Senator McLUCAS (2:09 PM) —My question is to the Assistant Treasurer, Senator Sherry. Can the Assistant Treasurer inform the Senate of the government’s plans for further job-creating reforms in the Australian economy? In particular, how does the government plan to boost the ability of Australian companies, including small business, to expand, to compete internationally and to create jobs? What role will the government’s proposed resource super profits tax play in providing assistance to all Australian companies to keep growing for the benefit of shareholders, workers and the economy as a whole?

Senator SHERRY (Assistant Treasurer) —I thank Senator McLucas for the question. Job creation, a stronger economy and supporting Australian businesses to grow are key priorities for the Rudd Labor government. Our economic policies contributed to the creation of some 279,000 jobs in the year to May. Indeed, in the 2½ years since the government was elected there have been some 400,000 new jobs created despite a global recession—and that is in marked contrast to other advanced economies.

Making a strong economy even stronger is the future plan of this government. Unlike those opposite, we are planning for the future. That is why we are introducing a resource super profits tax. We are unapologetic about doing this. This reform is about turning some of the future profits from the mining sector into other forms of long-term wealth. A fair share of the profits from the resource super profits tax will help to fund company tax rate cuts from 30 per cent to 28 per cent. A fairer share of the profits from the resource super profits tax will also fund an instant write-off for small business for all assets of up to $5,000. In fact, about one-third of the revenue raised from the resource super profits tax will go towards business tax reform, which will make it easier for small and larger companies to hire more employees, expand operations and grow our already strong economy and make it even stronger. Changes to mining taxation are expected to increase GDP by 0.3 per cent in the long run, and the cut in company tax will increase the growth of the economy by 0.4 per cent. That is a long-run boost to GDP of around 0.7 per cent, which will add to jobs. (Time expired)

Senator McLUCAS —Mr President, I ask a supplementary question. How will the government’s proposed reduction in the company tax rate to be funded by the resource super profits tax make all Australian companies more internationally competitive? In the global economy how does Australia compare to other countries on company tax rates?

Senator SHERRY (Assistant Treasurer) —At the moment Australia’s company tax rate stands at 30 per cent, which is on the high side compared to other OECD economies. The government’s proposal is to use a share of the resource super profits tax to reduce the company tax rate across the whole economy to 28 per cent. That is in contrast to those opposite, who want to increase company tax rates. This will improve Australia’s competitive position.

Senator Abetz —That is false.

Senator SHERRY —Senator Abetz interjects that it is not true. The only tax policy we have from the opposition is to increase company tax by 1.7 per cent. That is the only tax policy they have. A lower company tax rate will reinforce Australia as a good place to do business. It will be of substantial benefit to the economy, it will help attract investment and it will add to jobs. The benefits from increased investment are many. They include business expansion, improved productivity, higher wages and investment. (Time expired)

Senator McLUCAS —Mr President, I ask a further supplementary question. Is the Assistant Treasurer aware of any alternative policies on reducing company taxes in the Australian economy? Is the Rudd government’s proposal to cut the company tax rate, to be funded by the resource super profits tax, the only policy aimed at giving Australian companies an edge in competing internationally and assisting them to expand domestically?

Senator SHERRY (Assistant Treasurer) —I have mentioned a couple of the tax cuts the Labor government intends to deliver as a result of the resource super profits tax. The only policy I am aware of from the Liberal and National parties is to increase company tax. They intend to increase company tax by 1.7 per cent. They want a higher company tax rate, 30c in the dollar going up to almost 32c in the dollar, in contrast to the Labor government’s proposal to reduce company tax to 28 per cent. A higher company tax rate as proposed by those opposite of some 32 per cent would lift Australia’s effective company tax rate to almost the highest, if not the highest, company tax rate in the advanced world. The only policy those opposite have on tax is to increase company tax to 32 per cent. That would make Australian industry uncompetitive and cost jobs. (Time expired)