Slade Brockman (WA, Liberal Party) Share this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Just before I do so, I note a quiet moment's silence, particularly from the Labor Party, and that's rare in that place. We don't have any Labor speakers on the speakers' list at the moment. Senator Farrell, are they going to come on? Do they have anything to say, Senator Farrell? Do you have anything to say? Senator Farrell, I think you're a little bit embarrassed by the comparison between the government's enterprise tax plan and Labor's current tax plan, which is a tax increase on Australia's retirees and superannuants. Labor have never met a tax they didn't want to increase. The government wants to bring down taxes on business and on Australians to make our economy more competitive, get more people into work, see wages increasing and see investment flowing into this country. The fact that Labor are now denying that reality really shows how far they have fallen in their economic thinking.

The government's enterprise tax plan is in two parts, the first part of which has already been legislated. That's for firms with up to $50 million in turnover each year, and that was a watershed change for business, particularly at the smaller end of the spectrum, the $2 million to $10 million turnover businesses. It's not just the reduction in company tax rates. This is a comprehensive plan of small-business tax incentives, including such things as the instant asset write-off and the ability to pool depreciation and GST on a cash-flow basis. This is a plan to get business moving.

The second part of the enterprise tax plan obviously extends the tax cut—takes it forward in time—to all companies. It is a very important reform of the economy, particularly at a time when we are seeing international company tax rates on the decline. Particularly in our major competitor countries, we are seeing much lower tax rates at play. In France, which is not often thought of as a bastion of low taxes, the company tax rate is 15 per cent; in Hong Kong the company tax rate is 16½ per cent; in Canada it is 15 per cent; in Ireland it is 12½ per cent; in Singapore it is 17 per cent; in the United Kingdom it is 19 per cent and falling; and in the United States it is 21 per cent and falling. We are in a global economy and companies are looking at the best place to invest. Yes, it is not the only factor they take into account, but to argue that lowering company tax rates isn't essential for Australia's competitiveness internationally over the long term is just nonsense.

Let's do the counterfactual argument for a moment. Does keeping tax rates where they are, or increasing them, do one thing to put a person into a job, to keep anyone in a job, to get anyone a new job, to increase anybody's wages, to allow businesses to invest in plant and equipment, to allow businesses to invest in training or to allow businesses to invest in developing a new product, entering a new market or developing a new export market? Keeping taxes where they are, or increasing taxes, can do nothing in that regard. All we can do to drive growth in our economy in this way is to lower taxes. Keeping taxes where they are, or increasing taxes, is not going to drive investment, is not going to drive wage growth, is not going to drive employment growth, is not going to drive investment in plant and equipment, technology, new products and new services, and won't allow companies to expand their markets overseas. A company tax cut to improve the competitiveness of Australian businesses, to put more money back in the hands of Australian businesses, is the way of doing this. It is the correct approach and I urge the crossbenchers to consider it very seriously when the time comes to finally vote on this bill.

We've heard from my colleagues about some of the things that have been said by others on the topic of cutting the company tax rate. I think it's worth repeating again that in 2011—admittedly, that's a while ago—the current Leader of the Opposition 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.

Did the rules of economics change between 2011 and now? I wouldn't have thought so. The shadow Treasurer, in 2015—only a couple of years ago—said, 'I would like to see the corporate tax rate come down over time.' And that's exactly what this bill does. It doesn't bring in a corporate tax rate cut tomorrow—as Senator Anning suggested we should perhaps do—it brings in a progressive reduction over time that will slowly bring the company tax rate down to 25 per cent. The shadow Treasurer went on to say, 'I have previously said that the nation should be aiming for a 25 per cent corporate tax rate.' Oh really! A 25 per cent corporate tax rate—that's what we should be aiming for? Well, surprise, surprise, that's what this bill does.

I mentioned earlier that perhaps the reason Labor has gone silent on this issue is that they don't like the comparison between a government which has delivered an enterprise tax plan—and wants to deliver the second round of that enterprise tax plan—and their own current policy, which is a tax increase focused particularly on self-funded retirees and pensioners. And that comparison is pretty damning.

We've seen Labor endorse a policy which sees a return to double taxation—so tax income with the company, and then tax it again when it gets to the retiree. That's a disgraceful policy. It should never have been suggested. It should be withdrawn immediately. It is the return of the bad old days of taxation policy, where taxation policy wasn't based on fairness and equity, where things like retrospectivity were commonplace, where death duties were seriously discussed or in place. I, and many other hardworking Australians, thought these ideas had been consigned to the dustbin of history and they now seem to be getting a run again, particularly in terms of the dividend imputation policy that Labor currently has. It is a cash grab. As I said earlier, Labor has never seen a tax it didn't like, didn't want to increase. So we've got a really stark comparison that, as we lead up to the next election, the Australian population will focus on more and more. They will begin to see what sort of economy Labor wants to deliver to this country, and it is not a pretty sight. Short-term tax grabs like the one Labor is proposing are not a great idea. They result in less money in the pockets of hardworking Australians.

In a contribution yesterday evening in this place, Senator Cameron basically said that the people receiving dividend imputation didn't deserve it. Well, I have a letter in my hand here that I began to discuss last night. I ran out of time, so I'm going to go through it again. It comes from a chap called Glen Diggins in Albany. Glen is a self-funded retiree, not a wealthy man, who was in the education department for 40 years—a teacher. He put aside for his own retirement; he saved around $550,000 in assets. He lost a bit of that in the global financial crisis. His balance was down to about $350,000 and, from that, he was deriving income last year of $33,000. I don't think anyone on the other side would call Glen a high-income earner or a wealthy man. A $350,000 superannuation balance is not an awful lot. Out of that $33,000 income, under Labor's tax plan, he would lose $10,000 of it. He would have his income slashed by one-third. Labor senators on the other side know this because they're receiving the same correspondence as I am from many, many retirees around Australia. That is why Labor have gone silent on this issue and that is why Labor don't want to talk about tax, because the comparison is too stark for them to cope with.

There are a few myths floating around about the enterprise tax plan. The first one is that it's unfunded. Of course it is funded. The PBO has said the fact that the budget baseline is improving is reflected in the most recent MYEFO, and that includes the company tax cuts. In fact, the company tax cuts have been in the numbers for a while, since the 2016 budget. The last five budget updates have shown a return to budget balance in 2021—five successive budget updates showing the same trajectory to a balanced budget. These tax cuts have been delivered, they're budgeted for, and they will drive growth and jobs in our economy. We've seen, particularly over the last 12 months, over the term of this government that the economic policies we're putting in place are driving jobs growth very, very strongly. We've seen 400,000 jobs created in the economy over the last 12 months, and that is a testament to good economic management. So the enterprise tax plan is fully funded, it is good for the economy and it should be put into place.

Something else that has been said is that the company tax cuts will somehow hurt workers. Again, how you could ever justify this intellectually is completely beyond me, and the Labor Party finds it pretty hard because they've said themselves, on various occasions, that company tax cuts will actually help workers by increasing employment and increasing wage growth. Julia Gillard, when Prime Minister, 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 growth and jobs, then you are also against increasing wages …

So when the Labor Party stand in this place to talk about it—they're not standing in this place today, but they've talked about it previously—they are, in the words of their own former Prime Minister, against economic growth, against jobs and against wage increases. The Labor Party are now on the record as being against all three of those things.

Professor Richard Holden from the University of New South Wales, in looking at the enterprise tax plan, said:

… higher company taxes reduce wages most for the low-skilled, women, and younger workers.

  …   …   …

The best, most credible evidence we have suggests that a cut in the Australian company tax rate is not a gift to the so-called "big end of town". It provides a benefit to businesses and workers in fairly equal measure. And the benefits to workers tend to flow disproportionately to women, young people, and the less skilled.