Mr Wilson (5:16pm) — I'm glad to speak on this bill, the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, and I oppose the tax cuts for big business. Labor oppose the tax cuts to big business because they are irresponsible. In doing that we are trying to save the government from itself. We're trying to save Australian households, especially low- and middle-income Australians, from bearing the burden of this revenue giveaway. That is what it is. I agree with everything the member for Gellibrand just said. The government is proposing to give away $65 billion. It's going to create a structural hole in the budget. It hasn't done anything to repair that. It's not part of some comprehensive set of tax measures that produces some sort of fiscal balance or some balance in terms of its effect across the broader economy—the real economy and its effect on households. That point was made on Q&A the other night by Heather Ridout in saying that this is really a crude tax giveaway. It does not fit into any kind of larger plan for the Australian economy.
These tax cuts will result in current and future revenue burdens falling elsewhere. That's been the case whenever these things have been done. The OECD has observed that, where corporate tax rates have been cut, consumption taxes, VATs and GSTs inevitably go up to make up for the hole that's created in taking away revenue that is rightly, fairly and equitably derived from big businesses. Those taxes—VATs, GSTs and consumption taxes—are regressive taxes, and they fall hardest on the poor; they fall hardest on those who have the least. I note that the Tax Justice Network has said in relation to corporate tax cuts, particularly for big business and multinationals, that:
Governments make up shortfalls [from corporation tax cuts] by levying higher taxes on other, less wealthy sections of society, or by cutting back on essential public services, so tax 'competition' boosts inequality and deprivation.
A number of Labor speakers have made that point.
If you look at the proposed tax cuts, if you were a person sitting at their kitchen table or driving their car or in their workplace and you were looking at the issue of giving away corporate tax cuts, particularly to big business and multinationals, you would be sensible to back up a step. You'd be sensible to ask: what exactly is the problem that a massive and unprecedented tax giveaway to big business is trying to address?
What is the burning need to take $65 billion of revenue, to create that kind of structural hole in the budget, to create that burden that will fall elsewhere in Australian society?
I think most people have a sense of the challenges we face. We know that workers' share of national income is at a record low. We have falling real wages. We have rising inequality. Just to give a sense of how bad inequality in Australia has become, the top one per cent of Australians in terms of wealth and assets now own more than the bottom 70 per cent altogether. There's no way you can look at that kind of outcome and say that this is a system that's working, that this is a system that is delivering outcomes as it was designed to or as would be fair. That kind of outcome is not the result of a fair system; it's not even the result of a meritocracy. It is a grossly distorted system in which one per cent of Australians can own more than the bottom 70 per cent put together. Yet this kind of measure will only exacerbate that.
So, we have rising inequality. We have record underemployment. And under this government—despite, as the member for Gellibrand pointed out, making their run for government on the basis of an apparent debt emergency—debt has more than doubled, to now more than $500 billion. What's more, there's evidence of significant tax avoidance, especially for large multinationals. If you take all those challenges together, how on earth would any reasonable person think that the solution would be to cut corporate taxes for the biggest and most profitable companies in Australia, including a significant number of foreign multinational companies? How on earth could you think that giving away $65 billion of precious revenue, which we need for essential services, at a time when the budget is already significantly in the red, and cutting penalty rates to low-income workers and increasing the tax for people under $87,000 could possibly be regarded as the way to address those challenges?
Any sensible person knows that when you forgo taxes it's the same from a budgetary position as spending money. Any time you give up revenue, you want to do so on the basis that there's a very sound reason for doing that. You're giving away public funds, and in this case you're creating a hole that will endure into the future. The government has said that they have good reason for doing that, and I think that's the kind of thing everyone who comes and participates in this debate ought to consider. What we already know about the $65 billion giveaway is that it will increase government debt. We know that when you give away $65 billion to big companies—multinationals—that is funding that cannot be used for health and education, for crisis housing and homelessness support services, or for the social safety welfare net.
That's the first thing. That's a given. But the government said, 'We've got to do this, because it's the only way we can stimulate economic growth, it's the only way we can create jobs and it's the only way we can get a higher investment flow into Australia.' There is no basis for any of those three arguments. The government hasn't put anything forward on that front. There is no independent economic analysis. There are no economic commentators who will back in those claims.
Are big businesses struggling under the existing tax burden? Is there any evidence that big businesses in Australia are at the point of collapse? There isn't. We're living at a time when large businesses are making record profits. There is no evidence of widespread business struggles or difficulties. There's in fact the reverse. There's evidence that large companies in particular are doing very well. They're not sharing that success. There's no flowthrough to wages. But they're certainly recording record profits. We know from the 2015 ATO data in relation to this question of whether business is labouring under some inordinate tax burden that one in three private companies paid no tax in that relevant tax year. One in four public corporate entities paid no tax, one in three private companies and one in four public companies paid no tax and fully half of the foreign companies operating in Australia, by some accounting method or other, had no taxable income.
We also know, as the member for Gellibrand and a number of other Labor people in this debate have pointed out, that companies in Australia couldn't possibly complain about the tax burden they face if they had regard for the tax burden that exists in comparable economies. The relevant comparator group is the G20. We are the 13th-largest economy in the world. We sit in that group of developed economies that make up the 20 largest economies. When the US Congressional Budget Office undertook its analysis, it showed that Australia is average or even below average in terms of tax burden. That judgement does not take account of the impact of our innovative dividend imputation arrangements, which are calculated to have the effect of removing taxable burden by about a third. So there's no case to be made that the Australian taxation position with respect to companies is unduly or comparatively burdensome. There's no evidence that companies are desperate for a tax cut. There's just nothing of that kind.
That obviously goes to the question about whether or not making this kind of tax giveaway is necessary or even assists in relation to investor flows. Again, there's no evidence of that. Companies invest in Australia for a whole range of reasons. In some cases, if you think about the resources that Australia holds, they invest here because we have those resources. Someone doesn't come here to look at an LNG play or to consider developing an iron ore resource because of the tax position. They come here because we are blessed to have a lot of natural riches in those ways. A more responsible government would be ensuring that the general economic framework in this country supports new kinds of investment in the future—investment in things like renewable energy. That would be a much more prudent way of spending scarce government funds than giving away $65 billion at a stroke.
There's no evidence that tax cuts, particularly tax cuts of this exorbitant magnitude, do anything much for growth. The government's own numbers indicate that the tax cuts would deliver about one per cent of growth over 20 years. When you break that down to the benefit for individual households, it's about 0.1 per cent for households. A 0.1 per cent increase in the position of households is about the same as what happens on a monthly basis in the economy as it is. These tax cuts will not deliver growth. It is a sad indictment of a government whose mantra was jobs and growth that the best they can do, the only thing they can do, is to give $65 billion away to big multinationals that are making record profits and doing very well, thank you. There's certainly no evidence that tax cuts lead to jobs, and since this proposition was put forward I haven't read a single thing about this. I've read countless articles and pieces of analysis that say the opposite. There is simply no evidence that tax cuts, in and of themselves, create jobs. Lots of things do create jobs. Investment in infrastructure creates jobs. Investment in education creates jobs. Investment in health services creates jobs. Those things are all demonstrably true. Giving away a huge tax cut to large businesses that are already performing quite well and are quite profitable does not flow through to jobs and does not flow through to wages.
The truth is that there is no rationale for $65 billion in tax cuts for big business. It can't be justified on the basis of delivering economic growth. It can't be justified on the basis of creating jobs. It's got nothing to do with investor flows. My old woodwork teacher used to say to me, 'Before you start any job, measure twice and cut once.'
This government is going to create an enormous hole in the budget going into the future. Once you give money away it's very difficult and unlikely that you'll ever get it back. This government and previous coalition governments have form in this space. They cast a long shadow. The Howard government lived through very sunny economic times. It acted with extraordinary profligacy towards the end of its time. We are living with the structural impact of that profligacy even now.
This is a further act of profligacy. It probably goes one step further. This $65 billion giveaway will be a savage blow to the ability of this and future Australian governments to do their job, which is to look after the broad economic and social welfare of the Australian people. On that basis, it is grossly irresponsible. It creates a massive structural hole in future budgets. It will prevent us from supporting essential services, from investing in health and education, public infrastructure, in our precious environment, in the good working of the social safety net. It answers no demonstrated need whatsoever. It has no demonstrated benefits. The very, very marginal benefits that the Parliamentary Budget Office has found are pathetically minimal. It will shift the tax burden from companies to households as sure as night follows day. It will put the needs of future Australian governments to derive revenue to pay for essential services on households and take them from large companies, particularly multinational companies that are already profitable and already have countless ways of avoiding the tax they have to pay. I'm glad to oppose it.