Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

The Greens believe that all Australians, no matter who they are, should pay their fair share of tax. We believe it's fundamentally unfair for us in this place to be legislating for a tax cut for big, wealthy, greedy companies, some of the most profitable companies in the world—many of them multinational companies—who currently aren't paying their fair share of tax. If we do legislate for a tax cut for the big end of town, then the burden is going to fall on other Australians to make up the difference, and that's fundamentally unfair.

Let me be completely unambiguous and totally clear. The Greens will not support tax cuts for big, wealthy corporations—not in this government, not ever. It is not in our DNA—unlike the Labor Party, who have come in here today and said that they won't support tax cuts for big corporations by this government but have said very clearly, through Mr Chris Bowen, that they will support tax cuts for big corporations if they form a future government and if the budget allows them to do so. Mr Bowen has made it very clear that his personal philosophy in his book is that he's not against tax cuts for big wealthy corporations. Well the Greens are, and let me tell you why. They don't work, except for returning profits to shareholders and bumping up fat cat CEOs' pay packets. That is all they're good for. There's no evidence that the benefits will trickle down to others in the economy. In fact, we are 100 per cent confident that the burden will fall on the most vulnerable Australians to pick up the slack. And I'm going to give you some really, really good reasons why I believe that is the case.

You will never get tax cuts from the Greens for big wealthy corporations. We were the ones who initiated the first Senate inquiry, which broke a lot of ground in this place four years ago, into multinational tax avoidance. We've got a long way to go but we've managed to achieve a lot already. People don't understand; there's always a lot of spin in politics—I get that—but the only thing we've heard about in this debate is headline tax rates. We haven't talked about effective tax rates, which are tax rates after the various deductions—of which many are very generous and provided by the government for big corporations—or average tax rates. Australia actually has some of the lowest effective and average tax rates in the OECD—not the highest, as Senator Cormann and the government will tell you, but some of the lowest.

Only a few years ago in this place we were told that we had a budget emergency. We used to be told relentlessly that the country was going broke and that we urgently needed cuts to spending, including cuts to the most vulnerable—to single parents, to the unemployed, to students—and here we are just a few years later about to give tens of billions of dollars in essentially handouts in corporate welfare to some of the biggest, wealthiest companies in the world. So the budget emergency apparently is gone. I'll bet you it comes back at some stage in the near future, once this tax cut has gone through.

Let me give reasons why I don't believe that a tax cut for wealthy corporations will benefit Australia and average Australians. Trump's tax cuts have been in this debate ad nauseam and, basically, we're following, as we often do, the US, following one of Trump's key policies here. But what have we seen in the US? We've seen a very clear trend towards big corporations buying back their shares, and increasing payouts to CEOs and to shareholders. Morgan Stanley recently published a survey of some of the biggest companies on the New York Stock Exchange and 44 per cent of them said that they were going to use the funds from their tax cut to support share buybacks and give back money to shareholders.

For those who actually understand finance and how markets work, there's a lot more to this than there seems in this debate. This is not just about the fact that companies are choosing to buy back their own shares or give money to shareholders over workers, which is something I'll get to in a minute, but there are no guarantees at all that we're going to get the much-needed tax cuts going into wage rises in this country. There is no evidence at all that that's going to be the case. The reason companies are doing this, the reason any company buys back its shares or returns money to shareholders, is that they don't have a better return on investment. That's a fundamental principle of finance, which means that they're not going to spend that money by investing that money in their business to get a better return—the best short-term returns being giving the money to shareholders, their own CEOs or buying back their shares.

The whole basis of the argument that we've heard from Senator Cormann and the Treasury for the tax cuts, how the simple logic goes—for those students in the gallery today—is: we give companies tax cuts, they take that money and they invest it back in their business; that investment leads to productivity growth and, because they get productivity growth, we get increased wages and more jobs for workers. If you want a clearer signal that that is total and utter rubbish, just look at what CEOs and companies are doing in the US. They are not investing this money back into their business. You invest in your business only when you see, for example, an opportunity to increase demand for your products or lower your costs. Most of these corporations are highly efficient as they stand now. They are in very competitive environments and have their business models locked away.

What are they doing with this handout from governments and the Australian taxpayer? They are buying back their shares and returning the money to shareholders. Apart from the fact that workers are missing out, it also means the entire logic behind this tax cut is a lie. It is a mistruth. It is false. Companies do not agree with the Treasury secretary or Senator Cormann that they'll reinvest this tax cut into their businesses, increasing productivity and ultimately hiring more people—the so-called trickle-down effect. The evidence is simply not there to support this. When you lower tax on a corporation and they buy back shares, it enhances their potential net profits after tax, their returns on assets and ultimately—guess what—the valuations of their shares. This makes sense to anyone who understands finance. Who benefits the most when a share's valuation and therefore the share price improves? Those CEOs who are paid tens of millions of dollars with all their share packages, and shareholders; that's who. This is a rort for big businesses.

Why are big businesses around the world and in Australia arguing for tax cuts? Let me tell the Senate and those students listening in the chamber today how the system is gamed to the advantage of multinational corporations. These companies are called multinational or transnational because they have operations in countries all around the world. Does that make sense? They go into a country and lobby for a tax cut. What happens after that? When one country goes ahead and cuts their corporate tax rate, other countries then say, 'Wait a second, we're going to miss out on investment and business here, because money will flow to where businesses get the best return,'—the same argument that Senator Cormann has been progressing throughout this debate—and then another country cuts their corporate tax rate, and so on and so forth. This is a race to the bottom. The IMF has warned about a race to the bottom on corporate tax cuts. These multinational corporations are gaming the system. They are going around the world and lobbying to get tax cuts in different countries, and then other countries have to do the same thing in order to remain competitive and stay ahead of the curve,. My question to the Senate is: where does it end? We are going to drop our headline corporate rate to 25 per cent, which is in line with the OECD average; Mr Trump is going to drop his to 20 per cent or 15 per cent. Who knows where it stops?

Who benefits? It is companies with operations in different countries, because they will arbitrage and leverage direct foreign investment based on tax rate. They are running this show, this government and many governments around the world. They donate to political systems. We're all aware of the special interest effect, which is so on display in multilateral trade negotiations like the Trans-Pacific Partnership Agreement, where rules are being written for us—our democracies, our parliaments—by multinational corporations through shady negotiations that lack transparency, including allowing corporations to sue us if they don't like the sovereign decisions of parliaments. This is the world we live in. You cannot ignore the reality that this tax cut today has come about because Mr Trump dropped his corporate tax rate, as have other countries in this race to the bottom. Now, to remain competitive, we are doing exactly the same thing. Where will it end? We need corporations to not only pay competitive and fair headline rates but also pay their tax in the first place. Many of these corporations already know how to rig and game the system by not paying tax at all.

So what about wage rises? Will we get any guarantee from the big business lobbies, from Senator Cormann and the Liberal government—or from a Labor government, if they form government—that their big business tax cuts will lead to workers' wages rising? I asked questions of the Treasury secretary and the Treasury officials during estimates, and they gave us a figure of one per cent over time, which works out at $750 a year. Now that is not a step $750 increase every year; that is a level $750 a year. But let me tell you: if—'if'—we ever get to $750, it relies on the economic logic that I've just described, that companies will reinvest the windfalls from a tax cut back into their businesses, increase investment, increase productivity and have more money and more jobs for workers. That's what it relies on, and I'm telling you that that is a false assumption that underpins the model of our Treasury. This is not to mention the fact that when corporations do reinvest back into their own businesses, often it's in labour-saving technology, to cut their costs, and not in giving workers more jobs or giving workers pay rises. That is also not what the evidence bears. So the whole fundamental premise behind us supporting this corporate tax cut to somehow magically, like a magic pudding, create jobs and create higher wages for workers is a false story. It is not the case, and the Senate should not be supporting this.

Since I've been in this place, I've always wanted to be not just oppositional, but to be propositional.

Senator Ian Macdonald interjecting—

You may laugh, Senator Macdonald, but my record will show that I've contributed a lot more than you have in this place towards economic debate in this country. So let me tell you what the Greens propose. We propose the best way to get wage rises—and even Senator Macdonald doesn't disagree that we have a problem with wage rises in this country. The Treasury secretary has acknowledged it; Senator Cormann has acknowledged it. Wage growth has been sluggish for too long. We've put forward very good policies for stimulating wage rises in this country.

For three years, we've also run with a platform of investing in infrastructure in Australia—exactly what we need to enhance productivity and grow long-term jobs. That is exactly what we need to do. Funnily enough, some of the world's top economists have actually criticised the whole tax cuts debate and said that the best way to enhance productivity and ultimately create more jobs and higher wages is investing in long-term productivity-enhancing infrastructure. I'm proud that my party took to the last election not only a comprehensive package on how much investment is needed in this country in infrastructure and what kinds of infrastructure are needed but also the best way to finance it, including the establishment of an infrastructure bank. As Senator Williams would know, much of that infrastructure is needed in rural and regional Australia. I chaired a select committee into exactly this thing. It went around the country collecting this evidence. So we have a plan for stimulating jobs, sustainable growth and productivity that will help workers. The government's policy is not the right path.

So I've talked a bit about the policy, but what about the politics of this? I'll talk about that in the last four minutes that I've got left. We know that One Nation, behind closed doors, are close to cutting a deal with the government, if they haven't already, to support this. No doubt this has been brought to the chamber because they've already cut a deal. I would hope that One Nation have thought long and hard about what they're going to get in return for supporting what is the key piece of legislation in the economic space for this government in its term of government. It is a bad policy; it is a policy that we shouldn't be supporting. I will say it again: the Greens are the only party in this place who are unambiguously saying, 'We do not support corporate tax cuts for big wealthy corporations.' Labor, as usual, want to have their cake and eat it. Mr Bowen has been out there saying he's not averse to the principle of supporting tax cuts for big corporations. I noticed that, in the last contribution from Senator Cameron on this policy, he was very careful to say that he wouldn't support it from this government while the budget wasn't being balanced, while we had a budget crisis on our hands. But they're not ruling out that Labor will support big tax cuts for big wealthy corporation if they get into government.

So let's be very clear about this. The only party that is ruling it out is the Greens, because we see a different future, a different vision for this country—a vision that runs an inequality lens over every single policy we enact in this parliament. Asking corporations to do less and asking poorer Australians to do more is not going to help inequality in this country. There is so much more we need to do. We can raise revenue by tackling structural problems in our tax system. We can tackle problems of unfairness in our property market by removing negative gearing and capital gains tax concessions. We can fix the rort that is petroleum resource rent tax.

There's so much more we can do, and I'm very proud to say to you, Senator Macdonald—through you, Chair—that the Greens lead on these issues and Labor and sometimes even the Liberals follow. Since I've been in this place, we have consistently put forward good economic policies—not that it's often acknowledged. We've still got our work to do to get that acknowledged, but we have consistently always put forward good economic policies to make Australia a fairer place—I'm very proud of our track record—and we will continue to do so, and I'm not at all bothered if other parties adopt our policies. I see that as our role in this place: to push other parties as a change agent, to get what we need in this country to move towards fairness.

Supporting tax cuts for corporations, the big end of town, who already don't pay their fair share of tax and already get generous tax deduction concessions so they have low effective and average tax rates, is madness. What we should be doing is actually asking them to pay the full amount of tax. We should be cutting down on rorts and reductions that allow them to continually pay no tax. We should be looking at an overhaul of our tax system, and we should be looking at ways of raising revenue that allow us to pay for our social safety net and support our most vulnerable, including our students. We should also be looking at ways to make the country fairer at the same time, and I think that blueprint is out there for everyone to see, but it just takes political courage. It takes political courage to stand in this place and make those decisions. Once again, I'm proud to be part of a party that does have the political courage to come in here and state a very strong position on important matters relating to inequality and fairness in this country. That's why we've been elected to parliament by the people who voted for us.

I look forward to hearing the high level of debate from other senators—including you, Senator Macdonald, up next—on why the evidence suggests we should be cutting tax for some of the world's wealthiest corporations, who are going to use this money to buy back their shares, pump up their valuations and pay their CEOs more money, and have made no guarantee they're going to invest this tax cut back into industry, investment and jobs in this country.