Malcolm Turnbull’s $65 billion handout for big business

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks very much for being here this morning. My name is Andrew Leigh, Shadow Assistant Treasurer. We've seen today news that the Government has appears to have fallen short in the Senate in its attempt to give Australia's biggest businesses a massive corporate tax cut. This would be a corporate tax cut which the Government has tried to justify at every turn.

 

There is one simple number to illustrate why they have failed and that's four out of five. 

 

Four out of five Australians oppose giving money to big businesses and taking money away from schools. A Business Council of Australia secret survey revealed this week that four out of five CEOs say that if they got a big business tax cut they wouldn't spend it on wages. That accords with the evidence which we have from Australia and the United States. You look at companies that pay less company tax – that have a lower effective rate of company tax – they tend to have lower rates of job growth, not a higher rate of job growth as the Government would lead you to believe. That's true in Australia by my own research, it's true in the United States by research conducted last year. So this argument that this big business tax cut is just what the economy needs to kickstart growth is at odds with the evidence.

 

Indeed, it's at odds with the evidence that the Government brought down in the 2016 budget when they announced this unaffordable corporate tax giveaway. Their own estimates there suggested that a big business tax funded by increasing income taxes on middle Australia (a point the Government very rarely likes to admit), would only add 0.1 per cent to household income growth - a benefit that would flow in the 2030s. 

The Government tells us it is incredibly urgent to cut the big business tax rate but you can see the lie of that in their own schedule which would have the big business tax cut coming in mid-2026. If it's so urgent it's pretty hard to see why they'd have a 25 per cent rate cutting in in mid-2026.

The values of this Government are clearly on display with their urging of big business community to not give up the fight for a big business tax cut. Malcolm Turnbull's priorities will always be a corporate tax giveaway before giving money to schools and hospitals. Yet when you ask Australia’s top economists what they think would spur growth, two out of three of them say it would be investment in education rather than an unaffordable big business tax giveaway that would do best to spur growth.

Labor is the party of economic growth. We support economic growth through investing in human capital – great schools, more apprentices, giving every kid a chance to go to university who has the smarts to get there. Not shutting down the demand-driven university system, as occurred on New Year’s Day this year. Labor’s got a plan for growth through investing in infrastructure, through investing in schools, through making sure we have great institutions like our FutureAsia Plan to boost exports into the region. That’s the secret to growth, not an unaffordable tax giveaway.

Happy to take questions.

REPORTER: The Government is obviously keen to get the company tax cuts through, but it won’t happen before Easter I guess. Do you think that will affect the momentum going forward or how to you see it playing out?

LEIGH: I’m not sure if you mean the momentum of the Australian economy or the momentum of the Turnbull Government. Frankly, both have stalled. We have Malcolm Turnbull now hitting 29 lost Newspolls, not Labor’s metric but the metric that he himself said that leaders should be judged by. We’ve also got the Australian economy struggling for momentum right now. We’ve had a year in which growth has been too sluggish, we’ve got consumer demand still in the doldrums. Part of the reason for that is that wage growth over the past two years under Malcolm Turnbull’s prime ministership has been just 4 per cent while corporate profit growth has been 32 per cent. If Malcolm Turnbull wasn’t so hellbent on cutting penalty rates, then we might see more of that consumer confidence flowing through, we might see a stronger consumer driven economy. There’s no way that promising corporate tax cuts in 2026 can deal with the growth challenges that Australia has now.

REPORTER: I guess just on another issue, there’s been talk with Australia expelling the Russian spies that we might look at the World Cup and boycotting that – that’s been ruled out, the team boycotting. But what do you think about Australia’s response there and sport and how it’s all been impacted?

LEIGH: Labor believes the response has been appropriate and proportionate. It places us in line with our allies, recognising the significant breach of international law and international norms that on the available evidence the Russians appear to have engaged in.

No other questions? Thanks everyone.