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Wednesday, 13 September 2017
Page: 10319


Mr EVANS (Brisbane) (19:01): I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This is another key plank of this government's plan for more jobs and greater economic growth. It sits very comfortably side by side with our multinational tax avoidance laws, which sadly those opposite opposed but which nonetheless have clawed back almost $3 billion and counting so far in tax from multinationals. Our reforms so far and our economic plan are paying dividends, as seen in the recent economic data. In the first half of this year, we've had some of the fastest jobs growth in decades, and over the past 12 months we have seen almost a quarter of a million new jobs created, four out of five of which have been full-time jobs. That is the type of economic response that we hoped to achieve from our economic plan and from the first phase of our enterprise tax plan, so it is pleasing to see those early economic results. We hope to see more good economic news and better days ahead as we continue to pursue our economic plan.

I stand here in this parliament of and from Australia's small-business middle class. That is significantly as a result of the economic plan that we took to the last election, at which I was elected to ensure this government could pursue that economic plan and our election commitments. Our plan stands in stark contrast to the lack of a plan on the other side of this House. Our plan is cognisant of the ever-changing nature of the global economy. We're talking about big trends here—globalisation, digitalisation—trends and forces which Australia cannot, and probably should not, even attempt to hold back.

This is about updating our tax environment so that our local businesses can be as competitive and as flexible as they need to be in this new world. We know that at the most basic level Australia is relatively uncompetitive, compared to other Western nations and other nations around the world, when it comes to our corporate tax rates. The UK-based Oxford University Centre for Business Taxation found that Australia's corporate tax competitiveness on headline and effective tax rates was ranked the sixth worst out of 33 OECD countries, and the seventh worst on effective marginal tax rates.

The US administration have obviously outlined their corporate tax plan to bring their headline rates down to 15 per cent, but they're not the only ones. The UK is now sitting at 19 per cent, and has declared that it's heading to 17 per cent. Singapore is already at 17 per cent, and rates are also lower across most of Europe. Even the French President, Emmanuel Macron, has announced he intends to extend the planned French tax cuts, which reduces their corporate tax rates first to 28 per cent and then down to 25 per cent—very similar numbers to those that we are talking about here.

Without our ability to match international tax rates, Australia is unable to attract as many new businesses, to attract as much investment, to attract as many new jobs. If we're not competitive, international investment and companies will look past our advanced manufacturing industries, our highly-specialised services industries, our world-class education system and our productive and highly-skilled workforce. I will talk a little bit more on the importance of competitiveness later.

Regardless of the boost to competition, a tax cut is also fundamentally a boost to the economy. We know, through history, that every time Australia's had a corporate tax rate cut, our economy has grown. Higher-paying wages and more jobs for future generations should be the main objectives of every government, but we can't do that unless we have a company tax rate that allows us to compete globally and allows our businesses to reinvest and hire more employees.

This bill obviously follows the Treasury Laws Amendment (Enterprise Tax Plan) Bill that we delivered earlier in this term of the government. This is about the remainder of the government's plan to cut the company tax rate over many years to come. This government successfully passed those previous cuts to the company tax rate for small and medium businesses with an aggregated turnover of up to $50 million earlier this year, just after the budget. That's a good start. It impacts around 3.2 million businesses around Australia who employ over 6.5 million workers, but we can't afford to stop there. Under this bill, 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 enterprise tax plan is a long-term vision for tax reform. It's a 10-year staggered approach. Therefore, it provides certainty to business, especially those looking to invest over a longer planning horizon. The government will lower the corporate tax rate to 25 per cent by 2026-27 for all companies. That will be, when it's achieved, the lowest corporate tax rate in Australia since the mid-1960s.

Australia has gone, over the space of many years, from having the ninth-lowest corporate tax rate amongst the advanced economies down to the equal fifth-highest, currently. While there's those who believe that Australia can't afford to make our business taxes competitive, the obvious point looking forward over the long term is how we can possibly afford not to be competitive and viable. That's why this government works so hard to get the first stage of this enterprise tax plan passed, and that's why we believe that the full enterprise tax plan should be implemented.

The lower corporate tax rate will improve the competitiveness of Australian businesses and generate more business investment. Economic modelling in Australia has fairly consistently found that the current tax system is a negative drag on the economy. Doing nothing is not an option if a more efficient tax system will help to grow the economy. Higher levels of business investment boost the productivity of Australian workers, reflecting improved output from using new tools, business systems and other capital. This improvement in productivity will drive increases in real wages. That's why it is so important. In the short term, the government's package of reforms across company tax and small business will support the transition to a more diversified economy and the creation of new and better jobs, especially in the non-mining sectors of the economy.

At the same time as reducing the corporate tax rate, the government is ensuring that businesses pay their fair share of tax by introducing tougher rules targeting multinationals, which I mentioned at the beginning of this speech. But where does the other side of the House stand on this? I suppose one has to be thankful that Labor's hypocrisy on these matters is readily observable, languishing as it does on bookshelves and in discount bins across Australia and acting as a constant reminder of their hollowed-out principles. If we cast our minds back to the shadow Treasurer's paperweight, he said:

But Keating knew that the corporate tax rate needed to be cut to make Australia competitive, that capital and investment would flow to tax-competitive nations and that this was an important job-creation move. Today capital is even more mobile than it was then and it is important that our corporate tax rate is competitive.

For a very long time this used to have bipartisan support in this parliament. We all aspired to cut Australia's corporate tax rate. For example:

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.

That is a direct quote. That is what the Leader of the Opposition, Bill Shorten, said in March 2012 when he was in government. Here is another quote:

Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.

I could keep throwing quotes out there. Rudd, Gillard, Rudd, Latham, Crean, Beazley, Keating, Hawke—the list goes on. They all agreed. Even the member for Lilley promised to cut the corporate tax rate. Admittedly, he did promise that at a time when he also promised the country four economic surpluses that never quite eventuated either. The point is that some of the most eloquent arguments that have been made in this place for cutting taxes were made consistently over all of those years by the Labor Party. But they have now walked away from that consistent legacy spanning decades.

I think it is really important for us to reflect not only on the motives of an opposition leader who would say one thing when he was a minister with real responsibility and another thing when in opposition and, presumably, digging for populist votes. I think it is important for us to reflect on the significance of what it really means when one of Australia's major political parties just decides to crab walk away from what has been a longstanding bipartisan principle of Australia's economic approach. They are walking away from what has always been a key plank of Australia's economic plan—a bipartisan plank, as I said. They are walking towards populism and the politics of envy, which were supposed to have been eradicated when the Labor Party reformed itself back in the 1980s to make itself fit for office again. What we have is a Leader of the Opposition—possibly, in his mind, a younger Bernie Sanders or a jogging Jeremy Corbyn—who is all rhetoric, all envy, but no real solutions. In my view, the Leader of the Opposition is like an economic witchdoctor: his cures are worse than his fictional illnesses. He will smash small business, he will smash small business trusts, he will tax hardworking Australians, he will tax everyone hoping to use the property market to set themselves up for the future and he will ensure that the most militant unions in this country can disrupt our worksites once again.

Labor, in this debate, is on the side of the politics of envy. The government is on the side of aspiration and economic opportunity. The tax debate thus far gives the game away for the opposition. They have consistently used the catchcry '$60 billion in handouts to big business and multinationals'. I am happy once again to use my speech in this place to try to bust some of those sensationalist lines that they have been using with respect to tax reform. If we break that silly phrase down word by word, we can expose the mistruths behind it. For starters, there is 'handouts'. As I said, I come from a small business family and a small business background. Tax cuts for businesses aren't handouts. It's not a handout to let some hardworking business owners out there keep more of the money that they've earned through selling their customers their own products. It's their own money, fundamentally.

In relation to that $60 billion tag, that is, of course, a figure obtained by using the 10 years over the forward estimates and beyond of budgetary impacts. We can talk, I suppose, about what that really means in practice. What we've legislated in this parliament so far and what we intend to legislate through this bill is for small businesses and medium businesses only, at this stage, to get the benefit of the tax cuts over the short term, and then for that to roll out over a long-term plan to larger businesses. What we have legislated for in this parliament is for small and medium businesses only to keep about $1.6 billion of their own money. That would grow to about $2.3 billion of their own hard-earned money in this financial year, rising to $2½ billion the year after that, $2.8 billion in 2019-20 and so on. As I mentioned, the tax cuts that this government has managed to achieve so far aren't going to big businesses or multinationals at all. They are going to those small and medium businesses. I'm proud to say that, given my small-business background.

The bill before us is about a longer term plan that will let the entire economy benefit from better competitiveness. There will be multiple elections between now and when any tax cuts would apply to big businesses where, if the Labor Party want to, they can test their preference for higher business taxes. We can see whether Australians, fundamentally, at those future elections, want higher or lower taxes. Over time, this government very much wants all remaining businesses, medium and then large businesses, to benefit from increased competitiveness. That's the point of this bill. After all, that used to be the bipartisan aspiration of this place. I can certainly tell you that the people in Brisbane who work or want to work in larger medium or even big businesses deserve more hours, more jobs, more opportunities and more chances of promotion into the future. So, if the Labor Party at some stage between now and two elections time, when these tax cuts would take place, want to draw themselves up a hit list of businesses or industries which they think are bad and therefore deserve higher taxes, they can do that at some stage over the coming years. But, until then, they should back off the politics of envy. They should back this bill like this government is backing businesses and hardworking Australians.

Both sides of politics used to say that there needed to be a long-term plan to reduce corporate taxes in this country, for the sake of all Australians. The Labor side of politics is now trying to walk both sides of the street on that. The long-term plan that everyone talks about and has always talked about is this bill. This bill deserves support. Hardworking Australians and hardworking businesses in Australia deserve this boost. I support this bill.