Bill Shorten has decided unilaterally to roll back the cuts to company-tax rates for companies with annual turnover of between $10 million and $50m should Labor secure government.
The Opposition Leader is even thinking about excluding companies with turnover of between $2m and $10m.
Shorten seems to be having an existential crisis. He has decided to wage war against virtually every business in Australia except the very smallest. And bear in mind that more than 80 per cent of all employees work for private-sector companies. Doesn’t he care about them?
Having declared that the case for cutting company-tax rates was highly persuasive not very long ago, he now thinks companies should be grateful to pay some of the highest company-tax rates in the world.
And his reasoning? Firms should be happy to see their workers able to see a doctor or secure a better NBN connection.
Let’s face it, Shorten has seriously lost the plot.
Just look at what he said in 2011. “Cutting the company-tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages.”
Scott Morrison couldn’t have made the case any better.
And as for the argument that the main beneficiaries of lower company-tax rates are foreign investors, Shorten had the correct answer: “We should not forget that we are just one option for international investors — we have to offer the most compelling values.”
Again, ScoMo would completely agree.
Shorten is really sounding quite unhinged on this topic. The budgetary position is now more favourable than when he made those arguments. And as for the so-called cuts to health and education he talks about as being a result of company-tax cuts, he only needs to look at the substantial growth of spending in these areas (and plenty of others) as set out in the budget.
The thing is that a cut is not some sort of mythical comparison between a far-fetched, 10-year Labor plan of excessive spending in an area or adequate, measured spending. This approach not only beggars belief but is incredibly poor policy.
We need to spend enough on health and education to efficiently meet expected objectives, bearing in mind that trade-offs always exist. This is how good governments govern. Flights of fancy don’t count.
And here’s something else for Shorten to consider: turnover is not a good indication of the size of a business. Some businesses have lots of revenue but very small margins. They probably employ quite a few workers. Other businesses have small amounts of revenue but fat margins. They probably don’t employ workers.
To think turnover of $2m a year is a suitable cut-off between small and big businesses is just bizarre. If Shorten had consulted his colleagues, this fact might have been pointed out to him.
The international research on the impact of company-tax cuts is clear-cut. For a small, open economy such as Australia, about 60 per cent of the gains from lower company-tax rates accrue to workers (higher employment and real wages) and the rest to the owners of capital. But note that in Australia, we are all owners of capital through our superannuation balances.
Should we conclude that Labor and Shorten simply don’t care about workers and superannuants?
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