James Paterson (Victoria, Liberal Party) Share this | Hansard source

It is a pleasure to follow Senator Sterle after that very interesting contribution to the debate. I am going to see if we can bring the debate back to the topic at hand and perhaps look at some evidence that would help illuminate the debate on the topic at hand. Although Senator Sterle's contribution was certainly very passionate and heartfelt and I do not doubt his sincerity at all, one thing that he did not mention in his very interesting address is exactly where the Australian job market is at the moment, what the unemployment figures are, what this government's record has been in this area and what the task is for us ahead. So I am going to bring the debate back to that during my contribution.

I would like to begin by talking about the most recently available updated employment figures. They are the labour force figures from October. These figures show that our unemployment rate in Australia has remained steady at 5.6 per cent for the month of October. That is 0.3 of a percentage point lower than it was 12 months ago in October 2015 and it is the equal lowest on record since February 2013, seasonally adjusted. Employment rose in October by 9,800 jobs. That was driven by a significant increase in full-time employment of 41,500 jobs. That is welcome because it has certainly been a feature of the debate in previous months that there has been a lot of growth in part-time employment, so it is pleasing to see some growth in full-time employment. Total unemployment fell by just over 2,000 jobs for the month and has declined by 38,900 jobs or 5.2 per cent over the year to, as I mentioned, the lowest level recorded since February 2013.

Breaking down those figures, there were some other encouraging results. The female unemployment rate is now the lowest it has been since July 2013. Particularly encouraging, given the real challenge that I think everyone agrees we have with youth unemployment, is that it dropped by 0.2 of a percentage point to 12.5 per cent—although of course the government recognises that there is much more to do in this area.

Let us talk about the record of the government not just in the last month but since we came to office in September 2013. I think the record there is a strong one, although I certainly would not suggest that the task is finished. Since September 2013 a total of 467,100 jobs have been created. That leaves the total employment figure standing at 11,938,900 in October 2016. So, under this government, employment has actually continued to grow. It grew by 0.9 per cent in the past year. That stands in contrast to our predecessors. Under Labor, the jobless queues grew by 200,000 during their six years in office. In particular, in the time that the Leader of the Opposition, Mr Shorten, was the workplace relations minister, the number of unemployed people increased by around 70,000, and the unemployment rate rose from 5.2 per cent to 5.6 per cent. So, when we hear those opposite, and particularly the Leader of the Opposition, suggest that they would do a better job, I think it is instructive to look at their record and Mr Shorten's record personally in this area.

From November 2007, when Labor won the election, to the end of their time in office 128,800 manufacturing jobs—which is one in every eight—disappeared completely. During the two years in which Labor's illustrious and infamous carbon tax was in place around 125,000 more Australians joined the unemployment queues. This government, as we discussed at length during the campaign and since, does have a plan for jobs and growth, and we would be able to further improve the good, solid results we have had in the space if those opposite got out of the way and allowed us to implement the plan we took to the election and implement the plan the Australian public sent us here to do.

A particularly important centrepiece of this plan is our plan to reduce company tax rates. This financial year we hope that the tax rate for companies with an annual turnover of less than $10 million will be reduced to 27.5 per cent. That will decrease the tax rate for around 870,000 companies who employ around 3.4 million workers. Those lower tax rates will allow those small and medium businesses to employ more people to invest back into their businesses and to continue to grow the economy.

Over 10 years the government plans to reduce tax rates for all businesses down to a rate of 25 per cent by the year 2026-27. That is a really important reform, and, as I want to talk about now, a reform which has in the past enjoyed bipartisan support, a reform which has enjoyed support from across the spectrum of the economics profession, including from people as respected and non-partisan as Ken Henry, the former Treasury secretary, who found and recommended that cutting the company tax rate is the most powerful thing a government can do to encourage investment and therefore, flowing on from that, encourage the creation of jobs.

It is easy for those opposite—and they certainly did so during the election campaign—to run a scare campaign on this issue. It is not immediately intuitive when you explain to people why reducing company tax rates will benefit them. I understand why people might initially be skeptical, but the evidence base on this is actually very strong, and there is very little debate about it in the economic community. Everyone agrees that the most powerful bang for your buck in cutting taxes comes in the company tax area, and that flows on to higher returns on investment, higher returns for shareholders and better wages for employees.

The reality is that we live in a globally competitive economy, and we are fighting every day out there to attract that marginal dollar of capital that we can invest here in Australia to increase our productivity, to improve employment and to provide more opportunities. We want that investment here in Australia. We want to fight for it as strongly as we can. To do so we need to provide the most attractive opportunities for investment, because if a global investor who can choose between us and many other alternatives knows he is going to get the same return on investment in Australia as he is going to get in another country—let's say in South-East Asia, where company tax is a lot lower—but the company tax rate is going to be lower and the return on investment is the same, then of course he or she is always going to invest in that country that has a lower rate of company tax, because that overall return on investment for him or her and their shareholders is going to be higher. So the reality is that if we want to compete in the global economy, if we want to attract investment, if we want to have jobs, we need to have a globally competitive company tax rate.

The election of new President Donald Trump provides a further incentive for Australia to address this issue. He has promised to substantially reduce the United States corporate tax rate. It is currently far above our corporate tax rate but he is proposing to slash it down to 15 per cent. That is a significant decision for a major global player, and we should be very sensitive to it just because of that alone—but we should be particularly sensitive to what the United States is doing because the United States is our largest source of foreign direct investment. At the moment an American investor looking at Australia knows that for an equivalently good investment they are going to get a better return for their shareholders in Australia because we have a lower corporate tax rate. But if that equation changes, if the corporate tax rate becomes lower in the United States, those investors will reconsider their investments in Australia, they will focus instead on the United States, we will lose that capital investment in Australia and as a result we will all be poorer for it. That will flow through to lower wages and fewer jobs. That is why this is critically important.

I thought—I still hope for this deep down—that those opposite believed that. When the opposition leader, Mr Shorten, was in government, when he actually had the burden of office and making decisions which affected people's lives, he had a much more responsible, much more mature, attitude on this issue. In 2011 he talked about the then Labor government's tax reform agenda. He said it 'has a strong focus on ensuring that Australia remains an attractive place to invest.' He went on:

Cutting the company tax rate is an important step along this road.

This recognises the benefits to investment and growth from lower company tax rates and a trend to lower rates across the OECD over the past 30 years.

He was recognising the global reality then—I do not know why he has forgotten it since. In 2012, when he was the Minister for Financial Services and Superannuation, he said in a Sky News interview on 13 March:

Any student of Australian business and economic history since the mid-80s knows that part of Australia's success was derived through the reduction in the company tax rate.

He went on to say:

We need to be able to make life easier for Australian business, which employs two in every three Australians.

Speaking in the House of Representatives in 2011, he said:

Cutting the company income tax rate increases domestic productivity and domestic investment.

This is the crucial part:

More capital means higher productivity and economic growth and leads to more jobs and higher wages.

Those opposite say they want more jobs, they say they want higher wages. They used to have a plan to achieve that but they have since abandoned that plan. Mr Bowen, who is now the shadow Treasurer, took the time to study this issue, to look at the evidence, and he wrote a chapter in a book promoting growth through cutting company tax. It is pretty clear where that was heading in 2013. He talked about the achievements of Paul Keating, a former Treasurer, and the company tax cuts he made and the great dividends that paid. He talked about what the United Kingdom is doing presently, which is drastically slashing their corporate tax rate—another major source of foreign and direct investment for Australia, another country where investors will be considering whether they should invest their money at home in the United Kingdom or overseas in Australia. A big factor in their decision making is going to be the company tax rate. Mr Bowen said:

… the United Kingdom, facing a much tougher fiscal situation than Australia's, cut its company tax rate to 23 per cent in April 2013, to be reduced further to 21 per cent in April 2014.

Members and senators will be aware that they plan to reduce that even further, down to 17 per cent or possibly further under the government of Prime Minister Theresa May. What Mr Bowen was recognising was that even in a tough fiscal environment it is important to provide strong incentives for investment, because that drives job creation. Even in their situation, with a far higher budget deficit than us, having to have far more substantial spending cuts to their domestic spending programs, he recognised that company tax cuts were the right way to go. Finally, he said:

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

That is the key factor. Since he wrote that in 2015, the trend has continued—company tax has only been cut further. If we do not do the same, we are going to be left behind and we are going to have fewer jobs and less investment as a result.