It is a delight to rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016.
Senator Whish-Wilson: I’m glad someone is delighted.
Senator DUNIAM: I am excited about what this bill can do for our country, Senator Whish-Wilson, so it is a delight to get up and speak on it. I will come back to Senator Ketter’s contribution and the repeated mantra of ‘budget repair that is fair’, which, to my mind, seems odd when you are talking about spending more money. I am not sure how that repairs one’s budget. I would have thought everyone in this place, everyone in this entire building, including the other place, would agree that all Australians want to see a more productive and a more prosperous Australia—a place where there are more jobs for hardworking Australians. The Turnbull government’s enterprise tax plan, which we are debating at the moment, is one of the most significant reforms to Australia’s business taxation framework in a generation, and I think it paves the way to those elements I just described.
This country needs a tax system that supports enterprise by backing businesses to invest. Economic activity is generated in the business community, not here in the halls of Parliament House. It also must ensure that Australia continues to be an attractive place to do business—and I note Senator Whish-Wilson’s comments in his contribution, which I will cover off a little later on—and that means not just for foreign investment but also for people choosing to invest either here or overseas. It has to be an attractive place to invest their money. We want people to invest in this country, to grow our economy and to create jobs.
The 10-year program will secure our future and create jobs for hardworking Australians; it will create jobs that these people are crying out for in our regions and in our cities. It will help the 1.8 million Australians looking for extra work to boost their take-home pay, which I would have thought was something that the opposition would support, given the debate in recent days on the matter of penalty rates. When we are talking about ensuring that Australians have a decent take-home pay, those opposite are here talking about a way of preventing businesses from creating jobs. I do not know how the two match up. Improvement in Australia’s living standards must be driven by a higher level of labour productivity and participation, which are in part driven by lower company income tax rates. As I have said, those hardworking Australians who want that boost in their take-home pay and who need those additional hours need that pay to cover the increased living costs we have in this country. I am sure many of us have constituents who front up to talk about the increased cost living—not to mention the cost of power, which, in the great state of South Australia, has gone through the roof, like it has in many other parts of the country. Higher health and education spending and a bigger welfare budget will not help hardworking Australians pick up extra work and extra pay to take home to pay those bills. I guess, in response, that goes to the point in Senator Ketter’s contribution about budget repair that is fair by spending more on things like infrastructure, health and education, rather than, indeed, looking at how we spend that money and making sure the taxpayer—it is not our money; it is the taxpayer’s money—is getting value for money. Rather than using savings to get the budget back into balance and paying huge amounts of money in interest on debts that have been accrued by those opposite, Labor wants Australians to pay more tax so that we can spend more. The real contrast here is the enterprise tax plan that this government, the Turnbull government, has rolled out, which will boost the Australian economy, create the activity we need to ensure that we have a stronger economy. This bill will provide the encouragement for employers, as I have already said, to invest and grow their businesses and provide greater job security, more employment opportunities and higher wages growth.
The sad thing I have come to realise in the public debate on this issue and the contributions that have been made so far by the opposition is that Labor thinks that Canberra knows how to spend money better than people who run small businesses—the people who want to keep their businesses in the black so that they can keep paying their employees and keep paying their bills, the mortgage on their business or their business loan facility. Labor believe that they know how to create jobs better than business and that it is a better proposition for government to keep the hard-earned taxpayer dollars in our pockets here in Canberra than allowing businesses to do more with the money that they earn. Our plan aims to give businesses the certainty they need to plan and make long-term investments that are vital for growth and boosting our national economy and productivity. Compared to many other countries, particularly in the Asia-Pacific region, Australia’s corporate tax rate is high. I suppose that goes back to that point that Senator Whish-Wilson made that, indeed, if it is not the highest, it is certainly up there. When people are choosing to invest, that is something they take into account. We cannot ignore that fact. Corporate tax rates that are increasingly uncompetitive will make it harder for this country to attract investment, which is a key driver for labour productivity and growth.
Fundamentally, a more competitive business tax environment would encourage higher levels of investment in Australia, which is what we need, given the falling levels of private investment as we move from the mining investment boom of the last decade. Again, fundamentally, more economic activity provides more tax income. When businesses are earning more, when people are earning more, they are paying more tax. When they are spending more, they are paying more tax. So, freeing up these dollars, putting them back into the economy, allowing businesses to invest, to spend and to buy new infrastructure and putting it back into the community generates that tax revenue. So I do not actually understand Labor’s opposition to this and, indeed, that of many on the crossbenches. So it is vital that we give business every opportunity to invest, to innovate, to grow and to employ more hardworking Australians.
As part of this plan, as it has been covered off in this debate by a number of speakers previously, and I am sure it will be again, we are going to back small business by reducing their tax rate to 27½ per cent, starting with small businesses with a turnover of less than $10 million, on 1 July this year. That oft used phrase that small businesses are the engine room of the Australian economy is absolutely right. In the small towns of Tasmania, where I am from, these small businesses are the source of employment for people. There are not major factories anymore. There are not the large manufacturing facilities. There are small businesses. And we need to back them. They are the home of Australian enterprise and opportunity. Indeed, they are where many big ideas are born, ideas we try and foster and we want to see more of, so we can create more jobs in our regions. This set of measures is one way of assisting us to do that.
Across the country, small businesses employ over three million people and in 2013-14 added around $340 billion to our economy. We need to reduce the tax burden on small business first and, as many—not companies—will extend the unincorporated small business tax discount from 2016-17, the discount will be available to businesses with annual turnover of less than $5 million, up from the current threshold of $2 million. It will be increased to eight per cent. The maximum discount available will remain at $1,000.
Over the next decade, the discount will be further expanded in phases to a final discount at 16 per cent. This means that every year around 2.3 million businesses will, potentially, have access to the unincorporated tax discount. Further support will be provided for small businesses to expand and create jobs. Access to a number of tax concessions will be provided by increasing the threshold for these concessions to $10 million, up from the current $2 million threshold. These changes will benefit over 90,000 businesses.
Focusing on contributions of those opposite and the record of the opposition, it is important to reflect on some things that have been said and put on record by them. During the last election, last year, we saw much commentary on the government’s tax plan, with Labor cherry picking what they would support and what they would not—which is, again, what they are doing here today—but what we, actually, saw was the Labor Party at odds with what their predecessors had been saying for decades.
There is no denying that the Labor Party cut company tax in the past, and they did it not once but twice. Between 1983 and 1996 the Hawke and Keating governments cut company tax from 49 to 33 per cent. At the time, these measures were sold as an immediate boost to business confidence and an incentive for increased corporate investment in Australia. It is amazing now how, when this government is attempting to do something that will stimulate economic growth and invest and job creation, they rail against it. One has to ask if it is simply political opportunism. To quote Labor’s 1993 tax policy:
This measure will provide an immediate fillip to business confidence, as well as permanently increase both the incentive for companies to retain earnings and the relative attractiveness of corporate investment in Australia, with consequential beneficial effects on employment.
Funny, I’ve heard that before. I think it may have been in relation to our policy. So I wonder why they are now opposing it. It must be noted that this measure was implemented when the budget was in deficit, and had been since 1990-91, and would continue to be for the remainder of former Prime Minister Keating’s time in office.
Turning to the Gillard government, they went to the 2010 election promising a cut to company tax from 30 to 29 per cent—again, to encourage investment and job creation across Australia. That is a quote from their policy. Labor’s Creating jobs and skills in Australia policy stated:
We will cut the company tax rate to 29 per cent for all Australian companies to stimulate investment across the economy.
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A lower company tax rate will increase investment, raise productivity, and increase the real wages of working Australians.
In March 2012 then Treasurer Wayne Swan made their position as clear as could be:
We intend to fight tooth and nail to get this general company tax cut through …
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We want a general company tax cut.
But Prime Minister Gillard had to concede that despite how much Labor wanted to deliver the measure they could not, as they could not get the legislation through parliament.
On the current Leader of the Opposition and the Labor Party of today, the Leader of the Opposition expressed enthusiasm for company tax cuts when it was Labor’s policy. In November 2010, as the Minister for Financial Services and Superannuation, he told the Australian Services Union National Conference that Labor’s plan to cut the company tax rate would ‘keep all sectors of our economy competitive in their own global markets’. Again, I do not know why we have deviated from that position across the way, there, in the current debate.
Senator Whish-Wilson: Come on, fire up!