HON. WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
TREASURY LEGISLATION AMENDMENT (REPEAL DAY 2015) BILL 2016
HOUSE OF REPRESENTATIVES, CANBERRA
WEDNESDAY 16 MARCH 2016
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This bill, the Treasury Legislation Amendment (Repeal Day 2015) Bill 2015, is part of a disturbing pattern that we have seen from this government not just on superannuation but, of course, in its attitude to the entitlements of people on low and middle incomes right across our country. I think it says something about this government that among its highest priorities in the super system is to make it easier for people to dodge their super guarantee obligations. This very much reflects the approach of the government to regulation, whether it is superannuation or taxation, or the intersection of the superannuation and taxation system. I think it shows a real pattern of behaviour and where the heart of this government really lies.
The heart of this government really lies, I think, with an overpowered and overpaid financial and corporate elite. Basically, this government dances to their tune. The overpaid and over-empowered corporate elite are trying to, basically, pull down many of the key policy platforms that have driven growth and social mobility in our society and in our economy. Over the last 30 years, Australia has been one of the most successful developed economies when it comes to both economic growth and maintaining social mobility. But the over-empowered and overpaid financial and corporate elite seek to take us down the American road of an increasing concentration of wealth and income at the top, a hollowed out middle-class and an even bigger army of working poor.
These people, who this government represents, are really targeting two areas of policy to achieve their ultimate aim—that is, to continue to put in place a series of policies which in United States are basically known as trickle-down economics. Give more money to the wealthy and the well to do, and the fruits of that will somehow trickle-down to those in the middle and those at the bottom. But, of course, that has not happened in the United States, where people on middle incomes for over 30 years have not had an increase in their living standards. And, of course, there is a bigger army of working poor. They do not have in that country what we have in this country—which is a progressive taxation system and a decent system of industrial relations with a decent minimum wage and decent minimum conditions for that job.
The policy justification, as I said before, behind measures like the one before us today in this bill and like what the government is trying to do elsewhere in taxation, are all about trickle-down economics. What this government is intent in doing is, basically, seek to put structural inequality into our economy and into our society, and then try to wrap it up in some form of respectable intellectual and policy framework. Year after year we see glossy reports from bodies like the IPA, the Business Council of Australia, the Australian Chamber of Commerce and Industry and all of those bodies that support and run this government. They put forward so-called modelling and claim it to be reputable. But what it is really all about is shifting the tax burden onto low- and middle-income earners and away from corporates and wealthy individuals.
Over the past year we have seen some stunning revelations from the Senate inquiry into corporate tax avoidance. It has exposed how hollow all of these glossy papers and the modelling that underpins them are. It has exposed the unethical behaviour of some of our most respectable companies. That unethical behaviour tears at the very fabric of industry and the trust that the public has, more generally, in the business community. That inquiry has shone a light on the ethically bankrupt and legally questionable tax practices of some of our largest companies.
Corporate tax is a vital part of the Australian social contract. Over the past four years corporate income tax collections have totalled $267 billion. Assuming, conservatively, that 10 per cent of corporate revenue is lost due to aggressive minimisation and evasion, at a minimum the cumulative cost to the budget is $26 billion over four years. That is a lot of money. We could do a lot of budget repair and a lot of good work in education with $26 billion over four years.
The data released by the tax office shows that over one-third of corporate entities operating in Australia did not pay any tax in the relevant year. Now, of course, among this group there were some that would have done the right thing, but there were some that did not. There are some companies that are serial tax avoiders. When a large number of public corporations are paying no tax that impoverishes all of us. The lost tax revenue must be found elsewhere from other businesses and individual taxpayers or at the expense of funding critical services. Organisations such as the Business Council have a solution to this: ignore it. Their solution to this is to make the punters pay. Their solution to this is to increase the GST by 50 per cent from 10 to 15 per cent.
As this government's tax agenda has lurched from one policy debacle to another—in fact, they are happening daily now—the BCA, through all of this, has been an ever-present voice calling for lower company tax and a higher GST. Rigorous analysis of what the BCA and others have been putting forward shows that it would result in an increased concentration of wealth and income. This would come at the cost of long-term growth because wealth concentration is not wealth creation. Wealth concentration is a drag on economic growth. We know this now from the work that the IMF and many other reputable organisations around the world have produced in recent times. But the Business Council of Australia, the Institute of Public Affairs and all the other fellow travellers who run this government are clueless or do not want to know about this advice.
It is in this context that I was stunned last week to read in The Financial Review what one of our leading, respectable businessmen said about tax. The head of the Commonwealth Bank said at The Financial Review roundtable that people think businesses are not paying tax, 'when the facts are that they are'. Well, the facts are that many are not. When many do not pay, everybody else—small businesses and individuals—pays, or we pay through the loss of services in health and education. While I acknowledge the Commonwealth Bank is—or may be—meeting its legal responsibilities, many other large, so-called respectable companies are engaged in outright tax evasion. That is what we have seen come out of the Senate inquiry. But the BCA has not spoken out about this once—not once. Yet it has the gall to go public suggesting a 50 per cent increase in the GST when the 30 per cent nominal corporate tax rate is not being paid by all corporates.
The data published by the tax commissioner is incredibly important. Few companies pay anywhere near the 28 per cent rate that the BCA is now arguing for. Few companies even pay anywhere near the 25 per cent rate that the BCA is arguing for. The effective rate for all companies is 24c in the dollar. So the very notion that this 30 per cent nominal rate is making us uncompetitive is a farce and ought not to be considered in any serious debate about taxation. The effective rate is 24c. That is the rate that is being paid by those who are paying their tax, because many are not paying anything or are paying considerably less than 24c in the dollar. Let's consider this fact: if all the companies that reported taxable income paid the full 30 per cent, the additional amount from these companies would equate to more than $11 billion. That is the extent to which people are not paying the 30c nominal rate or a 28.5 per cent rate. The average effective rate is 24c in the dollar.
Then we come to the argument from the BCA, which cites a Treasury roundup paper, which says that two-thirds of the growth dividend of a company tax cut flows to labour, with only one-third flowing to the owners of capital. This is a highly theoretical model based on an internationally-competitive scenario. It does not take into account the rampant tax evasion and avoidance that we are afflicted with. It does not take into account the beggar-thy-neighbour policies implemented by countries like Singapore, where there are many multinationals that have a zero rate. It does not take any of that into account. The zero rate in Singapore acts as a tariff against countries like ours and the good investors in this country. It is a tariff against responsible taxpayers in this country. That is how it acts. There is no way a country like Australia can compete with a zero rate. Even if we were to take the effective rate down to 15, companies would ignore it because they would be seeking to minimise their tax. This is the backdrop to the government's pattern of behaviour. They do not consider these factors when they come along and suggest big shifts in taxation, from an increase in indirect taxation through to a cut in the company rate. They will try to claim that a cut in the company rate will produce all these magical benefits, when the modelling is not realistic and does not, in any way, comply with the real practices that are going on in the community.
Much of this agenda—the BCA, the IPA and all of the other constituent elements of the Turnbull-Abbott government—is all about wealth concentration, not wealth creation. It is nothing like the 1980s and 1990s agenda of the Hawke and Keating governments. What it does resemble is the 1980s and 1990s American style trickle-down economics that I was talking about before. It is an agenda for growing inequality. At their core, Prime Minister Abbott, Prime Minister Turnbull, former Treasurer Hockey and current Treasurer Morrison all have it in their DNA that inequality is good for us because they work on a 'survival of the fittest' ideology. They do not see that the things we do together are the things that make us strong. They do not see an effective role for government to put in place effective long-term national policies like compulsory superannuation—perhaps the greatest achievement of the Hawke and Keating years. It is a savings pool unmatched just about anywhere else in the world. It is the product of a government intervention in the market to ensure that people saved for the long term. It was not just for the good of the individual but for the good of the country. But because it is a collective initiative, it is in the DNA of people who think that inequality is good for us to tear it down.
What we are seeing with this bill is an attempt to tear apart the essential infrastructure of superannuation for ideological purposes. The ideological purpose is to get the government out of the savings part of the economy, which is so important. Whilst we are the 12th largest economy in the world, we are vulnerable as a consequence. We have a small population and a large landmass with heaps of opportunity. We have always been an importer of capital, but being an importer of capital means that you are vulnerable as well. That is where superannuation comes in. It will only ever be achieved if government stands in the middle of the market and makes it a reality.
Our superannuation savings pool is bigger than our GDP. Why did that happen? It was because Labor governments, who are always the governments that put in place the big structural reforms in this country, put it there. When those big structural reforms are put in place, it is always the mission of the Liberal and National parties to tear them down. That is precisely what this bill is about. It is what the government has tried to do in industrial relations, it is what it is trying to do to Medicare, and it is what it is trying to do with the tax system. It is about tearing up a progressive taxation system and getting stuck right into the basis of fairness in the wage system in our society because, at the end of the day, what the Liberals stand for is trickle-down economics
