Cut company taxes or broaden investment allowance: Husic

Labor’s Industry Minister is advocating for a cut in corporate taxes to help companies have the capital to invest in the future.

Industry and Science Minister Ed Husic has added his voice to calls for a cut to company taxes, advocating for either a reduction in the taxation rate or via the establishment of an economy-wide investment allowance.

Speaking at a business event in Sydney, Mr Husic argued that changes to the company tax rate should be considered granted robust wages growth and recent changes to workplace laws and regulations.

“I believe, in the strongest Labor traditions, we need to be able to bring business and labour together and show that everyone wins,” Mr Husic told an Australian Financial Review summit on Tuesday morning.

“And we need to consider … how we do that, either through corporate tax reform or the way in which we provide investment allowances for the uptick in manufacturing capital.

Stronger wages growth and Labor’s industrial relations overhaul mean the government should consider corporate tax reform, Industry Minister Ed Husic says. Picture: NewsWire / Martin Ollman

“That is something long term, I think, that does need to be considered.

“We need to see business be able to invest and to free up capital to do that, and if they’re committed to do that, then be able to see that enabled, but having done that too in a way where we see people’s wages and their security or employment improved, and that is going to be the test.”

Companies above an annual turnover threshold of $50m are currently subject to a tax rate of 30 per cent of their taxable income. A 25 per cent rate applies to small and medium-sized enterprises below this threshold.

In his portfolio, Mr Husic is one of the ministers with carriage of the Albanese government’s $22.7bn Future Made in Australia plan, which provides subsidies and tax incentives to promote green manufacturing and onshore industries that bolster domestic capability.

Arguing that the Coalition had been unable to lower the company tax rate, Mr Husic said it was “largely because people felt that … profits – pre-pandemic – were performing quite well and wages were stagnating … it was really tricky to be able to have that conversation”.

“That’s why you saw the talk of corporate tax reform under the Coalition go nowhere,” he said.

Earlier this month, the federal budget unveiled an extension of the existing instant asset write-off for small and medium businesses, alongside production tax credits for the production of hydrogen and critical minerals.

Business Council boss Bran Black argued unlocking future investment would require an overhaul of company tax settings. Picture: NCA NewsWire / Martin Ollman

Seizing on Mr Husic’s comments during question time on Tuesday afternoon, shadow treasurer Angus Taylor questioned if they were aligned with Labor policy to which Treasurer Jim Chalmers argued they were “entirely consistent”.

“What (Mr Husic) said was that the corporate tax system has a role to play in incentivising manufacturing capital,” Dr Chalmers said.

“It might just have dawned on those opposite, but that was a central feature of the budget.”

Welcoming the comments, Bran Black chief executive of the Business Council, repeated the lobby group’s longstanding call for overhaul of the company tax arrangements.

“I’m pleased the federal government seems open to have this conversation, because its pipeline of new economy initiatives, particularly through its Future Made In Australia Act, will rely on a competitive tax rate,” Mr Black said.

“The BCA has long advocated for an economy-wide investment allowance in absence of a move on corporate tax, which would boost economic growth and opportunities for Australians.”

But Greens economic justice spokesman Nick McKim blasted Mr Husic’s intervention, branding Labor as “massively out of touch”.

“Instead of reducing corporate taxes, we should be introducing a super profits tax to make sure that the corporations who have driven inflation contribute to a fairer society,” he said.