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Wednesday, 27 June 2018
Page: 4124

Taxation


Senator McCARTHY (Northern Territory) (14:00): My question is to the Minister representing the Prime Minister, Senator Cormann. Yesterday, the minister told the Senate that, under the Turnbull government's corporate tax cuts, 'wages will be higher'. Why does business refuse to give the same guarantee?

Government senators interjecting

The PRESIDENT: Order! Colleagues on my right, I will ask for silence during the question, again.



Senator CORMANN (Western AustraliaLeader of the Government in the Senate, Minister for Finance, Special Minister of State and Vice-President of the Executive Council) (14:00): My statement was a statement of economic fundamentals—economics 101. If you attract more investment and generate stronger growth, and more jobs are being created, as they are under our government, then there is more competition for workers. As you start depleting the excess supply in the labour market, and if there is stronger demand for workers and less supply of workers, of course wages will go up. That is a very basic economic fundamental.

When we came into government, the economy was weakening, unemployment was rising—which is, of course, part of the reason why we went into a period of lower wages growth, because if wages had grown more strongly at the time of a weakening economy and rising unemployment then more people would have ended up unemployed. But what has been happening, as a result of our plan for a stronger economy and more jobs—as more than a million new jobs have been created in our period in government—is: of course, the excess supply in the labour market has continued to deplete. As more jobs are being created, there is more demand for workers and less supply of workers. That is basic market economics. Stronger demand and lesser supply drives prices up. If you've got lower demand and higher supply, prices go down. That is basic market economics. I know that the Labor Party don't—

Opposition senators interjecting

Senator CORMANN: So, under Mr Shorten, taxes on business will be higher, so there will be less investment, lower growth, fewer jobs, higher unemployment, less competition for workers and, consequently, lower wages. Under our plan, there will be lower taxes on business, which means there will be more investment because we compete for investment with countries around the world. There will be more investment. There will be stronger growth. There will be more jobs. There will be lower unemployment. And, as there is lower unemployment and stronger demand for workers, there will be higher wages. (Time expired)

The PRESIDENT: Senator McCarthy, a supplementary question?




Senator McCARTHY (Northern Territory) (14:03): Yesterday the minister told the Senate that, under the Turnbull government's corporate tax cuts, 'investment will be stronger'. Minister, why does business refuse to give the same guarantee?


Senator CORMANN (Western AustraliaLeader of the Government in the Senate, Minister for Finance, Special Minister of State and Vice-President of the Executive Council) (14:03): The senator just confused, here, the decision-making of individual businesses and the decision-making of businesses across the economy in aggregate. The truth is: if taxes are higher, the Australian economy will attract less investment. There's no question about that. If you make it harder for business to be successful, business will be less successful. If you make it harder for business to compete with businesses in other parts of the world, they will be less viable and less profitable. A less viable and less profitable business will hire fewer people. All of this is basic common sense. None of this is rocket science. This is the way the market has worked since time immemorial.

Some people have tried an alternative method. Some people have tried the socialist method of pursuing equality of outcome. They've tried the method of dragging everyone down to the lowest common denominator. And do you know what happens? Everybody ends up poorer. We want Australians to be better off. We want them to get the best possible opportunity to get ahead. (Time expired)

The PRESIDENT: Senator McCarthy, a final supplementary question?



Senator McCARTHY (Northern Territory) (14:04): Given that business leaders actively deleted commitments to higher wages and increased investment from their draft letter to senators advocating for corporate tax cuts, why is the Turnbull government continuing to mislead Australian workers?


Senator CORMANN (Western AustraliaLeader of the Government in the Senate, Minister for Finance, Special Minister of State and Vice-President of the Executive Council) (14:04): The government is being very candid and very honest with the Australian people. Here's a newsflash for you: business wants to pay as little as they can for anything they buy, whether it's products, whether it's services, whether it's their workers. And workers want to get as much as they possibly can get. And then there is the market; there is supply and demand. Business will not pay higher wages because they want to but because they have to, because if they want to manufacture products, if they want to deliver services, if they want to export products and services around the world, they can't do it without a workforce. And the more successful they are in creating products, in building things, in selling products and services around the world, the more workers they need. As they want to hire more workers than they otherwise would, competition for workers will be stronger than it otherwise would be, and the workforce across Australia will have more bargaining power than they otherwise would. Under your government— (Time expired)