Tanya Plibersek (Sydney, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. This morning The Australian newspaper reports economist Saul Eslake says the total cost of corporate tax cuts over 10 years from 1 July this year, both legislated and proposed to be legislated by this government, could be even higher than $80 billion. Is he right?

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for her question. I've addressed this question of the medium-term costs of corporate tax relief. Let me ask a question. The real question is: what is the cost to the Australian economy of an uncompetitive tax rate? What is the cost? Well, the member for McMahon wrote a book saying that Australia's company tax rate had to be competitive.

Ms Butler interjecting—

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

The member for Griffith is warned.

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

If Australia's company tax rate stays at 30 per cent for most companies—for the larger companies with over $50 million in turnover—by 2020 there will only be one country in the OECD with a higher tax rate, and that is Portugal. It is a competitive world, but I have to say that, when Australian companies are looking for capital, they don't normally see themselves as only competing with Portugal; they want to compete with the whole world. We are in a position where France is going down to 25 per cent. The US—obviously the largest economy—has gone to 21 per cent. The UK is below 20 per cent.

The reality has been acknowledged by Labor leaders and shadow Treasurers and Treasurers year in and year out, until this leader, whose rolled-gold guarantees can never be trusted on any subject, whether it's citizenship or company tax or backing in the workers he is supposed to represent. This leader changed all of the commitments over many years that we saw from the Labor Party which recognised that Australia had to be competitive internationally. He has abandoned that, and when you abandon international competitiveness—whether you abandon it on tax or whether you abandon it on free trade—you are abandoning Australian workers and their jobs.

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

My question is to the Prime Minister. Australia has a proud history of egalitarianism. We can look after everyone in our community because of our progressive tax system where people who earn more pay a higher rate of tax. But your new flat tax plan is the end of progressive taxation in this country. How is it fair that someone earning $200,000 a year pays the same rate of tax as someone who is earning just above the minimum wage? Why do you want to be the Prime Minister that killed egalitarianism?

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I want to thank the honourable member for his question, because it gives me the opportunity to remind the honourable member that, at the end of the seven-year personal income tax reform plan that we have set out in the budget, which has been introduced into the House in legislation by the Treasurer, 94 per cent of Australians will not have to pay more than 32½c for any additional dollar they earn. So the marginal tax rate which he's objecting to—he doesn't like it—from $41,000 up to $200,000 will be 32½c. This is the outcome. At that time, someone on $205,000 taxable income, earning five times as much as someone on $41,000 taxable income, will pay 13 times as much tax. That is the whole point. The tax systems remains thoroughly progressive, in the sense that the bulk of the tax is paid by people on higher incomes. The bulk of the tax, as is the case now, will be paid by the few and not by the many. But what it will ensure is that constituents in his electorate and in every electorate in this House who want to earn more, who want to get ahead, who want to do some more hours, who want to take on another promotion or start a business will know that they will not be put off that or disincentivised by a higher and higher marginal tax rate. It is an outstanding reform and it speaks to the optimism, the confidence and the aspiration that underpins the strength of the Australian economy. We know what makes the Australian economy strong. It's the optimism, the investment, the confidence of Australians—of Australian businesses in particular—and we are backing them.