Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Attorney-General (Senator Brandis) to a question without notice asked by Senator Farrell today relating to company tax cuts.

I rise to take note of the answers given by Senator Brandis to questions asked by Senator Farrell in question time today which go to the government's declared commitment to cut taxes to the tune of $50 billion—the company tax cuts. I want to turn back the Turnbull clock to the moment on 9 September when Prime Minister Turnbull was asked what the greatest achievement he had secured since deposing Prime Minister Abbott was. In what we could perhaps put down to another thought-bubble moment—though he seemed sincere at the time—he said his greatest achievement was the reforms to business tax.

Well, I do not know what is going on over there—and that is clearly the case for the government. We have had three days of Treasurer Morrison saying he will not commit to giving those tax cuts to big business. We have had a breakdown in communication, it would seem, because Senator Brandis got up and said, 'Yes, they're all going ahead.' That chaotic nature of the government is a typical example of how this government simply cannot be trusted. Its actions cannot be trusted. Its actions belie its comments time after time. The question is there in community: will the government stick with the promise that it took to the election or are we seeing the beginning of a backflip, at least in the other place? Senator Brandis clearly missed the memo.

From the very first day, Labor has not supported these Turnbull tax cuts. However, I do want to put on the record that it was Labor who, in its period of governance under Rudd and Gillard, instituted the small business tax cuts. Those opposite decried the instant asset write-off as a rort. They said it was something small business should never have. Indeed, Mr Abbott was completely opposed to it. It did make some resurrection, though, and come back into play. I would support genuine tax cuts to small businesses, which are the engine room of our regional communities and our regional economies, but the scale of what this government wants to do is all wrong.

This government's record is replete with management failures. Its plan for this has been a case study in fiscal and economic mismanagement and clearly defines the lack of leadership displayed by the current Prime Minister and the current Treasurer of Australia. In the Mid-Year Economic and Fiscal Outlook, which was released just a few days before Christmas, they showed how bad they are at managing the economy by having the deficit blow out by another $10 million over the forward estimates since the budget, and the deficit for this financial year since the government's first budget more than tripling. This is a government with a terrible economic record, and its decision to back in $50 billion worth of tax cuts, with $7.4 billion of that going to the biggest banks in this country, shows how completely out of touch they are.

We have net debt for this financial year blowing out by $100 billion since this government took office, which is more than $4,000 for every Australian. That is what they have done. But that is not good enough. On top of that, they want to take $77 away from ordinary Australians. That is, 700,000 Australians stand to lose $77 a week in their payments. They are happy to go ahead with a cut to the pay for ordinary Australians whilst going ahead with a $50 billion tax benefit to big businesses.

In the time that is remaining to me this afternoon, I want to indicate the concern that Australians have about this Prime Minister and his inability to honour his commitments or even show any solid line of commitment to the commitments he does make. It is of great concern. It is no surprise we had this conflicted answer from the minister today because this is a rudderless government being led by the quintessential hollow man. Mr Turnbull is a man who used to pop the collar of his leather jacket and find warm comfort in the plush chairs of the Q&A studios in Ultimo, promising a more centrist brand of politics. He now finds himself wanting to hand over $7.4 billion to the banks, and he will not lift a finger to stop the cuts to ordinary Australians. I can see that Mr Turnbull, the Prime Minister, is a political chameleon. His colours have all but run out and we will see in the coming days how strong his commitment is to that great reform his said was the mark of his prime ministership— (Time expired)

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to comment on the motion to take note. Last night I could not have been prouder, being a Liberal member of this government. What the passage of the bill last night demonstrated was that responsible government still is possible. That is, if you want to spend money you have to find the money somewhere. We see those qualities again in the government's enterprise tax bill.

What are the values that underpin the legislation that was carried last night and also the one under debate? The first thing is that those on this side understand the principle of fiscal responsibility on behalf of the taxpayer. Secondly, we also understand that our responsibility is to ensure that every taxpayer's dollar is spent on government programs and is best targeted to those who need it the most. Thirdly, on this side we believe that we have to ensure any government programs—whether it is support welfare or any other government expenditure, including revenue measures for companies—are regularly reviewed to ensure that they are still relevant and still deliver the purpose for which they were originally implemented. As parliamentarians on this side of the chamber, we know that it is our duty to deliver on all three of those for the Australian people.

We must live within our means. As every Australian family knows, you have to prioritise and you have to take tough decisions. The one last night was one such tough decision, but it was an important decision, as is the tax rate for companies. As those on the other side seem to have forgotten—or they really do not care—if you want to spend money, whether you are a company or, in this case, a government, you have three options. If you want to spend new money, either you have to earn it, which in the case of us is done by raising taxes; you have to make savings in your budget elsewhere; or you have to borrow the money, knowing that you will have to pay it back with interest.

The same tough decisions have to be made for corporate tax. It is so important that Australia now considers how we reduce the burdens of corporate tax on our companies. Ultimately, it means jobs and more money to the federal government that we still want to keep delivering on behalf of the Australian people. The enterprise tax plan benefits employees because businesses paying less tax frees up more money to pay employees more and give them more hours of work. Also, what it does is make our companies much more competitive with international companies. We are seeing that most of our major competitors overseas, if they have not done already, are in the process of reducing their corporate tax. Not only is that a disincentive for new businesses to come to Australia but it also puts us at a further disadvantage for exporting our goods and services to the rest of the world. Whilst we support sustainability in social services, high health and education spending and a bigger welfare budget, it will not help hardworking Australians to pick up extra work and pay.

Labor is demanding that small and medium businesses pay nearly $5 billion more in tax, but have again refused to support how that is going to be paid. In this case, it is more than $6 billion savings to our welfare system to get our budget back into balance. Labor wants Australians to pay more tax to support a larger welfare system. But it is much worse than that. Again, we heard in the debate last night Labor moralising as if they were the only ones in this chamber who actually care about the Australian people. Of course we do. But those opposite kept saying, 'Yes, we've got to find savings, but these are not the right savings.' I listened very carefully to the debate last night and guess what? Not a single member opposite suggested where else the money could come from. It was like something out of Norman Lindsay's The Magic Pudding. Somehow, from somewhere, this extra money is going to be found for all these new expenditures.

It is different for government, who actually raise money and spend money on behalf of the Australian people and Australian taxpayers. Mums and dads who take out a loan to pay for whatever it is they want have to pay back the interest and the principle, but they have to have some collateral. What is the Australian people's collateral for those opposite to keep suggesting more and more expenditure without having the corresponding savings? It is your children who are going to have to pay back the debt— (Time expired)

Malarndirri McCarthy (NT, Australian Labor Party) Share this | Link to this | Hansard source

I just want to pick up on a few things Senator Reynolds spoke about in terms of understanding the fiscal responsibility on behalf of the taxpayer. Senator Reynolds, I think what you are missing completely here in terms of members opposite is that when you keep removing things from the taxpayer—from the average Australian in this country—you really are missing out on the fairness test. You keep removing things. I go back to the 2014 budget, because that is where it really began in terms of many of our organisations across the country and in particular for Indigenous organisations, with a cut of half a billion dollars to Aboriginal and Islander services across Australia.

We have seen an increase in socially irresponsible decisions by the members opposite. We have seen the levels of joblessness and homelessness rise right across this country, and in particular in our regions. When we look at the mess of CDP and the problems that our communities are facing without the ability to have money available to feed their families, we are talking about real hunger, we are talking about people who do not have the money to pay for food for their children. This is how very real and hard these cuts are already impacting and have been for a number of years. So what happens when you just keep squeezing and squeezing to remove what we know are the basic human rights for most of our Australians across this country?

In terms of the question that was put to Senator Brandis this afternoon from Senator Farrell, the real question is: is the government walking away from its $50 billion company tax cuts? There are certainly reports in the media that the government is walking away from it and today in question time, we have the same. On 4 May 2016, the Prime Minister said—

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

Thank you Senator McCarthy, just a moment.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

A point of order, Madam Deputy President. That is a flagrant misrepresentation. I was asked a direct question and I gave a one-word answer.

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

Senator Brandis, that is a debating point, thank you. Please resume your seat.

Senator Brandis interjecting—

Please resume your seat.

Malarndirri McCarthy (NT, Australian Labor Party) Share this | Link to this | Hansard source

On 4 May 2016, the Prime Minister said:

Ensuring that our company tax rate is competitive, ensuring that it is competitive with other economies, particularly those in our region, is absolutely critical to attract the investment into businesses in Australia.

Yet today, it seems that the government may be about to change its mind. On 9 September last year, when asked to name his greatest achievement since deposing former Prime Minister Tony Abbot, Prime Minister Turnbull said 'reforms to business tax', and yet here we are wondering in the Senate if it was all just another thought bubble. Labor has never supported the company tax cuts. We certainly made it clear last year after this was announced, throughout the election campaign and through to today that we do not support this $50 billion dollar ramraid to the budget to deliver tax cuts to big business. The government's plans for this have been a case study into its fiscal and economic mismanagement, clearly defining the lack of leadership displayed by the current Prime Minister and the current Treasurer of Australia. The 2016-17 Mid-Year Economic and Fiscal Outlook released only a few days before the Christmas break showed this clearly. It showed deficits blowing out by another $10 billion over the forward estimates since the budget.

The deficit for this financial year, since the government's first budget, has more than tripled. The net debt for this financial year has blown out by $100 billion since this government took office. That is more than $4,000 for every Australian. The projected surplus for 2020-21 has shrunk to $1 billion, leaving us all in the danger zone when it comes to our much coveted AAA credit rating. I will add that this government has been a failure on the economy all over—a negative quarter of economic growth, just the fourth in more than 100 quarters, 34,000 full-time jobs lost last year, stagnating living standards and record low wages growth. This government totally walks away from everything. It is certainly walking away from what it took to the election and it is doing the same as always, even with 18C.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to particularly take note of some of the comments that members opposite have just made. For anyone of the Australian public who is listing to this at the moment—

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Nobody is.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

you really need to consider what both Senators O'Neill and McCarthy have just said. They have talked about the fact that Australia has a growing debt and they are suggesting that the government is walking away from some of its commitments. I ask you to cast your minds back to when the Rudd-Gillard-Rudd governments left office. It was unlike when they inherited government: the books were in balance. We had money in the bank earning interest. When the coalition resumed government, there was a massive national debt and, importantly, the trajectory of the debt was on an increasing level. Ever since the coalition has come into government, it has sought to rein back that debt.

Members opposite should remember the words of the former Prime Minister, Mr Howard, who said that politics is governed by the rules of arithmetic. If the ALP does not support measures that the government brings into this place, to take steps to make savings to rein in that debt—well, guess what?—that debt is going to continue to increase. We have managed, with the support of the crossbench, to get some measures through that will reduce the rate of growth of that debt, but the primary reason that the government has not got its measures through is that the opposition has not supported those measures, so they cannot turn around and say that the government is walking away or not delivering or not fulling election commitments when they are the ones who are voting against the measures that the government has brought forward.

On this issue of tax cuts, it is pure rank political opportunism by the opposition, and particularly by the leader of the opposition. When Mr Shorten was in government, he made the case again and again about why company tax cuts would lead to more employment and benefit the economy. At the moment, we have the ridiculous situation where, for pure politics, we are seeing small and medium businesses being asked to pay some $5 billion more in tax and the opposition at the same time refusing to support measures that will reduce debt by nearly $6 billion. It is pure class warfare when members opposite start talking just about big business and put this label on 'big business', but when they were in government, they understood why, for example, other comparative countries to Australia were taking similar measures. The United Kingdom reduced its main corporate tax rate in stages from 30 per cent to 20 per cent. Over the period from 2008 to 2014, Canada has reduced its main corporate tax rate from an average of 36 per cent to 26, and Singapore has come down as low as 17. In the UK, their analysis says that that tax cut has been a central part of the government's economic strategy, contributing to the economic recovery in that country, business investment and job creation. The University of Oxford found that the corporate tax reforms in the UK increased investment by nearly $11 billion. The UK government have said the long-term impact of corporate tax cuts would increase GDP by up to 1.3 per cent.

In a state like South Australia, where we desperately need to see jobs for young people who have trained in trades or have gone to university and come out as graduates, we see them going interstate at the moment, and part of the reason for that is that we do not have large companies who are prepared to invest in South Australia, creating those job pathways, whether you are a tradie or a graduate. We desperately need to see Australia be a competitive place in the world, because that will attract the capital that will lead to corporate investment, and corporate investment leads to growth in GDP. That gives us the ability to pay for things like education, housing, health and all of the things that we want as Australians. But it starts with investment. It starts with people creating jobs. As the Labor Party well know, it is only because of rank political opportunism that they now deny that corporate tax cuts are not just about the big end of town; they are about delivering jobs for everyday Australians.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It is over 18 months since the Prime Minister knocked off the member for Warringah and took the helm of the Liberal Party, promising a mature discussion on economic issues, and what an 18 months it has been! We have seen a proposal for the states to collect income tax, a huge change to state and federal fiscal relations, floated in a football field and then shot down within days. We have seen the Treasurer hint at changes to negative gearing, but only to be comprehensively shut down by the Prime Minister. We have seen the government abandon simplistic three-word slogans like 'axe the tax' in favour of nuanced, sophisticated three-word slogans like 'jobs and growth'. We have seen the government have multiple conflicting positions on the effects test, some of them, quite impressively, held simultaneously. But what we have not seen is a mature discussion about economic issues.

Given that the corporate tax cuts are the only policy that this government seems to have for stimulating growth, it seemed inevitable that the caravan of confusion and chaos would eventually visit, and now it has. There are reports on the front page of the Financial Review that the government is contemplating 'junking the vast bulk of the plan'. It does not seem that this is just made up by the journalist. The journalist goes on to say:

Business groups have become increasingly concerned at the lack of commitment and this intensified on Wednesday when Treasurer Scott Morrison refused for a third straight day to say whether the government would stick with the plan and take it to the next election …

It sounds like some people are very worried about is going on inside this government. Senator Brandis gave some very short answers to questions about the government's intention in this regard, and it remains to be seen what will actually happen to corporate tax cuts. I will wait and see what will happen. But do not get me wrong, because I would be very happy to see this government dropping this misguided policy, which we cannot afford.

But it would raise an existential question for the government: what is this government actually for? What exactly is the point of this government? What is the policy that the Prime Minister has nominated as being his greatest achievement? He said 'reforms to business tax', and when Senator Brandis was asked in this chamber just moments ago, 'What reforms are these?' what was his answer? 'The ones we have in mind.' So the reform that the Prime Minister nominated as his greatest achievement so far is a reform that the government has in mind to be undertaken in the future. There are some serious problems when the greatest achievement you can identify is one which has not actually yet occurred.

It ought to ring alarm bells in the coalition party room. What do you have after that, when the only reform you have is something that has not yet happened? You have, I guess, a commitment to the right of people to be bigots, and you also have a whole range of excuses about inaction on a whole range of subjects. We have been told you cannot have a free vote on marriage equality in the parliament, because the plebiscite was an election commitment. We have been told the government will not contemplate changes to negative gearing and the capital gains tax, because it is contrary to the position they took to the election. Yet maybe, if you believe what is on the front page of the paper, the government might be contemplating a walk away from the tax cuts that were the centrepiece of their election offerings. Just this week, we have been told we cannot afford to make payments to struggling families and that people in need will have to wait longer before accessing payments they desperately need, because apparently we cannot afford to maintain our very targeted welfare system. Yet what we can afford, maybe—let's see—is a $50 billion tax cut.

We know what all these reasons and excuses for inaction are. They are just that—excuses. They are fig leaves. Like a small child that throws a tantrum, the government refuses to take ownership of its decision. It likes to say it cannot do things when the actual reason is that it does not want to. We know the truth: the only election commitments this Prime Minister cares about are the commitments he made to the right of the Liberal Party before being elected leader. The only policies we cannot afford are those that bring a cost to him in the party room. That is no way to govern, and those watching the Minister for Immigration and Border Protection might tell you that is probably no way to hold the leadership either.

Question agreed to.