Pressure on Shorten to fix ALP company tax split

Bill Shorten’s leadership group meets today amid growing anger in caucus and shadow cabinet over his company tax policy.

Bill Shorten in question time yesterday. Picture: Gary Ramage

Bill Shorten is facing urgent ­demands from his shadow cabinet colleagues to resolve Labor’s ­bungled company tax policy, ahead of a leadership meeting this morning that is expected to sign off on his captain’s call to scrap tax cuts for businesses with a turnover between $10 million and $50m a year.

The Australian understands the Labor leadership group will meet amid growing anger in the caucus and shadow cabinet at not being consulted about the policy.

LIVE: Follow the latest developments from Canberra in our PoliticsNow blog.

It is expected to give the green light to the repeal of $20 billion in tax cuts for up to 20,000 businesses but preserve legislated tax cuts for companies with a turnover of up to $10m, which is the threshold the government uses to define a small business.

However, The Australian has been told that Labor’s shadow cabinet is divided over the settings of the policy, with some senior colleagues of Mr Shorten arguing that the opposition should be more aggressive and tax cuts should be stopped at a threshold of $2m in turnover. According to multiple senior Labor sources, other members of the shadow cabinet have put the view that the already legislated cuts for businesses with a turnover of up to $50m should be kept to avoid a backlash from small business.

Anthony Albanese, who has differentiated himself from Mr Shorten by urging a closer relationship with the business community, added to the internal turmoil, saying Labor must appeal not only to trade unionists, but to “small ­businesses, to people who are contractors, to people who are ­professionals”.

He revealed he would meet business figures tomorrow and on Saturday, ahead of the NSW Labor conference.

The fallout from Mr Shorten’s captain’s call came as the government seized on new figures that showed $1.1bn more had been collected in company tax this financial year than had been forecast in the May budget.

In a bid to convince crossbench senators to pass the government’s 10-year company tax cut plan, ­Finance Minister Mathias Cormann said the increased revenue took “a big chunk out of the cost of the $35.6bn for the remaining unlegislated business tax cuts”.

The latest monthly account figures, released by the Finance Department, showed company tax collections were $9.2bn higher than forecast in late 2016.

Mr Shorten has been accused of announcing Labor’s tax policy prematurely on Tuesday — without taking it to his shadow cabinet or the Labor caucus — when he revealed that if elected he would repeal tax cuts for 20,000 businesses with turnovers between $10m and $50m.

The move sparked a fierce backlash from the small business community, as well as Labor MPs angry at not being consulted.

One MP yesterday publicly refused to declare support for it.

Moving to quell rising internal dissent and a potent attack campaign over his anti-business stance, Mr Shorten is expected to announce before the weekend that, while 20,000 businesses would have tax cuts taken away, 100,000 small businesses would be quarantined. One shadow cabinet member warned Labor risked being punished at the ballot box at the Super Saturday by-elections on July 28 unless it reassured small businesses that Labor would not leave them worse off.

“It’s disappointing we haven’t had a process, and there is a lot of concern about the $10m threshold, let alone $2m,” a shadow cabinet member said. “This requires clarification as soon as possible.”

The nation’s peak small business group warned it would be considered “a declaration of war” if Mr Shorten did not exempt firms with a turnover of $10m from Labor’s repeal of business tax cuts.

Council of Small Business ­Associations of Australia chief executive Peter Strong said: “If they do that, it means the left of the Labor Party have won the debate on small business.”

The Labor infighting came as a new poll for Queensland’s Courier-Mail newspaper revealed ­almost half the voters in the crucial by-election seat of Longman supported extending company tax cuts to all businesses.

The June 26 ReachTEL poll, of 814 Longman residents, revealed 48.1 per cent of people surveyed supported extending company tax cuts to all businesses. As Pauline Hanson hardened her opposition to the government’s enterprise tax plan, the poll revealed 66.9 per cent of One ­Nation voters supported a tax cut for all companies, including big businesses.

Mr Shorten’s misstep on Tuesday sparked a sharp response from Mr Albanese, who sheeted the decision to the Labor leader alone, saying he had exercised “his right to announce Labor policy”.

As concern mounted within Labor over its relationship with business yesterday, Tasmanian backbencher Ross Hart repeatedly refused to endorse his leader’s surprise announcement on repealing company tax cuts.

It took 14 awkward responses before the member for Bass, who holds his seat by a margin of 6.1 per cent, said he supported Mr Shorten’s decision to repeal the ­already legislated tax cuts.

In a 15-minute interview, Mr Hart labelled the decision a “captain’s call”, argued it had not gone to shadow cabinet or the caucus and described it as a “matter for Bill Shorten”.

Bass, in northeast ­Tasmania, borders the by-election seat of Braddon, one of four seats Labor will seek to defend on July 28. Three were triggered by ALP MPs falling foul of the Constitution over dual citizenship.

Malcolm Turnbull said the Labor leader had “declared war on small and medium family-owned businesses right around Australia” without consulting his colleagues.

“Where were all the economic shadow ministers out defending the Leader of the Opposition? They were missing in action,” the Prime Minister said.

Scott Morrison said businesses with a turnover of between $10m and $50m would pay an extra $1m each in corporate tax over the next decade under Labor, or about $12,500 per worker.

The Treasurer declared Mr Shorten had “kicked all of those businesses in the guts”.

“That is the cost of what this reckless Leader of the Opposition, this liability of a Leader of the ­Opposition, will do to businesses as he steals back the tax relief that this parliament has legislated,” Mr Morrison told parliament.

Government Senate leader Mathias Cormann said he continued to seek crossbench support to bring the Coalition’s full enterprise tax plan “to a successful vote this week”.

There was growing speculation yesterday that the government would not bring on a vote if it was unable to muster the support it needed from One Nation and South Australia’s Centre Alliance.

Senator Hanson, after vowing not to “flip flop” any further on the bill, told the Nine Network yesterday: “I am still talking to the government.” However, she later declared she was “standing firm”.

“Let them take it to the next election, let’s see what the people say,” the One Nation leader told 3AW radio.