Lisa Singh (Tasmania, Australian Labor Party) 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) to questions without notice asked by Senators Kitching and Chisholm today relating to company tax cuts.

Senator Cormann had an opportunity in question time today to make clear how this government's corporate tax cuts are fair to the voters in Braddon when only 10 companies headquartered in Braddon will benefit from these further tax cuts. Further, he had the opportunity to confirm that only three companies headquartered in Longman will benefit from these corporate tax cuts.

We know that the numbers are that limited in these electorates because the Australian Bureau of Statistics has provided, clearly, that information—that these proposed company tax cuts, to 2023, according to the ABS, will benefit only a tiny handful of businesses in these electorates. Why? Because the majority of the company tax cuts that this government wants to put forward will benefit, of course, Malcolm Turnbull's own electorate—the Prime Minister's own electorate. Under this Prime Minister's out-of-touch tax cuts, the biggest benefits go to the biggest cities in the country. They do not go to regional Australia. They do not go to electorates like Braddon and Longman.

Senator Cormann, instead of actually answering the question, which he had the opportunity to do in question time, simply carried on with his usual rhetoric saying he is looking after working families across Australia. Well, Senator Cormann, just because you say it does not make it true. In fact, I almost felt that Senator Cormann's nose was growing as he gave answers to these questions in question time! The people of Braddon and the people of Longman know very clearly how untrue they were, because they know—they're living in those electorates—that there aren't these big businesses that simply are going to be benefiting from these unfair company tax cuts.

This morning the government actually had a chance to debate their company tax legislation. But no, they wanted more time to do deals with the crossbench, to do deals with Senator Hanson, in the hope that Senator Hanson would flip-flop around again—or, as Senator Cormann says so often, 'wibble wobble, wibble wobble'. They were hoping that would happen and they could continue to do deals to get her over the line.

Let's face it, that is something that we on this side of the chamber are very concerned about. That is why we called these bills on for debate—to find out where this senator stands. The Australian people should be very concerned that she may again just sell out the voters of Australia, the voters of Longman, through her flip-flopping on this.

Let's be very clear: these bills are about an $80 billion big business tax handout at a time when we have a budget deficit, at a time when we have penalty rates being cut, at a time when we have schools and hospitals being cut in Australia and at a time when we have wages that are failing to keep up with inflation. Seventeen billion dollars of these $80 billion worth of tax cuts go to banks alone—just go to banks alone. This is what this government wants to do. It wants to prop up the banks. This is all while the banks are going through a royal commission, as we know, and all while we have disclosure going on through that process. At the very same time that royal commission is going on this government wants to bring legislation in this place to give banks $17 billion worth of tax cuts. That same amount the government is cutting from schools and every other part of our education system, when we look at TAFE and the rest. How unfair and unaffordable are these tax cuts?

The Australian people know very clearly how out of touch this government is. It doesn't just have to be Senator Cormann trying to convince Australians on that front, because the economists are doing it very well themselves as well. These are economists such as Saul Eslake and Goldman Sachs, who have pointed out that the vast majority of these tax cuts will go into the pockets of overseas investors and banks. That is absolutely unfair and unaffordable. That is why, day in, day out in my home state of Tasmania, Justine Keay, our candidate for Braddon, is pointing that out very much to the voters of Braddon. They understand how unfair this is. (Time expired)

Richard Colbeck (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Singh talks about being out of touch, but her presentation on taking note, just then, demonstrates just how out of touch Labor really is. In fact, the topic that she chose to take note on, the question from Senator Chisholm, shows how low the Labor Party has sunk in the politics of envy and how far out of touch they genuinely are about what's happening in their communities, that they would go down this line. The suggestion raised in the community locally by the former ALP member for Braddon—who hung on for months longer than she should have done, regarding her citizenship—that there are only 10 businesses in Braddon that will benefit from the extension of the tax cuts, shows how out of touch Labor is. They don't understand the operation of the economy in our electorates.

For example, there are 3,817 people employed by Wesfarmers in Tasmania. Wesfarmers' registered office is in Western Australia. The Labor party don't count them—Wesfarmers and Coles—because they are based in Western Australia. There's the suggestion that there is no benefit to the people of Braddon or Tasmania from the tax cuts. A quick google is done by the opposition, to work out that there are 10 businesses in Braddon that have their corporate headquarters there, and they forget about all the others. That includes Tassal and Huon Aquaculture, who have significant operations on the west coast of Tasmania, in Braddon, where they create jobs and invest their returns to grow the economy, to build one of the biggest aquaculture sectors in Australia. In fact, aquaculture is the one thing Tasmania does in a greater sense than any other state in Australia. Because Tassal and Huon Aquaculture have their headquarters outside of Braddon, the Labor Party don't count them. There's no benefit to Braddon from the fact that they get an advantage there. And MMG in Rosebery has its corporate headquarters in Melbourne. The Labor Party don't count MMG, but MMG employ 411 people in its mine at Rosebery.

That's how far out of touch the Labor Party are when they're trying to construct these arguments about the benefits of this government's tax plan. They're not interested in how the spread works out through the broader economy. They're not interested in the fact that these companies invest their profits back into the business to the benefit of these communities.

So there are thousands of employees who benefit through their companies from the tax regime, from keeping the economy strong and from growing the economy and growing jobs. Even our local newspaper, The Advocate, is not included, because Fairfax are headquartered in Sydney—even that newspaper, that business that operates and influences our region. A quick google from Ms Justine Keay, in an attempt to get her head around the economic issues, leaves them out. Just because an ASX 200 company isn't headquartered in Braddon doesn't mean it doesn't have an influence and it doesn't mean that it doesn't have an effect.

This just shows how low the Labor Party have gone and also how out of touch they are when they're considering the impact of a strong economic plan like the one the government is looking to put in place. When companies are globally competitive, as they need to be—such as the vegetable processor at Turners Beach, which employs over 300 people and has a turnover in excess of $50 million—they are restricted in their capacity to reinvest in their business by the attitude of the Labor Party. They're not interested in those people. They try to play the politics of envy. They try to play one business off against the other. But the effect of that is a weakening economy, because that's the way Labor operates.

Just to repeat something I mentioned here in a previous contribution—and it's something the Labor Party actually used to believe—cutting the company tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth, and leads to more jobs and higher wages. Bill Shorten used to believe that. (Time expired)

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

I can say one thing to Senator Colbeck: we're absolutely happy to make the Braddon by-election a referendum on these corporate tax cuts, because the people of Braddon will know, along with the rest of Australia, that the government's focus is a purely ideological agenda, and you can see that.

I'm still relatively new to the Senate, but when this debate was on last week and when they guillotined and rammed it through, it was one of the few issues I've seen in this chamber that has united the Liberal Party. So much in this place divides them—when it comes to energy, when it comes to the environment, when it comes to school funding. But when it comes to tax cuts and when it comes to corporate tax cuts, the whole Liberal Party speaks as one. That's because—and this is the danger for Australians—it is absolutely an ideological pursuit that those opposite want to make. You need to look at the direction of this government and also understand the long-term consequences of this, because this is what their priorities are. Last week it was tax cuts for millionaires; this week it's tax cuts for big business. And who benefits from this? Millionaires, big businesses and the banks, as Senator Singh said: $17 billion of the $80 billion goes to the banks.

This is their vision for Australia. These priorities reflect their vision of Australia. They think that if big business is doing well, if rich people are doing well and if the banks are doing well then the rest of Australia will flow on; they'll get the crumbs. Well, we on this side disagree with that. We know that when Australia is doing well regional cities are doing well, small towns are doing well and outer suburbia is doing well. That's what Labor wants to invest in. That's why you see the differences and the divide between the government's priorities and the vision they have for Australia, which is all about the big cities and all about big business. It's not about small communities and regional towns, who the government think will get the crumbs. But here we understand that the key for those places is investing in education, investing in the school system. That will actually give the best benefit economically over the long term. The government's own economic modelling, when it comes to the tax cuts, showed that any benefit is 20 or 30 years away and is miniscule. Yet the direction of this—and this is why it is an ideological pursuit from those opposite—is that this also, from their point of view, locks in looming cuts. That's where it will lead: handouts for big business and looming cuts to essential services. The Australian people will be able to work this out.

These are the facts. We know there'll be very little benefit to electorates like Braddon, and Longman in Queensland, and that they will suffer the consequences of what those opposite have done. I think the interesting thing about the ideological pursuit by the Liberals is the fact that the Nationals, who would once have stood up to the Liberals, are happy to sit there and watch this happen. They've abandoned the electorates that they purport to represent. In outer suburbia in Queensland and in regional communities, the Nationals are nowhere to be seen standing up and fighting the Liberals and defending those places that need government support. They're happy to vote with their ideological partners and to see this.

What we know is that those cuts to health and education that would be a consequence of this will have, over the longer term, a detrimental effect on those smaller communities and on those regional towns. They actually rely on those services to get ahead. They rely on those services to attract people to come and live there, whether it be health or whether it be education. It is the lifeblood of those communities, which those opposite don't understand. They just see that if there's a benefit to the big end of town, if there's a benefit to capital cities, then somewhere down the track that will flow on to regional communities. We know that isn't the case, and on this side we will absolutely stand up to it.

Senator Colbeck came in here and tried to run the line that there would be some benefit to parts of Tasmania. We know that that is absolute nonsense. We know that it is those smaller communities, it is those regional towns, that are going to suffer the consequence of the ideological pursuit of those opposite. I'd say to the Australian people that you absolutely need to understand the priorities and the direction of this government. It is to favour the big end of town, it is to give a tax handout to banks at the expense of essential services. This will be what they pursue, and this will be what the next election will be fought over. You'll have Labor promising tax relief for those who need it the most, as well as ensuring fair funding for health and education into the future so that those communities can rely on it. (Time expired)

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

Let's be crystal clear about the political strategy being deployed today by the Australian Labor Party: they are seeking to engage in toxic, divisive class warfare and the politics of envy. It was evident in the question asked by Senator Kitching today, as it was in the question asked by Senator Chisholm—and, indeed, by the political advertisement released by the Labor Party today—that what they are hoping to do is divide Australians by class, to divide them into the haves and have-nots, and to make them feel a sense of resentment about each other's success. They're very clearly attempting to smear and target the Prime Minister, because he is personally wealthy, but I don't think it will be successful. I don't think it'll be successful, because I hold the Australian people in much higher regard than the Labor Party evidently does.

Australians don't resent each other when we have success. Australians admire those who have a go, who take risks and who have success. In this country it's something that we celebrate and that we are proud of, not something that we resent and seek to tear down and be jealous about. Yes, the Prime Minister is personally a wealthy man. I'm very proud to be part of a political party that is led by someone like Malcolm Turnbull, who, with his wife Lucy, has had a lot of good fortune. They've been fortunate to be born in a wonderful, prosperous and free country like Australia. They've been fortunate to have good health throughout their lives. But they've also worked very hard. They've had a bold vision for the future. They've taken risks and they've been rewarded for it. That's something that we should all celebrate.

Entrepreneurs, people who do take those risks in a free country like Australia, are only rewarded if they're providing something of value to others. You can't get rich in a free country like Australia by stealing money from others or by seeking government favours. You get rich by starting a business that offers services or goods to people that they are willing to pay for. In doing so, by accumulating wealth, that's evidence that you have provided something of value to your fellow citizens, because they've willingly parted with their own money in order to purchase those services from you.

Already entrepreneurs have made a great contribution to our society that we should be celebrating, but let's think about the other ways that they contribute. Of course, if they've had success they will pay a lot of tax in their lifetimes, as they should—the Prime Minister among them. He has paid a hell of a lot of tax over his time, and that's contributed to the services that we all enjoy. They've probably also employed people. They've provided jobs for others. They've personally taken risks so that other people can have the dignity of work and can benefit from employment, and that is a pretty significant contribution. And of course many are generous contributors to their community in the form of philanthropy. Many donate and contribute to and support great causes.

Yet the Labor Party seeks to demonise these people. It is trying to say that if these people benefit in any way, shape or form from a cut in personal income taxes or from a reduction in company taxes, somehow we should resent them and we should vote accordingly. The problem with that politics is that, if you hit these people, you hit all Australians, and if you demonise these people, you put at risk all Australians' wealth and prosperity. Whether we're modest income earners or high income earners, we all benefit from an economy that rewards success. We all benefit from an economy that says people who take risks and employ people are to be lauded and followed and copied, not resented. We don't benefit from an economy where we seek to punish these people; ultimately, we would end up just punishing ourselves. If we increase taxes on people's individual incomes, if we increase taxes on companies, if we become less globally competitive then, ultimately, we're hurting all Australians workers and all Australian families—not just those at the top and not just those at the bottom.

Australia is a remarkably equal and fair society. We rank highly in the world in terms of our equality. We rank highly in the world in terms of our social mobility. We do that because we have an open opportunity society. We have a society where you can put your hand up and have a go, take risks and be rewarded for that. Most Australians would much rather live in a country like that than in the alternative. We've seen, throughout history, around the world, that this undergraduate socialist idea of 'smashing the rich' is a dangerous one that is only going to imperil our nation and impoverish it, not allow it to continue to be so prosperous and free.

Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the motion to take note of answers by Senator Cormann. Every time Senator Cormann gets to his feet on the subject of taxation, he repeats his main talking dot-point, his mantra—namely, that giving massive tax reductions to the wealthiest 10 per cent of the population, as he did last week, and to the banks and other large corporations, as he wants us to agree to do this week, will lead to greater investment, higher employment and higher wages for Australian workers.

But all the evidence we have from Australia and overseas contradicts this. After the Reagan tax cuts, the Bush tax cuts and the Howard tax cuts, the beneficiaries of these cuts did not use these massive windfall gains to hire more workers or pay their employees higher wages as Senator Cormann would have you believe. No, they used the money to pay themselves bigger bonuses and their shareholders bigger dividends. The evidence for this is overwhelming, and I'm sure that Senator Cormann knows that what I am saying is true. Let's look at a recent example of that evidence. Let's look at the Business Council of Australia's survey from just a few short months ago, where only 16 or 17 per cent of Australian CEOs admitted that they would use tax cuts to boost employment. That's less than 20 per cent of them. More than four in five of the CEOs surveyed would use the extra funds to—wait for it—return money to shareholders or increase investment in the corporate entity. They would not boost employment. They would not boost wages. This is the trickle-down economics that the government would have you believe works. It does not.

In every response to every question, not just today but over the last few months, Senator Cormann has gone with his usual response—even after the BCA survey came to light. But let's look at the history, because it is informative. Ronald Reagan became president in 1981, determined to put into practice the new economic doctrine dreamed up by the conservative think-tanks—that if you radically cut tax on corporations and on high-income earners, economic growth will take off, tax revenues will rise and the tax cuts will pay for themselves. Of course, as we know now, nothing of the kind happened. According to a paper from the Brookings Institution, federal revenues fell by nine per cent, the deficit blew out, interest rates rose to 20 per cent and there was a severe recession. In response, congress had to reverse most of the Reagan tax cuts.

By contrast, when Bill Clinton raised taxes on high-income earners in 1993 the economy boomed, creating 23 million new jobs and a record eight years of continuous growth. Then came George Bush, who once again cut corporate taxes and taxes on high-income earners—exactly what this government did last week and what this government would have us do this week. The Heritage Foundation predicted that the Bush tax cuts would produce a golden age of growth and prosperity so that the US could pay off its entire debt by 2010, but what in fact happened? There was weak growth all through the Bush years, culminating in the crash of 2008 and the deepest recession since the 1930s. Bush left the US mired deeper in debt than ever before. After taking office in 2009, President Obama had to again raise taxes to try and get the economy back on track. Now President Trump is again taking the US down the road of massive tax cuts for corporations and upper-income earners—and, of course, the Australian Liberal Party is following its new mentors in the alt-Right.

All the evidence is that this will of course end badly, both overseas and in Australia. It is simply not true that cutting taxes stimulates economic growth or employment, no matter how many times those opposite repeat this article of faith. Research in the US by the non-partisan Congressional Research Service shows no correlation between the top rate of tax and economic growth. All the evidence is that cuts in tax for corporations is used mainly for stock buybacks, to pay executives bigger bonuses and to pay stockholders bigger dividends—as discovered in that startling piece of surveying by the BCA of their members. I have no objection to shareholders getting bigger dividends, but let's be clear: that is a far cry from Senator Cormann's constant assertion that tax cuts are a magic elixir that will lead to more investment in productive industry, more jobs for Australian workers and higher wages. (Time expired)

Question agreed to.