PM warned on plan for company tax cuts
The PM’s senior cabinet colleagues have warned that they must resolve the company tax issue or face an election wipeout.
Malcolm Turnbull’s senior cabinet colleagues have privately warned that the government must resolve the company tax issue and seek an immediate resolution to the Catholic school funding crisis or face a wipeout at the next federal election.
Following damaging results at the Super Saturday by-elections, including the Liberal National Party’s primary vote plummeting to 29 per cent in Longman, the government is expected to re-examine its positions on company tax cuts, Catholic schools funding and electricity bill relief.
Bill Shorten’s victory in Longman triggered immediate concern from Coalition MPs that the low primary vote — if replicated at the next election — could deliver seven Queensland seats to Labor, and threaten the political future of Home Affairs Minister Peter Dutton in Dickson.
Queensland Coalition MPs and ministers yesterday reached out to Mr Turnbull about the need to scrap the government’s $35.6 billion corporate tax cuts package, or exempt the banks, to avoid a voter backlash at the federal election, due to be held by May next year.
In response to Mr Shorten’s by-election victories in Longman, Braddon, Perth and Fremantle, and Georgina Downer’s heavy loss in Mayo to Centre Alliance’s Rebekha Sharkie, Mr Turnbull told colleagues the company tax cuts had been a significant issue in Trevor Ruthenberg’s loss in Queensland.
Amid a renewed campaign by Labor, the unions and GetUp!, a colleague of Mr Turnbull said the company tax issue must be finalised “one way or another” with a vote in the Senate.
“We will look very seriously and thoughtfully and humbly at the way in which the voters have responded,” Mr Turnbull said in response to questions about whether the government would re-examine key policies.
A senior government source said the government would now potentially accept a crossbench deal on company tax cuts for an increase in the current $50 million turnover threshold — for instance, to $200m — and accept defeat on cuts for larger corporations, which would include the banks.
Labor’s victories have shored up Mr Shorten’s leadership and scuppered talk of a federal election being held this year.
A cabinet minister told The Australian that the government should not react with panic but should assess the consequences in a “sober” manner before looking at any policy changes. The Australian understands the government’s energy policy is likely to be reassessed, with electricity prices identified as a key issue among older voters in Longman, a seat previously held by the LNP’s Mal Brough and Wyatt Roy.
The by-election results also sparked a fresh push inside the Turnbull government to resolve the funding war with the Catholic schools sector.
A senior minister told The Australian the dispute with the Catholics was a “sleeping giant” for the Coalition at the next election, after the Queensland Catholic education sector weighed into the Longman campaign.
Catholic education leaders have warned of a nationwide campaign targeting other key seats if the funding issue is not resolved. “The Prime Minister has to step in on this and fix it,” the minister said.
Mr Turnbull said the Coalition’s policies would be re-examined in light of the by-election results. While denying the Longman by-election result had been extraordinary, he conceded both national and local issues had played roles.
“We will be carefully considering the analysis of the by-elections, particularly in Braddon and in Longman, but I can assure you we will remain committed to the strong national economic plan that is delivering record jobs growth, strong investment,” he said.
When asked if company tax cuts had become an electoral deadweight, Mr Turnbull would say only that a lower-tax environment was important for business.
“It is vitally important that Australian companies are competitive. If you look around the country, if you believe that having record jobs growth is important — I do and I think most Australians do — you can see that’s coming because businesses are investing and they’re hiring,” the Prime Minister said.
In Longman yesterday, Mr Shorten said Labor would deliver on its by-election promises and suggested they would be funded in lieu of delivering company tax cuts for big business. “One point I have to say is the reason why we could offer promises in healthcare and school funding and looking after people’s jobs, is because we’re not giving tens of billions of dollars away to big banks and big corporations,” Mr Shorten said.
A senior LNP MP said the company tax cuts should be scrapped immediately because Labor had successfully linked the economic reforms with providing a “protection racket” for the big banks.
“I think it should be abandoned,” the Queensland MP said. “I think it’s a clever political move (by Labor) … I think it’s one of the best political lines around for a long time.”
LNP MP Michelle Landry, who holds the marginal Queensland seat of Capricornia, said the government should consider a company tax policy that carved out the banks, a proposal backed by Senate crossbencher Derryn Hinch.
Former Queensland premier Campbell Newman yesterday urged Mr Turnbull to quit as Prime Minister. “He should go. He should fall on his sword,” he said.
Queensland Coalition MPs Ken O’Dowd, who holds the marginal seat of Flynn, and Scott Buchholz, who holds the regional seat of Wright, said the government had failed to sell its corporate tax cuts effectively. “That’s not being done well enough by our party,” he said.
Centre Alliance senator Rex Patrick said his party had not yet considered supporting a new tax regime providing cuts for companies with a turnover of up to $500m.
Senator Patrick who, along with colleague Stirling Griff, could deliver a crucial vote for the government in the Senate, said Finance Minister Mathias Cormann had previously “ruled it out”.
The Australian understands Pauline Hanson will not support any further company tax cuts, piling pressure on the Centre Alliance.
Senator Hinch said he would support company tax cuts for businesses with a turnover of up to $500m and vote with the government if they excluded the banks.
Additional Reporting: Joe Kelly
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