Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
Senate powerbroker Nick Xenophon has delivered a double blow to the Turnbull government.
Not only has his Senate team rejected the government’s omnibus bill which ties an overhaul of childcare subsidies to a raft of welfare cuts, it’s not budging on tax cuts for big business.
The Xenophon team would back the first stage of the government’s 10-year business tax plan which would lower the tax rate for companies with a turnover of less than $10 million to 27.5 per cent.
Small business with a turnover under $2 million received a tax cut to 28.5 per cent under former treasurer Joe Hockey, but all other companies still pay 30 per cent.
Asked whether he would support cuts for bigger firms, Senator Xenophon told Sky News on Tuesday: “Not at this stage, we think they should be deferred”.
The government needs nine of the 10 crossbenchers to support its $50 billion plan that would set the company tax rate at 25 per cent tax rate in a decade’s time.
Labor also opposes the omnibus bill.
“People might be more sympathetic to the government’s proposition if they basically jettisoned the $50 billion tax cut and recast it,” opposition frontbencher Brendan O’Connor told Sky News.
But the government is equally adamant, saying Australia needs to cut business tax cuts to be more globally competitive.
“The fact is we are not competitive right now, we are losing investment in Australia, we are losing expansion of businesses in Australia and that simply means there are fewer jobs,” Trade Minister Steven Ciobo said.
However, an analysis by think tank The Australia Institute, doubts a company tax cut for big business would produce the ‘jobs and growth’ claimed by the government.
It says just 15 companies would realise a full third of the windfall – the big banks, insurers, miners, retailers and Telstra – and believes they won’t spend it on innovation and investment.
“They are more interested in maintaining their market power and the profit this brings,” the institute’s senior economist Matt Grudnoff argues.
“What innovations they do make focus on reducing jobs, for example ATMs, automated mining trucks and self-check-out machines in supermarkets.”
Or simply, they might simply hand the bonus straight to their shareholders and not increase investment at all, Mr Grudnoff says.