Malcolm Turnbull has declared the Coalition will take its politically unpopular big business tax cut to the next election, despite a key crossbench senator telegraphing that he would not vote for the proposal in its current form.
Defining the economic policy terrain for the next federal election, the prime minister on Wednesday dug in behind his government’s policy to cut the corporate tax rate from 30% to 25%, telling parliament the government was “committed to it today and at the next election” and adding “we welcome a contest with the leader of the opposition on tax”.
Turnbull’s commitment followed a statement just before question time by the South Australian independent Tim Storer indicating he was not on board with the proposal.
Storer told the Senate he “remain[ed] to be convinced that I should support this bill in its current form, in isolation from a broader discussion and initiatives on enhancing the overall sustainability of our taxation system and with alternative uses of government revenue that can generate prosperity and enhance fairness for the Australian people”.
The Turnbull government brought on consideration of its company tax cut legislation last week in an effort to win Senate support in the final parliamentary sitting fortnight before the budget, but parked the debate on Tuesday night, lacking the numbers to get it through.
Courtesy of a flurry of backroom lobbying and crossbench diplomacy by the Coalition, amplified by corporate chief executives including Twiggy Forrest, the government managed to persuade seven of nine crossbenchers to support the change, including the new Tasmanian senator Steve Martin, and the One Nation bloc of three senators.
But Storer was a holdout, as was the Victorian senator Derryn Hinch, who pursued an extensive wish list ranging from punishment for paedophiles to exempting the banks from the tax cut.
On Wednesday Storer outlined a range of in-principle concerns, including whether the tax cut was affordable, whether it was the best way to stimulate economic growth, and whether it should go ahead in the absence of a broader agenda on tax reform.
He told the Senate that as a new arrival in the chamber he intended “to review each bill on its merits, examining all the the evidence available in a non-partisan manner. I believe this is what the South Australian people expect of me”.
On Wednesday evening the treasurer, Scott Morrison, said the government would continue to negotiate with the crossbench and continued “to inch forward”, citing One Nation’s change of heart to suggest all was not lost.
With the government spinning its wheels, Labor distributed a leaked document from the Business Council of Australia which it said was a draft of a statement the council issued last week containing non-specific commitments on investment from 10 chief executives if the tax cut passed the Senate.
The BCA said the new document was not a draft of last week’s statement but a working document connected with an outreach and advertising campaign it launched this week to try to defend itself against progressive activist campaigns that the business community considers deleterious to its interests.
The leaked document, headed “Informal Compact”, spells out specific commitments if the company tax passes. It reads: “If the Senate passes the enterprise tax plan in full, we will – 1. Create more Australian jobs in the cities, suburbs, town and bush; 2. Invest in more Australian projects and ideas – especially in remote and rural Australia; 3. Be in a stronger position to avoid offshoring of jobs; 4. Be able to increase wages when the conditions are right; 5. Pay our tax and show our commitment by signing the ATOs tax transparency charter.”
The BCA’s chief executive, Jennifer Westacott, said the organisation was working on a statement that could be supported by the membership that would go beyond the company tax cut debate, and that process was “ongoing”.
Labor used question time to ask a series of questions to the government about apparent the lack of commitment by business to pass through the benefits of the company tax cut to their workers – questions the government deflected by raising previous statements of support for a company tax cut from ALP figures.
The finance minister, Mathias Cormann, said the government would continue its efforts to persuade Storer and Hinch to support the measure between now and when parliament resumes for the May budget.
He defended the role of the business community in the debate, saying last week’s intervention by the BCA, the public statement from the 10 chief executives, was “a significant and important intervention”.
Cormann said the government had “made a lot of progress” in the past parliamentary fortnight despite not hitting the requisite level of support to pass the tax cut.
Labor says once in government it would junk the Turnbull government’s big business tax cut, if it passes the Senate, which sets up a political battle between the major parties on economic policy at the next federal election.
The Labor leader, Bill Shorten, said this week Labor would outline its position on the company tax cut that had already cleared the parliament – a tax cut for businesses with a turnover of less than $50m – after the budget.
While signalling it would repeal the big business tax cut, the opposition was holding out on the prospect of future tax relief for businesses prepared to invest locally.
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