The treasurer, Scott Morrison, has refused to be drawn on the economic impact of the government’s downsized corporate tax cut package.
In an interview on Sky News on Monday, Morrison cited the government’s commitment to implement the full $48bn tax package in repeatedly refusing to nominate the economic impact of the tax cuts for businesses with a turnover of up to $50m a year.
On Friday the government passed the first phase of its company tax cut package with support from One Nation and the Nick Xenophon Team. That tranche will cost the budget $24bn over the medium term, half the $48bn over 10 years for the full package.
Asked what the smaller package would do for economic growth, Morrison said Treasury had modelled the full package and found “the cumulative impact ... would be to lift the size of the economy by 1% permanently”.
“What we’ll see is businesses investing more in their businesses, giving people more hours, having more room to be looking positively at people’s wages as their profits increase,” he said, without nominating the size of the expected benefit.
In an earlier interview on Sky, the finance minister, Mathias Cormann, also refused to reveal the economic impact of the tax cuts.
Morrison said he did not believe the benefit was “too small” to model, adding that the businesses that received cuts employed 6.5m Australians, half the workforce.
The treasurer questioned why Labor supported company tax cuts for businesses earning less than $2m a year, but didn’t support them for medium and big business.
Labor has refused to rule out clawing back the tax cuts for businesses earning more than $2m a year, and the Australian Council of Trade Unions has indicated it will campaign for them to do so.
Labor is not expected to conclude and announce its position until after the May budget.
On Monday the shadow treasurer, Chris Bowen, said the treasurer was “all at sea in the last few days ... unable or unwilling to explain the economic benefit of these tax cuts”.
“We know that the benefit, from the government’s own figures, of the full $50bn package was a 1% increase in the size of the economy in 20 years’ time and $2 a day wage increase in 20 years’ time.
“The impact of the smaller package which the government managed to pass will be much smaller than that; you will need a microscope to find the economic dividend.”
Asked whether Labor was causing economic uncertainty by refusing to say if it would claw back the tax cuts, Bowen said the opposition would not engage in “policy on the run” and would consider the issue at shadow cabinet first.
The stoush over company tax cuts comes as the government faces increasing pressure on housing affordability. On Monday new Corelogic data showed Sydney property prices have increased by almost 20% in just 12 months, while prices have increased by 12.9% on average nationwide.
On Friday the Australian Prudential Regulation Authority imposed new limits on interest-only mortgage lending to reduce risk in the Sydney and Melbourne housing markets.
On Monday, the Australian Securities and Investment Commission joined efforts to clamp down on risky lending by announcing it would use its data-gathering powers to find lenders and brokers that are pushing customers on to more expensive interest-only loans.
Morrison said the regulators were applying a regulatory response that was fine like a “scalpel” in comparison to the “chainsaw” approach of Labor to abolish negative gearing.
Asked whether the government was considering a proposal to allow first-home buyers to access their superannuation for a deposit, Morrison said he would “not speculate” on the contents of the budget.
Earlier, Cormann said the government would keep its commitment not to abolish negative gearing or reduce the capital gains tax discount “in the way Labor was suggesting” but did not rule out other changes to capital gains tax.
On the superannuation proposal, Cormann said “you don’t improve the affordability of anything, including housing, by boosting demand”.
“If you enable people to access their super ... and you enable more people to enter the housing market more quickly, you’re boosting, and to the extent there’s a housing affordability issue that would make the problem potentially worse, all other things being equal.”
The policy would amount to a wealth transfer from people saving for their retirement to people selling their property, he said.
