Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

As a parliament our responsibility is to ensure that Australians today and into the future have the best possible opportunity to succeed, to get ahead. To ensure that happens we need to ensure that the millions of businesses around Australia, who employ nine out of 10 working Australians, have the best opportunity to be successful and to get ahead. Australia is a country with a population of 25 million. We are an open trading economy. We have opportunities to sell more products and services around the world. But we're also globally exposed. We rely on foreign capital to develop our economy, and many parts of our key economic sectors are highly capital intensive. We compete for capital with businesses in other parts of the world, we compete for access to markets overseas and we compete for access to our own markets with businesses overseas. Keeping taxes on business in Australia high when countries around the world have substantially lowered theirs is making it deliberately harder for our businesses to be viable, competitive and successful into the future.

If the Senate votes the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017—a proposal for a lower globally-more-competitive business-tax rate—down today the moment will come when this parliament will have to revisit this proposal. This is not only important for Australians today this is also important for future generations of Australians. If we want Australians today and into the future to be able to get a job, to have job security, to have the opportunity to build and develop a career here in Australia and to get wage increases then we need to ensure that the businesses around Australia who create those jobs through their enterprise and who pay those wages have the best possible opportunity to compete with businesses in other parts of the world and have the best possible opportunity to be successful into the future. Australia can only be successful into the future if we ensure that the businesses around Australia have the best possible opportunity to be successful into the future. The businesses that pay taxes on their profits help us fund a world-class health system, a world-class education system and an appropriately generous social safety net.

The opposition leader, at various times, talks about how his priority is jobs. 'Jobs, jobs, jobs', was what he said in one of his Press Club speeches in the past. But the truth is, unlike the coalition, Mr Shorten does not have a plan for jobs. Mr Shorten does not have a plan for jobs and growth. Let me tell you something, jobs don't grow on trees. Jobs are created by successful, profitable businesses. If you make it harder for businesses here in Australia to be successful into the future—guess what?—they will be less successful. I challenge anyone to credibly put forward an argument that a less successful business would hire more people than they otherwise would. A less successful business would hire fewer people. As businesses around Australia find it harder to compete with businesses in other parts of the world that pay substantially less tax and if businesses are hiring fewer people the unemployment rate would go up. That is the consequence of the socialist agenda pursued by Mr Shorten. Less successful businesses will hire fewer people, there will be less competition for workers and wages will go down.

I understand that business tax cuts, which can be described as a tax giveaway to big end of town, are not politically popular, but we don't have a job here in this chamber just to make decisions following the lead of what is popular today. We have a responsibility to make judgements about what is in the best interests of families around Australia into the future. We have a responsibility to make judgements about what is in our national interest into the future, and not just follow the lead of public opinion at one particular point in time.

I was interested to hear Senator Georgiou talk about spending money as we are proposing to lower the corporate tax rate for businesses around Australia. That is not government spending money. That is government taking less of other people's money, so they can invest it in their future success, so they can hire more Australians, so that those Australians who are more successful into the future pay more tax. Do you know what's happened over the 2017-18 financial year? Corporate tax revenue has gone up by about $10 billion compared to what was expected at budget time. That was after we legislated business tax cuts for businesses with a turnover of up to $50 million. Corporate tax revenue has gone up, which helps us pay for the important and essential services provided by government, which Australians expect.

Comments have been made about the big end of town. What we are doing here today, by keeping our taxes on businesses high in Australia, is deliberately making it harder for businesses like Qantas or Thomas Foods International in South Australia, with a turnover of $1.6 billion. I see Senator Storer there. He should have a chat to Thomas Foods International, a meat-processing business in South Australia which competes globally and which will tell you that a higher corporate tax rate in Australia makes it harder for it to be successful, which means it will hire fewer people than it could if only the Senate were to support a lower, globally more competitive business tax rate.

By standing in the way of our global champions out of Australia, by making it harder for the big employers of Australia—our big end of town, supposedly—to be competitive, what we are doing is helping the big end of town overseas. We are helping the big end of town in the US, in France, in Ireland and in the UK—all of these countries where the tax rate is lower. It is 21 per cent in the US. It is going to 17 per cent in the UK. It is going to 25 per cent in France. It is 22 per cent in Sweden. We are helping the big end of town in all of those countries to take business investment and jobs away from Australia, and do you know who is going to be the beneficiary? Workers in all those other countries, at the expense of Australian workers. Do you know who else is going to be the beneficiary? Small and medium-sized businesses in all of those countries, because the bigger businesses in the US, the UK, France and all these countries will not come and procure their products and services from small and medium-sized businesses here in Australia; they will procure their products and services from small and medium-sized businesses in their respective countries.

The Labor Party, of course, used to know all of this, and I would put it to the Senate that the Australian Labor Party still knows today what is in the workers' best interests. They know that a lower, globally more competitive business tax rate is necessary, is in our national interest and is in the best interests of working families around Australia. Bill Shorten has said it many times. I will just use one quote at random:

Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.

Mr Bowen has also said it, and this is the one, I guess, that upsets me the most on behalf of working families around Australia. Seven months before we put a proposal for a lower, globally more competitive business tax rate into our budget, a proposal to reduce the corporate tax rate to 25 per cent—not leading the world but putting us into the average of corporate tax rates around the world—this is what Mr Bowen said:

Shadow Treasurer Chris Bowen says Labor accepts that company tax falls hardest on workers rather than wealthy shareholders, and aims for a 25 per cent company tax rate to spur economic growth.

I'm quoting him:

"I would like to see the corporate tax rate come down over time. I have previously said the nation should be aiming for a 25 per cent corporate tax rate," Mr Bowen said, adding that it would not be easy to do.

Of course, because Labor know that it's not easy to do, they have milked this for all it's worth politically. They know what is right for working families around Australia. They know that the future success of working families around Australia depends on the future success of the businesses that employ them. They know that keeping taxes in Australia high by international standards makes it harder for business in Australia to be successful. They know that making it harder for business to be successful leads to negative consequences for working families around Australia.

Yesterday we had a Greens senator, Senator Bartlett, talk about how we needed to fight poverty. I agree. We must fight poverty, and the way to fight poverty is to increase opportunity for people to get ahead. Stronger economic growth creates better opportunity, in particular, for low-income earners to get ahead. That is demonstrably the case. Proportionately speaking, the beneficial impact of stronger growth is most significant at the low-income end. The people that will suffer the most from making it harder for our businesses to be successful into the future are low-income Australians, who will find it harder to get into the workforce, harder to keep their job and harder to get a better job. If we condemn the businesses around Australia to an uncompetitive business tax rate, if we deliberately help businesses in other parts of the world to take business investment and jobs away from our businesses here, we make it harder, in particular, for low-income earners to get ahead.

Obviously part of the politics of all this is that the Labor Party have become quite good at sharpening their populist political message, and so it's all become about, 'This is just a tax giveaway to the big banks,' which of course is not what this is all about. But in order to ensure a lower company tax rate for the businesses around Australia who are exposed to global competition, whose workers are exposed to global competition, the government did propose to One Nation that we would be prepared to carve out the four big banks. We proposed that to others too. I've got to say I'm somewhat intrigued to hear Senator Georgiou say today, 'We never saw the amendments.' Let me tell you: the offer was very, very clear. We were so committed to ensuring that the businesses around Australia—including, in particular, the bigger businesses around Australia who are on the front line of global competition—have the best possible opportunity to be viable, to be competitive and to be successful into the future that we were prepared to carve out the four big banks. At no point were we prepared to put in a $500 million cap, because that would actually be counterproductive. It would damage the economy. It would cost jobs. As none other than Mr Shorten said—and I couldn't have put it better myself:

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

In worse case scenarios some businesses might actually lay people off to get smaller - and the size based different tax treatment would create a glass ceiling on business workforce growth.

Instead we want a level playing field regardless of the size of the company.

That was a speech from Bill Shorten to ACOSS in Melbourne. Mr Shorten was right then, and he still believes this now. The reason he's arguing a different case is all politics. He is selling out the best interests of working families around Australia on what he perceives to be his ticket to the Lodge. He's very good at running the populist, sharp political lines. But you know what? I'm not here to run sharp political lines. I'm here to stand up for Australian families, to do the right thing by Australian families, today and into the future. That is why we have given this such a red-hot go. The Labor Party, of course, know this too.

A range of other issues were mentioned, like the claim that we needed to do more on multinationals. No government has done more than the Turnbull government to ensure that multinationals pay their fair share of tax. I think this is widely understood. None other than the Commissioner of Taxation, Chris Jordan, has spelt out in some great detail, at various Senate estimates hearings, what a significant impact our measures have had in terms of increased company tax revenue. In recent years we've implemented the multinational anti-avoidance law, the diverted profits tax and tougher penalties against tax avoidance. We've made improvements to transfer pricing laws and in relation to the public disclosure of tax information by large companies. We've pursued measures to implement country-by-country reporting. We've implemented changes to hybrid rules.

We were prepared to do more. We did talk—and it's a matter of public record—to the crossbench, to One Nation and others, about reforming the petroleum resource rent tax arrangements. I see Senator Burston here, a great, honourable man, because he was part of the deal that the government did with One Nation in March. He was there—it's a matter of public record—when we shook hands. You've got to remember that One Nation actually was prepared to back corporate tax cuts for all businesses, when the banks were included. Now Senator Georgiou comes in here and he says, 'I can't vote for this because, yes, the government might have told us that they were prepared to exclude the big four banks, but they never showed us the detailed amendments.' I mean, really? Let me just say that, if the Senate votes against a lower, globally more competitive business tax rate here in Australia, we will be letting down working families around Australia today and into the future. Everybody needs to be very conscious of that.

I will now turn to some of the other issues that were raised, starting with the One Nation suggestion that Senator Hanson made on the record here yesterday. She suggested that we should abolish the petroleum resource rent tax regime and replace it with a royalty regime offshore. We're talking about an industry that has made more than $200 billion worth of capital investment in a particular taxation regime. It is completely ludicrous, and completely reckless and irresponsible, to suggest that, as part of a negotiation for a lower globally more competitive business tax rate, we can make that sort of change to a taxation arrangement.

There's a good reason why Labor in government—the Keating government—introduced petroleum resource rent tax arrangements back in the late 1980s and early 1990s. It has actually served Australia well in helping to attract massive capital investment that has helped generate a significant capital-intensive new industry, to the point where we are going to become the biggest exporter of LNG in the next few years. This has generated a massive number of jobs and massive additional income, which helps to pay for our hospitals, our schools, our Defence Force and you name it. The proposition that somehow a country like Australia, which relies on foreign investment, could turn around and abolish the PRRT arrangements and replace them with a royalty regime as part of a negotiation on reform to our corporate tax laws is completely and utterly unrealistic.

People in this debate have made the point, 'Oh, in the US this hasn't really worked.' In an interview with Fran Kelly last week, I made the point that, on the back of the Trump administration corporate tax cuts, the US recorded in excess of four per cent growth on an annualised basis in this most recent quarter; the US unemployment rate had a three in front of it; wages growth was the strongest it's been in a very long time; and massive capital investment had been returned to the country. I also said that the Trump tax cuts had led to stronger investment, stronger growth, a lower unemployment rate and higher wages.

And do you know what? I got a request from The Conversation to 'please substantiate' my assertions as part of a fact-check process. That was more than a week ago. I provided the evidence that in the US they've secured more than four per cent growth on an annualised basis in the most recent quarter; that the unemployment rate was now 3.9 per cent; that wages growth was the strongest it had been in a very long time; and that massive capital investment had been returned to the country. The IMF, the International Monetary Fund—hardly a right-wing conspiratorial organisation—updated their US growth forecast following the passage of the Trump tax cuts. They said:

The U.S. tax policy changes are expected to stimulate activity, with the short-term impact in the United States mostly driven by the investment response to the corporate income tax cuts.

But some people here will argue that black is white and that white is black. The truth is that, if the Senate stands in the way of a lower globally more competitive business tax rate here in Australia, the Senate stands in the way of the opportunity for working families around Australia today and in the future to get ahead. If we maintain one of the highest corporate tax rates in the world, we will attract less investment and we will generate lower growth than we otherwise would, which means that we will see—