Taxing times in the Senate as Labor acts against jobs

The parliamentary roadblock for the government’s modest but important company tax rate reduction proves beyond doubt that this country has developed a dangerous resistance to economic reform. Malcolm Turnbull’s so-called enterprise tax plan was the centrepiece of the Coalition’s 2016 budget almost two years ago. The plan aimed to cut the company tax rate from 30 per cent in a staggered series of reductions, first for small businesses and eventually for larger companies, until 25 per cent would become the universal rate in 2026. Not only did Scott Morrison announce this plan in the budget but the Prime Minister took it to the 2016 election as a central plank of economic policy. Despite winning that election, the government’s mandate for this crucial step has not been accepted by the ALP or the Greens.

The Greens are not interested in economic development and have never seen a tax they didn’t like, so we can leave them to one side. But Labor claims to operate in the interests of working families and to support their aspirations for jobs, home ownership, prosperity and independent retirement. This means fostering a vibrant, growing and globally competitive economy.

In recognition of this the ALP leadership, from Bill Shorten down, previously has advocated in favour of reducing the company tax rate. Labor’s 2010 policy statement promised a small company tax cut, extolling the same rationale the government uses now: “A lower company tax rate will increase investment, raise productivity and increase the real wages of working Australians.” As prime minister, Labor’s Julia Gillard said: “I stand for cutting company tax because that’s going to help our businesses grow and help them offer people jobs.” As recently as 2011 Mr Shorten advocated lower company taxes. “Cutting the company income tax rate increases domestic productivity and domestic investment,” he told parliament. “More capital means higher productivity and economic growth and leads to more jobs and higher wages.” Yet now the Opposition Leader describes the government’s cuts as a $65 billion handout, fuelling his ugly politics-of-envy rhetoric. This is base opportunism that can only damage the national interest.

The government’s only hope was to negotiate nine pivotal Senate votes from the 11 crossbenchers. They almost got there but have been thwarted by unknown novice Tim Storer. Senator Storer filled the place vacated by the Nick Xenophon Team’s Skye Kakoschke-Moore (who ran into dual citizenship strife) because he was next on the NXT electoral list. Yet between the election and the countback he fell out with Mr Xenophon and resigned from the party, so he ended up in an NXT seat but is now an independent.

From this obscure, bizarre and only vaguely representative position of influence, Senator Storer has seen fit to reject the government’s mandate on a matter as fundamental to the economy as the corporate tax rate. This is some conceit from a man whose only semblance of a mandate comes via a party he has abandoned. It would be wrong to say Senator Storer was not elected by any particular cohort because there were 189 South Australians (presumably family and friends) who gave him their first preference on the 2016 Senate ballot. From this base he deigns to hold the nation to an uncompetitive tax rate that could do immense harm between now and when a future Coalition or Labor government manages to reduce it.

By choosing to give up our cheap energy advantage and now levying companies more in tax than the government believes is warranted, we are shunning investment. And, perhaps even more corrosive in the medium term, we are demonstrating that our system is broken. With all the best will in the world, with a mandate and a clear case that has been argued long and hard in the past by the opposition, the government still can’t implement its agenda. Senator Storer needs to ponder his role but, more to the point, Labor under Mr Shorten must decide whether it is a party that is ready to govern or simply committed to politicking. We have seen more than enough politicking from both major parties in the past decade. Good policy needs to get a look-in eventually.