Thank you everyone. It is a great pleasure to be here at ACCI’s second Business Leaders Summit, giving the opening address today.
Today is the first day of the third sitting week of the 45th Parliament – a Parliament that the Government is determined will be a parliament of delivery.
We have already seen significant progress in this short period, with the Government securing $11 billion towards budget repair in our first two sitting weeks, with passage of our Omnibus Savings Bill and our tobacco excise increases.
It will be a Parliament that delivers for all Australians, whether they’re in our cities or our regions, whether they’re young, retired, or part of our evolving workforce.
And so in my opening address I’d like to share our vision for delivering opportunity through enterprise.
Current domestic and international economic settings
If Australians were to look around the world today, they would see that economic growth is hard to come by.
But while many advanced economies are struggling, Australia continues its remarkable run of growth.
Through the year to the June quarter, our economy grew by a healthy 3.3 per cent.
That marked 25 years — or 100 quarters — of uninterrupted economic growth for Australia.
There is only one other nation in the world to have done better.
When you consider what the world has been through in those 25 years — the global financial crisis and the great recession, and the Asian financial crisis in the decade before, the dot com bust — Australia’s resilience is truly remarkable.
But it was no accident.
Our strong policy institutions — both fiscal and monetary policy — and flexible markets have supported us through turbulent times. Our commitment to enterprise has driven our success.
That said, it is not a record we should take for granted.
We still face challenges, and the Turnbull Government knows that.
We know that the headline growth figures never tell the full story. While Australia is outperforming the rest of the world —we still have low inflation and low interest rates — not all Australians feel they are in a better position.
Right now, we face the burden of lower commodity prices which are holding back wages and, as a result, higher living standards.
Furthermore, we are at a critical stage of a delicate — but so far successful — economic transition from a mining boom to more diverse, services-led growth.
What remains critical as we transition is our enterprising spirit.
That is why the Government went to the election with a clear economic plan for jobs and growth.
Our economic plan is about backing work and investment with lower taxes — encouraging workforce participation and business investment to improve growth and create new jobs.
We know that when business injects capital into the economy, demand grows, productivity grows, and wealth and jobs also grow.
We want people to be confident and optimistic about their future, and the future of the children and grandchildren.
Our enterprise tax plan
But to do that – we need to examine critically where we are today.
We are very aware that over the last 15 years, Australia has gone from having the ninth lowest corporate tax rate among advanced countries, to now having the sixth highest out of the 35 OECD countries.
Meanwhile, our reliance on corporate tax revenue as a share of our economy is consistently among the highest in the OECD.
This ultimately erodes Australia’s competitiveness as an investment destination. And that is why the Government will deliver a tax plan targeted to provide opportunities through enterprise — a tax plan that backs work and investment through lower taxes.
Corporate tax cut
And it starts with delivering tax cuts for small and medium-sized enterprises.
As the Government announced in this year’s Budget, as of this financial year companies with turnovers of less than $10 million will have a tax rate of 27.5 per cent — that’s around 870,000 companies — and access to a range of small business tax concessions.
This will not only make Australia an even more attractive place to invest — but it will also help make Australian companies more competitive overseas.
Furthermore, over the next 10 years we want to drop the tax rate for all companies to 25 per cent.
Legislation for the cut in the company tax has been introduced into Parliament and has been referred to the Senate Economics Legislation Committee.
Personal income tax cuts
But it is not just companies that will directly benefit under our tax plan: we are also targeting personal income taxes.
The Government knows that, without action, in 10 years nearly half of all taxpayers will be in the highest two tax brackets.
That is neither fair nor sustainable.
That is why we are making a start on preventing this from happening. We are increasing the threshold for the middle tax bracket from $80,000 to $87,000, which will be backdated to 1 July 2016.
This action will keep around half a million people out of the second-highest tax bracket — which is 37 cents in the dollar — and provide modest relief for more than 3 million hard-working Australians.
It’s all about creating room in the tax system so that people who earn more — because they work more, change jobs or win a promotion — are rewarded, rather than penalised, for their efforts.
So the Turnbull Government is working to build a tax system that boosts economic growth, supports more jobs and helps Australians — and their families — to get ahead.
Targeting tax avoidance
At the same time, we want a tax system in which Australians have confidence.
Whether it’s individuals seeing tax come out of their weekly pay check or small businesses doing their bit, people paying their tax need to know that others are doing the right thing too.
And that includes large corporations.
Tax avoidance, by its very nature, goes to the core of public trust in our institutions.
Over the past three years, we’ve been working very hard to tackle multinational tax avoidance, both alongside our fellow G20 nations and out in front of them.
We’re working to make our laws stronger than ever before.
In last year’s Budget, for instance, we announced Australia’s first steps towards implementing the OECD/G20 base erosion and profit-shifting recommendations.
Since then we have introduced country-by-country reporting so multinationals must reveal information to the ATO about their global operations.
That, of course, includes how much income they are earning and how much tax they are paying in each country in which they operate.
In fact, we have gone beyond the base erosion and profit-shifting recommendations with our multinational anti-avoidance law, which applied from 1 January this year, which stops companies that provide goods and services in Australia from artificially booking their revenue offshore.
Building on that work, in this year’s Budget we announced a new Diverted Profits Tax. This means large multinationals trying to artificially shift Australian profits offshore will be hit with a 40 per cent tax.
The Diverted Profits Tax is expected to raise around $200 million over the next four years and legislation will be introduced into the Parliament this year.
At the same time, a new tax transparency code will encourage businesses turning over $100 million or more to publish more information about their tax affairs, while new protections for tax whistle-blowers will encourage people to come forward and report wrongdoing.
These measures are all important because business should compete on their merits not on whether they are receiving a tax advantage against a competitor through artificial restructuring designed to avoid tax.
In 2015, we doubled penalties for multinationals who avoid their tax and, for global companies making $1 billion or more, we’re increasing the penalties for breaching their reporting obligations a hundred fold — from $4,500 to $450,000.
Of course, these new measures need to be backed up by an empowered and well-equipped ATO.
That’s why, in our last Budget, we moved to establish a new Tax Avoidance Taskforce at the ATO. This taskforce is expected to raise an extra $3.7 billion in revenue from big companies and high-wealth individuals over the next four years.
Recently introduced to the 45th Parliament is legislation to give force to a new tax treaty between Australia and Germany, and that will be dealt with this week. The new treaty implements OECD and G20 Base Erosion and Profit Shifting integrity rules that will minimise tax avoidance opportunities, as well as providing increased certainty for businesses and reducing tax impediments to bilateral trade and investment.
The 45th Parliament will deliver on reducing tax impediments, whilst we ensure we continue to minimise tax avoidance opportunities, creating opportunities for enterprise whilst ensuring the integrity of our tax system.
Our small business agenda tax measures
I’d like to spend a few moments talking about the Government’s small business agenda, another significant priority of the 45th Parliament.
I know we will be having a further conversation about small business shortly, but let me quickly take you through our small business tax measures.
As you know, since the 2015 Budget, small businesses with annual turnover less than $2 million have been able to immediately deduct assets that individually cost less than $20,000.
In addition to not limiting the number of items that can be immediately deducted, this initiative also provides significant deregulatory benefits because small businesses don’t have to track assets across years for tax purposes.
More recently, in the 2016-17 Budget, the Government announced an increase in the small business turnover threshold from $2 million to $10 million.
This means over 90,000 extra businesses can now qualify for this accelerated depreciation treatment – in addition to a range of other small business concessions – which will help them grow and service their customers.
We’re also taking action to ensure that Australian businesses have a level playing field to compete with overseas vendors.
And we’re doing that by ensuring the GST law applies to imported goods and services that would be subject to GST if they were sold domestically.
So the measures announced in the 2015-16 and 2016-17 Budgets mean that, from 1 July 2017, low-value imported goods and digital products and services will all face the same tax regime as those sourced domestically.
More specifically, imported goods under $1,000 dollars will have GST collected at the point of sale, using a vendor registration model.
Under that model, overseas vendors with an Australian turnover of $75,000 or more will be required to register for, collect and remit GST for low-value goods supplied to consumers in Australia.
We also recently directed the Small Business and Family Enterprise Ombudsman Kate Carnell to undertake an inquiry into the adequacy of the law and practices governing bank lending to small businesses.
Ms Carnell will examine some of the cases identified by the Parliamentary Joint Committee, which looked at the impairment of customer loans. Her advice to the Government will then go on to help us determine whether further regulatory action is needed.
The review’s interim findings will focus on external dispute resolution schemes in the financial services sector, with an interim report due by the end of the year. And that’s a separate review that’s being led by Professor Ian Ramsay looking at a one-stop consumer complaints shop that will allow consumers the opportunity to have access to justice in a timely manner to ensure that it is looked at by an independent expert and, where appropriate, that they get access to compensation.
Building on the Government’s commitments
All of this is part of the work we are doing across the Government to ensure that the 45th Parliament is one of delivery.
We have committed $50 billion in infrastructure to invest in Australia’s cities and regions to better connect Australian products to domestic and international markets.
Our trade agreements remove barriers to Australian exports, and help transition the economy and create jobs.
Australia’s financial system is resilient, it is efficient, and, following on from the Government’s Financial System Inquiry, we are now in the process of implementing many of the recommendations to make it even stronger.
We are working with the states and territories to develop a new competition and productivity-enhancing agreement to drive ambitions reform across all levels of government to further competition.
We’re ensuring greater workforce participation with growth-friendly policies that put more Australians into employment.
And our National Innovation and Science Agenda is helping harness new sources of growth to deliver prosperity.
Ladies and gentlemen, we all have a stake in making sure that Australia’s long run of economic growth continues.
We have a big agenda, and we are determined to do all we can to provide opportunities for all Australians, including creating opportunities through enterprise.
We must ensure that our transitioning economy is working for all Australians.
That means getting the economic settings right.
It means understanding our challenges and maximising the opportunities.
And that’s what we are doing.
With your help, the Turnbull Government’s strong agenda for growth will shape a stronger, more diversified new economy.
An economy where enterprise is acknowledged, supported and applauded.