Why I support the Company Tax Cuts
Senator BURSTON (New South Wales) (12:36): I rise today to speak on the government’s Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017. This bill seeks to amend the Income Tax Rates Act 1986 to progressively extend the lower 27.5 per cent corporate tax rate to all corporate entities by the 2023-24 financial year and further reduce the corporate tax rate in stages so that by the 2026-27 financial year the corporate tax rate for all entities will be 25 per cent.
As the Senate knows, my support for this piece of legislation has turned out to be quite significant with regard to the make-up of the crossbench. It was with a heavy heart that I announced my resignation from Pauline Hanson’s One Nation party. I now represent New South Wales in the Senate as a member of the United Australia Party. I would like to take the opportunity to advise the Senate of the events that led to this.
As part of a so-called team, the three Pauline Hanson’s One Nation senators had negotiated a significant package that was in the best interests of all Australians in return for support of the company tax cuts for all Australian companies. We shook hands on a deal, and I thought that was that. On Monday, 1 June, I received a call from Senator Hanson that she was considering pulling our support for company tax cuts for all Australian companies. I advised her that I was not comfortable at all with going back on a deal we had made and that we needed to discuss it further at a face-to-face meeting with Senator Georgiou later in the week, as we had scheduled. I was shocked to read the following day, on the front page of The Australian newspaper, that our policy position had changed yet again—I think the common phrase is ‘flip-flop flip-flop’—and that we now opposed the legislation. When we met later in the week, as previously scheduled, Senator Hanson asked me if I still supported the legislation and if I would vote for it. I informed Senator Hanson that I would. I was then told that I was sacked as the Pauline Hanson’s One Nation party whip. Born and raised from humble origins in the Hunter Valley, my father taught all his sons that, once you shake hands with somebody, that’s it. A few weeks later, I was saddened to be asked by Senator Hanson to resign from the party and from the Senate for sticking to my word. It had become clear that my relationship with Senator Hanson was irrecoverable and that the best way forward for me to represent the best interests of the constituents of New South Wales was to resign from the party. I also want to emphasise that the deal on company tax cuts between the government and Pauline Hanson’s One Nation party was always on the proviso the company tax cuts passed the parliament. Comments made by the government’s key negotiator, Senator Mathias Cormann, in the media recently confirm that the deal still stands.
I firmly believe that this legislation, which progressively reduces the corporate tax rate from 30 to 25 per cent for all corporate entities by 2026-27, is in the best interests of the country. We must ensure that Australian companies remain internationally competitive. I remind the Senate that the proposed rate of 25 per cent, which doesn’t come in until 2026-27, will still just leave us in the middle of the pack compared to our international competitors.
Many OECD countries have also reduced their company tax rates. In the UK budget of 2015 the government announced legislation setting the corporate tax main rate at 19 per cent for the years starting 1 April 2017, 2018 and 2019, and at 18 per cent for the year starting 1 April 2020. The US has also cut the rate of company tax from 35 per cent to 21 per cent, which has in turn seen its unemployment rate drop to 3.9 per cent.
According to a report from the OECD, the average corporate tax rate amongst the 35 countries listed is currently 21.94 per cent. So in 2026-27, if this legislation passes, our corporate tax rate will still be more than three per cent higher than that average rate. If the trend of lower company tax rates continues around the world, our rate of 25 per cent in 2026-27 may well be still one of the highest in the OECD.
As a senator representing New South Wales in this chamber, I note that according to recent figures published in the media there are 1,622 companies in Australia earning over $50 million. Of that number, 739 of them are based in New South Wales. That’s over 45 per cent of Australian companies and their employees that would benefit from this legislation that are based in the premier state—my state.
I would also like to take this opportunity to say to Senator Hanson and Senator Georgiou to honour the deal we made with the government and pass company tax cuts in full to help companies and their employees based in their respective states of Queensland and Western Australia to remain internationally competitive.