Oct 19, 2017

Treasury Laws Amendment (Enterprise Tax Plan No 2) Bill Speech – 19 Oct 2017

I’m sure the member for Bruce will reflect on the standing orders. I wasn’t going to speak on this particular matter, but the member for Bruce inspired me with his rhetoric and passion for the subject. I, too, want to speak about the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. Deputy Speaker Howarth, you’ve obviously heard that, on this side, there have been a lot of concerns raised about the net benefit for our economy if the $65 billion tax cut goes through. I’ve heard a lot of observations from our perspective that it will not be terribly much. That’s in the spirit of bipartisanship. That was really driven home to me. I would categorise myself as someone in the Labor Party who is pro-business. I have worked with businesses in a whole range of areas in my previous life. If I thought this was a good idea and I thought this would actually generate the prosperity that this government says it is going to generate, then not just I but also others on our side would support this proposed tax cut, but that’s not what I see at all.

I deal with businesspeople a lot. For the parliamentary record, when I was parliamentary secretary to Kevin Rudd, particularly during the global financial crisis—the one that is often denigrated on the other side; the one that we say wasn’t as bad as people were saying—we worked very closely with business. It’s important to lay the groundwork for why I say that the $65 billion could be better spent and could be backed up with appropriate savings. If I go back in history—and it does tie into the enterprise tax plan—we started detecting a substantial softening in the US economy, particularly when we saw the collapse of Lehmann Brothers. I’m glad I’m able to talk about this, because it’s one of the great failings of the Rudd-Gillard-Rudd era that they were never able to get a proper description of what we were facing during the global financial crisis, due to the internal dynamics.

I hoped that your side of politics, Mr Deputy Speaker Howarth, had learnt from us, but I think you took the wrong lessons from us. I think you’re now reaping the dividend of that cancer in the way you deal with unpopular leaders or have difficulties with leaders. That’s not an attack on you; it’s just an observation. When you are consumed by the discussion about internal dynamics, your government doesn’t get the message out about what it wants to achieve and what it has achieved for the economy. During that particular period of time, particularly with the collapse of Lehman Brothers, businesses generally were facing diabolically bad conditions, and they weren’t talking about tax cuts then, I can tell you.

We faced two difficulties. I can recall being party to a number of very serious conversations about the economic difficulties that we faced. The first one was stabilising the world financial order. When I spoke to Lindsay Tanner, who was then our finance minister, he said that the world had a financial heart attack on three occasions and, in effect, the entire world financial system was close to collapse. Australians don’t realise that. Australians don’t realise that a lot of businesses were going to basically hit the wall. We were facing the most grave consequences in terms of what might happen since the Great Depression. That’s how bad it was. It’s interesting, when we have this discussion now about this particular bill and the $65 billion tax cut, to reflect on what actually occurred then. That informs Labor’s view a lot on how to best support business productively so that it can grow in a market that is still affected by the vestiges of the global financial crisis. When a lot of the economic commentators spoke about the global financial crisis and how Australia came out of it, I always detected an underlying fragility. I think it’s still there. I think it affects big business and small business.

But my point is that we basically faced a situation where the global financial order was going to collapse. What stopped it collapsing here in Australia was the bank guarantee. I meet with businesses. I deal with businesses across the area—and I’ll touch on that in a second and tie it to this particular bill. The Prime Minister formed a special committee—I think it was the SBPC, the strategic budget priorities committee—and I recall having a discussion on the weekend that the SBPC was meeting. There was a lot of criticism about the SBPC, but we were facing a situation at the end of that particular week in October where, if the Australian government had not taken action, there would be a run on the banks the following week.

Why do I talk about business? The reason that I talk about business is that, on the weekend that the SBPC was meeting, I sat down with a gentleman who had developed a lot of property around Dandenong and the surrounding area—someone who was not necessarily pro-Labor but someone I would speak to from time to time—and, while we were sitting there having breakfast, he said, ‘If you don’t provide a bank guarantee for my business, I’m taking $16 million out of the bank next week.’ I thought that that was bluster and I said, ‘You can’t be serious.’ He said, ‘My savings aren’t safe; I’m taking the money out of the bank’—he was a liquid businessperson, a successful businessperson, not a spendthrift—and I thought, ‘This is getting very serious.’ If you remember what Ken Henry said when we talked about this period of time, you’d recall that he talked about his mother basically wanting to take money out of the bank.

People underestimate what it was like for businesses during that time. At that time, I dealt with Gerry Ryan, who’s the head of Jayco, and we would convene meetings with large businesses in the Dandenong area. These were not publicised. They were important meetings that were put together with major retail chains and major manufacturers that formed the bulk of employment in the Dandenong region. This was slightly out of my area, and I would ask, ‘What can we do to protect your businesses? This was around the same period—late 2008-09. Gerry started to convene these meetings so that I could talk with big businesses and small businesses directly, who said, ‘We’ve got to have stimulus in the economy; otherwise, we’re going to start laying off thousands of workers.’

I think the thing for critics of the then government’s stimulus package—and again it relates to this particular bill—is the question around what business needs to create jobs and opportunity. When I hark back to that period of time, what business needed was spend on infrastructure and the creation of confidence in the community. I won’t go into the details of the meetings, because these meetings were held with up to 14 or 15 members of the business community—and my staff member was there at that time. We were literally facing this yawning chasm of: ‘My God; employment is going to collapse in the south eastern region of Melbourne.’ It was that close.

The worrisome thing, when I look at this bill and the $65 billion we’re talking about, is that everyone has forgotten what Australian businesses were facing and what the Australian government needed to do to keep those businesses afloat. The first component was to stop the run on the banks—and that’s what happened with the bank guarantee. I noticed that former Treasurer Wayne Swan was speaking here yesterday about BHP and its role. The former Treasurer was obviously right at the coalface in terms of what happened there, and he was talking about businesses that don’t pay tax—and I’ll talk about that briefly later on. But people forget that we needed to create confidence.

The second measure—regardless of what side of politics—is to inject liquidity into the system, which we did with the first stimulus in November-December that year. That lifted retail. Retail is the canary in the coalmine. If retail is doing well, it’s a good canary. When it was not doing well, major retailers were telling me, ‘We’re sacking.’ They were getting ready to sack thousands of workers for the Christmas period in 2008. That didn’t happen. That was, I think, a government working constructively with small business and big business.

Then, of course, we established the infrastructure projects. Again, we would have differences about how that money was spent. When I looked at the number of tradespeople in my constituency whose jobs were saved by those stimulus packages that built those buildings that the opposition, the now government, were criticising, I was seeing a person, a livelihood, a lifestyle, potentially taken away. My point is: when I look at what the government’s putting forward, I see a measure that is not going to deliver the economic benefits that the government wants and that will be at a substantial cost to the economy and to its own reputation really. There are better ways of doing this.

Again, when I talk to businesses now, they’re not saying, ‘Don’t give us a tax cut.’ They’re saying, ‘Build more infrastructure.’ There are Liberal supporters and coalition supporters. I wouldn’t go so far as to say they were talking like socialists, but when you’re talking about people that I would regard as being in the far right of the Liberal party and they are saying to me, ‘I want you guys in the state government to concentrate on infrastructure,’ not one person has mentioned a tax cut. We’re proposing $65 billion worth of tax cuts, and these are big businesses—they don’t talk about this—like Jayco, for example. Gerry Ryan hasn’t come up to me and said, ‘I would like a tax cut’—and they employ 800 people. They are a world-leading manufacturer of a great product. Gerry has another wing, his dinosaur creatures company, which features in Hollywood. I think that’s about a $130 million enterprise. This is a man that does business overseas. This are one of the people that your government is targeting with this tax cut, but he’s not saying we need this.

Again, when I look at the rationale for why we need this, it’s just not evident. I accept that the government has put forward its reason, but we’ve heard speaker after speaker on our side debunk that. We’re not opposing this because we just like opposing it; we’re opposing it because we think the $65 billion, if it needed to be spent, could be spent in much more effective ways. For example, I have two headspaces in my regional area. They happened as a consequence of lobbying that my office did with a group of incredible young students in 2012 because we had a suicide cluster. If anyone has lived in a region where you see young people killing themselves in the numbers that they did in my constituency, you don’t want your worst enemy to live through that; I can assure you of that. What we did was lobby the then government—and there was resistance from our side, so I’m not saying this was an easy thing. We did a program with Four Corners called ‘There is no 3G in heaven’. What the then Gillard government did was direct, I think, up to $6 million—$3 million for the headspace in Dandenong and $3 million for the headspace in Narre Warren. At least we did something with that.

Last week I went back to that headspace again as part of national Mental Health Week and headspace day. I met with the young people and I heard about the lives that are being saved. As I was saying, when you’ve been through an area that’s been as scarred as that region, particularly with the young people that had been killing themselves, you ask: ‘What do they need?’ If you talk with them afterwards, they say, ‘We need funding certainty because, beyond 2019, we’re not quite sure if we can still function.’ We have massive population growth down our way and, as someone who’s lived through that experience of young people hurting themselves in this way, the fact that there’s not a guarantee of the funding for an essential service that protects and saves young people blows my mind. If I saw something in this bill that basically said, ‘We’re going to put $120 million to national headspace,’ I would say congratulations to your side of politics, Mr Deputy Speaker Howarth. I would like that, but there’s nothing there.

There are tax cuts to businesses that sometimes, in effect, pay no tax. I have here, in my hand, an article from ABC News titled: ‘Who pays what? ATO names large companies that paid zero tax in 2014-15’. It says there are 670 large companies that paid no corporate tax in the 2014-15 financial year, and 1,900 public, private and foreign-owned entities for the 2014-15 income year paid no tax. I could spend a couple of hours reading through these figures. For example, you have a company with an income of $216 million and there’s no tax payable—that’s quite extraordinary. My view is that we can’t support this particular tax cut. There are better ways of doing this. I respectfully put to you and to the government that this bill be reconsidered.

 

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