Deborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance (Senator Cormann), the Minister for Education and Training (Senator Birmingham) and the Minister for International Development and the Pacific (Senator Fierravanti-Wells) to questions without notice asked by Senators McAllister, Watt and O’Neill today relating to proposed company tax cuts.

At the start I want to take the opportunity to put on the record just a few indications of how totally out of touch this government is. Right now, when inequality is at a record high and wages growth is at a record low, is the time that this government decides it's a good idea to give a $65 billion tax cut to the top end of town. How out of touch can this government get? It's breathtaking. I think of things we talked about in the last year. Right here and now—when wage growth is at a record low of about 2.1 per cent, essentials are rising in cost, electricity prices have grown around six times greater than wages growth, health prices are around two times greater than wages growth, nearly 1.1 million people are underemployed, more than 290,000 people are unemployed and young people are struggling to find secure work—this government adds a cut in income tax for people who earn over $180,000 while slugging working- and middle-class Australians with a $44 billion tax—that was the Medicare levy, which I expect most of the people in this room will be paying. That's the context, of deep need across our community, in which this government has decided it wants to give a $65 billion tax cut to big businesses.

The contrast between Labor's view and the current government's view of this couldn't be any starker. I want to go to some remarks that were put on the record in the debate today by Senator Wong, the leader of Labor in the Senate, who said:

… few policies in recent years … have more starkly illustrated the difference between the Labor Party and the coalition than this government's commitment to handing $65 billion to Australia's biggest and wealthiest companies.

Recall that this is a tax cut which comes at a time when government debt is at record levels, when Australia's health system is under pressure, our schools need more resources, and inequality in this country is worsening—

She said the government's priority is:

… a massive handout to our most powerful and most wealthy.

For those who are interested she also said:

It's also a transfer of wealth offshore, with an estimated 60 per cent of the benefit of the tax cut likely to head overseas.

That's the reality that we're confronting with this out-of-touch government.

What's happening in the US should give us a bit of warning about why we shouldn't allow this government to go ahead with this. The crossbenchers who are holding firm should remain firm, because we can see what's happened in the US, where this has gone on. TrimTabs' research says that the tax cut to big businesses has meant that companies, instead of putting their money into jobs and investment, growing their businesses and creating jobs, are buying back their own shares. We know that so far in the US there's been a $214 billion buyback of shares. There have been no jobs and no investment in the things that create jobs; just the buyback of their own shares. The Bank of America said the S&P 500 companies are all repatriating their foreign profits, and they expect that they're going to buy about $450 billion worth of their stock back in addition to the $214 billion that I've already put on the record. That's triple the amount of previous record share buybacks in any single year.

So what has Mr Trump done that this government wants to do? He has given a big tax cut to the top end of town and is saying, 'It'll trickle down, it'll get to you little people some day.' But what's going on is that big business is using that to buy back their own shares to fatten their profits for themselves and give bigger pay rises to the CEOs. That is what a big business tax cut will do; it will not help the people Labor is standing up for.

My question today to Senator Fierravanti-Wells put on the record that the government agrees with all these things. They are making Australians work until they're 70. They admitted they're cutting the energy supplement of $14 a fortnight from pensioners. They admitted there is a cut to pension indexation. They have cut $1 billion from pensioner concessions. They have axed the $900 seniors supplement and cut the pension to around 370,000 pensioners. They didn't dispute that; Senator Fierravanti-Wells quite happily accepted that and went on reading her notes about 2009—completely out of touch! This government is attacking working people and pensioners at every single turn but ready to give a $65 billion cut to the top end of town. (Time expired)

Eric Abetz (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The reassuring thing about Senator O'Neill's speech is that we all know she does not believe what she said. We also know that Senator Wong and others, in their contributions in this debate, do not believe what they have been saying. Indeed, Senator O'Neill quoted the Leader of the Opposition in her contribution in this place earlier today. But let me remind the Senate of where Senator Wong actually stands in her heart of hearts. She said to the Senate:

We understand that the cut in the corporate tax rate is important to increase productivity, to promote broad based economic growth and to encourage more investment and jobs across Australia.

She has also said:

… lowering of the company tax rate is good economic policy.

This is what the Labor Party understood. They still understand it but they simply can no longer say so to the Australian people—for cheap, mean, political purposes. The Labor Party know that corporate tax cuts do translate into more jobs and wages growth. How do we know that the Labor Party believes that? Because they have said so. Indeed, it goes 'up and down the income ladder'. The Labor Party believe that. How do we know the Labor Party believe that? Because they have said so.

Allow me to quote none other than Labor's current leader, Mr Shorten, from when he addressed the Australian Council of Social Service national conference just a few years back. He said:

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

So much for Senator O'Neill's ugly, divisive commentary about 'people growing fat'! No, Mr Shorten himself acknowledges that this helps people at the lowest rungs of the income ladder. And the good news is that, within one year, about 70 per cent of people—and within two years it is over 80 per cent—have climbed from the lowest rung onto the next rung and are on the way up the ladder of aspiration. We Liberals absolutely salute them because we want every Australian to have the opportunity to have a job and experience wages growth. That is what this plan does; this is what this plan delivers This is not on the say so of Prime Minister Turnbull or Treasurer Scott Morrison but of former Prime Minister Julia Gillard, current Labor leader Bill Shorten, economics spokesperson for the Labor Party Dr Andrew Leigh and Senator Penny Wong—and the list goes on.

The Australian Labor Party knows how good this policy is because it delivers a social dividend for the Australian people in jobs and wages growth. Yet they have the temerity, they have the audacity—indeed, they have the indecency—of today trying to tell the Australian people that somehow policy that was good only a handful of years ago is now destructive of Australian society.

I say to the Senate, and especially to those crossbenchers who are still thinking about it, that the Labor Party knows that corporate tax cuts translate into job opportunities and wages growth. How do we know that? Because they've told us so, time and time and time again. This is not one outburst by one Labor spokesman; this has been a continual thread of Labor policy—which, might I add, is one of those rare lucid moments that the Australian Labor Party has had when it comes to economic policy. We had a bipartisan approach on this some years ago. But today, for cheap political reasons, the Australian Labor Party seek to divide the Australian community, knowing that in so doing they deny our fellow Australians who are unemployed a job opportunity. And they seek to deny those who are employed, struggling with managing the household budget, the opportunity of an increased income.

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

Listening to the responses of those opposite, you would think that the corporate tax cut was the ultimate all-rounder: it can bowl, it can bat, it'll increase wages, it'll increase profitability and it'll increase investment, all without hurting the budget bottom line. I would caution the crossbench to treat these claims with a grain of salt, because a lot of the claims that are being made by the government simply do not stand up to scrutiny.

Take the claim by the Prime Minister this weekend that there would be an extra $750 in the pocket of the average Australian full-time worker if the government's corporate tax cuts were passed by the Senate. I want to spend a little bit of time exploring what this means, because, the way the Prime Minister says it, it sounds as though if we pass the legislation Australians will have cash in their pocket by Christmas. Now, even on the most optimistic modelling by the government, this is not the case. It's not $750 per person a year; it's $750 on average across the entire economy at some yet to be determined point in the future. I know this because Treasury Secretary John Fraser was asked about that $750 estimate in Senate estimates this year. He explained that it did not refer to an annual increase in wages per worker; it referred to the estimated level lift in wages that would occur across the economy once the tax cuts had been fully phased in and investment in Australia had increased as a result of companies responding to those tax cuts and there was an increase in productivity growth as a result. He did not say how long it would take for that process to run its course—and fair enough, because that sequence of events is almost impossible to estimate with any certainty. It's also difficult to tell whether any of those steps will happen. They are based on highly variable assumptions about company behaviour and Australian and global economic conditions.

If you are after a guarantee that the tax cut will increase wages, you are not going to get it. They can't give it. That is simply not what their modelling tells them. It is not what their modelling is based on. And it's probably why the Business Council of Australia's letter also ducked the question about wages and instead talked in very general terms about investing more. Adobe CEO David Mendels explained why this is the case. He said:

As a CEO and member of the Board of Directors at a public company, I can tell you that if we had an increase in profitability, we would have been delighted, but it would not lead in and of itself to more hiring or an increase in wages. Again, we would hire more people if we saw growing demand for our products and services. We would raise salaries if that is what it took to hire and retain great people. But if we had a tax cut that led to higher profits absent those factors, we would 'pocket it' for our investors.

That's the truth. That is really the dynamic in the package that's been put before the Senate. What is proposed in no way guarantees a flow-through to investments and productivity that will lead to job increases and in no way guarantees a flow-through to wages. This is simply not the way that business decision-making actually works.

Nobody from government can credibly tell anyone in this chamber that the tax cuts will go straight to wage rises. It's not what their modelling says. It's not what business is saying. It's not what economic research says. But there is one exception. An intriguing piece of research came out recently showing that companies that pay no corporate tax are also more likely to pay their CEOs an average of around a fifth more than firms of similar size and circumstances that do pay company tax. So there might be something in this claim that wages will go up—because there is some evidence that they will go up for CEOs, but not for average Australians who are doing it tough.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I rise to contribute to this debate on responses to questions at question time. I noticed that Senator Wong was talking about foreign investment. We had a couple of arguments in Senate estimates about foreigners buying our farmland. The fact is—as John Laws has said for decades—that the more you tax something, the less you have it. So, if you're going to tax businesses less, they're going to grow more. As they grow, they will employ more people who will actually pay tax when they are paid their wage every week.

Senator McAllister was talking about some companies not paying tax. If they're making a profit they have to pay tax. So, if they are not paying tax, they're not making a profit. If you look at the mining companies that come here, for the first years of establishment they invest billions of dollars before they start selling the minerals and making an income. Of course, in this situation, I certainly support foreign investment and foreigners investing in Australia and creating jobs, our exports and our wealth. I also support the tighter restrictions that we've put on foreigners buying our land and the register of who owns our land in order to keep an eye on our food security for future generations.

A classic example is the Adani mine in the Galilee Basin. All these new coal-fired power station generators are being established around the world. When I got information from the Parliamentary Library some six months ago, some 621 new units of coal-fired power stations had been established. And guess what they are going to burn? They're going to burn coal. They have a choice: do they burn the higher-quality, higher-grade coal from Australia or the brown coal, the less efficient coal, from places like China or Indonesia? I would prefer that they burn ours from Australia. This is why we need investment to start places like the Adani mine. Those opposite support it, depending on where they are. If they're in Melbourne for a by-election for the seat of Batman, they don't support the Adani mine and coalmining, but if they are in Queensland they do. But I suppose that's populist politics—to support where you think you will get the most votes.

In relation to the age pension, I think one of the greatest commitments we need in this country is to those who have worked and done their bit for our nation, especially our war veterans. There's no question that the average population of Australia is ageing—in other words, living longer. The population is ageing and the government has made tough decisions to ensure that the age pension remains sustainable and supports those most in need. Since the coalition formed government in 2013, pensions have increased by $86 a fortnight for singles and about $130 a fortnight for couples. Pensions will continue to rise twice a year with indexation. The age pension is paid at the highest fortnightly rate of income support payments in the Australian social security system. The age pension has the most generous indexation arrangements in Australia's social security system. The indexation, calculated twice a year, is the most generous arrangement as far as indexation goes.

When the age pension was introduced, the average male life expectancy was 55 years. To ensure the pension was sustainable, the coalition supported the move to a higher pension age under Labor, who in 2009 said they'd shift the age pension age to 67. So it was Labor that actually first kicked off raising the pension age. While not yet legislated, increasing the age pension qualification age to 70 by the year 2035 remains government policy. That is still a fair way off. It will begin in 2025 and occur gradually over time, just as the Labor measure is increasing the pension age to 67 right now. In a media release, the then Treasurer, Mr Wayne Swan, supported by Minister Jenny Macklin, in 2009 said:

Increasing the age pension age is a responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians.

  …   …   …

Australia must move towards a higher pension age over the next decade.

An op-ed by the member for Fenner titled 'You're only as old as you feel' also suggests a better approach would be to index upper age limits in all laws:

How might age indexation operate in practice? One approach would be to mandate that all elderly age limits should increase by three months every year …

That might be a bit tough, that one. But the point is that we are living longer, we have better health and we are living fitter—if you have a hip wear out, you can have it replaced, as I had done three years ago. That's why the indexation's like it is. (Time expired)

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

I rise to take note of answers and provide responses to Senators Cormann and Birmingham. Senator Cormann said earlier on, in a response to Senator McAllister, that he has no idea how much the banks expect to save as a result of his tax cut. I can tell you how much, Senator Cormann: approximately $9.5 billion. Even despite the bank levy and even despite a royal commission, his government continues to back his mates in big business. It's important that the crossbenchers listen to this, because this is a crucial moment where they can have influence, in the right way, for the people of Australia, for the battlers of this country.

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

Senator McCarthy, please resume your seat. Senator Williams?

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Madam Deputy President, I paid particular attention to the questions without notice to be addressed in taking note, and Senator McAllister's question, I believe, was not one of the questions that we are taking note of. Is that correct?

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

Pardon?

John Williams (NSW, National Party) Share this | Link to this | Hansard source

In other words, I'm saying that Senator McCarthy is not speaking to the questions that were pointed out in the motion to take note of answers.

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

She indicated in her opening that she is taking note of answers provided by Senators Cormann and Birmingham, and they were the answers that Senator O'Neill moved to take note of. Please continue, Senator McCarthy.

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

I'm glad we've clarified that. Let me say to the crossbenchers in the Senate: this is a crucial time, an important time, when you can influence an important decision to reflect the battlers of this country. Sixty-five billion dollars in cuts to big business should not be your priority. It should not be the priority of this Senate. The priority of this Senate should be issues like CDP, when we know that 33,000 people across this country can do so much better. When we look at the penalty cuts that have impacted on workers right across this country, where is the relief and the fairness for them? When we look at housing partnerships and the agreements that fail to be met, where is the priority of this government? It is not with the needs of the battlers of this country. And what about NAIF? There is $5 billion that has not been spent in the three years that it has been fed to be a lifesaver for companies across northern Australia. Not one dollar of a $5 billion program on infrastructure and investment, to provide confidence to this country, has been spent. If this government spent as much time as it is spending now to push, bully, persuade and provide any kind of support to crossbenchers to vote for it on working in the other areas that I mentioned that impact Australians in this country, we would be in a different place. We would certainly be in a different place.

At a time when wages growth has hit record lows, Malcolm Turnbull is doing everything he can to give big business a $65 billion tax cut and is doing nothing to stop a pay cut for workers. For workers, it is getting harder to make ends meet. In fact, under this Prime Minister, electricity prices have risen by 12.4 per cent, health prices have risen by four per cent, education costs have risen by 3.2 per cent, residential house prices have risen by more than eight per cent, and yet his priority is a $65 billion cut to big business.

What plans does this government have to address the increased cost of living? They have a plan to attack penalty rates. This time, it's hairdressers who are going to get the chop. The government have a plan to cut funding for our public hospitals. They have a plan to cut people's pensions. In fact, last week, they voted with One Nation to ensure poor women are worse off when their husbands die—an absolute disgrace. The government doesn't have a plan to end the Medicare freeze. The government doesn't have a plan to protect people's penalty rates. The government doesn't have a plan to increase apprenticeship numbers. Indeed, during question time, we heard Minister Birmingham respond to Senator Watt, saying that, yes, there has been a decline in apprenticeship numbers since the Liberals assumed power. The government's only plan, their only objective in this place, is to shamefully pass on tax cuts for their mates in big business. The government is one for billionaires and certainly not for battlers.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

And ordinary Australians.

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

I'll pick up on that. Let's talk about ordinary Australians. Let's talk about the 33,000 people on CDP who are breached and have no money to feed their families. They are the ordinary Australians you are penalising as a result of your $65 billion tax cut.

Question agreed to.