Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

That's exactly right. In 2004-05, the ratio of tax to GDP was 24.3 per cent; in 2005-06 it was 24.3 per cent; in 2000-01, 24.2 per cent. In fact, the top seven years out of the top 10 were all Liberal administrations. You have to go to the eighth year to find a Labor government down at 23.3 per cent. That was back in 1986-87. Then you go to the Liberals again. They are the ninth on the list. The No. 10 on the list of 10 top years of tax to GDP ratio was a Labor administration, 1987-88, at 23.2 per cent. Interestingly, if you were to look at the next highest, you'll find it in this year's budget—the 2018-19 budget—where we see that the ratio of tax to GDP is 23.1 per cent. So they're back on their form.

What's most extraordinary when you look at this particular research—and what a lot of people would probably do a double-take on—is, if you were to flip the analysis and look at the 10 lowest tax to GDP ratio years since 1980, 10 out of the 10 years where we had the lowest level of tax as a proportion of GDP were under federal Labor governments. That's right: the lowest tax to GDP ratio years since 1980 all took place under Labor governments. The Liberal-Nationals talk the talk, but it's not borne out by the facts.

Despite their old debt and deficit rhetoric, the Liberal-Nationals are making things worse for this country, not better. While Australia's financial outlook is already improving, thanks to more favourable global conditions, one might wonder if a reduction in the headline rate of company tax is the best way to go, given the IMF, in its World economic outlook, January 2018 update, says, in relation to what's happening in the US, that, despite an initial sugar hit to the economy:

Due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards.

So, when it comes to Australia's modelling, the Treasury's modelling indicates that the tax cut will boost GDP by just one per cent in 20 years time, an average increase of just 0.05 per cent a year. It's always somewhat misleading to compare Australia's situation to the US when it comes to corporate tax, because we have a rather unique system of dividend imputation and we don't have state corporate taxes, so it's something of an invalid comparison.

At the same time, we're seeing CEO pay rates approaching the pre-GFC levels. A report that was released in March by the Australia Institute revealed that the CEOs of the top 100 companies in Australia were paid an average of $5.2 million in 2017. Bank CEOs took home around 100 times more than the average Australian. This prompted Australia's Treasurer during the global financial crisis, Wayne Swan, to say:

The gross distortions in CEO pay relative to average worker earnings strike at the heart of economic inequality in Australia.

My colleague Dr Chalmers in the other place has talked about this issue, particularly in relation to Goldman Sachs. I'd like to say here that there's little to no evidence to suggest that corporate tax cuts will lead to more jobs or higher wages. I will return to this point later with regard to what big businesses in Australia are promising.

We do have some evidence that business investment in Australia is at high levels, despite the fact that we have a comparatively high headline corporate tax rate. I think it's important to note here that looking at the headline tax rate is somewhat misleading, and I've made that point on a number of occasions. When multinational companies are looking at whether or not they're going to invest in Australia, they don't just look at the headline rate of tax. They look at a whole range of factors to determine whether or not they're going to make a decision to invest in our country. They look at the stability of our economic system, they look at the level of infrastructure that we have in this country, and they'll have a much more detailed examination of our taxation system to see how it all fits together. The headline rate has its place, but it doesn't tell the whole story as to whether or not a particular country is going to be suitable for investment by foreign companies.

We say that there are better ways to deliver benefits to businesses, and that's why we announced our plans for an Australian investment guarantee. This is a plan to deliver more targeted relief. Under our proposition, businesses can immediately expense 20 per cent of new assets up-front. So, rather than having a nebulous change to the company tax rate—a very blunt instrument—let's look at ways that we can provide immediate relief to businesses to assist them to invest in their businesses, which has a more direct impact on the creation of jobs. Our plan also goes to delivering balance depreciated in line with normal schedules from the first year and rewards businesses for investing in Australia versus tax breaks for multinational foreign investors. And it costs about an eighth of the Liberal-National plan, so it delivers more bang for the buck.

It's not just Labor that has come out with some new positions and been talking about good policy. It's interesting to note that some other parties have endorsed the Australian investment guarantee. Australian Chamber of Commerce and Industry CEO James Pearson said:

Business welcomes this commitment from the Opposition—it's good policy …

What's particularly positive is the proposal to make this a permanent feature.

This is important as policy certainty and policy consistency is critical for business.

The Energy Efficiency Council said:

A new Federal Labor policy that gives an immediate tax deduction to businesses that invest in energy saving equipment would help slash energy bills …

That's something every Australian would be interested in knowing about. This is very sound policy. It's had endorsements from other interested parties and business representatives. I also note that Mr Peter Strong of COSBOA has welcomed the Labor policy. He said:

… it would make it easier for Australian businesses to invest and grow. The fact that this measure is available to all businesses, big and small, is also very positive as it will help small businesses directly as well as encouraging larger businesses to invest in the products sold by small business.

This is a ringing endorsement of the approach that we've adopted, in comparison to the fiscally reckless approach adopted by those opposite. It's important in this debate to outline that there are better ways to deliver benefits to taxpayers, but we know that those opposite have been asleep at the wheel. The Liberal-National party's ambivalence on this issue is hurting workers.

Earlier this year, I had the opportunity to visit the union picket line at Longford in Victoria in relation to the ExxonMobil dispute, and I heard firsthand from workers who couldn't get a fair deal on wages from a company that hadn't paid tax in Australia in years. In fact, the next day, under questioning in our corporate tax avoidance inquiry, ExxonMobil revealed it wouldn't be paying tax in Australia until 2021, making a total of eight financial years that this company will have paid no tax in this country. It might be legal, but it certainly doesn't pass the pub test, and I know that many average Australians who pay their fair share of tax are outraged by that. This evidence and the Labor-led report on corporate tax avoidance back up Labor's point that we need more transparency in Australia's taxation system. When companies dodge their tax obligations, it impacts on the government's ability to fund crucial infrastructure and services such as roads, rail, hospitals and schools. We know that this government looks after the top end of town and turns a blind eye to corporate tax collection loopholes.

In conclusion, I want to once again take the opportunity to thank Susan Lamb and congratulate her on her re-election to the seat of Longman. During the course of my doorknocking with Ms Lamb, we heard lots of concerns about these tax cuts for the top end of town. The Australia Institute's research shows that Queensland will receive very little benefit from the Liberal-National plan. Only eight per cent of companies set to benefit are based in my home state of Queensland. The majority of companies that benefit from this tax plan are in New South Wales and Victoria. We need a Labor government to restore the balance between rich and poor across the country.