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Monday, 26 March 2018
Page: 2086


Senator RUSTON (South AustraliaAssistant Minister for Agriculture and Water Resources) (13:25): I, too, have great pleasure in standing today to talk on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. We've often heard it said by just about everybody in this place that the most important thing that a government can do is to make sure that the people of this country have a job. We need to have the policy settings to ensure that anybody who is capable of having a job and who wants a job has access to a job. That's why I particularly support this package. It's because I believe this is a job creation bill.

This government absolutely believes that its economic mission in being here is to secure more jobs and higher wages so that families around Australia today and into the future can have the best possible opportunities to get ahead and to prosper. Jobs and higher wages, I'm afraid to say, don't grow on trees. We have to have policy settings. They need to be created. They need to be paid for. The only way that we can pay for more jobs, better jobs and higher paying jobs is to make sure that we have a profitable business community. The fact is that jobs are created by businesses. Nine out of 10 Australians are employed by businesses. So it is on the back of that that this government seeks to create those jobs by putting packages and policies into the marketplace to make sure that businesses are prosperous. This is not in any way a dirty concept. This is absolutely pure economics that says that prosperous businesses allow prosperous employees, create jobs and create better wages. So what we're seeking to do through this particular policy measure is to secure future job prosperity, increase career prospects and make sure that wage increases are there into the future by making sure that we have profitable businesses able to employ people. That's why we are absolutely 100 per cent committed to pursuing a 25 per cent tax level for Australian businesses.

I would like to make a few points about why we think this is so terribly, terribly important. Firstly, we live in a global economy. Our businesses operate in a global economy, and it is becoming much, much more mobile. Capital is mobile, resources are mobile, people are mobile and, in fact, companies are mobile. If we want businesses to remain in Australia and to attract businesses into Australia, we have to be globally competitive. One of the absolutely major factors in our global competitiveness is our business tax rate. It is absolutely our No. 1 economic priority. That is why we believe this particular package is so terribly important to the delivery of prosperity for the future of Australia—taxation absolutely underpins the ability for our businesses to be able to continue to grow and to employ more Australians.

This particular risk that we are talking about at the moment with our tax rate for companies over $50 million is the fact that the rest of the world is moving to a lower tax regime. We see that the US has legislated that now their company tax rate is going to be 21 per cent. France has decided to reduce their business tax from 33 per cent to 25 per cent by the year 2022. So what we need to do is to make sure that we are competitive in the international marketplace with our tax rates so that we are not putting our businesses at a disadvantage. In contrast, if we do reduce our company tax rate to 25 per cent, it corresponds that we will be able to attract more business. And obviously more business means more investment, greater productivity and stronger growth. It is all about growing the economy for more jobs.

But it actually goes further than that. It goes further than just dealing with businesses and jobs. As an Australian economy, as an Australian society, we have a belief that there is a certain level of social welfare requirements, public amenities and social services that we all would like to see for our community. The only way that we can continue to afford and fund those particular services is by making sure that we have a strong economy and strong tax revenues coming in so that we can continue to be able to pay for the things that most Australians believe they have a right to have.

We say that not only does passing these tax cuts back to 25 per cent allow the opportunity for the growth to continue so we can afford to pay for these things; what we fail to mention in this debate is that, if we don't—if we become globally uncompetitive, if we lose business, if we lose investment and, correspondingly, lose jobs and growth revenue—then we are in a situation where we will continue to struggle to be able to pay for all of those things that Australia prides itself on: being a great country, a First World country, a country that not only looks after the disadvantaged but also provides great public amenities and services to the population, like education and health. We believe the basic, fundamental economics 101 of this particular package is about economic growth and providing all of the things into the future to allow Australia to remain at the top of the economic tree.

What has been quite interesting in this debate so far are some of the things that have been said by those from the Labor Party who sit opposite. We're probably not unsurprised at some of the comments that have come from the Greens. We've always known that they've had a long-held view that we don't have to pay for the things that we spend money on in our economy, but those opposite in the Labor Party have shown a level of economic rationalism that is prudent and sensible over time. I think deep down that many people in the Labor Party actually believe that this is the right thing to do. But you don't have to take my word for it. I can actually quote you some things that those on the other side have said over time. I quote the Labor shadow Treasurer, Chris Bowen, who reported in 22 September 2015 that:

Labor accepts that company tax falls hardest on workers rather than wealthy shareholders, and aims for a 25 per cent company tax rate to spur economic growth.

I'm not quite sure what epiphany Mr Bowen's had in the last two years that has had him go from holding that particular belief to now believe that it's a completely wrong premise. I'll be very keen to hear what he has to say about what has happened in the last two years to change his mind to the completely opposite view to his previous view on how corporate tax stimulates economic growth and the impact on wages and the economy.

I also quote the Leader of the Opposition, Mr Bill Shorten, when he was referring to company tax cuts. I will quote the House of Representatives Hansard, so he certainly can't deny he's ever said this:

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.

He is also quoted as saying:

… lowering the corporate rate for smaller businesses only (as the Greens propose) 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.

I'm not quite sure how on earth you can make those statements on the public record. He obviously believed them—well, he either believes those or he believes what he's saying now. That he would, for politically expedient reasons, change a very solid, well thought out, well-constructed belief that he obviously believed in only a couple of years ago is, I think, one of the most disingenuous things anybody could do, let alone somebody who proposes that they should be elected the leader of this great country of ours at some stage in the future. He has turned around today and said something else just because he wants to put a thorn in the side of a government that is trying to have an economic growth proposal policy package for this country. He is seeking to try to bring it undone out of bloody-minded politics instead of supporting what he knows is in the best interests of Australians and, most particularly, Australian workers, when he knows that this is the best thing for Australia.

Previous Labor Prime Minister Julia Gillard equally made a statement in support of a reduction in the company tax rate, because she saw the value of this for economic growth, which leads to jobs. As I keep on saying, this is not just about economic growth for the companies; it is also about jobs. Companies that are profitable and growing not only pay more tax but also employ more people and put upward pressure on wages. Ms Gillard understood that, too, because she said:

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

I'm not quite sure how one could be any more categorical in supporting the concept that cutting company tax has a direct and positive impact on jobs.

Always perennial favourites for us are the often logical and sensible comments of Andrew Leigh, who is a member of the House of Representatives. When it comes to economic policy, he quite often comes out with much more common sense than many of those who sit on the same benches as he does. Equally, Andrew Leigh said: 'Company taxes end up being paid by consumers and workers.' We have heard so much from those opposite about how this is somehow going to benefit only the big end of town and that somehow these tax cuts will go straight into the pockets of the chief executives of all the companies. Obviously, those on the other side do not believe for one minute that that's the case. They understand the economic principles that underlie the levers that get pulled in the economy to deliver the outcomes that we seek for this country. Once again, the voice of reason, Mr Leigh, says that consumers and workers pay the ultimate burden of higher taxes, particularly in the corporate area in company taxes. So it would only serve to be logical to suggest that, if we cut company tax rates, it would be the consumers and the workers who would end up being the beneficiaries.

I cannot believe the audacity of those who come in here and make statements that are completely contradicting things that they've said in the past. But, before I finish on some of these amazing quotes, I must draw the attention of the chamber to comments made by the Leader of the Opposition in the Senate, Penny Wong. I will quote the Senate Hansard—so it is undisputed:

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 is also quoted as saying:

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

It just beggars belief that we should be sitting here having this debate. We would like to think that somewhere in the next five minutes those opposite will actually realise that they are holding the country to ransom by their behaviour in attempting to stop these tax cuts coming in. Not one, not two, but so many of those in the Labor Party who like to think that they've got economic credentials have constantly been in the public domain and in the various chambers in this very parliament talking up the economic value, the jobs growth value and the national value and benefit of tax cuts; yet we are standing here today as a government—a good, solid, sound economic policy delivering government, a jobs growth policy delivering government—having this conversation.

One of the things I probably took the greatest exception to was this idea that somehow the only beneficiaries of these tax cuts were going to be businesses. I think the Leader of the Opposition in the Senate in her contribution described them as 'undeserving recipients' of these particular tax savings. I'd like the Leader of the Opposition in the Senate to advise us whether she actually believes the following companies in South Australia are 'undeserving' of the benefits that are likely to be delivered from these proposed tax cuts. I would draw the chamber's attention to a number of good, solid South Australian companies that I am sure many in this chamber will have heard of.

Angove Wines, a large wine business in my home town of Renmark in the Riverland, has a turnover of more than $50 million. Its main retail operations are in the Riverland and McLaren Vale. It has 170 staff who are permanently employed and an additional 190 during vintage. Samuel Smith & Son, which is known to many as the Yalumba brand, has an annual turnover well in excess of $50 million. Australian Vintage and Accolade Wines are other wine companies in South Australia. In South Australia alone, just off the top of my head, I can tell you about four wine companies that are employing thousands of South Australians. Accolade Wines alone employs over 1,000 people and, once again, it is administered from South Australia. Are they undeserving recipients?

Who hasn't heard of South Australia's great family-owned brewing company Coopers? Their turnover is well in excess of $30 million, with a staff of 230, and is administered from South Australia. Who hasn't heard of Haigh's chocolate frogs? Anybody who wants to say they haven't, let me know and I'll make sure I deliver you a chocolate frog. Haigh's turns over more $50 million. And there is San Remo pasta—I'm sure you've heard of it. The list goes on and on. RM Williams, with a $127 million turnover, is based in Salisbury in South Australia with 650 people employed locally and nationally. Many of you probably go to bed at night but don't realise that the blanket you pull up or the lamb's wool you're a lying on is actually a product of Michell Wool, another great South Australian company. Codan is a fantastic Australian company and a world leader in technology. Then there is the Mossop Group and the Sarah Group, both of which build homes, and the Ahrens group, which manufactures agricultural machinery. I could go on and on. There's the Adelaide Airport. They are examples of great South Australian companies, which many in this chamber would have heard of. Are they undeserving recipients of the benefits? Are they undeserving recipients who might choose to employ more people if they were given the incentive to do so by the economic environment created through these company tax cuts that are on the table at the moment?

Let's dispel a couple of myths about this particular suite. It is actually good for jobs. A strong economy creates jobs. If anybody would like to disagree with that, I'm happy to have the debate. This policy is also fully costed over the forwards, but it will result in higher government revenues. We've already seen with the tax cuts that have been delivered for companies under $50 million an immediate increase in the tax revenues coming from those particular businesses. Whilst it looks as though there is a cost attached to this policy if you take it right now, the long-term, and even the medium- and short-term, returns to government on increased receipts are absolutely unquestionable.

We also need to be very clear about the consequences of not changing this company tax rate. Companies currently are striving to grow in the Australian marketplace, but if we say, 'If you are over $50 million,' where is the incentive to grow? They hit the ceiling at $50 million and they don't want to go any further. That is stifling the growth of some of our great medium to large companies. There is always the possibility that large companies will go offshore. If you have a tax incentive of between 21 and 30 per cent between us and the US, there is a massive incentive to move offshore. Basically, this makes Australia plainly uncompetitive.

They say it's only for the big end of town, but you only have to look at the comments of people like Ken Henry, who said, 'In the long run, company tax affecting mobile capital is paid by labour, predominantly geographically immobilised, unskilled labour.' They suggest it is for the big end of town, but we know that's not true. There are so many credible economists who have said that isn't the case, and so it is disingenuous to suggest it in here.

In conclusion, we believe all businesses in Australia, whether they are big or small, are in the one ecosystem. They work together, live together and cross-pollinate together. If big business does well, small and medium businesses, who supply goods and services to many of the large companies, will be successful, so there will be a negative impact on them if we take the heads off the big businesses around town. They are the drivers of our economy, and all big businesses were small businesses once. We must protect Australia's position as a competitive place to do business, and we must make sure that we get rid of this populist narrative that suggests, for some reason, that we are only sticking money in the pockets of the big end of town. We are not. We are creating jobs, we are making our businesses competitive and we are increasing revenues that will support our country into the future. I commend this bill to the house.