Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance (Senator Cormann) to a question without notice asked by Senator Cameron today relating to proposed company tax cuts.

What another pathetic performance from this pathetic government during question time—absolute nonsense coming from Senator Cormann and those on the front bench, who don't have a clue about the pressures that ordinary Australian workers are under. This is the Leader of the Government in the Senate who can't answer a question when it comes to any criticism of this government. He hadn't read the Goldman Sachs position. Malcolm Turnbull used to work for Goldman Sachs. They are arguing that 60 per cent of the profits from any corporate tax cut in this country will end up going overseas. They won't go into the pockets of ordinary Australians, battling to put food on the table, battling to get shoes for their kids to go to school. That won't happen. The money will go overseas.

The problem in the US is that the money is not going to workers in the United States. It's clear that what's happened in the United States is that a build-up of pressure for wage increases has been marginally dealt with. What's been described as happening in the US is that the crumbs of the tax cuts are going to workers. That's what the US analysis is: that the workers will not get a pay increase of any significance. They're getting one-off bonuses in a small number of companies in the US.

We've had companies here making massive profits over the last few years, and have the workers in this country had a wage increase? No, they have not; their wages have been stagnating. And all we get from this rabble of a government, from this economically incoherent government, is an argument that if you give big business a tax cut of $65 billion, somehow, wage increases will trickle down to the workers. Well, after 27 years as a union official, I know that nothing trickles down to workers. You've got to get out there and fight for an increase. You've got to get out and battle for every increase you get. But this lot over here, some of whom have never had a real job in their lives, think there's some magic out there and that, by giving a tax cut, you will get trickle-down economics in action and workers will get a wage increase.

They want to give $65 billion of tax cuts to multinational corporations and the banks. What a ridiculous proposition! We don't hear anything from this mob across the chamber about government debt anymore. We don't hear anything from them about balancing the budget anymore. We don't hear anything from them at all on this. All you get from them are these crazy economic propositions that we've seen—and Senator Cormann has been at the core of every economic decision that's been made. First, we had Malcolm Turnbull, the Prime Minister, saying we should increase the GST. That would be really helpful for working families! I think that lasted about a week. Then we had a new approach, and that was that taxing would be done by the states and that that would solve all the problems—let the states tax working people! I think that lasted two days. Now we've got trickle-down economics.

If trickle-down economics worked, it would've worked by now, because companies are making massive profits. Business executives are getting massive increases in executive salaries—Alan Joyce, $14 million a year; Chris Rex from Ramsey Health Care, $18 million a year. If anyone sitting in the audience is paying private health insurance, that's where your private health insurance is going. It's going to the executives. It won't be the workers who will be getting the money. (Time expired)

James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

If we were playing Senator Cameron bingo, we'd have a full bingo card after that speech: all the usual tired rhetoric, all the typical slogans from Senator Cameron that he wheels out every time this issue is raised. I was ticking them off one by one: 'trickle-down economics', tick; 'corporate tax cut handout', tick. He even called the government 'a rabble', perhaps his favourite phrase of all. The thrust of Senator Cameron's accusation in question time today, in the question he asked, was that foreign investors are going to get a better return on investment for their investment in Australia as a result of this legislation being passed. Well, Senator Cameron, on that you are at least in part right. Foreign investors will get a better return on their investment in Australia if this tax cut passes, as will employees of Australian companies, as will Australian shareholders of Australian companies, as will customers of Australian companies.

Foreign investors getting a better return on investment in Australia is not a bad thing. In fact, it's a good thing. It's a necessary thing, because, if we want foreign investors to continue to invest in Australia, if we want them to increase the level of investment that they make in Australia, then we want them to get a good return on that investment. They are not investing in Australia out of the goodness of their heart. I hate to break it to Senator Cameron, but they are not investing in Australia because of our weather; they are not investing in Australia because they like koalas or kangaroos; they are investing in Australia because they get a good return on their investment. If we can make that return on their investment better, then they will invest more. If they invest more, then Australian workers will be the direct and No. 1 beneficiaries of that investment. If we want to see capital deepening occur in our economy, we need to attract more foreign investment. If we want to see multifactor productivity in the workplace increasing, then we need to see more foreign investment. If there is anything this government can do to attract more foreign investment or more investment generally, then that's exactly what we should be doing if we are concerned about the number of jobs that this economy is creating and the wages that people are taking home.

I want to address some of the other claims made in Senator Cameron's speech then—in particular, his constant refrain that giving companies a tax cut is in some way a handout. It is not a handout to let companies retain more of the earnings that they have generated by fulfilling their customers' needs by selling them goods and services. That's not a handout at all; it's money that they've earned in the marketplace from their customers by fulfilling their needs with a product or a service. If we let them keep more of their money, and if they use that money for better returns to their shareholders, for more investment in plant and resources, for higher wages for their employees, then that is a good thing for the Australian economy. It is no handout at all.

A handout would be what Senator Cameron and his colleagues in the Labor Party are very fond of doing, which is taking money from people who are productive in the economy, from people who earn in the economy, and handing it to people who are not. That has the exact opposite effect of what you want to see if you want to generate economic growth. You don't take money from productive people and give it to unproductive people and expect that you're going to get a higher return on investment and expect that you're going to get economic growth. You allow those who are productive, who are efficient, who are profitable, to be rewarded for being so, and you will see more of that, if that's what you want to see more of.

We've also heard, as I said before, Senator Cameron's favourite bingo card phrase, 'trickle-down economics'. All you need to know about trickle-down economics is that no-one has ever described themselves as a believer in trickle-down economics. It's just a political insult. It's just something that the Left uses to throw at people who disagree with them or have a different view about economics to them. It is not describing a political or economic philosophy at all. Trickle-down economics exists only in the minds of Senator Cameron and his contemporaries.

Senator Cameron comes in here and says that this government does not have a plan or has an insufficient plan, in his view, to create more jobs and create more employment. Well, I'm very happy to stack up our plan against his plan and the plan of his colleagues, any day of the week. Our plan is to generate more investment in this economy and, as a result of that investment, for better wages to be paid and more jobs to be created. His plan and his colleagues' plan is to pass legislation to increase wages. If it were that simple, everybody would do it. If you could just make this country a more prosperous place by passing a law, then it would be the most prosperous place in the world, given the number of laws that we pass in this place. But passing laws doesn't create wealth. Passing laws requiring people to pay more to their employees doesn't create higher wages. It's totally artificial. It's a top-down central-management-style approach to economics that has failed every time it has been tried throughout history and throughout the world. The alternative policy, of rewarding those who work hard, who invest, who take risks, is the path that works. It works here in Australia. It works everywhere else in the world. If we implement it successfully with this plan, we'll see those benefits continue to flow to Australia.

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

In question time today we called on Minister Cormann to provide evidence that tax cuts would lead to wage growth, and he referred us to the effect of Trump's tax cuts in the United States. Let's actually look at the effect that those cuts have had. There's an article from the Financial Times. Now, you know that this is a radical socialist publication. Nonetheless, let's take an interest in what the Financial Times has to say. The article's heading is 'Trump's tax cuts herald $1tn bonanza for US investors', and then the subtitle is 'Growth in stock buybacks outstrips investment in capex, R&D and employees'. The first paragraph says:

US companies are on track this year to return a record $1tn to shareholders, as Donald Trump's tax cuts prompt boards to boost buybacks and dividends at a faster rate than their capital expenditure, research and development budgets or wage bills.

It doesn't look good, does it? If we really want to look at the Trump tax cuts, let's see what they delivering. Well, according to the Financial Times, not a great deal for wages. The article continues:

Goldman Sachs estimated in February that buybacks would jump by 23 per cent to $650bn this year, while JPMorgan predicted … that they would rocket by as much as 50 per cent to $800bn …

…   …   …

US companies have announced a record $187bn in new buyback plans so far this year—

That's what has been announced, according to Birinyi Associates, and—

Cisco and Wells Fargo lead the list, with plans to repurchase $25bn and $20bn respectively.

Goldman Sachs also sees dividends expanding by 12 per cent to $515 billion. They're some big numbers, aren't they? And how much will actually end up with workers, according to this analysis? CNN Money has estimated that, at the end of February, workers stood, at that stage, to end up with just $6 billion extra. Hundreds of billions of dollars is the range from all the analysts for share buybacks, but so far there is $6 billion for workers.

Like in the US, a sugar hit of tax cuts might do wonders for share prices and it might do wonders for executive salaries, but it's not going to do very much at all for wages and investment. The thing that is holding companies back from investing and hiring is not a lack of funds; it is a lack of demand. If you go back to that Financial Times article, it spoke of Howard Silverblatt, senior index analyst at S&P Dow Jones—another socialist organisation:

Reinvesting had not been a priority for most large companies for some time, he said. "Companies had enough money before the tax act to hire workers, to do more capex, to invest more. The bottom line is sales hadn't picked up."

How do you get sales to pick up? It's a big question, isn't it? Here's one idea: you could increase the wages of the people who are doing the buying. It sounds a little bit like economics 101, to quote the patronising thing that we hear so often from people on the other side of the chamber. I was astounded to read the submission from the National Retail Association to the Fair Work Commission's minimum wage review. It said that wages should remain stationary—not even meet the rate of inflation—because sales had not picked up. Who do they think will be doing the spending?

If the government were serious about increasing wages, if this was actually one of their policy objectives, there is a much more efficient and much more direct way to achieve that than handing $65 billion of taxpayer money to large corporates. They could just make the request in their submission to the Fair Work Commission. But they didn't do that; they ducked that question. If the government were serious about increasing capex and investment, they could have a policy like the Labor Party's Australian investment guarantee, which provides tax benefits for future investment but doesn't reward the investments of the past. They haven't done that. When all else fails, the government argues that, irrespective of the lack of benefits, we just need to reduce our tax rates to stay competitive with the US. But, as all the economists emphasise, companies don't make investment decisions based solely on the headline tax rate. They look at things like roads, rail, labour market capacity and infrastructure, and they look to the skills of our workforce. If this government were serious they would invest in these, but they haven't. Wages, investment and international competitiveness are not policy priorities for this government; they are just political arguments.

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

I, too, rise to take note of the answer provided by Minister Cormann. But, first of all, I have a confession to make to this chamber. When I spoke this morning on the new tax bill, I inadvertently misled the chamber. I said that we had had 16 consecutive months of jobs growth in this country, the longest run of jobs growth ever. However, I now apologise to the chamber, because it was actually 17 consecutive months of jobs growth, which is still the longest run of jobs growth ever, on record, here in this country. So my apologies for that misleading statement.

Listening to the debate in the chamber today, to the questions and the speeches in taking note of answers from those opposite, all I can think is how much those opposite would benefit from the year 7 and year 8 economics and business study books in our schools, because any grade 7 or grade 8 student would know exactly the fallacy of what those opposite say. We heard this morning from the Greens that the solution to economic growth is investment. Well, those of us on this side agree that we do need to invest in infrastructure and social programs. But what you never hear from those opposite, and what we certainly haven't heard in these speeches on the take-note motion from those opposite, is where the money is coming from.

As I observed this morning, there is no little group of fairies at the bottom of the garden that sprinkle money-dust over the economy, just as there is no magic pudding of money. We have to earn the money. And, if you want to spend it, you have to tell us how you're going to raise it. Just spending money without actually saying where the money is coming from is not economic anything.

What have we got from those opposite? I'd just like to remind those opposite of what has been said by those who are a bit more honest, or have been more honest in the past, about what it takes to generate national wealth, and why company tax rates in the current world taxation environment are so important. What do you think Julia Gillard said as Prime Minister about the importance of tax cuts? She said this:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.

How right she was then. All of you opposite know that what she said then was correct and what you're saying now is not. Let's have a look at Bill Shorten and what he himself has said on a lower corporate tax rate:

The Government's tax reform agenda has a strong focus on ensuring that Australia remains an attractive place to invest.

…   …   …

Cutting the company tax rate is an important step along this road.

This recognises the benefits to investment and growth from lower company tax rates and a trend to lower rates across the OECD over the past 30 years.

It is not only disingenuous.

This is probably the most important measure this government has introduced, I believe, in this chamber since it was re-elected, because it is critically important, in this global economy, that we continue to not only make free trade agreements but also enable our companies to be profitable, to employ and to grow their workforce. And we can see these policies are working, through the evidence of our tax cuts and other incentives for small business, who employ 6.7 million Australians. They are expanding; they are growing. In fact, nearly a million jobs have been created—new jobs, mostly full time, and a majority of them for women. These are new jobs.

As I said, 17 consecutive months of economic growth and jobs growth are something we should be proud of and not trying to undermine in a cynical attempt to get the post-budget address-in-reply speech by the Leader of the Opposition leading up to the next election—the messages of division, of lack of hope and of fear. I think those opposite should be ashamed, because, as they well know, to survive in the 21st-century economy we need to grow the economy. We need to provide support not just to small businesses but to larger businesses so that they can grow, compete, export and employ more Australians.

Anthony Chisholm (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

We know that those opposite have been consistent on one thing: they have consistently been backing big business. If it's a choice between big business and Australian workers and Australian families, I know which side our team comes down on. We will always back Australian workers and Australian families, whereas those opposite are going to back big business. There's a real divide in this parliament over this issue. I'm proud of the stance that the Labor Party have taken on this—and we will absolutely stick to it.

I know whose side the Australian people are on, and that is our side. They know that the rubbish peddled from those opposite is exactly that—it is absolute rubbish. The funniest part of the arguments that the coalition run is that we've got to back Trump, that we've got to go down the path of Trump. I can imagine what Australian families are thinking about when they hear those opposite talking about going down the Trump path. That is exactly what Australia doesn't want. We know what they've done to their health system in America and, if we go down the path that the coalition want to with corporate tax cuts, that's what it's going to lead to in Australia. This is the path, the trajectory, that they want Australia to go down. The Australian people, Australian families and Australian workers are going to stand up against them, and the Labor Party are going to be there with them.

It is concerning that the crossbench are falling for what is basically a trick from those opposite—an ideological pursuit that they have been sticking to now for years. It's disappointing that some of the crossbench have indicated that they're willing to support it. What have they got in return? A letter from 10 CEOs—that's all they have in return—saying that these changes would mean that they would invest more in Australia. It's not worth the paper it's written on. When it comes to making those sorts of decisions, those CEOs are answerable to their board and shareholders. When they're making investment decisions, they're not going to go, 'Remember that letter I wrote 18 months ago.' Of course they're not. They're going to be answerable to their board and shareholders. They are the ones who decide the CEO's salary and terms of appointment and if they have a job or not. So this nonsense that a letter from 10 CEOs is some sort of guarantee that the crossbench should sign up to is nonsense. The crossbench still have time to work that out. They have time to say: 'Hang on a sec. This isn't good enough. This isn't going to work for the Australian people. We've made a mistake and we are going to reject this approach because it will have a devastating impact on Australian families.'

Let's look at this. We know the government already have cuts to health and education on the table. We know what they've offered up. Giving business a $65 billion tax cut means billions less for government services like health. We know the advantage that this will give to the big four banks. They are some of the most profitable banks in the world and they will be the big winners from this, getting an extra $7.4 billion in the first 10 years of tax cuts when they're already making record profits. By the 2025-26 financial year, the tax cuts for the big four banks will be $3.2 billion each year. When was the last time these banks invested that back into the community? They don't anymore. They shut branches, employ fewer people and are all talking about automation and what that will mean for their workforce. It is nonsense to think that banks getting a tax cut are somehow going to reinvest this. It will go to their shareholders. It will go offshore. It isn't going to create one more job for the Australian people. This is what the government are proposing. This is what the crossbench is signing up for.

Then we come to foreign shareholders and how they are going to benefit from this. They will be the big winners from a company tax cut. Basically, the benefits of the company tax cuts go mostly to foreign shareholders, not to Australian shareholders. There's also no connection between tax rates and employment. There is no correlation between lower company tax rates and employment or economic growth. Common sense says this. The historical analysis says this. International data confirms this as well. Tax rates are only one part of any investment decision that companies make. They do business in Australia because we are an attractive place to invest. We have a stable workforce and stable political conditions, so they know they can make a decision that will make a difference.

We also know that regional areas in Queensland and other parts of Australia will suffer from this decision because they're going to see none of the benefits that those opposite talk about. I'd say to the crossbench: it's not too late to wake up over the weekend, come back into this place and make a sensible decision for Australian workers and families.

Question agreed to.