Jane Hume (Victoria, Liberal Party) Share this | Hansard source

My case in point! I have sat in economics 101—and 102, and 201, and 202, and 301 and 302, Senator Farrell. I have spent 20 years working in businesses that include some of Australia's largest employers, as well as my family's own small business. I understand the concept and the components of risk and return and investment decision-making. I understand the importance of business confidence and competitiveness. And, while I have fought very passionately in this place for government policy many times before, I can honestly say that I believe that the government's enterprise tax plan will be the most significant contributory factor to the growth and competitiveness of our economy that this place can deliver in this term of government.

Legislating company tax cuts for all companies, regardless of size—regardless of size—can and will make a significant difference to the competitiveness of Australian businesses, the attractiveness of Australia for foreign investment and the employment and wages of millions of Australians. Company tax cuts create opportunities for Australian businesses to invest, to grow and to employ.

No one policy is ever the only solution. But if the enterprise tax plan is not the silver bullet, it certainly is a stainless steel one. Those with a good head on their shoulders and an honest heart in their chest know there is now a pressing need for parliament to provide significant tax relief for Australian businesses. Yet the only thing that is standing in the way of the parliament doing so is the pig-headed recalcitrance and the self-interested political obstructiveness of the Labor Party. If logic tells us that company tax cuts and a reduction in the cost of doing business will encourage investment and growth, and if economics tells us that a reduction in company tax cuts and a reduction in the cost of doing business is a key driver of growth, what possible criticisms, other than political, can be levelled?

The opposition says we can't afford company tax cuts. The Parliamentary Budget Office, as well as Standard & Poors and other ratings agencies, say that we can. For five consecutive budget updates we have remained on track for a return to budget surplus in 2020-21. The three major credit ratings agencies have affirmed this forecast by reinstating Australia's AAA credit rating. Indeed, from this year we will no longer raise new borrowings to fund everyday expenditure, the first time since the GFC and a year earlier than at budget. The national grocery bill will now no longer go on the national credit card. Everyday expenditure is being paid for with everyday revenue. These are the welcome dividends of prudent fiscal management and a growing economy but, most importantly, during additional estimates, we heard confirmed by the Parliamentary Budget Office that this strong fiscal performance has factored in the costs of a company tax cut already. Moreover, growth outlooks and business confidence indicators generated by the private sector providers and used by private sector businesses have also already factored in company tax cuts.

The Australian economy is in fact relying on this parliament to implement the drivers of growth, the drivers of confidence, the drivers of investment and the drivers of employment that we have promised. The opposition has claimed that there is no evidence to suggest that jobs will flow from company tax cuts but evidence from the tax cuts to small and medium businesses and the promise of company tax cuts to big businesses suggest otherwise. We've already delivered tax cuts to 3.2 million small and medium businesses, giving them the flex to grow their businesses and create more and better-paid jobs, and the results cannot be clearer: 400,000 new jobs in the last year alone, 300,000 of them full time, 15 consecutive months of jobs growth—the longest consecutive jobs growth on record—and the participation rate at its highest in seven years.

We only need to go to the headlines in today's newspapers to see Australia's largest employers have committed already to increasing investment and employment in Australia, should the company tax cuts pass. While it's always a giggle for us on this side when Senator Cameron bleats his favourite catch cry in a snide tone of 'trickle-down economics', the evidence is irrefutable. Senator Cameron, despite an astonishing array of cushy and well-paid jobs in industry superannuation, is clearly no economist. The opposition has said reduced company tax cuts won't make Australia more internationally competitive. Indeed, yesterday, with his career as a GP, who called on his knowledge of Economics 101, Senator Di Natale said, 'Why would we even want to compete with America?' I ask the crossbench to ignore the Greens entirely in this debate. Their grasp of economics is almost as thin as their grasp on reality.

Of course reducing the company tax rate will make Australia more competitive. Prior to January, the United States had the highest corporate tax rate of any country in the OECD. However, when President Trump signed into law the Tax Cuts and Jobs Act of 2017, the United States became open for business. He slashed the corporate tax rate from 35 to 21 per cent. Meanwhile, Australia continues to languish with the fourth-highest corporate tax rate in the OECD. If we are to remain internationally competitive in a rapidly transforming world, we must reduce corporate tax rates. The coalition's enterprise tax plan will do so; it will cut our corporate tax rate to 25 per cent for all businesses, making Australia more competitive with countries like the US, like the UK and like Singapore. Without that second tranche of enterprise tax plan, our international competitiveness will be put at risk. Put simply: inertia is not an option.

The opposition has also said a decrease in company tax, even if it creates jobs, won't raise real wages. I can't understand the logic there because the laws of supply and demand certainly haven't been suspended. If we get the policy settings right, the economic benefits will follow. Continued jobs growth will eat into the capacity of the economy and put upward pressure on wages. We've already seen above average wages growth in the fastest growing sectors of the economy like health care and education. More importantly, however, the medium-term realisation of the full company tax cuts mean that while wages grow, inflation will not be jolted into action to erode the benefit of those wage rises. The economy is set to grow at a steady and reliable pace, and that is what the coalition's economic agenda is all about: improving confidence so that businesses invest, reliable economic growth, more jobs, more better paying jobs for all Australians.

The opposition has said that it's comfortable with a two-tiered company tax system. This is the situation we currently find ourselves in. The problem with a two-tiered company tax system is it creates a disincentive for growth. If we accept that it is in the interests of this country to encourage Australian businesses to grow, and I think even our colleagues on the other side would concede that point, then we simply cannot have a system where a business is disincentivised to grow beyond $50 million in revenue. A two-tiered system is exactly that—a perverse disincentive for businesses to grow. This will undoubtedly discourage innovation in these companies and seriously undermine the benefits of company tax cuts, and we must always remember that large companies were once small companies.

Of course, it's large companies that provide the biggest bang for the buck in terms of the economic growth that will come from lowering taxes on larger businesses. That was pointed out by my colleague Senator Paterson in a fascinating opinion piece that he submitted to the AFR. Large businesses employ more Australians, and certainly we've seen much of the employment growth in this term of government come from those very businesses. How perverse it is that we would consider punishing them now.

The opposition says that a company tax cut is a bonus for big business, a bonus for the top end of town. That is politically loaded opportunistic balderdash. Shame on the opposition for trying to convince the Australian people of ignorant guff. Australians aren't stupid. Companies don't exist independently of their employees, their owners, their shareholders, their customers and their suppliers. These are the people that a company comprises. Companies are little more than the people who own them, who work in them, who buy from them, who sell to them and who rely on them. It is these individuals who pay the company tax—through lower wages, lower investment returns and higher prices—not the business per se. It's those individuals who will benefit most from a company tax cut.

The opposition says that this policy is not about fairness. That is convenient rhetoric that simply disguises ignorance of the facts. I heard Senator Di Natale refer to Germany in his speech to the chamber yesterday. He conveniently left out the recent findings in that very country that demonstrated that not only does cutting corporate tax rates lead to jobs growth but those who most need our help—women, young workers, low-skill workers—are those who stand to benefit the most, and this in turn helps to redress economic inequality, an issue about which the Labor Party and the Greens purport to care so deeply. Surely this alone would be compelling enough, tax cuts leading to jobs and jobs growth for those who need them the most.

But the fact is the opposition don't really need convincing of the benefits of a company tax cut; they already know. It wasn't so long ago that Mr Shorten himself said:

Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living.

Similarly, the shadow Treasurer, Chris Bowen, has also previously stated:

It's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

Quite extraordinary! I've got so many more quotes from so many more Labor—I was going to say luminaries, but that might be stretching the friendship a little bit. My favourite one comes from Penny Wong. She was quoted in Hansard as saying, only in 2012:

We understand that the cut in the corporate tax rate is important to increase productivity, to promote broad based economic growth and to encourage—

wait for it—

more investment and jobs across Australia.

Penny Wong also said—