Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Australia needs this bill to be passed because we must reduce our company tax rate to remain internationally competitive and create more jobs. As we transition from the mining investment boom, it is vital that we give businesses every opportunity to invest, innovate, grow and employ more Australians. This government wants to give all hard-working Australians the opportunity to earn more and be rewarded for their efforts. Our enterprise tax plan is a critical step in our economic transition, as we look to encourage private investment across the economy to generate broader based economic growth.

This legislation is designed to deliver the remainder of the government's plan to cut the company tax rate. This follows the passage in May last year of legislation to cut the company tax rate for companies with an aggregated turnover of up to $50 million. This has helped around 3.2 million businesses, employing over 6½ million workers. However, we cannot afford to stop there. While the cut in company tax for companies with a turnover of less than $50 million is a good start, Australia must continue with the second stage of this reform to make the nation's company tax rate internationally competitive. If we fail to do so, we will be effectively applying a handbrake on the growth of some of our most innovative businesses. It would be a truly perverse outcome if the reward for growth for firms currently under the $50 million were a higher tax rate. That's why early passage of the full enterprise tax plan is necessary.

Under the plan, the turnover threshold to qualify for a lower tax rate will be progressively raised to cover all companies by 2024-25 before the company tax rate is reduced to 25 per cent for all companies by 2026-27. The plan is fully funded as a 10-year phased approach. It provides certainty to businesses, especially those looking to invest without a concentrated short-term impact on the budget. The government will lower the corporate tax rate to 25 per cent for all companies, as I said, by 2026-27. This will be the lowest corporate tax rate since the mid-1960s, and it will benefit all Australians. Our package of reforms, largely driven by the corporate tax rate cut, is expected to boost business investment and the level of GDP by just over one per cent in the long term.

In recent years, a large number of our international competitors, including Canada, Singapore, the United Kingdom, New Zealand, Norway, Israel, Japan and France have reduced their company tax rates, and in December last year the United States slashed business tax from 35 per cent to 21 per cent. If Australia's rate remains stranded we will have one of the highest tax rates in the OECD, making it much harder for Australian companies to compete fiercely in an increasingly competitive global market.

International investors will take their capital and the resultant jobs to countries where it's cheaper to do business—it's obvious. The IMF's World economic outlook released last year warned that the US corporate tax cut plan will cut our GDP by one per cent and threaten the sustainability of our tax system unless we respond, and this is consistent with Treasury's analysis. The international tax scene has changed; the case for our response is now overwhelming and our plan is a responsible one.

As Treasury has indicated, the impacts on Australia of US tax reform could, in effect, be offset by the implementation of the government's enterprise tax plan. Treasury modelling released at the 2016-17 budget estimated that our tax cut would increase the size of our economy by around one per cent—a permanent boost to economic growth and jobs, as well as high wages as a result of more investment. Australia benefits from our openness to investment, allowing us to build on our resources, employ more Australians and trade our goods and services on the global market. A more competitive business tax environment would encourage higher levels of investment in Australia for both small and large businesses, and, of course, would benefit hardworking Australians through increased wages and employment in the long run. As I said, this bill will cut our company rate to 25 per cent.

Until recently, we had nearly four decades of bipartisan support for business tax reform. Regrettably, the current Leader of the Opposition, Bill Shorten, and his shadow Treasurer, Chris Bowen, have reversed their previous strong support for a more competitive company tax rate for political—of course, not policy—reasons. Their opposition to our plan means Labor now wants higher taxes, reduced investment, fewer jobs and lower wages.

Bill Shorten is reported to have told business leaders to, 'expect nothing from a Shorten Labor government.' Those opposite have absolutely no respect for small business and they refuse to tell them what their secret plan is to reverse the already legislated tax cuts for small- and medium-sized businesses. Of course, reversing these taxes will mean higher taxes on Australian jobs. Those opposite do not have a plan. Six years of fiscal vandalism under the Labor-Green alliance left our economy in a mess, and now those opposite are even less responsible and more of a risk to our economic security. Bill Shorten and Labor will spend and borrow more, meaning higher taxes, fewer jobs and more debt for future generations to pay off.

Labor knows that company tax cuts will boost jobs, will lift wages and will increase investment, because they used to support reducing the company tax rate. In Chris Bowen's own words, 'It is a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.'

According to Treasury modelling, the cost of the Shorten opposition's announced new taxes on the Australian economy will be over $200 billion. That equates to over $8,000 for every Australian. This is a direct hit on Australian families, households and businesses, with new taxes on everything from housing and investment income to superannuation. Of course it will increase the cost of living. It will cripple small businesses and hurt our economy, and we will fight against Labor's plan for new and increased taxes which will impact on pay packets, homes, electricity and enterprises.

After Labor racked up $240 billion in deficits over six years, debt would be on track towards $1 trillion without our sensible savings. We have halved the growth in spending from a four per cent increase per year under Labor to 1.9 per cent. The coalition has reduced growth in debt by two-thirds and therefore reduced the burden on our future generations. And we are on track to balance the budget in 2020-21. You opposite have no plan whatsoever. You will spend and you will borrow more, which will mean higher taxes, fewer jobs and more debt, as I said, for future generation.

We have heard these myths. Senator Brockman spoke about myths, and I also want to focus on a number of these myths that those opposite have been seeking to peddle to justify their position. The first is that the enterprise tax plan is unfunded—wrong. The independent Parliamentary Budget Office put an end to this lie, stating:

The fact that the budget baseline is improving is reflected in the most recent MYEFO … And … that includes the company tax cuts.

The cost of these tax cuts was included in the 2016 budget before the last election, which delivered a net improvement in the budget bottom line as a result of the Turnbull government's decisions. The budget has consistently projected return to balance in 2021 over five successive budget updates. Tax cuts have been delivered and are budgeted to go further, to drive more jobs and growth in our economy. More than 1,100 jobs were created every day in 2017, and we have had the longest stretch of job creation in our recorded economic history.

Labor also says that company tax cuts would hurt workers—wrong. The only thing standing between Australian workers and a pay rise is the Labor Party and Bill Shorten. As then Prime Minister Gillard said:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs. And, if you are against economic growth and jobs, then you are also against increasing wages …

Another myth is that Labor can pay for its promises by not cutting company tax—wrong. The Parliamentary Budget Office confirmed in evidence at the last Senate estimates that Labor not only went to the last election factoring in a full reversal of the government's tax cuts but spent the entire proceeds and still had combined higher deficits of $16.5 billion. At the last election, Labor promised to spend all the funds set aside for the tax cuts. They did this and still managed to increase deficits, as the Parliamentary Budget Office has confirmed, by $16.5 billion over the forward estimates. So, when those opposite tell us that they're going to pay for their new promises in health, education or infrastructure, their promises really aren't worth the paper that they're written on. Reversing all of the tax cuts we have delivered does not pay for one additional promise that they are now making. For example, in one week, from 18 to 24 February alone, those opposite made almost $300 million of spending announcements in Mackay, in Rockhampton and in Preston in Melbourne. You're making promises that you know that you can't pay for and therefore giving false hope to those communities. It is pretty simple economics: you can't spend your money twice. Every dollar in new spending that Labor claim is paid for by not proceeding with company tax is a lie.

Another myth is that you support small business—wrong, wrong, wrong. You are waging a war on small business. You would reverse our small-business tax cuts. Labor's new tax on trusts will hit at least 200,000 small businesses. Your energy policies, including the 50 per cent renewable target like the one you have in South Australia, would increase power bills and pose a risk to reliability for small businesses. You want to reverse the independent umpire's decision to modify Sunday penalty rates, which means small businesses would pay higher penalty rates than big businesses that do deals with big unions.

Labor will roll over to increasingly militant unions who have made their intentions clear: they will demand the power to strike, more power to run businesses and inspect their books, and more deals to entrench their powers. Under a Shorten government, union lawbreakers will become lawmakers. You just have to listen to the drivel that Sally McManus gave us yesterday. Here's a woman who doesn't believe in obeying the law. She will be puppet-master-in-chief. She and the CFMEU thugs will run those opposite. You over there will be puppets in their war against Australians.

To pay for the promises that you made at the last election, you will reverse the $25 billion in tax cuts that have already been legislated for small- and medium-sized businesses. You have rejected the idea that a business with a turnover of $2 million to $10 million is even a small business, showing your fundamental lack of understanding about how business works. Many small businesses that sell large assets have high turnover rates, but turnover does not equal profit. So if you sell farm equipment or cars in the local town or work in the construction industry as a builder or a supplier of products, the Labor Party doesn't think that you qualify as a small business.

Another myth is that company tax cuts only help big business—wrong. The head of the Council of Small Business, Peter Strong, recently called for implementation of our plan because, 'We want big business to also get the cut because they'll put the money with us.' He said, 'They need us and we need them.' Small business leaders have been calling on parliament. Their chorus has now been added to with, yesterday, the Business Council—some of Australia's biggest employers—committing to investing more in Australia with a more competitive tax. If large businesses invest more, smaller businesses benefit both as customers and as suppliers.

Bill Shorten used to believe that:

… lowering the corporate rate for smaller businesses only … creates an artificial incentive for Australian businesses to downsize.

… the size based different tax treatment would create a glass ceiling on business workforce growth.

All of this clearly means that Bill Shorten and Labor do not have a plan to strengthen our economy. Six years of fiscal vandalism has left our economy in a mess.

Earlier this year, the member for McMahon, who aspires to be our Treasurer—God help us!—endorsed a paper on negative gearing written by academics from the University of Melbourne. Of course, the shadow Treasurer didn't mention the main results: that prices will go down and rents will go up. He also conveniently failed to mention that the paper assumed a 100 per cent death tax. Indeed, page 9 of that paper states:

A household who dies unexpectedly has all his assets, taken by the government and liquidated if needed. After settling outstanding debt, the remaining assets are distributed equally to every surviving household in the economy.

So not only do you want to rip out $60 billion from more than one million retirees and pensioners, not only do you want to jack up taxes on investments, not only do you want to smash house prices and not only do you want rents to go up but you are now spruiking academic research that models prohibitive death taxes. Where is this coming from? Perhaps it's from the member for Fenner, Andrew Leigh, who once wrote an entire article urging us to bring back death taxes. Perhaps the shadow Treasurer is looking to Labor's former Greens alliance members for inspiration—after all, it was only a year ago that the Greens began a push for death taxes. So that's where we're going: the abolition of negative gearing and the imposition of death duties—potentially on the family home, because we know that it has been discussed at Labor conferences. That's where we are heading, because when those opposite run out of money they will be coming for moneys out of the pockets of ordinary Australians.

The coalition will fight for Australians against those opposite every step of the way. We, the government, have already passed legislation that backs small businesses by reducing their tax rate to 27.5 per cent, starting with businesses with a turnover of less than $10 million in July this year. In total, the legislated changes to date will support 3.2 million businesses with a turnover of up to $50 million, improving things for 6.7 million hardworking Australians.

Of course, our enterprise tax plan is only one element of the Turnbull government's National Economic Plan for Jobs and Growth. Along with our plans to reduce the tax burden on Australian businesses, we are opening up new markets in our region for Australian exporters through comprehensive free trade agreements. We are investing $70 billion in productivity-enhancing infrastructure across Australia. We are delivering on a comprehensive 20-year Defence industry plan. We are implementing significant reforms to improve competition and choice for Australian consumers across the economy, and in banking and financial services. We are securing record funding for Australian schools and hospitals. We are protecting Australia's revenue base through some of the world's toughest anti-tax-avoidance laws. We are acting to secure our future and create jobs for all Australians.

But, of course, if those opposite, God forbid, were ever to return to the Treasury benches, we know—history has told us—what we would likely see. Let's go back to when Labor were last in power. We have to remind Australians of what life under Labor was like before: double-digit inflation—we know interest rates went up 18 per cent on mortgages; there was a huge government debt and we got the recession we had to have. That's what life under Labor will be like— (Time expired)