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

My question is to the Minister for Finance, Senator Cormann. Why is it important, particularly for working families in my home state of South Australia, that the government's plan to reduce the business tax rate to 25 per cent for all businesses is implemented in full?

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

I thank Senator Fawcett for that question. It is important to working families in South Australia that our business tax cuts are implemented in full, because working families in South Australia are looking for more jobs and higher wages so South Australian families today and in the future have the best possible opportunity to get ahead.

More jobs and higher wages don't grow on trees. In South Australia and all around Australia more jobs and higher wages are created and paid for by successful, profitable businesses. Making sure our business tax rate is globally competitive helps makes businesses successful and profitable, boosting investment growth, jobs and wages. Any South Australian senator standing in the way of lower business taxes is standing in the way of more jobs and higher wages in South Australia. That includes you, Senator Farrell. Any South Australian senator standing in the way of lower business taxes is holding South Australia back, is holding South Australia's working families back and is standing for less private investment, lower growth, fewer jobs and lower wages. After 16 years of bad Labor government, more investment for more jobs and higher wages are particularly important for South Australia, because, of course, nominal growth in South Australia is below the national average, employment growth is dramatically below the national average and population growth is at just 0.61 per cent. While housing finance increased 3.9 per cent over the year across Australia, in South Australia it declined by nearly five per cent.

Let me add one important point: lowering the corporate tax rate for smaller businesses only creates an artificial incentive for Australian businesses to downsize. In a worst-case scenario, some businesses may actually lay people off to get smaller. A size-based different tax treatment would create a glass ceiling on business workforce growth. Bill Shorten, in March 2011 at ACOSS— (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Fawcett, a supplementary question.

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

How will the government's plan to cut business taxes support wages growth?

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

More investment, stronger economic growth and more successful and profitable businesses hiring more Australians means stronger demand and more competition for workers among the profitable businesses, which means that businesses have to pay more to secure the services of those workers.

Senator Cameron interjecting —

Here we have Senator Cameron saying, 'Let's just increase penalty rates.' Increasing the cost of hiring an Australian worker without helping business to be more successful and more profitable will boost unemployment. It will send more Australian workers onto the unemployment queue. If we want to have more jobs, higher wages and the best possible opportunity for Australian families to get ahead, including in particular in South Australia, we need to ensure that the businesses that employ them have the best possible opportunity to be successful and get ahead. I don't expect Senator Cameron to understand, but Mr Shorten should. (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Fawcett, a final supplementary question.

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

Minister, what are the consequences for jobs and wages if the government's proposed business tax cuts for all businesses are not implemented in full?

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

The consequences are less investment, lower growth, fewer jobs, higher unemployment, lower wages and—I would encourage Senator Hanson to listen very carefully to this—poorer investment returns for self-funded retirees on their superannuation investments. Don't take my word for it; look at what the International Monetary Fund said in their October 2017 World Economic Outlook:

Where countries are considering significant reductions in corporate income tax rates—

which is the case in the United States, the United Kingdom, France and others—

there could be significant negative spillovers on activity and the fiscal position of non-reforming countries.

In addition, the recent World Bank forecast shows Australia was rated sixth in the OECD for investment as a share of the economy in 2016, but our ranking is declining, and we are forecast to be ranked 20th in 2022, our lowest ranking on record. This is not where we want to be. We want to continue to be an attractive destination for investment. (Time expired)