece of legislation because history has shown us over and over again that lower taxes with less government leads to a better society because it is a freer society, a more equal society and a happier one. Western democratic societies have never had to set up their own institutes to measure global happiness in order to declare themselves the happiest people on the planet. It really is Disneyland politics.

If we are to bring the best of ourselves to this place, then surely we must learn from history. Surely we must enact legislation that we know will help our community be happier and will give people more opportunities and, therefore, more choices. Underlying this bill is the lesson that we have all learnt over many years: when the state taxes its people and companies less, people are better off. The reason for this is pretty obvious: individuals are better at spending their own money than the government. It is what PJ O'Rourke calls the 'other people syndrome'—that we're better at spending other people's money than we are at spending our own. If, let's say, I'm buying myself a car with my own money, you can bet I'm going to get a pretty good car at a pretty good price. But, when I'm buying a car for someone else, with someone else's money—let's just put it this way—different criteria apply and that person gets a very different car to the one I would have bought myself.

Wherever possible, we should leave money in the hands of other people who earned it, because they are going to use it more sensibly and more effectively than the state. And so it is with company tax. You see, companies do not really pay tax; they collect tax. Any tax you charge a company is passed on in lower growth, lower investment, higher prices, lower returns and lower wages. When you vote against this bill, what you are voting for—and let's be very clear—are fewer jobs for those out of work and lower wages for those in work. That's what the Labor Party stands for when it opposes this bill.

Many Australian companies have to compete against foreign companies that emanate from jurisdictions with much lower rates of tax and much friendlier tax environments. How are they meant to compete in the market when that is the situation? Why do some people in this place want Australian owned companies to do worse than foreign owned companies?

What this parliament needs to appreciate is that you can't move land and you are limited to how many people you can move—and it is always the most skilled that do—but there are few limits on how much capital you can move around the world. In an environment where most investors are happy with returns that are less than 10 per cent, what do you think the attitude of international investors is when they are faced with more viable businesses in Australia that have to pay 30 per cent tax versus one in Singapore at 15 per cent or one in Ireland at just 10 per cent? So if you are a small business or a start-up, or just trying to grow your business, forget about getting competitive and reasonable financing from overseas.

You see, the Labor Party and the Greens want to make sure that you only get a loan from the banks, that you have to put your house on the line—and anything else you might have. If you lower tax rates, you increase the supply of risk capital in our economy. If you are the Greens or Labor, you don't want to see the banks having to compete for business—oh no, none of that for their mates in the banking sector! You see, under Labor and the Greens, the only people entitled to preferential treatment are the unions. And if you are an Australian entrepreneur trying to build a business that employs people, that provides jobs and creates competition so consumers can get a better deal, don't expect to get any favours under Labor or the Greens—because those opposite believe they are better at spending other people's money.

Let's just review what the bill does. Further to the Treasury Laws Amendment Act 2017, the bill amends the Income Tax Rates Act 1986 to progressively extend the lower 27.5 per cent corporate tax rate to all corporate tax entities by the 2023 financial year and further reduce the corporate tax rate in stages so that by the 2026 financial year the corporate tax rate for all entities will be 25 per cent. At the moment, the company tax rate has only been reduced to 27.5 per cent and this reduction only applies to businesses with aggregated turnover of less than $10 million from 2016 and businesses with aggregated turnover of less than $25 million from 2017. Reduction of the corporate tax rate then applies to businesses with an aggregated turnover of less than $50 million from the 2018 income year onwards.

This bill contains residual components that did not pass in May 2017. These include provisions to incorporate tax reduction progressively within a specific time frame. This bill allows the tax reduction to apply gradually to higher turnover thresholds until a cut-off to businesses earning less than a billion dollars by 2023. The threshold changes are: $100 million in the income year 2019; $250 million in the income year 2020; $500 million in the income year 2021; and a billion dollars in the income year 2022. Aggregated turnover threshold is then removed in 2023. A uniform company tax rate of 27 per cent would then apply to all businesses in the 2024 income year, which would then be lowered to 26 per cent a year later and, finally, remain at 25 per cent from the 2026 income year onwards. These changes would further encourage growth and innovation and promote investment that would then grow the economy, making Australia more competitive with other countries.

The benefits are broader than tax cuts. Increasing the aggregated turnover threshold will increase access to small business entity concessions, such as the $20,000 write-off for depreciating assets, immediate deductions for certain expenditures and simplified depreciation rules. Economy-wide modelling by Treasury and KPMG suggests change will have net benefit on GDP, GNI, employment and investment. So companies in my electorate such as PharmaCare, which provide supplements to help people lead healthier lives, can invest in bringing more products to market to help people avoid health issues and live healthier lives. And, while they are doing that, they are growing their business here in Australia and employing more Australians. Or what about Dematic, a company that designs and builds the logistical systems for the warehouses that increasingly drive our economy. Dematic, like so many other businesses, has multiple choices as to where it invests its money. It can ramp-up its businesses on the Northern Beaches of Sydney, building up its high-end design and engineering units, or it can do that in one of the other five nations in which it operates. You cannot tell anyone here, except for those members who keep unicorns as pets, that the level of tax they are paying in one country over another does not play a role in their decision-making process about where they invest their money.

Look at Link Healthcare, founded by John Bacon and his wife Lyn. It is a truly innovative company; it has expanded around the world. It has saved many lives and, just as importantly, it has made the lives of so many others better. It supplies drugs to the Australian market, when, to put it bluntly, none of the large multinational pharmaceutical companies would. According to Labor and the Greens, this truly remarkable Australian company should be put at a disadvantage compared to the very companies that could not and would not help Australians.

While there are plenty of other businesses in my community that would also benefit from a fairer, better and more efficient tax system, let me focus on two more only, starting with Kobi Simmat and his team at Best Practice Certification. They are doing the back-end work that helps digitise and grow companies. It is a company that helps others get on with doing business and provides a better place for all Australians.

As my second example, we have Andrew and Pip Goldsmith from The Boathouse. They took a punt—no pun intended—and ploughed money into a run-down wharf that no-one else would touch. It is now virtually impossible to get into, as people from right across Sydney come to have breakfast and coffee over the water at Pittwater. With lower taxes, this parliament will be encouraging more Australians to have a go and invest in buildings that have not been used for years and create spaces that people want to be in or, in their case, on. There are many other examples, like Incat Crowther, which are tendering to have their own designed ships built by the US Navy, or like H.I. Fraser, which does engineering work on things like dams.

So there you have it: companies that make people healthier, that supply warehouses, that build ships and dams and that invest in public buildings. All of them employ Australians, all of them export overseas, all of them make our nation stronger and more content. And Labor and the Greens want to hurt them all.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

John Kenneth Galbraith described trickle-down economics as 'the less than elegant metaphor that, if one feeds the horse enough oats, some will pass through to the road for the sparrows'. For the Prime Minister and the Treasurer, this analogy may as well be tattooed on their brows. Trickle-down economics is the mantra and the gospel of this government. It's the snake oil they peddle and the broken ideology at the centre of their politics and their policy. It's the broken ideology that they have come into this place to prosecute on behalf of their mates in big business, who fill Liberal Party coffers with one hand and suppress wages and keep megaprofits ticking over with the other. It's a broken ideology. Now, all around the world, people are revolting against it, and young people, in particular, are standing up.

If you listen to this government, you would think that a big corporate tax cut is the first stepping stone towards a perfect society, where everyone has a well-paid job, everything is cheap and everyone lives in a nice big house. If you listen to this government, you would hear the best way to make Australia a better place isn't by properly funding schools and hospitals or by investing heavily in the infrastructure of tomorrow—and it is certainly not by taking action on dangerous global warming that's threatening our way of life and it's certainly not by looking after vulnerable people. Apparently—apparently—cutting the corporate tax rate is the secret to unlocking the vast potential of our society.

Apparently, if we give the very rich more slices of the pie, all our problems will be solved. Well, that's not what the analysis suggests. Late last year the tax office released a transparency report which showed almost 680 companies, with more than $100 million in income, paid no tax in 2014-15—680 companies! At the same time we have companies in Australia who are making a motza and paying no tax, the government's saying, 'Well, perhaps we should give these companies a tax cut.' Why not start by asking the ones who are paying no tax to pay their fair share before we talk about giving handouts to the very wealthy?

In the lead-up to the election, research by the Australia Institute showed that there is no correlation between corporate tax rates and economic growth in OECD countries—that companies with lower company tax rates have lower standards of living, measured as purchasing power of GDP per capita. It also found that wages and mixed income had declined a share of GDP as corporate tax rates have been lowered and that average unemployment rates have risen as company tax rates have been lowered.

But this government doesn't let the facts get in the way of a good scare campaign. Instead, the Prime Minister, along with everyone else in his government, has taken a leaf out of Donald Trump's book by trying to convince us that tax is somehow an emotional or moral burden for society that they are courageously and selflessly ridding us of. These people are cradling the dying tenets of neo-Liberalism in their arms. They are desperately fanning the flames of fear around this building every time question time rolls around. One might ask: how has it come to this? Alarmingly, the answer is all too familiar, because some of the biggest problems with politics today can be traced back to former Prime Minister Abbott, the member for Warringah, who has helped poison the debate. While current Prime Minister Turnbull pretends he's capable of engineering a mature conversation about economics, he's just in lock step with former Prime Minister Abbott. He's following in his predecessor's footsteps.

Ultimately, the point of this whole big show is a distraction. It's a way of trying to distract the Australian people from the stark reality that's bearing down and that people are feeling every day: inequality is very real in this country and is getting worse, wage growth has stalled and youth unemployment is worryingly high and hasn't come back to normal levels since the GFC. This means that we are condemning hundreds of thousands of young people to life without ever knowing a secure income or a proper job. All of that is happening under this government's watch. Their answer is to say, 'Well, the problem is that the big banks are paying too much tax.'

According to Oxfam, the top one per cent in this country have over 22 per cent of the wealth, and the top one per cent in this country own more wealth than the bottom 70 per cent of Australians combined. Just think about that: the bottom 70 per cent of Australian have less combined wealth than the top one per cent. That's the kind of US-style society that we're heading towards. We hear reports that the Commonwealth Bank has made a record profit, even after allegedly breaching money laundering and terrorism finance laws, and then the government says that the big banks deserve a tax cut.

Let's just consider the government's argument for a moment. The government says, 'If we cut the tax rates to big companies, they're going to somehow employ more people.' Do you really think that, if the big four banks get $7 billion in tax cuts, as the government wants to give them, they're going to use that to suddenly employ all of those young Australians who are currently finding life tough because they haven't got a job? No. It's going to go straight to their profits—straight to their bottom line. The banks aren't crying out and saying, 'We'd love to employ more people, if only we paid less tax.' It's just going to be a big gift to the big banks and it will come at a cost, because that's less money that this government has to spend on schools or hospitals or looking after people who are doing it tough. In a society where the bottom 70 per cent of us have less than the top one per cent of us, by having less money available to build the common good so that it can give the big banks a tax cut is going to increase inequality.

They're not even keeping the fact that this government is owned by the top one per cent a secret. There was a fundraiser last year in the lead-up to the election for the Treasurer and the member for Higgins. It was sponsored by one of the big four banks—the same bank that the member for Higgins used to work at. The government aren't even keeping it a secret that they're sponsored by the big banks.

The revolving door between politics and big business is still spinning, and it's showing no sign of slowing down. It's grotesque and, sadly, it has been successful. As hard as it is to say, right now greed and corporate interests are doing very well in the battle in Australia. They gaze down at everyone else with contempt and contemplate new ways to erode the middle and working classes in this country.

What we should be doing here in this place is standing up to powerful interests. What we should be running here is a democracy that is truly representative, that looks out for the interests of regular people, not just the interests of big business, who can afford to employ the lobbyists and the ex-politicians and then come here and demand a tax cut. What this place needs to remember is that everyday people built those companies and that those companies would be nothing without everyday people working for them. This place needs to remember that, to fund the essential services which we rely on, which we all use and which we're all proud of, we need everyone to pay their fair share of tax. I urge the politicians of this country to stop this capitulation. The Labor Party has followed in the Greens' policy footsteps before; the Liberal Party has even followed in the Greens' policy footsteps before. They should do it again, because it is appalling that this government has the guts to stand up here, knowing how many people are unemployed or underemployed and want more work but can't get it and knowing that young people are doing it tough, and say, 'We want the big four banks to get an extra few billion dollars a year because they are not making enough.'

Well, this race to the bottom has to end. The concentration of wealth at the top has to end. As long as the people in power in this place are owned by the corporate interests that put them in, we won't get any meaningful reform. Some standards do need to be raised in this place. This government has, and will have, a lot to answer for if it goes ahead with this giant wasteful tax cut. If the Australian people had a choice between ensuring everyone could get their kids to the school of their choice and having it well funded and knowing they would be looked after in a public hospital if they got sick, knowing that it would mean asking the very rich in this country to start paying some tax instead of getting a tax cut, or giving the big four banks a tax cut, I know what most people would choose.

What is at stake with this bill is nothing more than, and nothing less than, the beginning of the erosion of egalitarianism in Australia and of the principle that in Australia, no matter where you come from or how much money you have, if you get sick the hospital will look after you. If you need to go to a doctor, they can see you without demanding your credit card first. In Australia, everyone gets to go to school, TAFE or university, no matter how much money they have. What's at stake is our belief that that is a fundamental principle that beats at the heart of this society. If we believe that, we've got to fund it. The question then is: who should we ask to foot the bill? The answer is very, very simple: those footing the bill should be the companies which are making world-leading record profits—they should be asked to chip in their fair share. Those 600-odd companies earning over $100 million a year that are currently paying no tax should be made to pay their legal minimum. If we do that and if we get rid of those unfair tax breaks for the people at the top, there will be enough money to make sure Australia is a place where everyone is looked after. We will be able to preserve egalitarianism in this country. If we think the solution to our current problems is to become more like the United States, then we are in strife. If government backbenchers stand up here and say, 'We have to do this because Donald Trump has done it,' then we are in serious strife. I do not want to outsource the government of this country to Donald Trump. I do not want our decisions about what is right for people in this country to be made by a reckless, dangerous president, who will do everything he can to wreck his own country and grow the gap between the rich and everyone else. If you believe that Australia is a place where everyone has a place, a country where everyone should be treated equally, no matter how much money they've got, and if you believe that the point of government is to make sure that everyone gets looked after and is can get the education and health care they want, no matter how much money they have, then you will vote against this bill.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to add my voice of dissent to this debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This is the government's $65 billion ram raid on the federal budget, a raid that will hike the deficit, deepen the debt and force vital services to be slashed. Those opposite screeched hysterically about the 'debt and deficit disaster' for months before the 2013 election, but you don't hear that much around these parts anymore. That's because they don't want to remind Australians about the damage they have done in the past four years to our national accounts, damage that far exceeds anything incurred in protecting the country from the global financial crisis.

In fact, they have hiked up the debt to a colossal half a trillion dollars, for the first time in Australian history, and very few Australians could even conceive of what half a trillion dollars looks like. Make no mistake: this Abbott-Turnbull government has trashed the budget and threatened the hard-won AAA credit rating that the formal Labor government secured for the first time in our nation's history. Now they want to rip a further $65 billion out of the budget for a corporate tax cut, with no evidence of any substantial impact on jobs or growth. Now let's be honest: there are only two ways the government will be able to fund this incredible corporate gift. They can sit back and watch the debt climb or they can continue their usual practice of gutting health, education and vital public services. It's an undeniable truth—every single dollar you rip out of the budget to give back to companies is a dollar you can't spend on health, education, infrastructure and the things we really need to drive jobs and growth.

Realistically, the government won't be able to find the cuts to make up for this breathtaking shortfall. Our budget is likely to continue mounting, while vital services get cut to the bone. This plan is reckless and it is dangerous, and there is no evidence that it will do anything but fatten shareholders' dividends and bolster already bumper profits. The big banks, which have a shameful rap sheet of scandals that have claimed thousands of Australian victims, will be rewarded—wait for it—with a $7.4 billion windfall. And an estimated 40 per cent of the money will head straight overseas to offshore investors and foreign tax authorities.

Labor agrees that our tax plan desperately needs repair, but we don't think we should do this by handing over billions of dollars to the big end of town. We want to see real reform and a fairer system that minimises wasteful tax breaks which disproportionately benefit wealthy Australians. We don't think it's right that some Australians are able to employ strategies that aren't available to millions of pay-as-you-go workers to dramatically reduce how much tax they owe. We want to do something about the excessive negative gearing and capital gains tax concessions that largely benefit wealthy property investors, the very same tax breaks that are driving up house prices and locking millions of Australians out of home ownership. We want to curb the practice of people using trusts to artificially split their incomes between family members in order to dramatically reduce their tax obligations. It's not illegal, but it is immoral. That's the sort of thing the government should be looking to curb.

For us on this side of the House, we also want to limit the amount of money that can be claimed for managing tax affairs. We think it's wrong that big companies pay a lower tax rate than lower- and middle-income Australians. We want to see some transparency, where businesses earning over $100 million are required to publicly disclose how much tax they pay. We want to shut down loopholes that allow multinational companies to shift their profits and avoid paying tax. But the government want to give them a further tax break. And, regretfully, each and every other one of these measures that would bring more fairness and more accountability to Australia's tax regime while saving billions of dollars has been opposed by the government. So let's be clear: Labor wants a fair tax system, and we understand the importance of budget repair.

What we don't want to do is levy a burden of debt and crippled services on future generations by handing $65 billion to the big end of town. Already, one-third of Australian companies pay no tax—I repeat: no tax—and the biggest multinational companies operating in Australia pay just over half the headline corporate tax rate of 30 per cent. Let's just pause for a moment to really think about this. This means that multinational companies earning billions of dollars are paying a lower average rate of tax than Australian nurses or Australian teachers. Most Australians would be appalled to hear this and would rightfully expect the government to rectify the situation. But, rather than fixing things, Mr Turnbull plans to make it worse by giving big companies a tax cut while he levies a tax hike on working Australians earning more than $21,000. In what world is that fair? What cruel and twisted priorities does that demonstrate?

The Turnbull government are shamelessly, transparently and single-mindedly focused on finding new ways to funnel public funds to the big end of town while fighting tooth and nail to protect the tax lurks and loopholes for the wealthy that do nothing to boost growth. They are a government at war with low- and middle-income Australians. They've trashed your services. They've cut your penalty rates. They're hiking your taxes. They've fought against your pay increases. And now they want you to thank them because they want to give your big business boss a tax cut. It's outrageous. This bill will rip $65 billion out of Australia's bottom line, take money away from pensioners and hurt jobseekers. It will mean less investment in health, education and infrastructure; it's going to force senseless cuts in our schools and universities; and it will require tax hikes for low-income workers. And for what? Very little.

Just consider the government's own figures that show this reckless cash splash will add a miniscule one per cent to growth, and it will take 20 years in order to achieve that. Even this anaemic result has been called into question. In fact, a report from senior research fellow at the Australian Institute, David Richardson, found:

…   …   …

But what about wages? Conservatives have been telling us for years that profits from rich companies will always trickle down to the workers. Well, the government's own data—the rosiest modelling it could summon—says that workers can look forward to a one per cent boost to their pay packets, also in 20 years' time. It's hardly anything to crow about. Even this seems questionable. In the December quarter, businesses recorded a massive 20.1 per cent boost to their profits. So, what happened to wages in that period? Well, they actually went backwards by 0.5 per cent. So it's very clear that there's no guarantee whatsoever that wages will grow with companies' bottom lines.

The government also tells us that, when companies make more money, they put more people on. The experience of Australian banks in recent months would suggest otherwise. In August, the ANZ reported a $1.8 billion cash profit for the third quarter. In May, Westpac announced a $4 billion profit for six months. Around the same time, Macquarie reported a record $2.2 billion in annual profit, and the NAB boasted a first-half cash profit of $3.3 billion. If the government were right that large profits equalled increased job creation, you'd expect that these banks would have created a bumper field of jobs this year, wouldn't you? Well, you would be wrong—very, very wrong. In fact, together, Westpac, NAB, ANZ and Macquarie have actually cut 2,300 jobs in recent months.

But, of course, this makes perfect sense. Employers don't create jobs because they are making more money; they create jobs when there is a greater demand for their services. The reality is that businesses are under relentless pressure from shareholders to increase their dividends and drive efficiencies by cutting staff, not putting more on. Any CEO who went on a hiring spree just because he got a lower tax bill would quickly find himself on the wrong side of the hiring queue. This is a government that, despite touting itself as the party of business, demonstrates breathtaking ignorance of basic business imperatives. These grossly expensive tax cuts won't do anything meaningful for wages, economic growth or job creation, but they will deliver one thing in spades, and that is increased inequality. Michael Bradley put it well in the recent Drum article where he says:

That's all just a long way of saying that the small business tax bonanza the Government is selling is largely illusory. In the bigger picture, 45 years of trickledown experiments, promising that the rivers of money which have flowed to corporations and the rich will turn into 'jobs and growth' for all, have delivered one clear outcome: a massive and sustained increase in income and wealth inequality.

We know from the OECD that increased inequality is inevitably a stall on growth.

But you might say that this is all theory and speculation and that we can't possibly know what's going to happen unless we try. Well, luckily, this real-life experiment of the government's agenda has already been done in the American state of Kansas. It crashed and burned so spectacularly that it drove the state to the brink of depression. In 2012, the people of Kansas were told that cutting taxes for the highest-income earners as well as cutting the corporate tax rate would be 'a shot of adrenaline into the heart of the Kansas economy'. They were told that they would create 22,000 new jobs. They were told that business and investment would flock to the state, increasing the wealth for everyone. They heard that disposable income would be increased by $2 billion over the following five years. Sound familiar? Well, it should, because it's exactly the same spin that those opposite are peddling in Australia today, with exactly the same agenda.

So, what actually transpired? Rather than adding jobs, the state registered a net loss of 23,000 jobs when compared to the previous average employment growth rate. Meanwhile, nearby states with similar economies saw an increase in job growth. How about the promised population growth? That was another spectacular fail, as the population actually slid backwards. And, again, neighbouring states continued to grow at the average rate. Similarly, disposable income also went backwards. But there was an explosion in debt and deficit. This led to severe spending cuts as the government desperately tried to repair the damage they'd done to the budgetary bottom line. After four years of this unmitigated disaster of anaemic growth, deepening deficits and savage spending cuts, the people of Kansas said, 'No more!' By a two-thirds majority, the conservative legislator admitted the spectacular failure of their program and repealed many of the tax cuts that had created such havoc in their state.

Inequality isn't just a word or a metric. It is a dangerous and growing trend where wealth is increasingly concentrated at the top end of the income spectrum, leaving people on low and middle incomes struggling and creating generations of working poor. This is exactly what the Turnbull government is all about—ensuring that wealthy Australians and companies are looked after. Forget about the debt and deficit. It's ignored, as are the millions of Australians who will find it harder and harder to get by. This legislation is a heist and a con, and it should be comprehensively rejected.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Here we go again. The government is once again trying to ram through its $65-billion big-business tax cuts, when we know that this has already been rejected by the Senate. We know that the government doesn't like listening. We know that the government—and the Prime Minister—has a tin ear when it comes to delivering economic reform, let alone energy reform. But, when it comes to the government having laser-like focus on an achievement, it is not reform of the energy, health or education sectors. It is the sole mission for and in the DNA of, it appears, every member of this government to do everything possible to give relief not to middle- and low-income working Australians—the hardworking men and women of Australia that I represent and that every single member in this place represents—but to large corporations and big business. That is their objective and clear intent. I know that, and my community and the people of Australia know that.

I want to remind the House of some of the actions of this government and what they've put on the table to pay for the legislation that we're dealing with today: cuts to families, through changes to family tax benefits; cuts to pensions, through scrapping the energy supplement, which I'll come back to; cuts to jobseekers, forcing them to wait for Newstart; cuts to young people, forcing them from Newstart onto youth allowance; and cuts to new parents and families, through changes to paid parental leave. The last time we debated this and the last time I spoke in the parliament about this—the very same week in which we saw tax cuts for millionaires and huge relief for large corporations—this government voted to cut the energy supplement for pensioners in this country. The same week!

I would sometimes like to give the government some advice about claiming fairness. Who can forget the leaked report about the budget that was brought down earlier this year—I guess it was from yet another hit inside the government; there are so many of them—revealing that the government had spent over $100,000 in market research testing about what should be in the budget. They didn't go to a town hall, like the Leader of the Opposition will do. They didn't travel the country, listening to what's happening to communities and small-business groups or what's happening on the ground. They paid for market research testing to tell them what to put in the budget. And you know what it found? The research, paid for courtesy of the taxpayer, showed that the word 'fairness' should be used. The government had to be told to use the word 'fairness' in a budget that delivered a tax cut to large multinational companies and millionaires in this country while increasing taxes—not even keeping them the same—for working people and people who are making do, getting by and keeping their head above water. So much for the Liberal-National Party being 'the party of low tax' and 'the party of small government'. That's rubbish; it's nonsense. In this budget, tens of thousands of people in my electorate, earning less than $80,000 a year, will get a tax increase. And, at the same time, they've got to watch a tax cut to large multinational companies. We know that when the big end of town says 'jump', this government says, 'How high?'

Despite this obviously extreme, right-wing agenda that has now taken over the government and that has been building up for the last four years now, what does the economic modelling say about the $65 billion handout? It says it's a waste of time and a waste of money. Not only are we seeing that the cost to taxpayers is a further $600 million over the forward estimates and $36.5 billion over the medium term, as outlined in the budget papers; on top of this, we're going to have annual, ongoing costs of $8.3 billion.

It doesn't stop there. New calculations show that this big-business tax cut will also cost the Australian people an extra $4 billion in interest charges. That equates to around $162 for every single man, woman and child in the entire nation. The total interest bill will hit over half a billion dollars in 2021 before blowing out to beyond $1 billion in 2023-24. These are simply staggering statistics. Surely, the government must have something to show for this incredible handout of taxpayers' money. Treasury analysis released by the government on budget night said that, as a result of big-business tax cuts, that the economy will be—wait for it—potentially one per cent bigger as a result. It is forgoing the revenue that would have paid for things like health, schools, adequate social security and family support, support for our ADF and support for a homelessness and housing strategy—let alone the NBN, but I don't have enough hours in the day to talk about the government's failure on the NBN.

What we're doing is asking this parliament—which has already rejected these cuts, as the Senate has rejected them—to then say, 'No, trust us; we are going to grow the economy, potentially by one per cent.' But that one per cent is over a decade. It's a bit like the latest so-called guarantee of the energy policy. The government is saying it's going to be a guarantee. There's no economic modelling to show that it is a guarantee, but the government is expecting us to agree when they say, 'We have all the answers. We know best. We are going to deliver, at best, a 50 cent reduction to the people of Australia in 2020.' This government is just going from the ridiculous to the absurd.

The one per cent is over a decade. But the decade I refer to begins at the end of the decade of tax cuts. That means the one per cent dividend claimed is actually around 20 years away. That's 20 years of waiting before the Australian people see growth of just one per cent, while the budget is $8.3 billion worse off per year and the Australian people are slugged with an interest bill of $4 billion a year.

We've already seen a Treasury research paper that predicts these company tax cuts are likely to increase company incomes by a mere 0.6 per cent over the long term. Further to this, the paper also suggests it will take 20 years for the economic benefits of these company tax cuts to have any long-term value, with half the benefit coming in 10 years. Given the large component of corporate tax cuts only starts to take effect in 2022, Australia will be waiting 25 years for a 0.6 per cent increase in incomes. While we're waiting for this to happen, a report by the UTS says more than 40 per cent of the $65 billion handout will go offshore to investors of multinational corporations and foreign tax authorities. This is even before I start on the big banks.

We all know that giving corporate tax cuts really pales into insignificance when compared to the protection racket, as I like to call it, that this government operates around big banks. Just recently, the Commonwealth Bank reported a near $10 billion profit—and this Prime Minister and Treasurer think that they deserve a handout from the Australian taxpayer to further enhance the bottom line of the CBA. In the same week that this occurred, the financial intelligence agency AUSTRAC filed claims in the Federal Court which state that the bank broke the law up to 54,000 times by failing to report suspicious transactions on time.

We know that the government is out of touch, and the community is seeing this. You only need to look at Newspoll, which has shown consistently 21 times why this government is out of touch and why this Prime Minister is losing support across Australia. We know that the plan to cut payments to families, pensioners, new parents, young people, students, people with a disability and jobseekers is on one side and on the other side is the plan to ensure that large corporate Australia somehow, magically, mythically, will deliver a trickle-down approach to provide long-term economic reform. With all this money being splashed about by the government to big business, it's clear for everyone to see where the government's priorities lie. I'll tell you it's not with Australian families, pensioners or any person needing a hand; it's with big business and the banks. To pay for the corporate handout, we know that there will be a whole range of cuts. For a government that's been in power for over four years and promising Australians that there are better days ahead, well, my community and the rest of Australia would like to know where are the better days ahead? It's certainly not in energy policy. It's certainly not anything to do with the NBN. It's not certainly to do with jobs or wages growth. And it's certainly not anything to do with inequality, which we're seeing at a 75-year high.

We have recently seen wages and salaries grow by just 0.7 per cent in the three months to June and by only 2.1 per cent over this year. We know that this increase, however, was driven by a jump in the number of hours worked rather than pay increases. The true figures show that the average compensation of employees declined 0.1 per cent for the quarter and climbed just 0.1 per cent over the year. Real net disposable income per capita—the best measure of potential living standards—slipped by 1.4 per cent. What did the Treasurer make of this? He said, 'Well, a substantial lift in wages would have to wait until a sustained improvement in profits.' If the Treasurer bothered to check, he'd know that earlier this year company profits rose by more than 30 per cent in the year to March, the best result in 33 years; while wages rose only 1.5 per cent, leaving the share of wages and national income at 51.5 per cent—the equal lowest level since the early 1960s. On top of this, new data released in the June quarter found that annual growth in compensation per hour fell over the June quarter from 1.1 per cent to minus 1.3 per cent—the weakest growth in 25 years.

While the government can claim that more jobs are being created, they are also coming with record low wages. Capital Economics chief economist Paul Dales said the wage figures were even worse when broken down to average employee compensation per hour and that 'there is no evidence whatsoever that wage growth has started to rise'. What does all that mean? Out in the community people are struggling. People are finding it hard to make ends meet with the rising cost of living and the rising cost of energy prices. The government's solution to the energy crisis is to give a 50c per week reduction in energy costs—pushing out to the 2020s. I don't know about you, Madam Deputy Speaker, but when I return to the electorate of Oxley this weekend and when I visit community groups with the big headline news that the energy policy of this government will deliver a saving of 50c a week—perhaps by 2020—I don't think that's going cut it. In fact, I know that's not going to cut it. When I go to small businesses and say, 'The great energy policy unveiled by the Turnbull government this week will deliver you a reduction of 50c a week,' I know that's not going to cut it. I know that people will say to me: 'You've got to be kidding. That's as good as it gets?'

With the package of bills before us today, we know that, when it comes to the government's priorities, it is not about delivering real reform for the economy; it is not about dealing with inequality; it is not about tackling the low wages growth that we are seeing year-in year-out. But we do know that small business needs support. Labor has supported the cut in company tax for small businesses to 28.5 per cent and will support a further cut to 27.5 per cent—covering all small businesses, who represent 83 per cent of Australian companies. Labor is very clearly on the side of genuine small business. I come from a small-business background. I know what it's like because my parents ran businesses. I know what it was like because I saw the struggle that they went through. We need to do more to support small businesses. I recognise that the 8,748 small businesses in my electorate are the backbone of our local economy. I know, from my parents and from when my father ran a business, how critical it is for government to be there when it's needed but also to get out of the road for businesses to be able to grow, to support the local economy and, more importantly, to grow employment in the local economy. But billion-dollar corporations and businesses do not need, at this time, a handout. They do not need assistance. When I speak to the people I represent, including community groups and chambers of commerce, and I say, 'I'm on your side; I'm supporting a tax cut for you; I don't support large, multinational companies getting a tax cut,' I know where they stand.

Andrew Giles (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

It is clear that the reactionaries who run today's Liberal Party, and their boosters in big business, have only one idea when it comes to securing Australia's economic future. It's an old idea and a very bad one. They remain disciples to trickle-down economics. Their only idea is to give more to those who already have quite enough, in the hope—the hope, not the expectation—that some of that may flow through to others and boost economic growth generally. This is despite the fact that these ideas, these policies, have been discredited over the last 30 years—in particular, since the global financial crisis.

But I will say one thing for the person who presently leads the Liberal Party and the government, the Prime Minister. He has been inconsistent, as we know, on just about every matter that he has expressed a view on—on energy, as we are seeing right at the moment, and certainly when it comes to marriage—but he has been a true disciple to neoliberalism. Throughout his political career, he has been a booster of inequality, and we are seeing that most clearly in this bill before the House today, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. That's something that serves this parliament poorly, and it would serve Australians poorly but for the firm opposition of the Labor Party—in this place and in the community—to this narrow, bleak agenda for Australia. There is only one idea this government and its boosters have, and that's why Jennifer Westacott, the leader of the Business Council of Australia, has said of this package that there is no plan B—because they can't conceive of one. They can't conceive of a different way forward, of a pathway to inclusive growth, to a more equal Australia. That is what the Labor Party are committed to.

In opposing this legislation, I want to make out the case for that pathway—for sustainable economic growth which is to the benefit of all Australians, not just the few. There is a plan B. There has to be a plan B. The failure of this government to consider alternatives, to consider the evidence, is something for which they stand condemned. When we consider this legislation before the parliament now, we are thinking about what's happening in the Australian economy at the moment. There are three things that are going on that I think are critical to this debate. Firstly, there are record-high company profits—a matter the member for Oxley just touched upon. Secondly, despite this, there are very low levels of reinvestment by those profitable businesses back into their businesses. Thirdly, and most troublingly for me and for most of us on the Labor side of the parliament, there is record-low wages growth.

What does this set of circumstances require? Policies to boost profits further while doing nothing for investment, and certainly nothing to secure reasonable wages growth, are the cornerstone of a plan to increase and exacerbate inequalities of income, wealth and power. That is what this bill represents—a continuation of that extreme neoliberal agenda. We know, on the basis of Treasury modelling, that this plan will also do nothing to secure economic growth. The growth dividend is negligible and almost laughable.

As we debate this bill today, we do so in the context of the warnings of the IMF that Australia has one of the fastest-growing levels of income inequality in the OECD. This is a problem that, on this side of the House, we are determined to solve. But this bill will only exacerbate it further. For me—and, I believe, for my colleague the member for Oxley—this is something which is bad morally. We think extreme levels of inequality are, in themselves, wrong. We also know—and this is what makes this bill and the government's approach so galling—that this isn't simply a question of how we see the world; this is a question of the evidence. We now know that the level of inequality that this bill will advance is actually a drag on economic growth. It's bad for everyone, not just those individuals being left behind by this cruel agenda. This is why there has to be a plan B. This is why I'm so proud to be part of a Labor team that has started to articulate an alternative way forward for the Australian economy and for Australians.

Before I get to some of the elements of that, I want to talk a little bit about the Treasurer, who in this bill—and, indeed, across his handling of his responsibilities—is all over the place. It's so confusing—and, again, also galling—to read reports about how he's embarking upon a new vision to secure inclusive growth. Wrapping himself up in the words of a Labor approach to economic management will not secure that approach. This bill—the narrowness of its vision, the bluntness of its application—underlines exactly that point. I read this morning his second reading speech. He said, 'I will not rest until this agenda has been prosecuted. I will not rest.' He said that on 11 May and we are now in October. Not even in this corner piece of the government's agenda to secure jobs and growth can the government effectively articulate its agenda. We know the commitment is real—we know it is visceral—to push Australia down this path to inequality. But, even on this core item of business, the government can't bring itself to advance its agenda/ Such is its level of dysfunction; such is the level of incompetence and incoherence by the Treasurer and all of the government's economic team.

I touched briefly on the warning the IMF delivered to Australia about the rapid increase in income inequality in Australia right now. I also touched upon the concern that this is not simply a question of the impact on individuals; it has a broader consequence in terms of the managing of our economy. I note again that, very recently—in September, in fact, when I last thought I was going to have the opportunity to speak on this bill, this centrepiece of the government's economic agenda—the Fairfax-Lateral Economics wellbeing index report revealed that the yearly drag on national wellbeing caused by income disparity across the economy had grown by $62 billion over the past decade. This is something which is getting worse, not getting better, even before this approach is legislated. I obviously hope it won't be legislated. Inequality is, as our leader, the member for Maribyrnong, has said, 'the biggest threat to our health as an economy and our cohesion as a society'. That's why we reject the agenda set out in this bill.

Government members describe this as 'the politics of envy', but that flies in the face of reality. It is a cheap and nasty rhetorical device that ignores those three factors that I set out earlier which characterise the Australian economy at the moment: record company profits, a very low level of reinvestment of those profits and record low wages growth. The last two are real problems. The second one, if businesses are doing well, is something that would be welcomed by the Labor side. But I don't think that welcome needs to be accompanied by an additional more than $36 billion handout at a time when our budget is in such structural disarray and when there is no evidence of any connection between those levels of profitability and wider economic benefits—particularly, again, when there is no plan to secure high levels of reinvestment in businesses. Indeed, we would suspect that much of this giveaway would simply be repatriated offshore. Also, there is not even an attempt to connect this to wage outcomes.

There are answers to the problems of wages. I spoke earlier about inequalities of powers as well as inequalities of wealth. Central to fixing this is to restore the balance in our workplaces, taking seriously what's going on in the world of work and restoring the power of workers to bargain effectively and to secure a fair share for their work. That is a problem that Labor is committed to solving, and the member for Gorton will be addressing some of the matters that will go to fixing this problem very shortly.

But we don't get any debate about a fair share from the world of work or from profits that companies are making. Instead we just get this blind adherence to the ideology of trickle-down. Its blindness is such that even voices that are very sympathetic—and very sympathetic, broadly, to this neoliberal agenda in perhaps a milder form—are casting very significant warnings. The government is heedless of the advice of the IMF, of the OECD, of even the World Bank, who are warning against this sort of reckless and irresponsible economic approach. Even the Reserve Bank of Australia has very recently cast very significant doubt—a position that government members should be mindful of—about the supposed benefits of this massive giveaway to big business. If the government isn't troubled by Treasury's advice about the measly growth dividend of the measure contained in this legislation, perhaps they could look beyond the helpful advice of the Business Council of Australia, or perhaps even ask the obvious question, which is: 'She would say that, wouldn't she?', speaking of Ms Westacott. Of course, she is in the business of securing a good deal for her members; good luck to her in that—except to the extent it causes a bad deal for Australians, for working Australians, and, indeed, for the Australian economy.

I think members should go beyond questioning Ms Westacott and should come back to the comments of assistant governor of the Reserve Bank of Australia Luci Ellis, in puncturing the arguments of the Treasurer when it comes to international competitiveness on corporate tax rates. Dr Ellis is a person that government members should have regard to, when she talks about the business environment—which is, of course, a critical factor for multinational businesses in choosing to locate here—the institutional framework, the rule of law, the macroeconomic outlook, and where the resources are. These are matters that are of deep concern to the Australian Labor Party's economic team in seeking to advance upon a race to the top, not a race to the bottom, in securing the future of the Australian economy; in supporting Australian businesses across a wide variety of sectors; in having a proper approach to infrastructure; and in having the confidence to invest in people and in skilling them through schools education, through training, and, obviously, through not short-changing our higher education system—as this government is continuing to seek to do in the face of all the evidence and in the face of great opposition.

On this legislation, the simple idea that it contains is in one sense very easy to rebut. The challenges that face the Australian economy and face Australian society are complex. The answers to them are complex also. But again, they are not to be found in giving more to those who already have enough, and continuing to have blind faith that these benefits will somehow be shared. If we simply look at the cost here, the cost to the budget is extraordinary at a time when we need to seek to effect significant structural repair of Australia's budget—a matter that used to be of concern to government members or, at least, seems to be of concern to them when they are in opposition. The massive giveaway without any dividend in return is extraordinary.

There's been some comparison to some overseas examples, and I want to say two things about that. Firstly, even Donald Trump in proposing company tax cuts sought to extract something in return; here, it's a freebie. It's simply to be taken on trust, and in spite of the evidence. Secondly, I would urge government members also to look to the United States and to have regard to the Congressional Budget Office's research on effective corporate tax rates. We on this side of the House are up for a proper debate about tax, but a debate that is grounded in fact. What matters of course is not the notional rate, but the effective rate. And I'd ask government members to give some consideration to that as they continue down this frolic. The cost is great. Again on the benefit: it is really blind faith that's put before us that this massive giveaway—this multibillion-dollar giveaway—to our biggest companies, at a time when they are enjoying record profits, will deliver return for anything other than the shareholders in those businesses, because we know the growth dividend is almost non-existent.

Lastly, let's also think about the implications of all this for the Australian economy—I've touched on the failure to articulate a pathway to sustainable growth—and for Australian society. We are confident in Australians; that is why we are committed to investing in them and to developing their capabilities. We believe that in the Asian century we can continue to thrive, based on our qualities, our capacities and our capabilities, if we support them with infrastructure, with investment in skills, and with recognising the real pathway to securing Australia's economic future—not this blatant grab; this handout to those who have enough.

Sharon Bird (Cunningham, Australian Labor Party, Shadow Minister for Vocational Education) Share this | Link to this | Hansard source

I will just shake the dust off these speaking notes! They've been sitting on my table for a while, waiting for the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 to come before the parliament for further debate. The optimist in me would take from that that perhaps the government was reconsidering the wisdom of this particular bill, but the realist in me recognises that it's probably more a reflection of their lack of faith in their capacity to get support across the parliament for the bill. Regardless, when this proposed enterprise tax plan was first announced, my Labor colleagues and I made it very clear that we would oppose it, and that position has not changed.

I stand here today, finally speaking on the bill, still opposed to what is a very unfair and ill-judged proposal before us. The legislation we have here is obviously seeking to implement the remainder of the government's company tax cut plans. This particular part of that plan would provide companies with a turnover above $50 million with a tax cut to 25 per cent. It's costing $600 million over the forward estimates and $36.5 billion over the medium term. Over the medium term, the government says this element of their company tax cut plan will cost $36.5 billion, with the cost of the full company tax cut plan being $65.4 billion. Indeed, in the final sitting week before the budget, the government managed to successfully pass part of its company tax cut plans through the Senate. It passed the tax cut, to 25 per cent, for businesses with a turnover of up to $50 million. Consistent with the position that we've had on the company tax cuts presented in this bill, we will be opposing it.

The bill is, in fact, the ultimate example of how wrong this government's priorities are. It is about looking after those that need it least, slugging those who are already struggling, and not addressing problems that are frustrating individuals, communities and businesses. I want to touch on a few of those, because these sorts of significant budget decisions, particularly in a constrained fiscal environment, are a real reflection of where the priorities of a government lie. This government has decided, from a trickle-down theory of economics, that giving cuts to big business is going to benefit the community. I would argue that the things that have been passed over, cut and ignored are far more significant to those in the communities that we represent. First up, obviously, are the penalty rate cuts, which have had, and continue to have, an impact on individuals and their families, and a flow-on impact on discretionary spending and businesses. I would just like to ask members of the parliament to look at the most recent Australian Bureau of Statistics report on retail turnover, which had a 0.6 per cent fall in August. This is a significant fall—I think, in fact, it's the largest fall since about 2013—particularly across areas such as food retailing; cafes, restaurants and takeaway food services; household goods; and clothing, footwear and personal accessories.

What's happening in our communities is that people have a dwindling discretionary spending budget. Their wages have been flatlining for a long time. If they rely on penalty rates—one member of the family might work on a Sunday, for example—to bring them in a bit of extra money, they have now had that severely cut. Under these circumstances—let alone the obvious issue that we've all been debating in this place around the growing hit from energy prices on the household budget—the amount of money that people have left over after paying for their basics, their food costs, their education costs and their housing costs is, no doubt, under huge pressure. The money that they, as locals, have on the Saturday to say, 'Let's go and have some dinner at the local restaurant,' or to say to the kids, 'Come on. We'll go and buy a new outfit for summer,' has been severely hit. The flow-on of that is a hit to our local small businesses, because that's where the locals shop. This blind adherence to attacking wages is completely oblivious to the flow-on impact that has on the movement of money in our local communities and, particularly, to our small businesses. As I said, we're seeing that in the ABS reports on retail turnover.

The other area the government has cut is school funding. They cut it, then they restored part of it, but there is still a significant cut in place compared to what was promised to the Australian population at the 2013 election, when both major parties had a particular position. We've stuck to ours; the government didn't stick to theirs. What that actually means in my own seat is a real cut to the capacity of my local schools to be able to implement targeted, specific, tailored programs to ensure our young people are competitive in the current economy. In my seat of Cunningham, there is $15 million less available to my schools as a result of the government's decisions.

We often talk about money, but one of the important things with the original Gonski reform proposals was that it tied the state, Catholic and independent sector school authorities to a range of performance requirements. When Mr Abbott won the election, became Prime Minister and walked away from the Gonski commitments, the government also did away with all the ties around that funding that required performance across a whole lot of areas, so we don't have a plan for improvement in our schools. Issues such as graduating from high school, going on to further education, literacy and numeracy support and teaching quality—all of these things that we know are critically important—should be priorities for this government, not the bill before us.

If we go beyond the school years, obviously it is very important that our students get postsecondary education. We know that the changes that are occurring in the workforce mean there are going to be very few jobs for people who come out of school and don't get a further qualification. At the moment, the two main pathways for that are our fabulous TAFE and vocational education sector, and our world-class universities. I think the government's cutting of $500 million out of the vocational education sector when it abandoned the national partnership agreement is really a sad indictment of the priorities, and we have seen that flow through to increased costs and pressure on the TAFE sector at the state level. There have been course closures, the endangered future of campuses and increased course costs that are locking out students. Instead, we should be investing in capacities and pathways through the TAFE system. As a former TAFE teacher but also as someone who understands how valuable a vocational education can be, I will continue to fight on that front.

Our university sector is under significant pressure as well. It is not just the universities themselves, which are facing significant direct funding cuts, but also our students at universities. They are going to have to pay higher fees. They are going to have to pay their loans back at a much lower level of pay—down to $42,000 from the previous $55,000. All of those pressures are being added to university students, I have to say, at a time when they're going out, starting their adult life and maybe looking to start a family or take out a mortgage. They are carrying significant financial burdens through the loans that they have to pay back. Really, a bit of time and a bit of space to breathe when they are earning at those low-income levels is particularly important to enable people to start their adult life. As a mother of adult children, I'm sure we don't all want them living at home forever, so we do need to make sure that our policy settings enable young people to start their lives.

The other issue—and it's been significant in my area—is the one I touched on around housing affordability. The government could be taking action much more significantly on housing affordability. I want to draw the parliament's attention to the Domain Regional House Price Report that has recently come out. In Wollongong, house prices jumped 16.7 per cent in the year to December 2016. That put Wollongong as the third most expensive city in Australia for housing. This is an extraordinary outcome. It's great for people who have housing—they look at it and see its value growing—but for our young people, who want to actually be able to stay in their local area, start a family and buy a house, as I said, this is becoming an increasingly difficult challenge.

We need policies. Labor has announced a range of policies around capital gains tax concessions and negative gearing to help make these young people more competitive against the investors. We want people to be able to buy their first home, not to be constantly outbid by people buying their seventh or eighth or ninth investment property. We particularly want those incentives directed towards new housing stock, rather than just buying up what's already available. Labor also has a range of other agreements and reforms that we have proposed around housing affordability and, importantly, homelessness as well.

There is the NBN mess. The government could actually do something about the mess of the NBN. It was fascinating to see the Prime Minister in parliament this week basically boasting about how successful it's been. I can only presume his phone's not working, because even members of his own side are reporting that they're having a hell of a time in their local communities with the NBN rollout. The Prime Minister attempted to say in answer to a question that it was all the fault of retail service providers. I'll tell you what: we should be onto retail service providers. There's some activity that absolutely needs to be called out about transparency in the provision of services. A lot of people—in fact, I surveyed my electorate and I was astonished at the number of people—who took the time to write knew they were on fibre-to-the-node and their problem was reliability, because every time it rained there was water in the pits and their lines went down. People know exactly what the problem is, and in so many cases it's the technology that the Prime Minister, in this former role as the communications minister, rolled out. People have frustrations with that.

Investing in some local infrastructure would be a good alternative because we know that quality infrastructure can drive economic diversification. It's actually about jobs and growth, unlike discredited trickle-down tax concepts. In my own area, for example, the Maldon-Dombarton rail link is currently being promoted by the Illawarra Business Chamber. It's been a project that I've campaigned on for over 10 years. It will be a game changer for our region by linking us with south-western Sydney and the port of Port Kembla. If we could have just one project, it would be great to see the government get behind that.

What we have before us is a bill that has all the priorities wrong. It's based on discredited economic theory, as other colleagues in this debate have been pointed out—a theory that has been proven across the world not to work and has been discredited by even conservative economic bodies, people such as the OECD, the World Bank and so forth. And we are supposed to believe that giving this cut to big business will mean that the improved financial position they find themselves in will automatically translate into jobs. Of course, the first thing they think to do when they are in that improved financial position is to go and employ more people! Well, they don't. Businesses employ more people because they have more work to be done. It is actually about increasing the demand, and that demand relies on people in the community having the capacity to spend and to be out supporting their local businesses.

This bill must be opposed, because it's discredited; it's unfair; and it's a reflection of the wrong priorities in a fiscally constrained environment to be going in this direction. I have to say, when I surveyed my electorate on this direct question, the vast bulk of people who responded to that question did not agree with this particular tax cut. In fact, they outlined their priorities, which I have gone through today, and that's where the government's focus should be.

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

This debate really does expose this government's recklessness when it comes to making decisions about this nation's federal budget. We have a government right now that is, as we speak, trying to cut funding from universities. It is trying to cut almost $4 billion in fiscal terms from university funding. It has legislation before the House to increase student fees and to lower the point at which people, who have been students in the past, have to make additional payments to the government by reducing the HECS threshold. At the same time, they are trying to give a massive, whopping tax cut to Australia's biggest businesses. They are trying to find a whole stack of money, billions of dollars, to give a whopping, massive tax cut to Australia's biggest businesses—so much for being responsible and handling public finances with respect!

This is a measure that really demonstrates the complete lack of respect this government has for its so-called 'jobs and growth' agenda. Remember the 'jobs and growth' slogan from the last federal election? I do—'Jobs and growth, jobs and growth.' Unfortunately for the Prime Minister, saying the same three words over and over again does not actually create any truth to those words. Repeating a slogan does not bring anything into existence other than hot air, and unfortunately we've seen it continue, even this week in parliament with the even less catchy slogan of 'economics and engineering'. You couldn't think of a worse slogan if you were given a million years in which to do it. We had jobs and growth last year at the federal election, and now what do we see? We're not seeing jobs and growth; we're seeing a $65 billion tax cut plan—a plan where the government wants to spend $65 billion on tax cuts for corporations, and not just Australian corporations but for multinational corporations as well.

This government has been hyperventilating about debt and deficit since it came into office in 2013. Of course, it hasn't even met its own tests in that regard, because both have increased over that time. If you purport to believe that we need to reduce debt and reduce the budget deficit, then the last thing you should be doing is worsening the budget bottom line by $65 billion by having this big tax giveaway for corporations. This discussion has been going on for a long time. This measure from the government was first flagged in last year's budget. Then the Treasurer was going on about this idea before this year's budget, but here we are today, in the middle of October, finally debating these bills. We only got to commence debate on them in mid-September.

I want to make it clear that Labor will not support this part of the government's $65 billion tax cut for business. We have always opposed this massive deterioration in the budget bottom line over the medium term. We think that this kind of hit to the budget does expose the hypocrisy of the Turnbull government when it seeks to make other cuts. It wants to cut revenue to pay for its cuts to spending, and when we talk about cuts to spending, it's the public funding of universities that we're talking about. It is also, might I say, the government's current plan to cut the energy supplement to 1.7 million seniors in this country. It will make their lives even harder: it will make it even harder for them to pay for electricity and for the costs of living.

Those are the things that government wants to cut spending on, but it is more than happy to give away $65 billion on tax cuts. So we've got a government that wants to stand up and support big corporations on the one hand while at the same time putting under pressure seniors who are relying on the energy supplements, students who are trying to get a higher education, and universities that are trying to actually create a higher education system that can compete in our region and in our world. We know that universities are an important part of this nation's domestic, internal economy and are also important for us internationally, because international education, together with international tourism, is our most important service export and is in the top rankings of all of our exports, not just service exports.

So this government is taking money out of the budget, by giving away $65 billion, while at the same time asking Australians to accept big, deep cuts to services and big, deep cuts to pensioners through the energy supplement. This is just ridiculous. I don't think people are going to stand for it. I think people are sick and tired of this government standing up for the big end of town and failing to look after the people it's elected to represent, like people in my electorate.

I recently had a gentleman visit me at one of my regular mobile offices. He was absolutely distressed at the thought of the energy supplement being cut. He wants to lead a dignified life. He does not want to see cuts to pensions. He worked hard all of his life and lost his superannuation in the global financial crisis when he was at or near retirement age. He didn't have the luxury of being able to work for another 20 years after the global financial crisis to restore his superannuation. He's reliant on the pension and he didn't expect to be. He is absolutely horrified at the thought of this government's cuts to the energy supplement for seniors—and so he should be, because Australians have a right to expect decency and dignity in retirement. Australians have a right to expect a government that will stand up for them, not for vested interests. Australians have a right to expect that a government will make the right decisions and have the right priorities when it comes to the federal budget.

Having these people, who claim to be deficit hawks and fiscal conservatives, reducing the budget bottom line by $65 billion just seems to be wrong logically, let alone ideologically. Why does the Turnbull government not care about seniors? Why does the Turnbull government not care about students? Why is the Turnbull government's priority to find a way to prepare and propose tax cuts for the big end of town, for big Australian companies and for multinationals?

They argue that this will create more investment and more jobs. That's the argument that we hear from the government. Unfortunately, this is the same old discredited, trickle-down-economics nonsense that we've heard from conservatives since the days of Thatcher and Reagan. The idea that if you just cut taxation for the top end of town then the benefits will magically flow down to everybody else is just wrong. The Prime Minister has argued that if companies have lower tax rates then there will be this magical reinvestment of their profits in their organisations and that will lead to better productivity and more jobs. Making companies' bottom lines better does not magically and of necessity lead to more investment and better jobs. We know that because that's what's happening at the moment. Company bottom lines are improving. We've seen record earnings by corporate Australia. Where's that money going? It's not going into wages. Wages growth is flat. Wages growth is at its lowest level since we started keeping the wage price index in 1997. Wages growth is not where the big, record corporate earnings are going. It's absolutely not the case. Those earnings are certainly not going, unfortunately—not as much as you might like—into investment into the company itself, into capital deepening, into improving productivity. They're not doing that. There's been an investment strike in Australia in recent years, and that's a problem. It's absolutely a problem. Australian firms need to get more productive—that's very true. Labour productivity growth has been up since the terrible productivity-killing days of Work Choices were put behind us, but multifactor productivity needs to improve, and that's going to require capital deepening and managerial expertise. But we're not seeing the levels of investment in those things from companies that we should be.

Where's the money going? It's going to shareholders. Of course that's where it's going. Earnings per share is an important measure for companies. I'm not criticising them for that—they need to raise capital; they need to be able to demonstrate to potential shareholders that people will get an income stream from their shares. But what about the days of capital gain from shares? What about the days of saying, 'What we want from shares is for companies to improve and for the value of our shares to go up,' and for that to be the key issue for people? I talked to the CEO of a big firm about this very issue last week. He talked to us about the productivity improvements that his staff had driven from the ground up and about the investment that his firm had made across their manufacturing business. I said to him, 'What do your shareholders think about the fact that you're reinvesting your profits into the company?' He said, 'You know what? We've found better shareholders. We've found shareholders who are in it for the long term, who want to see this place improve.' That's the sort of leadership that we want to see from corporate Australia. Instead of you having a handout, with tax cuts, while at the same time urging more so-called flexibility on your workforce—which really just means more ability to change their hours at short notice and to avoid paying them penalty rates, those sorts of changes—how about we see some leadership and you say: 'We want to see the best possible corporate Australia we can. We want to see reinvestment. We want to see investment in the capacity of our managers and our people. We want to see capital deepening'? That's what this country actually needs.

To hear this argument from the government that better corporate profits means better corporate investment and jobs, when it flies in the face of the reality of recent years, just demonstrates how ideological this bill is and how little this bill has to do with practical reality or empirical experience. This bill tells you everything you need to know about the Turnbull government. It tells you that the Turnbull government is a deeply conservative government rooted in the traditions of Thatcher and of Reagan. It tells you that the Prime Minister is not someone who is progressive, is not someone who wants to do the right thing in the interests of seniors who are worried about losing their energy supplement, is not someone who wants to promote greater involvement in higher education and greater quality in our universities. He's happy to make cuts affecting both of those groups. He's happy to make cuts to higher education. He's happy to make cuts to the seniors energy supplement. He is someone who has wholly signed up to old-fashioned Thatcherism and Reaganism, to old-fashioned trickle-down economics arguments—and they've been proven not to work.

What this shows is that the only way to have a government that understands the importance of investment—investment in education, in our people, in making sure that people in their later years have dignity in retirement and a decent standard of living—the only way to get a government that believes in those things and the only way to get a government that doesn't want to see seniors' and students' interests being sacrificed in favour of the interests of the top end of town is to vote for a Labor government at the next election. The only way to get a Treasurer who will act in the interests of the whole nation and not in the interests of vested interests is to vote for a Labor government. The member for Lilley is here in the chamber. The member for Lilley was responsible—together, of course, with the then Prime Minister and the members of the Labor government—for Australia's work during the global financial crisis in fending off a recession. This was the only developed nation in the world to fend off a recession during the global financial crisis. We were so fortunate to have a Labor government during that time because Labor governments understand that the budget has to serve the economy, not just the interests of the government but the interests of the national economy. Labor governments understand that this sort of neoliberal, trickle-down economics nonsense that, unfortunately, the Prime Minister seems to be 100 per cent signed up to just doesn't work. I'm very, very relieved that we had such wonderful leadership during the global financial crisis, and I certainly hope that, in the interests of the nation, we have another Labor government sooner rather than later. I'm very pleased to stand up to oppose this bill because these priorities in this legislation are the wrong priorities for our nation, and this nation should be supporting seniors and students, not the big end of town.

Wayne Swan (Lilley, Australian Labor Party) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, I think, aims to complete the coalition's extreme trickle-down economic program by cutting the corporate rate for companies with a turnover above $50 million to 25 per cent. The staggering cost of all these measures is $65 billion. Almost 40 years after trickle-down economics was first introduced in the US and the UK under Reagan and Thatcher, Malcolm Turnbull is attempting to import the most pure form of this foreign product into Australia. Make no mistake about it, this is a toxic foreign import. It follows the voodoo logic that tax cuts for the wealthy will drive economic growth and improve the lives of everyone in the community from the top down. But, of course, as the record of Reagan and Thatcher shows, company tax cuts are not the silver bullets to achieve economic growth. This point was made yesterday by the RBA's Luci Ellis in her brutal demolition of the Business Council of Australia's propaganda, which has been sprouted by Jennifer Westacott.

Reagan and Thatcher's enduring economic legacy in the United States and the United Kingdom is one of rampant economic inequality, hollowed-out middle classes and armies of working poor. If the BCA and the Liberals have their way, they'll take us down that American road. During my time as Treasurer, I was associated with an attempt to lower Australia's corporate tax rate. Our efforts in government were part of an entirely different context and a much broader package designed to manage the stresses of a two-speed economy by placing more weight on resource rent taxes and less on the corporate rate. As a solution to Australia's current jobs and growth challenges, a corporate tax cut makes absolutely no sense at all. It doesn't even make the top 10 sensible policy responses to Australia's current economic challenges.

Turnbull and the Business Council run the classic trickle-down argument that cutting corporate tax rates will restore Australia's tax competitiveness. Thanks to tax transparency reports legislated by Labor and damning Senate revelations of tax evasion by some of our largest companies, the rationale for Turnbull and the Business Council arguments completely evaporates. In 2015, as a result of Labor's tax transparency legislation, tax office data revealed that one in three private companies in Australia paid no tax, and one in four public corporate entities operating in Australia paid no tax. In addition, half of the foreign companies operating in Australia had no taxable income, while 56 millionaires paid no income tax. The revelation really blows Turnbull and the Business Council's trickle-down argument right out of the water, because, courtesy of deductions, deferred losses, minimisation and evasion, public companies in Australia already pay an average of 24 per cent on that taxable income, while private companies pay an average of just 19 per cent. Just last week, we had a conservative estimate from the ATO that an estimated $3.5 billion in tax revenue from large corporates and multinationals was unaccounted for. As the Senate inquiry into tax evasion uncovered, the ATO has confirmed that some of Australia's largest global companies have been engaging in aggressive transfer-pricing activities, costing the public billions of dollars in revenue.

In tax discussions, there is a conventional distinction between legal tax avoidance and illegal tax evasion. The reality is: there is a spectrum. Today, I want to discuss the behaviour of one company—BHP. Their behaviour leads me to believe they have operated at the evasion end of the spectrum for over a decade. For years, BHP have claimed to be a global leader in tax transparency and corporate responsibility. We now know nothing could be further from the truth. BHP have an ongoing $1.1 billion tax dispute with the ATO regarding their Singapore marketing hub, dating back to 2003 from 2013. In addition, they have a $300 million dispute with the Queensland government over royalty avoidance through transfer pricing. BHP's 2017 Economic contribution report also admits, for the first time, that BHP are also being audited for an additional three years—fiscal years 2014, 2015 and 2016.

Given that BHP is already engaged in a $1.1 billion dispute with the ATO and is now under audit for a further three years, it is clear that BHP is one of biggest tax dodgers, if not the biggest, in Australia. Consider this: last week the ATO confirmed it is currently engaged in disputes worth around $4 billion with large corporates, mostly associated with transfer pricing. This means that over 25 per cent of the value of the ATO's tax disputes are with just one company. BHP's 2017 Economic contribution report proves conclusively that BHP is a fiscal termite eating away at the foundations of our corporate tax system.

There wouldn't be another company listed in the ASX stock exchange which would have a tax liability anywhere near BHP's amount, although Rio may come close. Rio is also involved in aggressive transfer pricing. Clearly, these two companies—BHP and Rio—have not been playing by the rules. These tax disputes are pillaging the Australian Treasury and short-changing the Australian people, pure and simple. BHP and Rio are freeloading off the hard work of millions of workers who haven't had any wage growth in Australia for years and small businesses who are paying their fair share while fighting to balance the books. It is nothing short of a disgrace that BHP continue to claim they are a corporate leader in tax, given their aggressive use of marketing hubs in what is effectively a tax haven—Singapore.

However, the most outrageous aspect of BHP's tax affairs is hidden in their 2017 annual report, with the report for the executive director and his remuneration package. On page 134, the report outlines that the CEO exceeded his performance outcomes in the individual measures category, warranting a million-dollar bonus. When we turn to page 135, we discover one of the key performance indicators of individual measures of that category is 'strong representation on key issues such as transparency and tax'. In essence, the BHP board have awarded their CEO a million-dollar bonus for a billion-dollar bill avoided in tax. It is a million-dollar bonus for organising aggressive tax minimisation through a tax haven, resulting in one of the largest tax disputes in Australian history; a million-dollar bonus for enhancing transparency and tax reputation when the company's tax affairs can only be described as high farce. I'll say it again: a million-dollar bonus for $1 billion avoided in tax.

It is no wonder that, in an effort to restore their reputation, BHP have launched their 'Think big' campaign. Thinking big is just an advertising slogan to camouflage what the Big Australian has become in the last decade—Australia's biggest tax avoider. When I first began raising BHP's tax affairs in this place in late 2015, the company's chief financial officer, Mr Beaven, took the time to write to me about what an honourable taxpayer BHP really was. The letter made no mention of the ATO dispute, which was not yet public, and instead emphasised that BHP pays a lot of tax. Well, that's nice! But paying a lot of tax doesn't then grant you the right to evade billions in tax. BHP is like that guest at the hotel: it has rented the penthouse, it has had full room service but it has run off and left the bill because it has only paid for a standard room.

BHP have always presented themselves as a model corporate citizen. This behaviour destroys the morale of people who pay tax and who then come to believe that government treats them with contempt by penalising them while sparing the powerful and the wealthy. BHP, just like every other individual and business in Australia, have a legal and ethical obligation to pay all of their tax. Tax isn't an option. Tax isn't a donation. Tax is the price we pay for the institutions and structures, both legal and economic, which have made the Australian economy one of the strongest in the OECD. As a company, BHP have benefited enormously from our institutions and our structures. BHP should pay all of the tax they owe, not an amount that they decide is appropriate. When global and respected companies operate in this cavalier way, it compromises the integrity of the social contract and greenlights others to follow in their tax-avoiding footsteps. With the departure of the former BHP chairman, Jac Nasser, and the appointment of Ken McKenzie, BHP has an opportunity to begin to restore BHP's reputation.

When I first called out BHP's activities in 2015, I didn't blame the CEO or the board. Unfortunately, the self-righteous leadership of BHP shows no sign of remorse or contrition and, instead, have indicated that they will go to the wall claiming their tax dispute is simply about evaluation. Well, BHP, the gig is up. I'm not seeking to bury BHP but implore them to lead by example. For years, BHP have claimed to be a corporate leader. Now it's time to start acting like one and stop hiding behind PR campaigns.

I would have thought that the Treasurer and the other austerity campaigners in this government would be horrified by this behaviour of BHP and others and that they'd be out there publicly condemning it. Instead, we just have deafening silence. If the Treasurer were fair dinkum about acting on tax evasion, he would have been banging the table and condemning this behaviour. Of course, what is really happening here is the Treasurer is dancing with the one that brung him. This bill shows that the Treasurer is happy to blow out the deficit, with an unfunded $65 billion tax cut—unfunded!—and of course to see the budget further eroded by the disgraceful activities of companies like BHP.

At its core, this government is a trickle-down government. This is a government that believes in tax cuts for the rich and the powerful and deregulation for the powerful. It attacks the social safety net at every turn and it has wage suppression in its policy suite for everybody else. All that this corporate rate cut will end up in is stock buybacks and dividend payments. And who gets those? Generally people who are pretty well-off. As the RBA outlined yesterday, it will have a minimal impact on jobs and growth in the long-term—a devastating critique of the government's policy yesterday.

In a debate between Luci Ellis of the RBA and Jennifer Westacott from the BCA, Luci Ellis completely destroyed Jennifer Westacott's arguments—but there's nothing new about them. There is a very rich debate about the impact of this sort of corporate tax cutting and, as the Treasury modelling itself shows, it will have a minimal impact on jobs and growth over the long-term in this country. But the government are forging ahead with an unfunded tax cut which is going to blow out the deficit, are tolerant of other companies that are flouting their rules and are snubbing their nose at the Australian people. Why is that? It is because the government are dedicated to serving the top table first—dedicated to the wealthy, of the wealthy and for the wealthy.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

) ( It is a great pleasure to be following the member for Lilley in this important debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. It's a debate about tax, but, at its heart, it is a debate about the economic priorities we face in this country. Those of us on the Labor side understand that the single biggest economic issue that we have to tackle in this country today is the growing inequality between those who have and those who do not, between those who represent those who have and those of us, on this side of the House, who want to see a fairer Australia for all Australians. We know that the big economic levers that need to be pushed include giving working Australians a wage rise. It is time. Australia needs a pay rise. We know that we need to ensure the corporates are paying their fair share of the tax burden. We know that governments have to invest in social capital, particularly in our schools, in early-childhood education, in technical and further education and in our universities. Social capital is critical in addressing growing inequality.

But we also know that we need to invest in traditional infrastructure as well, economic infrastructure that is going to make a difference, particularly to regions that are struggling. The NBN is critical in this, providing the railways of the 21st century, wiring up every house and business in the country not only to the markets of their town and the country but to the markets of the world. We also know that, if we're going to address growing inequality, we have to do something about the growing inequality between capital-city Australia and those of us who live in regional Australia. It's my sad duty to inform the House that this bill, and this government, is failing against each and every one of these measures.

It is often said that budgets are about priorities. The priorities on display in this budget are very clear. Big business gets a tax cut, high-income earners get a tax cut and ordinary workers earning above $21,000 a year get a tax increase. If you're a worker relying on penalty rates, you get an extra wage cut because of the government's support of the cut to penalty rates. We are heading in the wrong direction. We will be opposing this bill, and we have opposed elements of the previous and related bills, because we do not believe that the answer to Australia's economic woes—to the growing inequality between those who have and those who don't—is to give the wealthiest and the big businesses in this country a $60-billion unfunded tax cut.

I've mentioned the growing inequality between regional Australia and capital-city Australia. I'm not surprised that there are not many members from the regional electorates of the coalition benches on the speaking list to talk in favour of this bill. You won't find a supporter of this bill in regional Australia for the very simple reason that it delivers little to them. If you look at the benefits that are going to flow from this bill and you do a geographic comparison between who wins and who gets nothing out of it, it is stark. I've had some data prepared which looks at the number of incorporated businesses that will benefit from this bill before the House in the capital cities versus those that are outside the capital cities. It might surprise you to know that the number of businesses in the area of Greater Sydney that are going to benefit from this legislation in the next financial year is 20½ thousand. For the rest of New South Wales, it's a little over six thousand. That's almost a factor of four to one—20-odd thousand to a little over six thousand. And we estimate that by 2026-27 there will be a quarter of a million businesses in Greater Sydney that will benefit from these unfunded, unaffordable tax cuts, compared to a little over 60 thousand businesses in the rest of New South Wales—67 thousand. In the state of Queensland, we see a similar pattern: a very large number of businesses in Greater Brisbane, compared to the rest of Queensland. In fact, right around the country there are big gaps. If you look at some of those places in regional Queensland—I happen to have the data for the City of Greater Brisbane: over 6,500 businesses are eligible to benefit from this legislation before the House. But if you go to an electorate like Capricornia, a little over 260 businesses stand to benefit. If you go down to New South Wales, in the electorate of Page it is a little over 230 businesses; over the road in Eden-Monaro, a little over 316 businesses. Down in Corangamite, it is 195 businesses.

The picture we can paint here is that we have members representing regional Australia from the coalition parties who are coming into this House and voting in favour of legislation that does nothing to benefit the businesses and constituents of their electorates, but does a hell of a lot to ensure that the big businesses in the capital cities of this country will benefit and to deny the government the revenue to fund the very services that are needed in rural and regional Australia to address growing inequality. They are cutting their own throats by voting for this bill. Mark my words, Mr Deputy Speaker, when we vote in favour of a $65 billion unfunded tax cut, things will follow. In the next budget we can expect the government to be bringing bills into this House which will introduce cuts to the very programs that are absolutely essential to address growing inequality in this country—that is, further cuts to vocational education, further cuts to university spending and further cuts to school education; further cuts to the social welfare safety net that is so important in some of these struggling rural and regional communities; and more disasters in the rollout of the NBN. So there are consequences for those regional MPs who vote in favour of this bill. Not only does it not deliver a benefit to their electorates but it puts in place a structure which is going to ensure that they are going to have to come in here and support further cuts to the social safety net and the social capital investment and the hard capital investment that their communities so desperately deserve and, importantly, so desperately need.

There are lots of reasons that this bill does not pass any sane test. It's not going to address the huge economic challenges around growing inequality in this country. But let's put that aside for one moment and see whether it will address the tests that the government has set for itself. We can see—as the member for Lilley has pointed out, and as the deputy governor of the Reserve Bank said at the National Press Club yesterday—this will have a negligible impact on growth in this country. In fact, on the government's own figures, there will be around one per cent of economic growth in 20 years time. This is a government that can't even get the modelling for growth accurate over the forward estimates, so we can take with a pinch of salt its estimates and its modelling for what growth is going to look like, as a result of this one measure, in 20 years time. We know that it's not going to do anything for wages either. If we accept the government's own figures of $2 a day in 20 years time, we can take that with a pinch of salt. It can't even get the modelling for wages growth right over the next two years; how can we accept any modelling it's done on wages growth over the next 20 years? By the standards that it has set for itself, this legislation is not credible—except and save for the one proposition that was put quite forcefully by the member for Lilley. We can set aside this idea that the bill is going to lead to wages, jobs and growth. There will be negligible impact on jobs growth, negligible impact on wages growth and no impact on economic growth. So, what's the purpose of it? Clearly, the purpose of this bill is to fix up their mates. It is a $65 billion tax cut for some of the wealthiest companies in Australia, the sole purpose of which is to fix up the mates who so ably and keenly support those on the other side.

A lot has been said about the need for us to have a competitive tax base, for us to be competitive with other jurisdictions in terms of economic investment. We've had a look at this and we've had a look at what is not only being said in Australia about the impact of taxation policies on business investment in Australia. We had some interesting statements from the assistant governor of the Reserve Bank yesterday at the National Press Club who argued that this sort of tax measure has a negligible impact on a business's inclination to invest in Australia. She said:

When businesses make decisions about where to locate—the tax rate does presumably matter, but so does the business environment, the institutional framework, the rule of law, the macro-economic outlook and where the resources are. There's a broader business environment to consider and those advantages haven't gone away.

She makes it quite clear what the Reserve Bank thinks of the government's argument that this measure is essential to boost growth, job creation and investment in this country. Never could there have been a clearer statement from the Reserve Bank of Australia that the government's argument in favour of this bill is absolutely bogus.

To the issue of comparing our tax rates to other countries around the world. The United States Congressional Budget Office put out a paper earlier this year saying that the statutory corporate tax rate is one of the many features of a tax system that influences corporate behaviour and that, because of their broader scope, average and effective corporate tax rates are better indicators of a company's incentives to invest in a particular country than the headline corporate tax rate. That is to say that, yes, you can look at the headline tax rate, but it is often the case that the majority of companies are paying that headline tax rate. The paper points out that the headline tax rate of 30 per cent in 2012 was equivalent to an average tax rate for Australia of around 17 per cent, and, in fact, the effective corporate tax rate for businesses in this country was around 10.4 per cent. This is the advice that the independent Congressional Budget Office is providing to the US Congress about how they should set their tax rates at a level which would make them competitive with Australia. It's not the 30 per cent headline they're looking at; it's the average tax rate of around 10.4 per cent. For all the reasons set out by the member for Lilley, we think that average is too low. In Australia we have a revenue problem, and it's why we cannot afford this unfunded, unconscionable corporate tax rate at this time. It's not what Australia needs. It is going to drive us backwards and not forwards.

Peter Khalil (Wills, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. I want to add my voice to those who oppose this bill and outline some of the issues with it, to reiterate what we've heard from some of the previous speakers. This government has introduced legislation that would implement the remainder of the government's company tax cut plans, providing companies with a turnover above $50 million with a tax cut of 25 per cent, costing around $600 million over the forward estimates and around $36.5 billion over the medium term. In the final sitting week before the budget, the government managed to successfully pass through the Senate part of its company tax cut plans, managing to pass a tax cut of 25 per cent for businesses with a turnover of over $50 million.

Consistent with our position on company tax cuts, Labor continues to oppose this bill because this bill is fundamentally flawed and fundamentally unfair. Not only is this government proposing to the House a measure which will materially, significantly and structurally damage the federal budget but is also demonstrating the skewed priorities of this government. It is standing up for massive tax cuts to big business and lining the pockets of multinationals to the tune of billions instead of delivering education, health care and affordable housing to the Australian taxpayers, whose money they wilfully spend. This bill is fiscally flawed and morally bankrupt. To speak to the economic inconsistencies in this bill, I reiterate the truth spoken by the member for McMahon, the shadow Treasurer, Chris Bowen, when he said in September, during the second reading debate, that we can have budget repair and a return to budget balance or we can have a corporate tax cut, but we cannot have both. This government has clearly chosen corporate tax cuts over budget repair.

It was about eight years ago when Malcolm Turnbull described $300 billion in projected gross debt as 'gigantic'. He said, 'Gigantic! Unacceptable!' What a stark contrast to his silence over the almost $500 billion—half a trillion dollars—in actual debt his own government currently presides over. This debt will soon hit half a trillion dollars on his watch. Under the Liberals, gross debt has blown out by more than $209 billion, net debt has blown out by $100 billion for the current year and the deficit for this year has more than tripled, from $10.6 billion in their 2014 budget to $36.5 billion now. If only the Liberals would spend less time bickering and briefing against each other and more time working together to address issues that actually affect Australians every day—housing affordability, job creation, education, health care and effective budget repair. Perhaps then we wouldn't have seen the deficit triple. Perhaps we wouldn't have seen the net debt blow out by $100 billion this year. Perhaps we wouldn't have seen the AAA credit rating at risk on their watch. If Malcolm Turnbull and Scott Morrison were actually serious about returning to surplus, they would immediately ditch their $65 billion tax gift for big businesses, including the big banks.

We've always opposed this significant structural deterioration to the budget. These cuts are a hit to the budget and show the rank hypocrisy and gross incompetence of a government which lectures the Australian people about the need for budget repair. Do you remember this? They used to talk about 'debt and deficit disaster'. They used to talk about 'budget emergency'. Remember that? I do. And yet, on their watch, the deficit has blown out, as I said, and debt has crashed past the half-a-trillion-dollar mark. Put simply, given the debt blowout under this government, Labor cannot support an expanded corporate tax concession that costs the budget $65 billion over the forward estimates. It would not be responsible, and we are for responsible tax reform that is genuinely fair. We have declared this since the plan was first introduced. We've highlighted some of the extremely minimal economic benefits of this plan: one per cent of economic growth in 20 years time and an increase of $2 a day in wages in 20 years time. There is negligible wage growth and negligible GDP growth in the government's own modelling, conducted by the Treasury, and all of this is at a time when wages growth has flatlined and is at record lows, at 1.9 per cent.

Some economic data that was released in September this year recently showed us that living standards, which had been climbing, went backwards in the last quarter. Australian families are facing the nasty cocktail of rising energy prices—electricity prices—stalling wages growth and record high underemployment, and the government have nothing to offer. Absolutely nothing! Let me correct myself. That's not right. They do have something to offer: they're offering a handout—a tax cut handout—to millionaires and multinationals. That's what they're offering. Their offer is to squeeze money from the most vulnerable in society.

We've had long-held concerns about low wages growth. Without a doubt, the dwindling bargaining power of workers and their representatives has played a central role in stagnant wages growth and rising inequality. This is at a time when the government has also supported penalty rate cuts from 1 July this year and has sought to raise income taxes on all taxpayers with incomes above $21,000. So a worker on $55,000 will pay $275 extra a year; someone on $80,000 will pay an extra $400 a year. It goes to this government's approach and its misguided priorities that its answer for flat wages growth is to cut pay and to have higher income taxes. However, it's not just the workers and families who are trying to make ends meet that this government is actually targeting; it's also going after the most vulnerable in our society, as I mentioned. It's going after the most vulnerable rather than actually asking its big-business buddies to pay their fair share. Only Labor is serious about fair budget repair that doesn't ask the most vulnerable in our community to carry the heaviest load.

The obscenity of this government's approach of targeting the most vulnerable is on display in my electorate of Wills. My staff and I have worked tirelessly with constituents who have been targeted and falsely accused—indeed, by the government's own admission, up to 40 per cent have been given false debt notices—in this government's disastrous Centrelink robo-debt debacle. It may have left the news cycle, but the repercussions are still very real. I regularly—and I'm sure many of my colleagues do—sit with students, aged pensioners and those with disabilities, and hear their stories firsthand. Their lives are made worse and harder by the irresponsible budget decisions made by this government. There's a real impact. Of course, we do what we can to represent them in challenging the wrongful debts. We advocate to Centrelink and to the Department of Human Services for their cases to be reassessed and to have an actual case officer look over and see the truth of their situation. I've had hundreds of constituents come to my office panicked about the debt notices that they have received—some with a $200 to $300 debt which was incorrect. One had a debt as high as $19,000.

But the underlying issue that I see as connecting these cases is this attack on the vulnerable. This government has a pattern of choosing to target the vulnerable for revenue while favouring the top end of town for tax cuts and exemptions. It has basically prioritised giving millionaires and big business tax cuts and raising income taxes on workers earning above $21,000 over saving penalty rates. It has targeted Medicare—our best safety net—from the very beginning, slashing funds from, literally, the sickest and poorest people in our country. It has targeted students, young families and those who need support and advocacy the most. We can see that clearly in this bill. It gives to companies that turn over more than $50 million—an amount of money, by the way, that does not even register as conceivable to the majority of Australians that this government claims to serve. This plan favours massive corporate tax cuts over hardworking Australians who, daily, place their trust in government. It is a $65 billion ram raid on the budget to be handed straight to multinationals and big banks at the expense of people who work and struggle throughout the country.

It's obvious that ordinary Australians are losing under this government. I see it, as I said, every day in my electorate office. They are being neglected. And, more than that, they are being wilfully targeted. The government have set out a net, and it doesn't matter who they catch—whether it's the tuna or the dolphins. They've collectively punished thousands of Australians, some of whom don't have the wherewithal or the understanding of how to respond, particularly when they're put on a Centrelink call where they're waiting for three or four hours trying to speak to someone. Often, they just give up and pay the fine, even though they know it to be incorrect. The lucky few who have managed to make it to the offices of local MPs have, maybe, got the assistance they need to combat this. But it was stacked against them.

The government have, over and over, been proven to lack real economic leadership. It is a fact so evident in their failure to live up to their initial economic promises of a surplus and the structural deterioration in the budget, but also in their neglect of Australians who are forced to fight for their rights to live and work peacefully. It's for these reasons that I absolutely oppose this bill. Economically, it's delusional and it doesn't stand up. The government have actually kidded themselves. They're trying to kid Australians into thinking that they have our best interests at heart in this bill.

The government are trying to have us think that the best and only way for our economy to grow is to take from the poor and give to the rich, but trickle-down economics doesn't work; we know that. We've seen the evidence overseas. In the US, many of the corporates have held onto the gains they've made rather than create employment or pass them on to shareholders through dividends, and it doesn't work here. By the way, by the government's own modelling we can see it has a negligible impact. Hardworking Australians will not see the benefits of billions in tax cuts for multinationals; it's not going to happen. This government will have you believe that this mess is the only way to grow the economy, but never has it been clearer that they are beyond out of touch with ordinary Australians. We can see all of that wrapped up in this bill. Morally, it is bankrupt. It abandons those who need responsible reform the most, and that's not what government should be doing. Quite simply, it has failed in its economic leadership; it has no economic leadership.

There's one person at the forefront of all of this: the Treasurer. The Treasurer's incompetence and failure to do his day job is yet another indication of this government's failure on economic policy. This is not a sudden revelation; we've seen this play out. This is a pattern of incompetence and failure that simply underlies how bad this government is. It's a blooper reel that would make Joe Hockey blush. It goes to the very heart of the government's policy vacuum and the Treasurer's failure.

The Turnbull government needs to ditch its $65 billion big business tax cut instead of relying on zombie measures to prop up its shaky projected surplus in 2020-21. For the sake of the budget and for the sake of all Australians, the Turnbull government must stop clinging to its cruel and unfair zombie measures, which have no hope of passing this parliament. The coalition has no credible plan to bring the budget back to surplus and to protect Australia's prized AAA credit rating. While it's trying to help big business, that's not helping the situation at all. Rating agencies have previously highlighted that a further slippage in the return to surplus would jeopardise this credit rating. If Malcolm Turnbull and Scott Morrison were actually serious about returning to surplus, they would immediately ditch their $65 billion tax gift for big business, including the big banks. Fundamentally and ultimately, only Labor is serious about budget repair that's fair. We don't ask the most vulnerable in our community to carry the heaviest load. We want to actually deliver to those most vulnerable, in education, in health care and in housing affordability, and make it better for Australians.

Anne Aly (Cowan, Australian Labor Party) Share this | Link to this | Hansard source

The government went to the last election with a mantra of 'jobs and growth'. We heard it spread throughout Australia at the last election. I must say, that's a very noble vision to have, a vision for jobs and growth. I'm fairly sure that most Australians would agree that jobs and economic growth are fundamental to the viability and the future sustainability of our society. But I'm sad to say that the mantra of jobs and growth has never extended, has never grown and has never emerged as an actual priority for this government.

The Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was first flagged in last year's budget. They are now reintroducing parts of the bill this year, and we've only been able to commence the debate on these bills in mid-September. This seems to be endemic of the way in which this government operates to pass bills through. They seem to be half-baked, they seem to be unsure of what they're doing, and they seem to want to pass things through quickly so that it appears that they're doing something, while they deal with their own internal unrest and chaos. This bill is actually a hit to the budget that demonstrates the hypocrisy of a government that lectures the Australian people about the need for budget repair. This is a government that used to talk about a debt and deficit disaster and a budget emergency, yet, on their watch, while they've been talking about jobs and growth and spouting that mantra, the deficit has blown out and has crashed past the half-a-trillion-dollar mark.

Just after this year's budget, we asked some simple questions about the actual cost of the full company tax rate plan. We've received several answers to that: $24 billion, $26 billion, $50 billion, $36.5 billion, $65.4 billion—the list goes on. But we've been very clear, since the plan was first introduced, about highlighting the extremely minimal economic benefits that would be an outcome of this huge spend, which ranges anywhere between $24 billion and $65.4 billion—who knows what the actual cost is? Let's have a look at some of those benefits, because they could hardly be called benefits. There will be economic growth of one per cent in 20 years time. That's a very low standard to want to aspire to. There will be an increase in wages of $2 a day in 20 years time—not today but in 20 years time. All of this comes at a time when wages growth has flatlined at a record low of 1.9 per cent and when economic data recently showed that living standards, which had been climbing, have gone backwards in the last quarter.

I like to get out in my electorate and talk to some of the businesses around there. I've issued an invitation to all of the businesses in my electorate—small, medium and larger ones—to come to me and let me know how this tax plan has benefited them and how some of the measures, like cuts to penalty rates and cuts to taxes for businesses, that have been implemented by this government under the banner of jobs and growth have benefited them. I have to say that not a single one of those businesses has come forward and said that they've actually been able to employ more people or increase their productivity as a result of anything that this government has done. In fact, the reality is that businesses have had to lay off people and have reduced their productivity. There's a reason for that, which is that this plan does nothing to instigate any growth in the economy. Along with all of the government's other measures, it actually does not result in any wages growth.

I'm no economist, but we all know that if you want to save money you have to spend less. We all know that if you want to grow the economy people have to be able to have more disposable income to spend in that economy. As a business, if you want to grow your business, you need to have more customers coming in. That's not what is happening. It is certainly not happening in Cowan, where businesses have had to shut down because people are spending less, and people are spending less because wages haven't grown. People are spending less because inequality in this country has actually increased under the watch of this government.

Since July this year, the government have also supported penalty rate cuts, and they seek to raise income taxes for all taxpayers with income above $21,000. I just cannot comprehend how people can make ends meet on an income of $21,000 a year. A worker on $55,000 will pay $275 a year, and someone on $80,000 gets an extra $400. I just don't comprehend that. I don't comprehend how it is that the proportion of my income that went to tax when I was a single mother raising two children on a minimum wage was actually higher than it is now that I am somebody on the highest income tax bracket. I have more avenues available to me now to reduce my tax than I did when I was a struggling single parent on the minimum wage. How is that fair? How does that reduce inequality in our society? More importantly, how does taxing and punishing the lower end of our society and making them pay for these tax cuts to big business result in jobs and growth? It goes to this government's approach and their misguided priorities that their answer for flat wages growth is a cut to pay and higher income taxes.

We hear those that support it say that it's needed to drive investment. But it was only a few years ago that we had the biggest investment boom Australia has ever seen with a headline corporate tax rate of 30 per cent. So where's the evidence to suggest that a cut to corporate tax rates is actually what is going to drive more investment in Australia?

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

It being almost one o'clock, the honourable member's time is expiring. The honourable member may wish to either continue this afternoon or finish.

Anne Aly (Cowan, Australian Labor Party) Share this | Link to this | Hansard source

I will finish, and I just want to finish on this: Labor's approach is that we have a dividend imputation, a great Labor reform, which means that every domestic payer of corporate tax, in effect, gets it back. These are the priorities that we should have. Australians can look only to a Labor government to look after their needs and to recognise their priorities, rather than to a government that is out of touch and cares only about giving big tax cuts to big business.

Debate adjourned.

Sitting suspended from 13:00 to 16:0 1