Rex Patrick (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

I rise to contribute to the debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. The debate over whether to lower the statutory tax rate of 30 per cent for companies has largely focused on the tax rate being too high compared to other countries and the need for lower tax rate in order to be competitive and attractive to investment. The Business Council of Australia and the government continue to argue that Australia's company tax rate is amongst the highest in the world and that if we don't reduce it Australia will be left behind economically. The important point to note is that there are three different figures. There's the statutory rate, there's the average rate and there's the effective rate—and I will talk some more about these.

The Conversation, in its fact check on whether Australia's corporate tax rate is not competitive with the rest of the world, concluded:

It is true the corporate tax rate at 30% is higher than some other countries in our region, but it is average compared to G7 countries. Further, Australia’s franked dividends system means Australian shareholders already enjoy favourable tax conditions on income earned from their investment in companies.

Figures from the US government's Congressional Budget Office show Australia, while having a relatively high statutory tax rate, has a corporate average tax rate of 17 per cent and an effective corporate tax rate of 10.4 per cent. The top statutory corporate income tax rate is just one of several aspects of a tax code that determines the amount a company will face in corporate taxes.

In its comparison, the Congressional Budget Office also looked at the role of corporate tax rates when companies are looking to invest. It said:

When companies are deciding whether to operate in a particular country, they consider, among other factors, the total amount of corporate income taxes they would pay to that country relative to the income earned there. That ratio—the country's average corporate tax rate—encompasses all of the provisions of the country's corporate income tax code. The advantage of using the average corporate tax rate to evaluate investment incentives is that it can capture features of the tax code that are missed both by the top statutory corporate tax rate and by the effective marginal corporate tax rate.

The fact check also says:

… it is true our headline corporate tax rate of 30% is higher than that of our neighbours in the region. But given our system of dividend imputation, it is questionable at best to say that having a headline corporate tax rate higher than our neighbours makes us uncompetitive. Economic and political stability are big factors for businesses making investment decisions, as is available infrastructure, wage rates, other taxes, and the nature of the industry in question.

In fact, I have a report here from ACOLA on Australia's comparative advantage that lists a whole range of factors that are normally considered when you are deciding where to invest. They include, and particularly in relation to Australia, that 'Australia has a well-skilled and effective workforce', that 'Australia has a strong and respected research capability', and that Australia has 'a strong federal structure and rule of law'. It talks about 'institutions in the areas of law, markets and culture' and about 'an inclusive and cohesive society'. There is a range of different measures that are used to determine whether or not a country is the right place to invest in. It's not simply the tax rate.

The simple argument that Australia needs to lower its company tax in order to attract foreign investment is unsound. As I've just highlighted, companies consider a range of factors when deciding to invest, not just the statutory tax rate. Further research undertaken by the Australia Institute in examining the Foreign Investment Review Board figures confirms that a lot of investment comes from countries with lower company tax rates. The report states:

… by value 71 per cent of foreign investment applications come from countries with company tax rates lower than Australia's rate and by number a large 97 per cent come from countries with company tax rates lower than Australia's rate.

While a lower statutory company rate appears attractive in theory, there is little evidence to back up the claims being made by the government that it will boost investment, create jobs and raise living standards. Further, on the analysis conducted it appears Australia is competitively placed in relation to average and effective corporate tax rates.

In opposing these tax cuts, I want to make it clear the Nick Xenophon Team is not anti business. NXT has been and will continue to be of support to small businesses. We supported the government's initial company tax cuts for companies with a turnover of up to $50 million. We copped a lot of criticism for supporting that tax but we stand by that decision. We were accused of giving big multinational companies a tax cut at the expense of funding schools and hospitals. I would like to remind the chamber, and those listening to this debate, what sort of companies we thought would benefit from that tax cut. There was Credit Union SA, which is under the $50 million threshold; Barossa Fine Foods, a smallgoods maker located in Adelaide: Clean Seas Tuna, a commercial producer of kingfish; Golden North Ice Cream, between $10 and 50 million, which is a key employer in the country town Laura in the mid-north; and Robern Menz, a confectionary manufacturer, which is between $10 million and $50 million. So there was a range of companies that we supported. We've given these small and medium enterprises a tax cut. The interesting thing is that the government has not provided any data. We were prepared to go along with that—we were prepared to support it. But there's no data showing that that's actually flowed through to increased investment. There's no data showing us that we have increased pay to the workers who work for these companies. Nonetheless, we were happy to support that particular change. However, we're not prepared to pass a tax cut that will benefit many big multinational companies and their shareholder: companies like BP, Caltex, IBM, Google and Uber all stand to benefit from this bill.

It was pointed out by the Australia Institute that Australia's system of dividend imputation means Australian shareholders will not benefit from reductions in the company tax rate. Australian shareholders would notice any increase in company after-tax profit being matched by a loss in franking credits attached to their dividends. The government would be giving with one hand and taking back with the other. However, foreign owners cannot use franking credits, so for them there is an unambiguous benefit from an Australian tax cut, and that's probably why these multinational companies are pushing for it. It is clear that further company tax rates will be more beneficial for these foreign companies. At this point in time NXT believes its support for tax cuts for companies with turnover of up to $50 million strikes the right balance. Before we even consider supporting further company tax cuts, we want to see clear evidence that the initial tax cut we supported has had a positive effect on the economy. The government may point to the creation of 403,000 new jobs in the year to December 2017 as evidence, but most of the rise in employment growth in 2017 was an increase in the number of women employed in the health sector, with the NDIS by far the largest employer—hardly a direct result of corporate tax cuts.

In the United States, President Trump promised that his tax cuts would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy, but this is not the case. TheNew York Times stated in an article published on 26 February this year:

Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares.

Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies' stock. A company purchasing its own shares is a time-tested way to bolster its stock price.

But the purchases can come at the expense of investments in things like hiring, research and development and building new plants—the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.

There is no evidence these large corporate tax cuts are matching President Trump's rhetoric, and we've been presented with no data to give us confidence that the rhetoric spruiked by Minister Cormann would be substantiated. The case for further company tax cuts has not been made, and we cannot support the legislation currently before the chamber.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak in favour of the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. It is with great pride that I rise to speak in favour of an extension to the reduction of company tax for all businesses, not just those with turnovers below $50 million. This bill delivers on the remainder of the government's enterprise tax plan, introduced in the 2016-17 budget. The enterprise tax plan is the centrepiece of the coalition's economic agenda. We took this agenda to the 2016 election and we won, which gave the coalition a mandate to govern and the imprimatur of the Australian people to legislate the policies we presented to them. I will come back to this later.

The first element of that plan, legislated almost a year ago for firms earning less than $50 million turnover each year, was a watershed change for businesses around the country and particularly for small businesses earning between $2 million and $10 million in turnover each year, because it not only reduced the company tax rate for those businesses but also provided those businesses with a turnover of up to $10 million access to the small-business tax incentives, the instant asset write-off, pool depreciation and GST on a cash-flow basis. That position was fiercely resisted by those opposite, but we have already seen just how well it was received. It was a game-changing moment for many small businesses and allowed them the confidence to invest, grow and employ. I thank my crossbench colleagues who gave the government their open minds and the people of Australia their goodwill and good wishes when they supported that first tranche of company tax cuts.

Now we find ourselves at another watershed moment, and once again we ask for the open minds of the crossbench and call upon them to demonstrate their goodwill and good wishes towards the Australian people. It's the Australian people who are the beneficiaries of the economic growth that comes from cutting the costs of doing business. It's the Australian people who are the beneficiaries of increased competitiveness with our overseas counterparts. It's the Australian people who are the beneficiaries of the increased overseas investment in Australia. It's the Australian people who are the beneficiaries of the greater number of jobs created because companies can afford to invest and employ. And it's the Australian people who, with the demand for employment rising, will see a corresponding rise in real wages—a genuine sustainable and organic rise in wages, not a confected one through ambit claims for exorbitant minimum wage rises. History shows us that those, by causing sudden inflation and pricing workers out of the market, do more harm—do the most harm—to the very people they attempt to protect.

The crossbench has indeed demonstrated that good faith and goodwill. Senators Bernardi, Anning, Leyonhjelm and Martin have already committed their support for the enterprise tax plan, and I thank them sincerely. So, too, do I acknowledge our colleagues from One Nation, my fellow senator from Victoria, Senator Hinch, and our new colleague, Senator Storer, for approaching this policy change with an open mind, intellectual curiosity and a desire for evidence of cause and effect.

The vast majority of Australians don't know what goes on in the deliberations of the crossbench. Many of them came to this place in my cohort of 2016 and together we have grown into this chamber. I think it's important to acknowledge how seriously they take their jobs. Over the years, crossbenchers, whether they be Independent or minor party aligned, have put up with their fair share of political grandstanding, ideological bellyaching and the ugliest part of this job, which is bloody-minded opposition only for the sake of political expedience. And haven't we seen plenty of that in this debate!

I think that the crossbench knows that the evidence is in. Growth can be achieved through cutting company taxes, and we've already seen that demonstrated in the first 12 months since the first tranche of the enterprise tax plan. Jobs numbers do increase in response to companies investing back into their businesses. We've heard an awful lot about economics 101 in this debate. Ironically, the people who mention it most often have never sat in an economics lecture in their lives!

Don Farrell (SA, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

If it's such a good bill, let's vote on it! Why are you waiting?

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

My case in point! I have sat in economics 101—and 102, and 201, and 202, and 301 and 302, Senator Farrell. I have spent 20 years working in businesses that include some of Australia's largest employers, as well as my family's own small business. I understand the concept and the components of risk and return and investment decision-making. I understand the importance of business confidence and competitiveness. And, while I have fought very passionately in this place for government policy many times before, I can honestly say that I believe that the government's enterprise tax plan will be the most significant contributory factor to the growth and competitiveness of our economy that this place can deliver in this term of government.

Legislating company tax cuts for all companies, regardless of size—regardless of size—can and will make a significant difference to the competitiveness of Australian businesses, the attractiveness of Australia for foreign investment and the employment and wages of millions of Australians. Company tax cuts create opportunities for Australian businesses to invest, to grow and to employ.

No one policy is ever the only solution. But if the enterprise tax plan is not the silver bullet, it certainly is a stainless steel one. Those with a good head on their shoulders and an honest heart in their chest know there is now a pressing need for parliament to provide significant tax relief for Australian businesses. Yet the only thing that is standing in the way of the parliament doing so is the pig-headed recalcitrance and the self-interested political obstructiveness of the Labor Party. If logic tells us that company tax cuts and a reduction in the cost of doing business will encourage investment and growth, and if economics tells us that a reduction in company tax cuts and a reduction in the cost of doing business is a key driver of growth, what possible criticisms, other than political, can be levelled?

The opposition says we can't afford company tax cuts. The Parliamentary Budget Office, as well as Standard & Poors and other ratings agencies, say that we can. For five consecutive budget updates we have remained on track for a return to budget surplus in 2020-21. The three major credit ratings agencies have affirmed this forecast by reinstating Australia's AAA credit rating. Indeed, from this year we will no longer raise new borrowings to fund everyday expenditure, the first time since the GFC and a year earlier than at budget. The national grocery bill will now no longer go on the national credit card. Everyday expenditure is being paid for with everyday revenue. These are the welcome dividends of prudent fiscal management and a growing economy but, most importantly, during additional estimates, we heard confirmed by the Parliamentary Budget Office that this strong fiscal performance has factored in the costs of a company tax cut already. Moreover, growth outlooks and business confidence indicators generated by the private sector providers and used by private sector businesses have also already factored in company tax cuts.

The Australian economy is in fact relying on this parliament to implement the drivers of growth, the drivers of confidence, the drivers of investment and the drivers of employment that we have promised. The opposition has claimed that there is no evidence to suggest that jobs will flow from company tax cuts but evidence from the tax cuts to small and medium businesses and the promise of company tax cuts to big businesses suggest otherwise. We've already delivered tax cuts to 3.2 million small and medium businesses, giving them the flex to grow their businesses and create more and better-paid jobs, and the results cannot be clearer: 400,000 new jobs in the last year alone, 300,000 of them full time, 15 consecutive months of jobs growth—the longest consecutive jobs growth on record—and the participation rate at its highest in seven years.

We only need to go to the headlines in today's newspapers to see Australia's largest employers have committed already to increasing investment and employment in Australia, should the company tax cuts pass. While it's always a giggle for us on this side when Senator Cameron bleats his favourite catch cry in a snide tone of 'trickle-down economics', the evidence is irrefutable. Senator Cameron, despite an astonishing array of cushy and well-paid jobs in industry superannuation, is clearly no economist. The opposition has said reduced company tax cuts won't make Australia more internationally competitive. Indeed, yesterday, with his career as a GP, who called on his knowledge of Economics 101, Senator Di Natale said, 'Why would we even want to compete with America?' I ask the crossbench to ignore the Greens entirely in this debate. Their grasp of economics is almost as thin as their grasp on reality.

Of course reducing the company tax rate will make Australia more competitive. Prior to January, the United States had the highest corporate tax rate of any country in the OECD. However, when President Trump signed into law the Tax Cuts and Jobs Act of 2017, the United States became open for business. He slashed the corporate tax rate from 35 to 21 per cent. Meanwhile, Australia continues to languish with the fourth-highest corporate tax rate in the OECD. If we are to remain internationally competitive in a rapidly transforming world, we must reduce corporate tax rates. The coalition's enterprise tax plan will do so; it will cut our corporate tax rate to 25 per cent for all businesses, making Australia more competitive with countries like the US, like the UK and like Singapore. Without that second tranche of enterprise tax plan, our international competitiveness will be put at risk. Put simply: inertia is not an option.

The opposition has also said a decrease in company tax, even if it creates jobs, won't raise real wages. I can't understand the logic there because the laws of supply and demand certainly haven't been suspended. If we get the policy settings right, the economic benefits will follow. Continued jobs growth will eat into the capacity of the economy and put upward pressure on wages. We've already seen above average wages growth in the fastest growing sectors of the economy like health care and education. More importantly, however, the medium-term realisation of the full company tax cuts mean that while wages grow, inflation will not be jolted into action to erode the benefit of those wage rises. The economy is set to grow at a steady and reliable pace, and that is what the coalition's economic agenda is all about: improving confidence so that businesses invest, reliable economic growth, more jobs, more better paying jobs for all Australians.

The opposition has said that it's comfortable with a two-tiered company tax system. This is the situation we currently find ourselves in. The problem with a two-tiered company tax system is it creates a disincentive for growth. If we accept that it is in the interests of this country to encourage Australian businesses to grow, and I think even our colleagues on the other side would concede that point, then we simply cannot have a system where a business is disincentivised to grow beyond $50 million in revenue. A two-tiered system is exactly that—a perverse disincentive for businesses to grow. This will undoubtedly discourage innovation in these companies and seriously undermine the benefits of company tax cuts, and we must always remember that large companies were once small companies.

Of course, it's large companies that provide the biggest bang for the buck in terms of the economic growth that will come from lowering taxes on larger businesses. That was pointed out by my colleague Senator Paterson in a fascinating opinion piece that he submitted to the AFR. Large businesses employ more Australians, and certainly we've seen much of the employment growth in this term of government come from those very businesses. How perverse it is that we would consider punishing them now.

The opposition says that a company tax cut is a bonus for big business, a bonus for the top end of town. That is politically loaded opportunistic balderdash. Shame on the opposition for trying to convince the Australian people of ignorant guff. Australians aren't stupid. Companies don't exist independently of their employees, their owners, their shareholders, their customers and their suppliers. These are the people that a company comprises. Companies are little more than the people who own them, who work in them, who buy from them, who sell to them and who rely on them. It is these individuals who pay the company tax—through lower wages, lower investment returns and higher prices—not the business per se. It's those individuals who will benefit most from a company tax cut.

The opposition says that this policy is not about fairness. That is convenient rhetoric that simply disguises ignorance of the facts. I heard Senator Di Natale refer to Germany in his speech to the chamber yesterday. He conveniently left out the recent findings in that very country that demonstrated that not only does cutting corporate tax rates lead to jobs growth but those who most need our help—women, young workers, low-skill workers—are those who stand to benefit the most, and this in turn helps to redress economic inequality, an issue about which the Labor Party and the Greens purport to care so deeply. Surely this alone would be compelling enough, tax cuts leading to jobs and jobs growth for those who need them the most.

But the fact is the opposition don't really need convincing of the benefits of a company tax cut; they already know. It wasn't so long ago that Mr Shorten himself said:

Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living.

Similarly, the shadow Treasurer, Chris Bowen, has also previously stated:

It's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

Quite extraordinary! I've got so many more quotes from so many more Labor—I was going to say luminaries, but that might be stretching the friendship a little bit. My favourite one comes from Penny Wong. She was quoted in Hansard as saying, only in 2012:

We understand that the cut in the corporate tax rate is important to increase productivity, to promote broad based economic growth and to encourage—

wait for it—

more investment and jobs across Australia.

Penny Wong also said—

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

Senator Hume, I remind you to refer to senators by their correct titles.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

The Leader of the Opposition in the Senate also said, on Insiders in 2012—wait for it—'Lowering of the company tax rate is good economic policy.' I don't understand what has changed for these new apostles of socialism. At what point did they divest their party of the legacy of Hawke and Keating? At what point did they deny their own beliefs, beliefs that they have stated on the public record time and time again? How did they move so far to the left that they could make Lenin blush? The opposition leader, clearly, blindly mimics Jeremy Corbyn's and Bernie Sanders's rhetoric of class warfare. I don't want to insult Jeremy Corbyn and Bernie Sanders, because for all their radical socialist tendencies at least they actually believe in what they say.

The basest political opportunism and expedience is the only explanation for this mindless opposition to good, sound, logical economic policy. Let me quote somebody else—the opposition leader, Mr Shorten, again. In an interview on Sky with Kieran Gilbert only a few years ago—I love this one—he said:

Any student of Australian business and economic history since the mid-eighties knows that part of Australia's success was derived through the reduction in the company tax rate. We need to be able to make life easier for Australian business …

Again, Mr Shorten said this to the ACOSS national conference:

Friends, corporate tax reform helps Australia's private sector grow and it creates jobs right up and down the income ladder.

Again to that ACOSS conference, Mr Shorten said:

… 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.

This is from Mr Shorten himself:

Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living.

It's quite extraordinary how the rhetoric has changed in such an extraordinarily short period of time. What has happened? What has created this turnaround? I can't identify any single economic factor that would have contributed to a change in thinking. However, I can identify political factors. I can identify political expedience. And I think our crossbench colleagues can, too. It has become all too clear, all too apparent, that this opposition is the most anti-business, anti-growth, anti-jobs opposition that we have seen since Whitlam. The parliament knows it, the economists know it—the real economists, not those in Economics 101 we hear bleating from the other side. The media commentators know it. Those in the business community certainly know it. And the Australian people know it. We expect economic nonsense from the Greens, who dwell on the fringe, but this is a party auditioning to govern. By not supporting the enterprise tax plan, the opposition have abandoned their traditions and their principles. They have abandoned the Australian workers, who want more jobs and better-paid jobs, and, by denying our economy every opportunity to grow and flourish, they have also abandoned their credibility.

I implore my crossbench colleagues to see this opposition for what it is: a hollow shell of rhetoric, without shame, devoid of any ideas other than higher taxes and the redistribution of other people's money. But we know that you cannot tax a nation into prosperity. As Winston Churchill said, it's a little bit like a man standing in a bucket trying to lift himself up by the handle. It just does not work. I implore my crossbench colleagues: look past the bloody mindless noise of the opposition and see this policy for the opportunity that it presents to our country. The evidence is compelling, and I know your hearts are in the right place. Your constituents have charged you with the responsibility of progressing our nation. Pass this bill and help progress a policy agenda that will keep Australia competitive, grow the economy, and allow businesses to invest and employ and create more and better-paying jobs.

Fraser Anning (Queensland, Independent) Share this | Link to this | Hansard source

This is not my first speech. I rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. While I support the government's company tax cuts, I don't believe they go far enough or are being implemented fast enough. Unlike the recent US tax cuts, which were considerable and immediate and have resulted in almost instant benefit to American workers and the American economy alike, the gradual implementation of a five per cent cut over almost the next decade means that all Australians forgo a major benefit until its complete implementation. While some of my colleagues feel that it's a handout to big business or trickle-down economics, and our current rate of 30 per cent should remain frozen for all time, the simple fact is: as a country, we're already uncompetitive on the global stage. These reductions to 25 per cent will still only take us, as a nation, back to the middle of the pack globally and the high end of the scale in the Asia-Pacific region.

What we actually require are further reductions, making Australia a more attractive location to do business. I would suggest that there is not one person in this room who would shop anywhere but where they felt they got the best deal. Corporations are no different. They will do business where they feel they are getting the best for their company. Right now, Australia, in terms of our corporate tax rate, is offering one of the worst deals, and, as a result, many businesses have gone elsewhere. We need to compete for these companies' business. Further reductions will entice business to headquarter their operations here, while also keeping their money onshore. Such reductions in the rate will also enable companies to reinvest more of their profits in things such as upgrading their equipment and machinery and growing their business with human resources. We will see a flow-on to the Australian worker, with productivity and eventually real wage growth.

We have seen some of these benefits already, with Lockheed Martin, the world's largest defence contractor, earmarking some of its expected windfall as a result of Trump's tax cuts for their pension program. The company has also come out and stated it is going to increase its commitment to initiatives like employee training and charitable contributions, particularly for education, science and maths. Businesses like AT&T have also reported they will have more financial flexibility as a result of the US tax cuts. I have experienced firsthand the effect of Mr Trump's tax cuts. My two daughters own a small business in the United States. As a result of the immediate and substantial reduction, my girls have been able to do some much-needed upgrades on their premises, they have employed two more staff and they've increased wages for all staff to ensure they are retained into the future.

Recently we have seen the normally reserved IMF come out and say the US tax overhaul was a major factor in global growth rising to 3.9 per cent this year. They have also stated that the corporate tax rate reduction will contribute noticeably to US growth over the next few years.

As the minister highlighted, critically, the majority of the gains from the company tax cut are expected to flow through to the Australian worker in the form of increases in real wages. Those opposite always say they are for the worker and the embattled. Well, this is an opportunity for them to show it. We have seen successive Labor governments like that of Gillard in 2010 promise to cut company tax rates, with then Treasurer Wayne Swan, who you will all recall was voted the world's best Treasurer in 2011, saying:

Reducing company tax will create new jobs and grow the economy right around the country.

The Leader of the Opposition, Mr Shorten himself, has previously criticised the Greens and their opposition to similar so-called big business tax cuts proposed by Labor. The arguments previously used by those opposite to support tax cuts in the eighties, nineties and 2000s equally apply today. As such, I call on those opposite and my colleagues on the crossbench to support Australia's workers and vote in favour of the government's legislation. Thank you.

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Just before I do so, I note a quiet moment's silence, particularly from the Labor Party, and that's rare in that place. We don't have any Labor speakers on the speakers' list at the moment. Senator Farrell, are they going to come on? Do they have anything to say, Senator Farrell? Do you have anything to say? Senator Farrell, I think you're a little bit embarrassed by the comparison between the government's enterprise tax plan and Labor's current tax plan, which is a tax increase on Australia's retirees and superannuants. Labor have never met a tax they didn't want to increase. The government wants to bring down taxes on business and on Australians to make our economy more competitive, get more people into work, see wages increasing and see investment flowing into this country. The fact that Labor are now denying that reality really shows how far they have fallen in their economic thinking.

The government's enterprise tax plan is in two parts, the first part of which has already been legislated. That's for firms with up to $50 million in turnover each year, and that was a watershed change for business, particularly at the smaller end of the spectrum, the $2 million to $10 million turnover businesses. It's not just the reduction in company tax rates. This is a comprehensive plan of small-business tax incentives, including such things as the instant asset write-off and the ability to pool depreciation and GST on a cash-flow basis. This is a plan to get business moving.

The second part of the enterprise tax plan obviously extends the tax cut—takes it forward in time—to all companies. It is a very important reform of the economy, particularly at a time when we are seeing international company tax rates on the decline. Particularly in our major competitor countries, we are seeing much lower tax rates at play. In France, which is not often thought of as a bastion of low taxes, the company tax rate is 15 per cent; in Hong Kong the company tax rate is 16½ per cent; in Canada it is 15 per cent; in Ireland it is 12½ per cent; in Singapore it is 17 per cent; in the United Kingdom it is 19 per cent and falling; and in the United States it is 21 per cent and falling. We are in a global economy and companies are looking at the best place to invest. Yes, it is not the only factor they take into account, but to argue that lowering company tax rates isn't essential for Australia's competitiveness internationally over the long term is just nonsense.

Let's do the counterfactual argument for a moment. Does keeping tax rates where they are, or increasing them, do one thing to put a person into a job, to keep anyone in a job, to get anyone a new job, to increase anybody's wages, to allow businesses to invest in plant and equipment, to allow businesses to invest in training or to allow businesses to invest in developing a new product, entering a new market or developing a new export market? Keeping taxes where they are, or increasing taxes, can do nothing in that regard. All we can do to drive growth in our economy in this way is to lower taxes. Keeping taxes where they are, or increasing taxes, is not going to drive investment, is not going to drive wage growth, is not going to drive employment growth, is not going to drive investment in plant and equipment, technology, new products and new services, and won't allow companies to expand their markets overseas. A company tax cut to improve the competitiveness of Australian businesses, to put more money back in the hands of Australian businesses, is the way of doing this. It is the correct approach and I urge the crossbenchers to consider it very seriously when the time comes to finally vote on this bill.

We've heard from my colleagues about some of the things that have been said by others on the topic of cutting the company tax rate. I think it's worth repeating again that in 2011—admittedly, that's a while ago—the current Leader of the Opposition said:

Reducing the corporate tax rate … sees more capital flowing into our domestic economy, which will then flow on to workers in the form of higher wages—thereby improving standards of living.

Did the rules of economics change between 2011 and now? I wouldn't have thought so. The shadow Treasurer, in 2015—only a couple of years ago—said, 'I would like to see the corporate tax rate come down over time.' And that's exactly what this bill does. It doesn't bring in a corporate tax rate cut tomorrow—as Senator Anning suggested we should perhaps do—it brings in a progressive reduction over time that will slowly bring the company tax rate down to 25 per cent. The shadow Treasurer went on to say, 'I have previously said that the nation should be aiming for a 25 per cent corporate tax rate.' Oh really! A 25 per cent corporate tax rate—that's what we should be aiming for? Well, surprise, surprise, that's what this bill does.

I mentioned earlier that perhaps the reason Labor has gone silent on this issue is that they don't like the comparison between a government which has delivered an enterprise tax plan—and wants to deliver the second round of that enterprise tax plan—and their own current policy, which is a tax increase focused particularly on self-funded retirees and pensioners. And that comparison is pretty damning.

We've seen Labor endorse a policy which sees a return to double taxation—so tax income with the company, and then tax it again when it gets to the retiree. That's a disgraceful policy. It should never have been suggested. It should be withdrawn immediately. It is the return of the bad old days of taxation policy, where taxation policy wasn't based on fairness and equity, where things like retrospectivity were commonplace, where death duties were seriously discussed or in place. I, and many other hardworking Australians, thought these ideas had been consigned to the dustbin of history and they now seem to be getting a run again, particularly in terms of the dividend imputation policy that Labor currently has. It is a cash grab. As I said earlier, Labor has never seen a tax it didn't like, didn't want to increase. So we've got a really stark comparison that, as we lead up to the next election, the Australian population will focus on more and more. They will begin to see what sort of economy Labor wants to deliver to this country, and it is not a pretty sight. Short-term tax grabs like the one Labor is proposing are not a great idea. They result in less money in the pockets of hardworking Australians.

In a contribution yesterday evening in this place, Senator Cameron basically said that the people receiving dividend imputation didn't deserve it. Well, I have a letter in my hand here that I began to discuss last night. I ran out of time, so I'm going to go through it again. It comes from a chap called Glen Diggins in Albany. Glen is a self-funded retiree, not a wealthy man, who was in the education department for 40 years—a teacher. He put aside for his own retirement; he saved around $550,000 in assets. He lost a bit of that in the global financial crisis. His balance was down to about $350,000 and, from that, he was deriving income last year of $33,000. I don't think anyone on the other side would call Glen a high-income earner or a wealthy man. A $350,000 superannuation balance is not an awful lot. Out of that $33,000 income, under Labor's tax plan, he would lose $10,000 of it. He would have his income slashed by one-third. Labor senators on the other side know this because they're receiving the same correspondence as I am from many, many retirees around Australia. That is why Labor have gone silent on this issue and that is why Labor don't want to talk about tax, because the comparison is too stark for them to cope with.

There are a few myths floating around about the enterprise tax plan. The first one is that it's unfunded. Of course it is funded. The PBO has said the fact that the budget baseline is improving is reflected in the most recent MYEFO, and that includes the company tax cuts. In fact, the company tax cuts have been in the numbers for a while, since the 2016 budget. The last five budget updates have shown a return to budget balance in 2021—five successive budget updates showing the same trajectory to a balanced budget. These tax cuts have been delivered, they're budgeted for, and they will drive growth and jobs in our economy. We've seen, particularly over the last 12 months, over the term of this government that the economic policies we're putting in place are driving jobs growth very, very strongly. We've seen 400,000 jobs created in the economy over the last 12 months, and that is a testament to good economic management. So the enterprise tax plan is fully funded, it is good for the economy and it should be put into place.

Something else that has been said is that the company tax cuts will somehow hurt workers. Again, how you could ever justify this intellectually is completely beyond me, and the Labor Party finds it pretty hard because they've said themselves, on various occasions, that company tax cuts will actually help workers by increasing employment and increasing wage growth. Julia Gillard, when Prime Minister, said:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs. And, if you are against growth and jobs, then you are also against increasing wages …

So when the Labor Party stand in this place to talk about it—they're not standing in this place today, but they've talked about it previously—they are, in the words of their own former Prime Minister, against economic growth, against jobs and against wage increases. The Labor Party are now on the record as being against all three of those things.

Professor Richard Holden from the University of New South Wales, in looking at the enterprise tax plan, said:

… higher company taxes reduce wages most for the low-skilled, women, and younger workers.

  …   …   …

The best, most credible evidence we have suggests that a cut in the Australian company tax rate is not a gift to the so-called "big end of town". It provides a benefit to businesses and workers in fairly equal measure. And the benefits to workers tend to flow disproportionately to women, young people, and the less skilled.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

What a load of bulldust!

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

You're taking your economic knowledge from the Labor Party, are you, Senator Hanson-Young?

The third myth I'm going to deal with is that Labor can pay for their promises by not cutting company taxes. Labor themselves revealed the myth of this through their policy of a tax increase on pensioners and self-funded retirees. As I've said, the cost of the enterprise tax plan was included in the 2016 budget, which delivered a net improvement to the budget bottom line as a result of government decisions. At the last election, Labor promised to spend all of the funds set aside for tax cuts. They did this and still managed to rack up additional deficits of $16½ billion over the forward estimates. When Labor say they'll pay for their new promises by not proceeding with the company tax cut, they are just not telling the truth. Reversing all of the tax cuts we have delivered will not pay for one additional promise they make.

Myth No. 4—and I probably don't even need to deal with this one, really—is the idea that Labor are in any way supportive of small business. Labor have done nothing over the years for small business. To pay for the promises they made at the last election, they must reverse the $25 billion in tax cuts to small and medium-sized businesses that have already been legislated. Labor have not ruled out reversing tax cuts for small- and medium-sized businesses. They've rejected the idea that a business with a turnover of $2 million to $10 million is even a small business, showing a fundamental lack of understanding of how business works.

The final myth is that tax cuts only help big business—again, this probably doesn't need to be dealt with, because it's pretty laughable really. Tax cuts help all businesses. I was recently with the Minister for Finance, then the Acting Prime Minister, at a business called Legeneering in Western Australia. This is a business that started just a few years ago, in 2005, with three employees. It's managed, through hard work, to grow itself to be a business of around 200 employees. One of its major contracting businesses is Woodside, a business that started a about 30 or 40 years ago with one guy and an idea. That has grown to be a business that employs many thousands of people. It employs, through its associations, around 20,000 people Australia-wide—so there are flow-on effects. There we have businesses that show the interconnection of small, medium and large business. Woodside contracts to Legeneering, Legeneering contracts to smaller businesses in its local area, and the business tax cuts that affect one business flow down and allow medium-sized businesses to employ more people, to grow and to engage in the economy. They, again, are able to source from smaller businesses and continue the movement of that money through the economy to grow the economy, to put people into jobs and to grow wages. That presumably is what everyone in this place—or at least most people in this place—wants to deliver.

The enterprise tax plan fundamentally, at its core, is about Australia being competitive. It is a global marketplace. We do need to attract capital from overseas. We do need to be an attractive investment destination. We also need to be an attractive investment destination for money that is held in Australia. There is a significant pool of investment funds in Australian superannuation today. A lower corporate tax rate makes it more attractive for that superannuation money to be invested into Australian companies as well. We've got to reduce the tax rate to remain internationally competitive. As I've already mentioned, our international competitors—Canada, Singapore, the UK, New Zealand, Norway, Israel, Japan and France—have all reduced their company tax rates in recent years. The US obviously has made a huge change to its company tax rate. We cannot remain stranded at 30 per cent for the majority of businesses, for larger businesses. We must begin a transition to a lower corporate tax environment to maintain our position as an attractive investment destination; to retain our position as a world leader in terms of our economic growth and our ability to provide good, high-quality jobs to the Australian people; to see our wages grow; and to see jobs and investment flowing to this country rather than everywhere else.

The international tax scene has changed over the last few years, and Australia has to respond to that. We cannot bury our heads in the sand and pretend this isn't happening. The government's enterprise tax plan is a responsible course of action. It's in the budget. It's been in the budget since 2016. We've now seen five budget updates where the return to budget balance has been over the same time frame. It can be relied upon. We've also seen Treasury modelling—which Labor particularly used to pay attention to—that said the tax cut would increase the size of the economy by around one per cent. That's a permanent boost to economic growth, it's a permanent boost to jobs and it will result—and everyone knows this—in higher wages as a result of more investment.

Senator Hanson-Young interjecting—

And anyone who laughs at that really reveals how little they understand of the economy. A more competitive business tax environment encourages a higher level of investment in Australia for businesses large and small. It will benefit all hardworking Australians through increased employment and wages in the long run.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

I rise to contribute to this debate on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 today. And, boy, haven't we heard the ideologues from the Liberal government out in force today, trying their hardest to convince people that if you give big corporate tax cuts to the big banks in Australia then somehow Australian workers will get rewarded with higher wages. Well, we all know that is just not true. And I've seen today of course that Pauline Hanson and One Nation are ready to sign on the dotted line to tick these tax cuts through. Well, Senator Hanson and One Nation are either sellouts—frauds—or fools, or possibly both. The truth is that this is a debate about what we prioritise as a parliament, what a government prioritises in terms of spending. It is a debate between everyday Australians and the interests of big business, corporate Australia and rich shareholders. That is what this is all about. It is the battlers, the workers and the future generation versus the banks, the CEOs and the rich shareholders. That is what is going on here.

Tax cuts do not pay for themselves. They never have—not once—anywhere, ever. The theory that tax cuts generate wealth for the wealthy and that this wealth somehow trickles down to the rest of us has never been borne out by the facts. We just heard from the ideologues on the government side the theory underpinning the company tax cut we're voting on today. The concept has been completely discredited. It is delusional and dumb economics motivated less by evidence than by ideology. Governments raise revenue with tax. The lower the tax rate, the lower the government's revenue. With no revenue, there's no money to pay for services. Governments have two ways to pay for essential services like health, education, energy and even national defence: with revenue or with debt—which is, after all, just deferred taxation. Debt will be accrued to pay for this government's handout to corporate Australia, rich shareholders and the big banks.

The government likes to crow about the effects of the Trump tax cuts on the US economy. Let's talk for a short moment about the effects of the Trump tax cuts on debt. The independent and non-partisan US Congress Joint Committee on Taxation released its modelling of the Trump tax plan in November. It found the cut would push the US economy $1½ trillion into debt. That is a lot of money to ask future taxpayers to pay for a handout for billionaires today. Trump himself said his tax plan has made a bunch of billionaires much richer. Prime Minister Malcolm Turnbull wants to make billionaires and millionaires in this country much richer too. That is the priority of this government, not looking after the wages of everyday Australians or ensuring we have enough money to fund our schools and hospitals. We're always being told the tax cut will end up driving investment and stimulating jobs growth. The government is trying to push an agenda where Australia follows the example of Donald Trump. Do you know what the US Congress Joint Committee on Taxation said Donald Trump's company tax cuts would actually create and what the effect on the economy would be once you include all of the jobs and investment they are supposed to generate in theory? The answer was debt. They said Trump's tax cuts cost the budget $3 for every dollar it generates. That doesn't sound like a very wise investment to me. Three dollars lost for every dollar gained is the example Treasurer Scott Morrison thinks we should be following.

When we cut taxes, we cut our ability to pay for things we need. Those services don't stop being necessary because we are unable to afford them. Instead we put it on our collective credit card. That's what this government is asking Australians to cop today. This tax cut for big business and banks is a giveaway we're going to be paying for with generational debt. We have to pay it back with interest. The government says they have a plan to make sure it absorbs the cost of the cash giveaway within the budget and it doesn't jeopardise the return to surplus. I want to make something crystal clear to all those in the chamber today who believe taxation is theft and debt is theft deferred to a later date. I appeal to those who believe deeply that every year we run a deficit hurts future generations of taxpayers. We've heard this many times in this place. Why on earth would you give this government a $65 billion cheque to hand to big business and banks? We would have less debt and fewer deficits if this cut were blocked. The deficit this year is nearly $24 billion. That's how much of the operation of government we're funding with debt. We're set to add billions of dollars to the national debt, all of which has to be paid back with interest, so we can give more post-tax income to companies like the Commonwealth Bank, Westpac and the big supermarkets like Coles and Woolies.

The question for the Senate is: do we want to spend Australian taxpayer money in this way? We in the Greens don't buy the budget emergency the government used to argue about. It seems to have been forgotten now their big business mates want a handout. We in the Greens, like many esteemed economists around the country, believe there is good debt and bad debt. If we're investing in productive infrastructure and a humane and strong social safety net, we're building a nation better equipped to pay back the debt many times over.

What we should be doing is building a nation that teaches its children better than any other nation in the world. We could do that if we wanted to fund it. We should be building a nation that offers its citizens clear air, clean water, clean streets and clean energy. We could do that if we wanted to pay for it. We should be building an economy that works for all of us. We should be doing that. We should be doing that by asking companies to pay into that nation-building mission. When we give them a discount on their contribution, we either wind back our ambitions as a nation or we fund them by paying more tax in other ways.

Asking everyday mum and dads to pay more tax so the mega rich corporate giants can pay less is not a fair way to fund our nation-building projects and to fund our country. We reject that as a choice because it's not fair, because it's not smart and because it's not right. But even more than that, we reject the idea that Australians should need to choose. This tax giveaway makes it harder for us to pay for the things we need. But it also makes us choose between what we're about to lose. The cost of this will be $65 billion. We don't have to give that to media barons who stoke resentment and fear. We don't have to give money to oil and gas companies to make it cheaper for them to pollute our water, our sky, our farmlands and our planet. We don't have to give money to pokie empires that prey on vulnerable members of the community and line their own pockets with other peoples' misery and desperation. We don't have to give money to coal companies to help them sabotage action on climate change. And yet that is what we're being asked to do today.

Companies like Microsoft, Apple, Google and IKEA aren't going to stop avoiding tax just because we lower the rate from 30 to 25 per cent. They don't want to pay tax at all. They try their hardest to get out of paying tax: through a complex series of profit-shifting arrangements, these big companies transfer income from where it's earned to where it's taxed; in every step of the process, they take a little off the top for themselves in transfer costs. They're gaming the system. And when we finally end up counting what's owed in tax, we find that these companies have whittled their tax obligations down to nearly nothing.

Everyday Australians can't do those sorts of tax tricks that these big multinational companies get away with. They're left to pick up the tab for the tax cut that simply means it takes fewer steps for a company to hide money from the tax collector. We're raising less revenue by giving money to companies who aren't paying their fair share of tax in the first place. We're paying their bills in the form of debts and cuts and sacrifices and hardship. If this company tax cut goes ahead, all that will happen is companies will have more post-tax income to hide in their tax shelters. Are we really going to support a plan that gives more money to multinationals who aren't paying the appropriate rate of tax on their income already?

Let's not be naive and imagine these tax-shifting corporates are going to invest any more in Australia as a result of this tax cut. Their investment decisions are not contingent on how high the headline rate of taxation is; their investment decisions are determined by how much tax they end up paying in the end. The tax rate is just where you start at. Where you end up is determined by how much we're giving these companies in deductions, offsets, subsidies and incentives. Once you factor all of those things in, the government's argument unravels.

This Liberal government focus on the headline because they don't want Australians to focus on the detail. The headline rate doesn't matter if nobody is paying it anyway. The average corporate tax rate in Australia, according to the CBO, is 17 per cent. Seventeen per cent is the fourth-lowest average corporate tax rate in the G20. The government think Australia is a high-taxing country. Well, they're wrong—the data proves it. We're a low-tax country at a time when we're being asked if we should become an even lower one. That means less revenue to fund the services Australians need. We are being told that if we don't we are going to lose money to every other country in the world with a higher headline company tax rate. The race to the bottom. The arms race on tax cuts.

But in looking at the headline statutory rates around the world, you see that if we're really trying to chase company tax rates why isn't the government concerned about competing for global capital against countries like Uzbekistan or Oman, with a 12 per cent tax rate—Uzbekistan has 7.5 per cent. The reason this government talks about the United States only is that it doesn't really care about being competitive; it just cares about cutting.

Companies invest for all sorts of reasons. We're not missing out on investments that are floating over to Uzbekistan. We're attracting investment from all over the world because we've got a smart, healthy, stable democracy. It is safe, secure, strong and sustainable. We've got that way and we've got that economy here in Australia because we've been investing in smart people, through investments in early childhood education, in schools and in tertiary education. Companies want the best and brightest to work for them. They come to Australia because that's where you're going to find the best and brightest. We made that happen by funding these services. We funded these services with tax, with revenue—taxes collected by the government. We're healthy because we invest in universal health care and support strong public hospitals and clinics. We don't bankrupt people for getting sick. We help them get better. Companies want to hire healthy and productive workforces. That's what Australia has. We have a healthy population, because we've built it. We built it with government revenue, government revenue that has come from tax.

The private sector might build and produce great cars, but it doesn't matter how good your car is if you have no roads to drive it on. We built the roads with government revenue generated by tax. When we lose tax in a handout to mega-rich corporations, we lose the ability to keep the Australia we want, the prosperous, egalitarian nation that we are.

Let me be clear, this is not a tax cut for battlers. This is a tax cut for bank executives and rich shareholders. This tax cut hurts pensioners, single parents, teachers, nurses and students. It hurts mums and dads who are struggling to put food on the kitchen table. It says that rather than spending money on you—Australians who are working every day, struggling with low wage growth and struggling to afford the next round of school uniforms or the next school excursion—the government wants to spend money on ExxonMobil.

It's worth noting the cynicism and hypocrisy that surrounds this tax cut. The government says it opposes Labor's franking credit policy because it means less money for those who pay the bills with those credits. Franking credits are refunds on money that companies pay in tax. If companies pay less tax, self-funded retirees get paid less in tax refunds. You can't seriously say you care about the income of age pensioners and retirees and then turn around and vote for this crappy, crappy bill. There are millions of Australians in every corner of the country who need the help of the people in this place to vote this bill down. In passing this legislation, what we're being asked to do at the moment is to hurt them rather than help them. That's the real choice this bill represents.

We've heard that Pauline Hanson and One Nation want to vote with the government to send this tax cut through. When One Nation votes with the government, they will vote to back billion dollar empires over battlers. When One Nation votes for this bill, they're boosting multinational profits over boosting pensions. When One Nation votes for this bill, they will be making Google's tax bill cheaper. They will be doing nothing to help lower the energy costs and power bills of everyday Australians.

What we're not hearing about is what we're going to lose if this bill passes. What is at stake is more than just a budget figure: it's the ability to fund every school in every state fully and fairly; and it's the ability to turn around a VET sector that is on life support. We will lose the ability to guarantee clean water and air for every generation of Australians yet to come. It's about choices, and the government is asking the Senate today to choose big banks, corporate CEOs and rich shareholders over everyday Australians. With this bill the Senate is being asked to choose fat cats in the big banks over nurses and teachers right across the country. As a nation, we can spend our money on anything we want. We don't have to chase Donald Trump into an economic black hole. We don't have to pump more money into tax shelters so that billionaires can get bigger bonuses. We don't have to water down what makes Australia great. We can actually invest this money into the services that will invest in everyday Australians.

I put it to One Nation and the other crossbenchers in this place: who are you going to back? Are you going to back everyday Australians, working mums and dads, and future generations or the greasy pockets of big corporate CEOs and rich shareholders? Are you going to back the big banks, Woolies and Coles, and Google over everyday Australians? It's a choice that the crossbenchers need to make. The Greens are firm, as we've always been. We will back Australians and the community over big banks and fat cats any day of the week.

Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Link to this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Australia needs this bill to be passed because we must reduce our company tax rate to remain internationally competitive and create more jobs. As we transition from the mining investment boom, it is vital that we give businesses every opportunity to invest, innovate, grow and employ more Australians. This government wants to give all hard-working Australians the opportunity to earn more and be rewarded for their efforts. Our enterprise tax plan is a critical step in our economic transition, as we look to encourage private investment across the economy to generate broader based economic growth.

This legislation is designed to deliver the remainder of the government's plan to cut the company tax rate. This follows the passage in May last year of legislation to cut the company tax rate for companies with an aggregated turnover of up to $50 million. This has helped around 3.2 million businesses, employing over 6½ million workers. However, we cannot afford to stop there. While the cut in company tax for companies with a turnover of less than $50 million is a good start, Australia must continue with the second stage of this reform to make the nation's company tax rate internationally competitive. If we fail to do so, we will be effectively applying a handbrake on the growth of some of our most innovative businesses. It would be a truly perverse outcome if the reward for growth for firms currently under the $50 million were a higher tax rate. That's why early passage of the full enterprise tax plan is necessary.

Under the plan, the turnover threshold to qualify for a lower tax rate will be progressively raised to cover all companies by 2024-25 before the company tax rate is reduced to 25 per cent for all companies by 2026-27. The plan is fully funded as a 10-year phased approach. It provides certainty to businesses, especially those looking to invest without a concentrated short-term impact on the budget. The government will lower the corporate tax rate to 25 per cent for all companies, as I said, by 2026-27. This will be the lowest corporate tax rate since the mid-1960s, and it will benefit all Australians. Our package of reforms, largely driven by the corporate tax rate cut, is expected to boost business investment and the level of GDP by just over one per cent in the long term.

In recent years, a large number of our international competitors, including Canada, Singapore, the United Kingdom, New Zealand, Norway, Israel, Japan and France have reduced their company tax rates, and in December last year the United States slashed business tax from 35 per cent to 21 per cent. If Australia's rate remains stranded we will have one of the highest tax rates in the OECD, making it much harder for Australian companies to compete fiercely in an increasingly competitive global market.

International investors will take their capital and the resultant jobs to countries where it's cheaper to do business—it's obvious. The IMF's World economic outlook released last year warned that the US corporate tax cut plan will cut our GDP by one per cent and threaten the sustainability of our tax system unless we respond, and this is consistent with Treasury's analysis. The international tax scene has changed; the case for our response is now overwhelming and our plan is a responsible one.

As Treasury has indicated, the impacts on Australia of US tax reform could, in effect, be offset by the implementation of the government's enterprise tax plan. Treasury modelling released at the 2016-17 budget estimated that our tax cut would increase the size of our economy by around one per cent—a permanent boost to economic growth and jobs, as well as high wages as a result of more investment. Australia benefits from our openness to investment, allowing us to build on our resources, employ more Australians and trade our goods and services on the global market. A more competitive business tax environment would encourage higher levels of investment in Australia for both small and large businesses, and, of course, would benefit hardworking Australians through increased wages and employment in the long run. As I said, this bill will cut our company rate to 25 per cent.

Until recently, we had nearly four decades of bipartisan support for business tax reform. Regrettably, the current Leader of the Opposition, Bill Shorten, and his shadow Treasurer, Chris Bowen, have reversed their previous strong support for a more competitive company tax rate for political—of course, not policy—reasons. Their opposition to our plan means Labor now wants higher taxes, reduced investment, fewer jobs and lower wages.

Bill Shorten is reported to have told business leaders to, 'expect nothing from a Shorten Labor government.' Those opposite have absolutely no respect for small business and they refuse to tell them what their secret plan is to reverse the already legislated tax cuts for small- and medium-sized businesses. Of course, reversing these taxes will mean higher taxes on Australian jobs. Those opposite do not have a plan. Six years of fiscal vandalism under the Labor-Green alliance left our economy in a mess, and now those opposite are even less responsible and more of a risk to our economic security. Bill Shorten and Labor will spend and borrow more, meaning higher taxes, fewer jobs and more debt for future generations to pay off.

Labor knows that company tax cuts will boost jobs, will lift wages and will increase investment, because they used to support reducing the company tax rate. In Chris Bowen's own words, 'It is a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.'

According to Treasury modelling, the cost of the Shorten opposition's announced new taxes on the Australian economy will be over $200 billion. That equates to over $8,000 for every Australian. This is a direct hit on Australian families, households and businesses, with new taxes on everything from housing and investment income to superannuation. Of course it will increase the cost of living. It will cripple small businesses and hurt our economy, and we will fight against Labor's plan for new and increased taxes which will impact on pay packets, homes, electricity and enterprises.

After Labor racked up $240 billion in deficits over six years, debt would be on track towards $1 trillion without our sensible savings. We have halved the growth in spending from a four per cent increase per year under Labor to 1.9 per cent. The coalition has reduced growth in debt by two-thirds and therefore reduced the burden on our future generations. And we are on track to balance the budget in 2020-21. You opposite have no plan whatsoever. You will spend and you will borrow more, which will mean higher taxes, fewer jobs and more debt, as I said, for future generation.

We have heard these myths. Senator Brockman spoke about myths, and I also want to focus on a number of these myths that those opposite have been seeking to peddle to justify their position. The first is that the enterprise tax plan is unfunded—wrong. The independent Parliamentary Budget Office put an end to this lie, stating:

The fact that the budget baseline is improving is reflected in the most recent MYEFO … And … that includes the company tax cuts.

The cost of these tax cuts was included in the 2016 budget before the last election, which delivered a net improvement in the budget bottom line as a result of the Turnbull government's decisions. The budget has consistently projected return to balance in 2021 over five successive budget updates. Tax cuts have been delivered and are budgeted to go further, to drive more jobs and growth in our economy. More than 1,100 jobs were created every day in 2017, and we have had the longest stretch of job creation in our recorded economic history.

Labor also says that company tax cuts would hurt workers—wrong. The only thing standing between Australian workers and a pay rise is the Labor Party and Bill Shorten. As then Prime Minister Gillard said:

If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs. And, if you are against economic growth and jobs, then you are also against increasing wages …

Another myth is that Labor can pay for its promises by not cutting company tax—wrong. The Parliamentary Budget Office confirmed in evidence at the last Senate estimates that Labor not only went to the last election factoring in a full reversal of the government's tax cuts but spent the entire proceeds and still had combined higher deficits of $16.5 billion. At the last election, Labor promised to spend all the funds set aside for the tax cuts. They did this and still managed to increase deficits, as the Parliamentary Budget Office has confirmed, by $16.5 billion over the forward estimates. So, when those opposite tell us that they're going to pay for their new promises in health, education or infrastructure, their promises really aren't worth the paper that they're written on. Reversing all of the tax cuts we have delivered does not pay for one additional promise that they are now making. For example, in one week, from 18 to 24 February alone, those opposite made almost $300 million of spending announcements in Mackay, in Rockhampton and in Preston in Melbourne. You're making promises that you know that you can't pay for and therefore giving false hope to those communities. It is pretty simple economics: you can't spend your money twice. Every dollar in new spending that Labor claim is paid for by not proceeding with company tax is a lie.

Another myth is that you support small business—wrong, wrong, wrong. You are waging a war on small business. You would reverse our small-business tax cuts. Labor's new tax on trusts will hit at least 200,000 small businesses. Your energy policies, including the 50 per cent renewable target like the one you have in South Australia, would increase power bills and pose a risk to reliability for small businesses. You want to reverse the independent umpire's decision to modify Sunday penalty rates, which means small businesses would pay higher penalty rates than big businesses that do deals with big unions.

Labor will roll over to increasingly militant unions who have made their intentions clear: they will demand the power to strike, more power to run businesses and inspect their books, and more deals to entrench their powers. Under a Shorten government, union lawbreakers will become lawmakers. You just have to listen to the drivel that Sally McManus gave us yesterday. Here's a woman who doesn't believe in obeying the law. She will be puppet-master-in-chief. She and the CFMEU thugs will run those opposite. You over there will be puppets in their war against Australians.

To pay for the promises that you made at the last election, you will reverse the $25 billion in tax cuts that have already been legislated for small- and medium-sized businesses. You have rejected the idea that a business with a turnover of $2 million to $10 million is even a small business, showing your fundamental lack of understanding about how business works. Many small businesses that sell large assets have high turnover rates, but turnover does not equal profit. So if you sell farm equipment or cars in the local town or work in the construction industry as a builder or a supplier of products, the Labor Party doesn't think that you qualify as a small business.

Another myth is that company tax cuts only help big business—wrong. The head of the Council of Small Business, Peter Strong, recently called for implementation of our plan because, 'We want big business to also get the cut because they'll put the money with us.' He said, 'They need us and we need them.' Small business leaders have been calling on parliament. Their chorus has now been added to with, yesterday, the Business Council—some of Australia's biggest employers—committing to investing more in Australia with a more competitive tax. If large businesses invest more, smaller businesses benefit both as customers and as suppliers.

Bill Shorten used to believe that:

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

… the size based different tax treatment would create a glass ceiling on business workforce growth.

All of this clearly means that Bill Shorten and Labor do not have a plan to strengthen our economy. Six years of fiscal vandalism has left our economy in a mess.

Earlier this year, the member for McMahon, who aspires to be our Treasurer—God help us!—endorsed a paper on negative gearing written by academics from the University of Melbourne. Of course, the shadow Treasurer didn't mention the main results: that prices will go down and rents will go up. He also conveniently failed to mention that the paper assumed a 100 per cent death tax. Indeed, page 9 of that paper states:

A household who dies unexpectedly has all his assets, taken by the government and liquidated if needed. After settling outstanding debt, the remaining assets are distributed equally to every surviving household in the economy.

So not only do you want to rip out $60 billion from more than one million retirees and pensioners, not only do you want to jack up taxes on investments, not only do you want to smash house prices and not only do you want rents to go up but you are now spruiking academic research that models prohibitive death taxes. Where is this coming from? Perhaps it's from the member for Fenner, Andrew Leigh, who once wrote an entire article urging us to bring back death taxes. Perhaps the shadow Treasurer is looking to Labor's former Greens alliance members for inspiration—after all, it was only a year ago that the Greens began a push for death taxes. So that's where we're going: the abolition of negative gearing and the imposition of death duties—potentially on the family home, because we know that it has been discussed at Labor conferences. That's where we are heading, because when those opposite run out of money they will be coming for moneys out of the pockets of ordinary Australians.

The coalition will fight for Australians against those opposite every step of the way. We, the government, have already passed legislation that backs small businesses by reducing their tax rate to 27.5 per cent, starting with businesses with a turnover of less than $10 million in July this year. In total, the legislated changes to date will support 3.2 million businesses with a turnover of up to $50 million, improving things for 6.7 million hardworking Australians.

Of course, our enterprise tax plan is only one element of the Turnbull government's National Economic Plan for Jobs and Growth. Along with our plans to reduce the tax burden on Australian businesses, we are opening up new markets in our region for Australian exporters through comprehensive free trade agreements. We are investing $70 billion in productivity-enhancing infrastructure across Australia. We are delivering on a comprehensive 20-year Defence industry plan. We are implementing significant reforms to improve competition and choice for Australian consumers across the economy, and in banking and financial services. We are securing record funding for Australian schools and hospitals. We are protecting Australia's revenue base through some of the world's toughest anti-tax-avoidance laws. We are acting to secure our future and create jobs for all Australians.

But, of course, if those opposite, God forbid, were ever to return to the Treasury benches, we know—history has told us—what we would likely see. Let's go back to when Labor were last in power. We have to remind Australians of what life under Labor was like before: double-digit inflation—we know interest rates went up 18 per cent on mortgages; there was a huge government debt and we got the recession we had to have. That's what life under Labor will be like— (Time expired)

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I'm really pleased to be rising to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 today and the Greens' opposition—total and complete opposition—to the prospect of giving over $60 billion in tax cuts to the big end of town, to big business. We have a choice, and this bill is a stark statement of the choice that we have in this parliament. We have a choice. We can either give a $65 billion handout to big business or we can have that $65 billion to spend. We have a choice. We can be working to build a more egalitarian, more equal, society or we can be increasing the inequality in our society by increasing the profits to big business, and not having the money to spend on the services, to spend on parts of Australian society that are desperately in need of investment.

The core things that are concerns, that are problems in Australian society today, aren't because big businesses aren't investing because they think their tax levels are too high. It's not that they are taking their money elsewhere because of the siren call of lower taxes, which is basically the core element of the government's reasoning as to why we need these tax cuts: 'If we don't have tax cuts, businesses are going to take their money and invest elsewhere.' That's not what's going on. Basically, we know there is absolutely zero evidence that giving businesses that $65 billion in tax cuts will mean that there is more investment here. There is absolutely zero evidence that by giving big business $65 billion in tax cuts that it's somehow going to trickle down and improve conditions and improve wages for ordinary Australian workers. We've been waiting for the trickle-down effect for a very long time. That's the core of the government's argument: that you give tax cuts to big business, then somehow eventually the benefits are going to trickle down and raise the conditions for ordinary workers and life is going to improve.

Senator Whish-Wilson interjecting—

That's right. It just doesn't happen. We have had more than 30 years of neoliberal economics. In every country where trickle-down economics has been pursued, basically ordinary workers are waiting for the small drops to start falling. In fact, they are watching instead the benefits trickle up; they are watching instead things being taken away from them and being put into the pockets of the big end of town. We know what will improve conditions for business and ordinary Australian people and will be good for our society overall—that is, investment in infrastructure to cope with our growing population; investment in a skilled workforce, in our schools, TAFE sector and universities; and investment in quality social services. If you ask ordinary Australians what needs to change in Australian society, they don't reckon big business need a bit more money in their pockets; they want to see decent schools. They don't want to see rundown schools in the suburbs of Australian cities and towns around our country, or overcrowded schools built in growth areas because we are not keeping up with the investment required to educate our growing population.

They want to see the end of homelessness. They think back to 20 years ago when we did not have people homeless on the streets of our cities. When I was a young adult, you walked through the streets of Melbourne and did not see people struggling, unable to afford a place to live. We can make these choices. We can invest in public and social housing. We can deal with the issue of homelessness and create a situation where everybody in Australia has the chance to thrive. It would help business if their workers could know their children are well cared for in quality childcare services instead of struggling with months-long waiting lists. Women can't return to work because they can't get a childcare place. Businesses need a skilled workforce. We have a desperate skills shortage in some areas of our economy, which is why we are bringing in nurses from the Philippines, because we are not training enough here in Australia. We need to bring in skilled workers because our technical and vocational education system has been stripped to the bone and is no longer providing the necessary services. That is where we need investment in Australia.

We know we have working poor. Again, that is a change in my adult lifetime. It used to be that if you had a job, you could at least afford to live, feed your kids and put shoes on their feet, but in order to survive now in a casualised, contracted-out workforce, so many people work two or three jobs and even then struggle to gather the money to keep home and hearth together. We won't somehow increase wages by hoping for the trickle-down effect of a corporate tax cut. There are many other ways. We could invest in infrastructure and other services and guarantee increases in wages, whether in the public service or the private sector. We can invest in all sorts of other services much more efficient at both creating jobs and creating economic activity in Australia, rather than this wish, hope and prayer that giving away $65 billion to the big end of town will improve conditions here.

This goes to the heart of the sort of Australia we want to have, of our democracy, as to whether the votes of ordinary people hold sway or large companies get what they want because of their continued push. The government tries to sell it to the community and say, 'If we invest in big business, that will have benefits for you,' without any guarantee that's going to happen. We know that there is no connection between a company tax cut and wages. We know that, in fact, company executives get bonuses that are based on cutting wages and worker numbers. We've even seen ads from the Australian Banking Association saying that 80 per cent of their profits go to shareholders—in which case, if you increase their profits, it is highly unlikely that workers are going to see a cent of it. If we are really concerned about wages a much better way of increasing wages is to guarantee wage increases in the public sector, rather than having wages flatlining and going backwards because of casualisation and contracting out. If we had a public sector wage rise, that would then force the private sector to follow. The Greens have put forward a policy to increase public sector wages across the board for non-executive workers by four per cent a year for the next five years.

In terms of increasing productivity, increasing the overall benefits to society and improving the conditions that businesses need to thrive in Australia, we need to invest in infrastructure. The cost of congestion in our growing cities is massive. That's what I hear companies talking about: 'Let's get our cities working properly! Why isn't our government investing in the infrastructure that we need so that we get sufficient transport?' It would mean workers don't have to be stuck in traffic for four hours a day and can actually get to work fresh. If the transport system is working well they are better able to get their goods around town. There is only one way that we can improve the infrastructure in our cities today and that's to invest in substantial public transport. That is the only way you can shift the huge volumes of people who are trying to get to work around our cities today.

I think of it as saying: 'If you've got $65 billion to spend, what would you spend that on? Do you give it to big business—maybe it would trickle down to workers and maybe it would mean that they get a tiny bit more investment in Australia—or would you spend that $65 billion on investing in the infrastructure that would mean we could deal with our congestion problems in our cities today?' The Melbourne Metro, the underground metro system that is now being built in Melbourne, has a price tag of about $10 billion. But we know that that is not even going to touch the sides of what's needed in terms of investment in public transport in Melbourne. There are already plans on the board for Melbourne Metro 2, which, again, is just what's needed to keep up with the growth of the population in Melbourne. That's what we should be saying: 'Yes, federal government money, supported by state government money, should go into those public transport services.' I expect that Melbourne Metro 2 will probably require another $10 billion. But it is absolutely needed.

We could spend the billions of dollars on tax cuts, or we could spend it on infrastructure that is actually going to transform our cities, that is actually going to mean that we have cities that work; otherwise, 10, 15 or 20 years down the track, with our growing population, our cities will be at an absolute standstill. That's what's going to cause businesses to flee. We know why companies like investing in Australia at the moment. It is because our cities basically do work, it is because we have stability, it is because we have social networks that mean we have well-functioning cities. But if you end up with a level of dysfunction through massive population growth that's not being catered for by that investment in infrastructure, that's the sort of thing that is going to turn companies away. They will not build a new facility in Melbourne or Sydney because it's just not working—the workers can't get to work, they are going to be stuck in congestion, and their goods are going to be stuck on tollways for a couple of hours in order to get somewhere.

We could be investing in high-speed rail. If we want to work out how we're going to deal with our growing population, that's the sort of infrastructure investment we need. We are told, no, that's unaffordable—it's too much. It is affordable. We have a choice. We can invest in that sort of city-shaping, country-shaping infrastructure, or we can fritter money away by giving a $65 billion tax cut to big businesses, which is going to have very little impact on the overall direction of our society. The Greens are absolutely firm that this is the wrong way to go. We have been clear throughout—it's basically philosophical for the Greens. We know that what needs to happen is we need to reduce inequality in our society. We need to improve the services and the infrastructure and reduce inequality, not give away tax cuts that are just going to increase that inequality.

The Labor Party have been all over the place. At the moment they are saying they are against these tax cuts. But, as the government has been saying—and others have been very clear—Labor don't know where they're at. The shadow Treasurer, Chris Bowen, has been quoted many times in this debate, and I think it is worth re-quoting him. He actually thinks that corporate tax cuts, in the long term or over time, are a good thing but that now is not the time to do them. In his recent book, he said:

… the nation should be aiming for a 25 per cent corporate tax rate.

So it's very unclear as to where the Labor Party lie—

Senator McAllister interjecting—

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Rice, could you resume your seat, please. Senator Whish-Wilson, on a point of order?

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Point of order: there are a number of consistent interjections in the chamber. Could I draw your attention to the fact that other senators are interjecting while Senator Rice is speaking.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Whish-Wilson, as you know, this can be a lively chamber at times. I have heard some conversations; very few. There is no point of order. Senator Rice, you have the call.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

It's all right, I can cope with it—but it does make it rather unparliamentary, I think. I look forward to the Labor Party staying firm on this and I look forward to the Labor Party actually saying that corporate tax cuts are not the way to go, because that is the direction that we need to head in. It would be extremely disappointing if, at some time down the track when we have a Labor government, they suddenly also fall into this myth that corporate tax cuts are going to be good for Australia, good for our economy and good for our society. It's very clear: if you look at countries around the world, at the places where people really want to live, that rate the highest in terms of satisfaction and happiness, they are not the areas that have got low corporate tax rates.

Then we've got the others on the crossbench. I think it's very sad that they have seemingly been bought off. They have been given a few bits of silver for their pet projects and, suddenly, they are all over corporate tax cuts. One Nation say that they are there for the battler, but the benefits of these corporate tax cuts for the battler are next to zero. We don't know what deal has been done with them. This isn't democracy at work; this is just playing various people off and offering them bits that they accept, rather than fundamentally saying what's in the interests of Australia. It's exactly like when Senator Hanson backed the $315 income tax cut for the richest Australians.

It's very clear—we have a choice. Going in the direction of these corporate tax cuts is not the direction that Australia needs to head in. If we want to have a society that functions well, that works well, that reduces inequality, where democracy and what's in the interests of ordinary people are what hold sway, then going in the direction of corporate tax cuts is not the way to go. We have a choice here in this parliament today, and I urge the crossbench to join the Greens in speaking out loudly and voting against this direction of increasing inequality in society. We've got a choice here. We can knock back these corporate tax cuts, and then we can move on towards creating a more equal, more caring and more sustainable economy and society for Australia.

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

I, too, rise today to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 and I do so with great pleasure, also recognising that this is one of the most important pieces of legislation to come before this chamber for many years—one that is actually vitally important for the prosperity of our nation.

I was just sitting there, listening to Senator Rice, and I almost could not believe what I was hearing. In fact if any year 7 economics and business students actually read the transcript of Senator Rice's contribution this morning or tried to apply her version of economics to their own year 7 economics exams they would fail dismally. We heard, and we hear constantly now, from those opposite about trickle-down economics and we hear about the big end of town. But that's all rhetoric. What we also just heard from the previous contribution was all about the desire for infrastructure expenditure on roads and other large projects. We, too, believe in infrastructure spending, but what any year 7 economics student knows is that there is no such thing as government money.

What we heard is a long list of where we should be spending money. But, of course, from the Greens there was absolutely nothing about where that money is going to come from. They are completely divorced from reality. As the great Margaret Thatcher reminded us, there is no such thing as government money. That money is taxpayers' money. It comes out of the pockets of hardworking Australians and Australian companies who actually employ those Australians.

This measure, which I am very proud of, is a pillar of the coalition's economic plan to ensure that Australia remains competitive as nations all over the world realise a lower corporate tax rate is the key to economic growth and creation. So let's have a look at the facts here in Australia so far. Let's get beyond the rhetoric of trickle-down economics—I actually think they don't understand the concepts of what they're spruiking. But let's have a look at this.

We do live in a global economy. There is no 'Fortress Australia'. Our economy and our future wealth generation in terms of jobs, and all of the money that the Greens want to spend on infrastructure projects, have to come from somewhere. They will not be generated solely internally within Australia. So we do have to be competitive. The government has already passed legislation that backs small business by reducing their tax rate from 30 per cent to 27.5 per cent, starting with businesses with a turnover of less than $10 million, on 1 July last year. In total, the legislative changes to date will support 3.2 million businesses with a turnover of up to $50 million. It is these small businesses that employ 6.7 million hardworking Australians. This is hardly what those opposite refer to as the big end of town. There are 6.7 million Australians employed by small business, and small business is now employing more Australians because they are more competitive with a more competitive tax rate.

So let's just have a look at the facts. Again, forget the rhetoric about the politics of division and envy and everybody being worse off. Let's have a look at the impact of the policies that this government has implemented for small business, and what that has resulted in. Let's have a look at the facts. The fact is that we've now had 16 consecutive months of job growth, the longest period of job growth in our history: 16 consecutive months of job growth! Those opposite should be dancing in the streets because we have now created 971,500 new jobs—not old jobs; new jobs have been created, an increase of 8.5 per cent. Total employment is now at a record high because we are entering into free trade agreements so that we can export more and we can employ more. And we get more money for those projects so loved by the Greens, because that money has to come from somewhere.

What have we created through these policies of actually allowing business to do business here and overseas, and to be more competitive? On average, 1,100 new Australian jobs are being created every single day. So, again, what do we hear from those opposite? Not congratulations! Today 1,100 Australians have got jobs, most of them full-time jobs. Those opposite should be shouting from the rooftops that the majority of those jobs are for women, and increasing women's participation in the workforce. It is very clear that our economic policies are driving confidence and investment. Again, the keys to stronger wage growth are policies that both grow the economy and strengthen our labour market by making our companies more competitive. Signing up to the Trans-Pacific Partnership will lead to additional significant jobs growth in Australia. We've seen it with the free trade agreements that have already been signed by this government—an additional 1,100 new jobs every day and 16 consecutive months of jobs growth—and yet not a word from those opposite.

We live on an island, but we do not generate the wealth here. We have to trade with other nations. We have to make sure that our companies, big and small, are competitive and have access to overseas markets so that we can create jobs. At the moment we're creating over 1,100 jobs a day. Measures like the TPP, and this tax cut now, will make sure that companies can employ more, so, hopefully, we'll get 1,200 or 1,300 new jobs a day as a result of these increasing measures.

I want to have a look at what our competitors overseas are doing. In recent years, a large number of our international competitors—companies that reside in Canada, Singapore, the United Kingdom, New Zealand, Norway, Israel, Japan and France—have all reduced their company taxes. Why? Because they know they need to be competitive in the international market to stimulate jobs, businesses and income to pay for domestic services. In December last year, the United States slashed business tax from 35 per cent to 21 per cent—a measure that is clearly and demonstrably yielding results in the United States in terms of jobs growth. If Australia's rate was to remain at 30 per cent, Australia would then have one of the highest company taxation rates in the OECD, making it all that much harder for Australian companies to compete in fiercely competitive global markets. Having the free trade agreements is very important, but we also have to make it competitive in terms of tax rates so that our companies can compete, win business, sell goods and services, employ more Australians and pay higher wages.

Those opposite, who have traditionally supported meaningful and bipartisan tax reform, have abandoned all economic reason for the philosophical beliefs that somehow continuing to have one of the highest corporation tax rates in the world and in the OECD will magically make us a more prosperous nation and pay for all of the services that the Greens were saying would fix the problem. Well, they won't. We need lower company tax rates to increase our economy to pay for those very services. The World economic outlook released last year by the IMF warned that the US corporations tax cut plan will cut Australia's GDP by one per cent. That cut means fewer jobs and also lower wages. This is the IMF themselves saying that the US corporation tax cut will cut Australia's GDP by one per cent and threaten the sustainability of Australia's tax system unless Australia responds. This is consistent with Australian Treasury analysis. It is also consistent with the analysis of any student who studied year 7 or year 8 economics. That is the way the international economy works.

We, as a nation, must recognise that the international tax scene has changed and that we are not immune from it. The case for an Australian response is overwhelming. The government's enterprise tax plan is a sound and sensible response to changing global economic circumstances. Treasury, themselves, have said that the adverse impacts on Australia of US tax reform could, in effect, be offset by the implementation of the government's enterprise tax plan. Australians benefit from our openness in investment, which allows us to build on our resources, employ more hardworking Australians and trade our goods and services on a global market. But I again remind those in this chamber: as the mobility of global capital increases, Australia's high corporate tax rate can and will deter this investment. Why would large global companies come to Australia if we are not competitive in terms of our taxation?

Ultimately, this again will lead to lower wages and less money for infrastructure and social investment spending.

Let's have a look at the hypocrisy of those opposite. I know that many of those opposite did year 7 and year 8 economics. In fact, for many years those opposite were supportive of lower company tax rates, because they know the implications for our economy if we don't keep up with those we trade and engage with. Let's look at what former Prime Minister Julia Gillard said in the other place:

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

So it is not just those of us on this side saying that. This is the Labor Party acknowledging basic economics.

A government senator: The ALP.

The ALP—Prime Minister Gillard. What did Mr Shorten—who has a long history of backflipping on probably every important national issue—say on this very issue not so long ago? He said exactly the same thing as Julia Gillard did. He said:

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.

I'll say that again: Bill Shorten himself said that cutting the company tax rate is an important step along this road. He said:

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.

I said at the beginning of my contribution that I believe this is one of the most important—if not the most important—pieces of legislation for our economic future in this country. Given that Bill Shorten not so long ago clearly understood the importance for our economy and for jobs of cutting tax rates here, he is doing little more than sabotaging this country's economic future. It is very consistent with his pre-budget and pre-election positioning on his messaging. And, sadly for this country, it is a message of division and envy, not one of recognising that this government has created almost a million new jobs—16 months of unbroken growth in jobs.

All I can say is: shame on the Labor Party for doing this on this issue, because we need to compete globally, we need to keep foreign investment coming in and we need new business opportunities. And as Bill Shorten said—in fact, I'll remind you of what Julia Gillard said, because it is very, very wise:

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

We know, as those opposite actually know as well, that a more competitive business tax environment will encourage higher levels of investment in Australia for both small businesses and large businesses. We've seen the effect that the company tax rate for smaller businesses has had on their growth and their employment rates.

So, despite the fact that Labor very clearly understand that lower taxes are unequivocally good for our economy and jobs, what is their approach? Labor oppose the enterprise tax plan and a reduction in company tax rates. Labor actually have said that they want higher taxes, reduced investment, fewer jobs and lower wages. Shame on them! Bill Shorten is reported to have told business leaders to expect nothing from a Shorten Labor government. They might demonise big business, as they keep describing it—sneering at it—but it is small and big businesses that employ Australians. Governments do not generate money, and they do not generate jobs; the private sector does. Bill Shorten and Labor have such little respect for small business that they refuse to tell them about their secret plan to reverse the already legislated tax cuts for small to medium-sized businesses. These are the millions of mum-and-dad businesses across this country, people who work their guts out to set up their businesses, to keep their businesses going and to employ fellow Australians.

As we've heard from these quotes and quotes from some of my colleagues who've talked on this already, Labor know that company tax will boost jobs, will lift wages and will lift investment, because they used to support these very policies, as we've heard. In shadow Treasurer Chris Bowen's own words:

… it's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.

That is the shadow Treasurer—again, like so many others, and Bill Shorten. They say one thing—clearly having the ability to pass year 7 and year 8 economics—but then when they want to position themselves pre-budget and pre-election with their policies of division and envy, they will jettison the economic future of this country.

Canadian tax expert Jack Mintz has pointed out that 'it is a myth that company taxes are paid by the rich and the powerful'. Mintz says repeated studies show that at least two-thirds of company tax is shifted onto labour through higher consumption prices, wage cuts and also lay-offs of staff. We know this is true, because we have seen it here in Australia, and we know the converse is true, because we have seen now with small-business tax cuts and other support for small business that they are growing and they are employing more Australians at record rates.

In a similar vein, our own Treasury has pointed out that while company tax is paid by companies the burden is passed on to shareholders, consumers and employees. The Tax Foundation in the United States found that for every $1 rise in state and local corporate tax collections real wages had fallen by $2.50 five years later. Unsurprisingly, they also found the reverse is true. Wages have actually risen in the United States by $2.50 for every $1 reduction in state and local corporation taxes. The simple and undeniable fact is that higher corporate taxes end up hurting workers the most. The longer term benefits of a lower corporate tax rate accrue to workers and households through permanently higher after-tax real wages and consumption.

In the Financial Review, Richard Holden observed:

… a recent empirical study by three German economists, published in the flagship American Economic Review, contains an ingenious way to get at the causal effect of company tax rates on wages. They utilise the fact that in Germany the company tax rate is determined in part by the federal government and in part by local government. This gave rise to a staggering 17,999 tax changes in 10,001 municipalities …

This was over a 10-year period. At the end of this analysis they found that, on average, workers bear 51 per cent of the total company tax burden. Through very detailed analysis they clearly showed what they had found in America: that the higher the company tax, the greater the burden on workers than anybody else. They also found that higher company taxes reduce wages for the low-skilled, for women and for younger workers disproportionately.

The Turnbull government wants to give all hardworking Australians the opportunity to earn more and to be rewarded for their efforts. The enterprise tax plan is a critical step in our economic transition. As we look to encourage private investment across the economy, to generate broader based economic growth, this bill, as I said at the beginning, is one of the most important pieces of legislation to come before this chamber. No matter the fact that the Greens clearly have failed in their year 7 and year 8 economics, obviously thinking that national wealth is found at the bottom of the garden, through the sprinkling of fairy dust, we have to go out and businesses have to earn money. This has been demonstrated to work for small businesses in this country, just as it will work for larger businesses in this country.

I will conclude by saying: shame on those opposite. Every single one of you who stood up and spoke against this bill knows that this is important for this nation. You are on the record. Your shadow Treasurer and your leader are repeatedly on the record saying that lower company tax is critically important to jobs growth and to the future prosperity of our nation. It is not too late. I commend those on the crossbench who have taken this issue seriously and who do understand the importance of this for our future. It's not too late for Labor to change their minds and do the right thing, but I'm certain they won't.

Debate interrupted.