SENATE SPEECH ON THE TREASURY LAWS AMENDMENT (ENTERPRISE TAX PLAN NO. 2) BILL 2017
SENATOR THE HON DOUG CAMERON
SHADOW MINISTER FOR SKILLS, TAFE AND APPRENTICESHIPS
SHADOW MINISTER FOR HOUSING AND HOMELESSNESS
SENATOR FOR NEW SOUTH WALES
SECOND READING SPEECH ON THE TREASURY LAWS AMENDMENT (ENTERPRISE TAX PLAN NO. 2) BILL 2017
WEDNESDAY 21 MARCH 2018
I think Labor's position on the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 is clear and unequivocal. We will not support tax cuts of $65 billion for big business while this government continues to attack the poor people in this country.
We've always opposed this significant structural deterioration to the budget. We've had this government argue about budget deficits. Do you ever hear them argue about budget deficits now? This will be a significant structural deterioration, and we will not support it. This is a hit to the budget that shows the rank hypocrisy of a government which lectures the Australian people about the need for budget repair. They used to talk about a debt and deficit disaster and a budget emergency but what's the situation now? The deficit for this year has blown out by eight times. It was $2.8 billion in their first budget and it's now $23.6 billion. Net debt has more than doubled since they took office: $175 billion in September 2013 and $353 billion in January 2018. Gross debt has crashed through the half-trillion dollar mark for the first time and it's set to get to $684 billion in 2027-28. So, given all these statistics, it's ironic to think that what the government has on the table is a $65 billion hit to the budget. The components that we are debating today alone cost $600 million over the forward estimates and $36.5 billion over the medium term.
Now, they claim that there are economic benefits, but we've been clear since the plan was first introduced about highlighting the extremely minimal economic benefits as a result of the full plan, let alone the parts that the government managed to get through: one per cent of economic growth in 20 years time and a $2-a-day increase in wages in 20 years time. We hear all these arguments about the great benefits of these $65 billion tax cuts, but the government's own figures show that it's one per cent economic growth in 20 years and a $2-a-day increase in wages in 20 years time. This is at a time when wage growth is at record lows. Private sector wages growth has flatlined in the last year, being equal to inflation. Australian families are facing a nasty cocktail of rising costs in electricity prices, stalling wages growth and record high underemployment, and this government has nothing to offer—absolutely nothing to offer.
Labor has long held concerns about low wage growth. The dwindling bargaining power of workers and their representatives has played a central role in stagnating wages growth and rising inequality. And what's the government's solution? Cut wages and raise income taxes. The government has also supported penalty rate cuts from 1 July this year, and they seek to raise income taxes on over seven million Australians with incomes between $21,000 and $87,000 from 1 July next year. They're coming after working-class Australians while they want to give massive cuts to the banks and massive cuts to overseas corporations. What is wrong with this government?
A worker on $55,000 will pay $275 a year and someone on $80,000 will pay an extra $400 a year. So the battlers in the community out there, who are doing it tough day in day out, are the ones that will get hit by this bill, and the big end of town will walk away with big smiles on their faces. And Senator Cormann can go and crack a Havana cigar with them, because that's what he's doing: giving a gift to the big end of town.
Labor opposes both of these measures. It goes to this government's approach and their misguided priorities that their answer for flat wage growth is a cut to pay and higher income taxes. We hear those who support it saying that it's needed to drive investment. But it was only a few years ago that we had the biggest investment boom Australia has seen, with a headline corporate tax rate of 30 per cent. The United States Congressional Budget Office put out a paper earlier this year saying that the statutory corporate tax rate is only one of the many features of the tax system that influence corporate behaviour, and that:
Because of their broader scope, average and effective corporate tax rates are better indicators of a company's incentives to invest in a particular country than is the statutory corporate tax rate.
The paper points out that at a headline rate of 30 per cent in 2012 the average rate for Australia was 17 per cent and that there was an effective tax rate of 10.4 per cent.
Budgets are all about priorities, and this government quite simply has its priorities wrong. Big business tax cuts are priority No. 1. Priority No. 2: high income earners get a tax cut. The battlers, the working class, get tax increases, and high-income earners get a tax cut. Workers earning above $21,000 will have their tax increased, and penalty rates will be cut. That's what you get from this government.
We've got our priorities—ensuring that we deal with inequality. We want to deal with inequality in this country. That means properly funding our schools, and proper investments in infrastructure. It also means a fairer tax system, further dealing with superannuation tax concessions, levelling the playing field for first home buyers through reforms to negative gearing and capital gains tax, and capping to $3,000 the deductions people can obtain for managing their tax affairs, as well as our plan to impose a minimum 30 per cent tax on discretionary trusts to deal with the issue of income splitting and deal with something that has been in the too-hard basket for too long. And we are proposing reforms to dividend imputation, where Labor is making hard decisions to make sure that essential services are properly funded to improve our schools and hospitals and provide tax relief for middle- and working-class people. Labor is about looking after working people in this country. The coalition have eyes only for the big end of town, only for big business, only for the people who put money into their election funds. We care about ordinary Australians. We care about making sure that people in this country have a decent life—completely the opposite to this government.
We also want to deal with this issue of intergenerational equity, making sure that we've got the policy settings in place for further generations of Australians—their kids and their grandkids. They're the ones we want to look after, because if we don't we won't have the revenue to pay for essential services, such as schools and Medicare; we won't level the playing field for first home buyers through reforms to negative gearing and capital gains tax; we won't properly fund our schools, our TAFEs or our universities; we won't have the money to adequately fund important infrastructure; and we won't have the proper policies to deal with climate change.
There is nothing fair about what this government is proposing. The issues that we believe are important will not be afforded under this government. This government is hopeless in their position on ordinary working-class people. We've got a better alternative. We always hear the government saying that Labor has no policies for growth, nothing for jobs or wages. So let me remind the Senate of what Labor is actually providing. We're investing in human capital. We're investing in the greatest resource we have: the people of this country. We're investing $17 billion extra into Australian schools so that schools are properly funded—not some rort that the government puts together to pretend it's dealing with schools. We will remove cuts to skills and to the TAFE system, which has been ravaged under this government and state governments. We believe that TAFE is important to make sure that working families can get their kids into vocational education and give them a decent job for the future. We'll invest in physical capital. We will have lots of commitments in national and local infrastructure, such as the Gladstone Port Access Road, the Ellenbrook rail, the Townsville Port channel widening project, the Mackay Port Access Road—all policies aimed at economic growth and job creation.
Further to these policies, Labor has announced the Australian Investment Guarantee. This guarantee will kickstart new investment, support jobs and build the long-term capacity of our economy. Unlike the government's company tax cuts, the Australian Investment Guarantee will guarantee that every dollar spent underpins new investment. We are guaranteeing the investment that will create jobs for the future. This is well targeted and affordable. Our policy will allow all businesses to immediately expend 20 per cent of the value of eligible depreciable assets in the first year of all new investments, with the balance depreciated in line with normal depreciation schedules for the first year.
The Australian investment guarantee is a permanent accelerated-depreciation scheme, and it will operate indefinitely. It will apply only to eligible investments valued at over $20,000, with no pooling of assets allowed, to ensure it's well targeted at productivity-enhancing investments. The Australian investment guarantee is a pro-growth, pro-jobs reform that rewards businesses making new investments in Australia. Only companies that make the decision to invest in Australia will benefit from this tax relief, while up to 60 per cent of the government's company tax cut handouts goes directly to foreign shareholders. We want to make sure the incentive is there for Australian businesses to invest, not just to give a boost of profits to overseas investors.
There has been lots of support for this policy. The Chief Executive of the Ai Group, Innes Willox, said:
The Investment Guarantee would provide a significant boost for businesses to invest particularly for longer-lived investments.
The proposed measure comes at a time when business investment, and particularly non-mining investment, has been slow to recover in recent years.
As a measure designed to lift investment, the Investment Guarantee would increase the stock of invested capital, boost the quantity of capital per worker, raise productivity and underwrite an acceleration of real wage growth.
The Chief Executive Officer of the Australian Chamber of Commerce and Industry, James Pearson, said:
Business welcomes this commitment from the Opposition – it’s good policy.
What’s particularly positive is the proposal to make this a permanent feature.
This is important as policy certainty and policy consistency is critical for business.
The Energy Efficiency Council said:
A new Federal Labor policy that gives an immediate tax deduction to businesses that invest in energy saving equipment would help slash energy bills.
The Chief Executive of the Property Council, Ken Morrison, said:
… the Australian Investment Guarantee would be a powerful tool for accelerating energy efficiency gains across different industries, but especially in the built environment.
… … …
We welcome Federal Labor's announcement of this policy and the potential it has to help reduce costs for consumers.
The chief executive of COSBOA, the small-business group, Peter Strong, said:
Labor's announcement is a welcome one as it would make it easier for Australian businesses to invest and grow. The fact that this measure is available to all businesses, big and small, is also very positive as it will help small businesses directly as well as encouraging larger businesses to invest in the products sold by small business.
The CEO of the Australian Food and Grocery Council, Tanya Barden, said:
This initiative will go a long way to encouraging investment in high tech and high skilled projects to enhance efficiency and increase scale.
We are particularly supportive of the Australian Investment Guarantee’s inclusiveness across the industry sector. The opportunity to use this Investment Guarantee towards energy saving projects is also very important.”
As I stated before, Labor will not be supporting this bill. It sums up the completely wrong stance that this government is taking of giving away $65 billion on a hope and a prayer that there will be investment. Labor, instead, has a superior policy offering. We've put out a significant policy agenda to date and will have more to say between now and the next election. And if you hear this argument about the credibility of the coalition and their economic policies, just laugh, because Malcolm Turnbull, the current Prime Minister, has no economic credibility. Where have they been on economic issues? They wanted to increase the GST. I think that lasted a week. They wanted to let taxing powers go back to the states. I think that lasted a couple of days. And now they're on the trickle-down approach with $65 billion of tax cuts, much of which will end up overseas. Remember, this is a government that continues to argue to maintain dividend imputation and give tax cuts back to people who are not paying any tax.
We hear the government arguing that this is about pensioners. It's not about pensioners; it's about wealthy self-funded superannuation recipients getting money that no-one else in the community gets. It's an absolute nonsense. When this government first came to power, it wanted to reduce indexation for the pension. We know who the friends of the pensioners are. It's not this government. It's not Malcolm Turnbull. The friends of the pensioners are the Labor Party. We will look after pensioners—real pensioners, not rich people that don't need money given back to them for nothing.
This is a government that wanted to reduce the indexation for pensions and reduce the pension. This is a government that wanted to freeze the asset income tax threshold for pensioners for three years. This is a government that wanted to reset the income test for single pensioners and pensioner couples combined. It wanted to increase the qualifying age for the pension to 70—the highest anywhere in the world. This is a government that wanted to abolish the senior supplement and make the seniors health card harder to achieve. It wanted to cut support for the states and territories for seniors concession cards. It wanted to abolish the mature-age worker tax offset. The government also abolished the pensioner education supplement. And the government will cease paying current aged care payroll tax supplements for aged-care providers. This is a government that doesn't care about pensioners. This is a government that only cares about the big end of town, handing money to the rich and the wealthy at the expense of working class Australians. This is a disgrace of a government; a rabble of a government. The sooner its tenure comes to a finish, the better for Australia and all workers.
MEDIA CONTACT: LUKE WHITINGTON 0422 275 775
Authorised by Noah Carroll ALP Canberra