Trump revival invigorates local tax push

Australia’s business leaders will ramp up calls for tax cuts after seeing Donald Trump’s tax plan in action in the US.

US President Donald Trump and Australian Prime Minister Malcolm Turnbull hold a joint press conference iat the White House. Picture: Nathan Edwards

Australia’s top business leaders will ramp up calls for the Senate to legislate more company tax cuts after hearing first-hand about the effects Donald Trump’s tax plan is already having in the US.

About 20 business leaders, including Fortescue Metals chairman Andrew Forrest, Wes­farmers chairman Michael Chaney and Rio Tinto chief executive Jean-Sebastien Jacques, attended Washington over the weekend as part of Prime Minister Malcolm Turnbull’s official visit to the US.

Others in the delegation include Visy chairman Anthony Pratt, outgoing Commonwealth bank chief executive Ian Narev, Qantas chairman Leigh Clifford, the executive chairman of Dow DuPont Andrew Liveris, Seven Group chairman Kerry Stokes and Business Council of Australia chairman Grant King.

The executives attended a joint press conference with Mr Trump and Mr Turnbull at the White House on Friday. They were also involved in a series of briefings with US officials, including Mr Trump’s top economic adviser Gary Cohn.

Fortescue Metals’ Andrews Forrest. Picture: Nathan Edwards

Billionaire Andrew “Twiggy” Forrest, founder of Fortescue Metals Group, said America had become 25 per cent more competitive “in one hit” after introducing an immediate write-off of capital goods over five years and a 21 per cent tax rate.

“I’ve been coming to America and doing business here for 25 to 30 years (and) I have never seen the optimism. I have never seen big businesses say ‘we are going to invest in America and we are pulling capital out of other countries and back to America,” Mr Forrest said.

The chief executive of miner Rio Tinto, Jean-Sebastien Jacques, said global businesses had no choice but to move people, jobs and money to countries that offered more competitive business climates.

Qantas chairman Leigh Clifford. Picture: Nathan Edwards

“Remember, there is limited (foreign direct investment) globally at any point in time. There is only one pot of money and when the money goes to one country, that’s it. You stop and it’s even more critical in these kinds of new infrastructure or mining business, which are very capital-intensive. Once the money is earmarked, it’s gone,” Mr Jacques said.

He said Australia was at risk of being left behind if its corporate tax rate stayed at 30 per cent.

“The competition is not between Fortescue or Rio or BHP, it is really about Australia versus India versus Brazil. We should not forget the big picture here,” Mr Jacques said.

“In Rio we love Australia, we want to make sure Australia is successful not only in next two years but 10 years, 20 years, 50 years from now.”

Without the support of Labor or the Greens, the government will need to win over eight of the 10 Senate crossbenchers to legislate the rest of its tax package but is struggling to gain the necessary votes.

Visy chairman Anthony Pratt watches Australian Prime Minister Malcolm Turnbull give the keynote address at the National Governors Association winter meeting in Washington. Picture: Nathan Edwards

Wesfarmers chairman Michael Chaney said the change in mood in US business was clear.

“The thing that’s really struck me is the energy and enthusiasm in the corporate sector. That is, ‘this is a real sea-change, we are bringing money back because — not only tax cuts — it’s the investment allowance and the depreciation, and it’s having an immediate effect’,” Mr Chaney said.

With “a bit more time the penny will drop” and the next government, led by Mr Turnbull or Bill Shorten or someone else, would “have to face reality and address the company tax issue”, he said.

Business Council of Australia president Grant King said Mr Trump’s chief economics adviser Gary Cohn had told a briefing that the government was seeing the company tax cuts “make a difference” in just two months.

Kerry Stokes, Leigh Clifford and WA Premier Mark McGowan at the National Governors Association winter meeting. Picture: Nathan Edwards

“It’s making a greater difference than they thought in their modelling, their numbers, more countries are investing, wages are growing, the number of companies that are saying ‘this is changing our decisions’ is significant,” Mr King said.

“Of course it’s changing the risk for Australia because what I’ve also heard is that the US has become an even more attractive place to invest because the numbers are simply different.”

BCA chief executive Jennifer Westacott, who also attended the weekend summit, said investment by US businesses was growing at a fast pace.

“Reducing taxes drives investment, drives higher wages, and creates more jobs. That is what US companies are telling us. This is real. This is happening. It’s not ‘trickle down’ economics, it’s pouring,” Ms Westacott told Sky News Business yesterday.