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Thursday, 11 May 2017
Page: 4315

Mr MORRISON (CookTreasurer) (09:33): I move:

That this bill be now read a second time.

This bill represents the second part, the second tranche, of the government's overhaul of the Australian company tax system, and our commitment to businesses of Australia to drive growth, provide employment and grow exports to support more and better paid jobs in this country. It is designed to make our company tax system more competitive on the international stage.

The bill follows the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 to deliver the remainder of the government's plan to cut the company tax rate down to 25 per cent for all companies by the end of the decade—over the next 10 years.

This government will not rest until we have successfully fought to implement a company tax framework that sets Australia up to have more and better paid jobs in the future and for future generations. We cannot do that until we have a company tax rate that allows us to compete globally and allows our businesses to reinvest and hire more Australians.

On 31 March 2017 the government announced that it had Senate crossbench support to cut the company tax rate for companies with an aggregated turnover of up to $50 million each. The government successfully passed that bill in the House just a few days ago.

That is a great start. It impacts around 3.2 million businesses employing over 6.5 million workers. That is more than half the Australian labour force. However, we cannot afford to stop there.

Under this bill, which I am introducing today, the turnover threshold to qualify for a lower tax rate will be progressively raised to cover companies by 2024-25, before the company tax rate is reduced to 25 per cent for all companies by 2026-27.

While the cut in company tax for companies with a turnover of less than $50 million is a good start, Australia must continue with the second tranche of this reform to make the nation's company tax rate internationally competitive.

When Australia cut its company tax rate to 30 per cent in 2001, there were 19 countries in the OECD with a higher company tax rate. Now only four OECD countries have a statutory company tax rate higher than Australia's.

Furthermore, both France and, as President Trump announced recently, the United States have plans to cut their company tax rates below 30 per cent, and, in the US, to take that down to 15 per cent. While, in France, they are expected to cut the corporate rate with the new President-elect Macron, supporting a 25 per cent rate.

These developments intensify the pressure on Australia's corporate tax arrangements, because of the rates that are existing around the world. The prospect of Australia having the least competitive corporate tax rate in the OECD is not something that this parliament should allow to occur. That is why the government continues to put forward these measures.

The company tax rate is critical because it has a significant influence on business investment decisions. A lower company tax rate, compared with other countries, will raise the attractiveness of Australian investments—making it easier for companies to attract the investment they need to grow their businesses.

More business investment, such as upgrades to machinery and equipment, would make Australian workers, and support them in their efforts and their hard work, to be more productive and generate growth in real wages. This bill is about supporting increased wages for hardworking Australians.

Treasury's economy-wide modelling suggests a cut in the corporate tax rate to 25 per cent would generate a sustained increase in the level of GDP of just over one percentage point in the long term. Legislating the rest of the company tax cuts now will allow businesses to base their long-term investment decisions on a 25 per cent tax rate.

Critically, for the workers of Australia, the majority of the gains from a company tax cut are expected to flow through to Australian workers in the form of increases in real wages. This is why the government's Enterprise Tax Plan is essential to supporting Australian jobs and wages into the future.

Full details of the measure are contained in the explanatory memorandum.