Good afternoon, everyone — it’s wonderful to be with you today.
The Australian Chamber of Commerce and Industry has a rich, storied history.
Over the course of two centuries, it has taken many forms. But whatever its structure — and whatever its name — it has always been true to its vision: a stronger business community, a stronger economy, and a better standard of living for all Australians.
Freedom, choice and hard work
It is a history, and a present, that’s worth acknowledging — and it’s one that puts you in good company.
Earlier this year, many of us celebrated an important milestone in Australia’s political history.
It has been seventy-five years since Australia’s longest-serving prime minister made the first in a series of weekly broadcasts for Macquarie Radio.1
And the words Robert Menzies spoke echo to this day.
He had, less than a year before, resigned as prime minister.
It would be another seven years before he returned to the Lodge — this time as the head of the newly formed Liberal Party.
But on that day — 22 May 1942 — he articulated the values that would guide him for another 16 years in office.
He spoke of ambition and effort. He spoke of hard work. And he warned that Australians cannot thrive on someone else’s wealth; someone else’s effort.
“The greatest element in a strong people,” Menzies said in his inimitable voice, “is a fierce independence of spirit.”2
It was, of course, his ‘Forgotten People’ speech. And those same values guide the Turnbull Government in 2017.
We believe in freedom and choice.
We believe in hard-working individuals having the opportunity to succeed — and pass on that success to their family.
And, crucially, we believe entrepreneurship and enterprise must be encouraged, supported and rewarded.
Setting the stage
Why? Because entrepreneurship and enterprise are the key to our nation’s future.
They always have been.
A dynamic enterprising culture is at the very heart of a strong economy and prosperous society.
As everyone here knows, Australia’s needs and ambitions — security, opportunity, higher living standards — are only achieved if business and enterprise succeeds.
Businesses create jobs and pay taxes; they provide good and services; they enrich our communities with their contributions.
And their success leads to economic growth.
That is why the Turnbull Government’s economic agenda is so focused on lifting them up, not pulling them down.
Our economic plan
We’re a Government with a clear economic plan — a plan that embraces innovation, supports trade, builds infrastructure and, importantly, lowers taxes.
And it’s a plan that’s working.
In the last two years, we’ve seen more than 450,000 jobs created.
The unemployment rate has fallen to 5.4 per cent — the lowest since the start of 2013.
Business conditions are well above average.
Company profits have increased 15 per cent in the last year.3
And after three tough years, new business investment has increased for the past four quarters.4
We’re seeing good results, and will continue to do so if we remain focused and disciplined.
So, that said, I’d like to spend my remaining time unpacking one aspect of the Government’s economic agenda — lowering taxes — and our work in this space to date.
As a Government, we know that high taxes are a fool’s game.
Higher taxes mean less reward; which can mean less effort; which in turn means less growth and less prosperity.
Labor is all about higher taxes with a platform for $164 billion in additional taxes that we know about. Labor’s message to the enterprising: If you make it, we’ll take it.
That is not a message this Government will ever send.
Instead, we’re supporting entrepreneurship and enterprise. And there’s no better example than the small business tax cuts and the extension of the instant asset write-off announced in this year’s Budget.
Small business tax changes
As part of our Enterprise Tax Plan, we have cut the corporate tax rate for businesses with an aggregate turnover of less than $25 million to 27.5 per cent, with the threshold lifting to $50 million in 2018–19.
Additionally, we increased the tax discount rate for unincorporated small businesses.
Right now, more than three-million small and medium-sized businesses — from the local newsagent to the local butcher to the local pub — are benefitting from the tax cuts.
We’re backing small businesses; the tax cuts provide them with the flexibility to invest more, employ extra staff and pay higher wages.
And we’ve combined these with expanded access to small business tax concessions, lifting the turnover threshold from $2 million to $10 million.
This means more businesses that can access, for example, the $20,000 instant asset write-off, which we’ve also extended for an additional 12 months to 30 June 2018.
And the response to date has been impressive, with around 300,000 small businesses — tradies, cafes and restaurants — taking advantage of the write-off.5
The rate at which these small businesses have recognised the opportunity has been particularly encouraging, with the average claim more than doubling to over $9,000.
Sadly, as I am sure you alll know, if the Labor Party had their way the small business threshold definition would revert back to a turnover of $2 million. That would see those businesses between $2 million and $10 million lose access to tax concessions like the instant asset write-off, and of course see their company tax rate rocket back up to 30%.
This reckless act would have an entirely negative impact on these businesses, the Australians they employ, and confidence in such a critical part of our economy.
Of course, our Enterprise Tax Plan doesn’t start and end with small and medium-sized businesses.
It proposes, as you would are aware, reducing Australia’s company tax rate to 25 per cent over the next decade.
It’s a big goal — and an important one given what’s happening globally.
Today, only four of the 35 countries in the OECD have a company tax rate higher than ours.
Right now, the United Kingdom has a rate of 19 per cent and is looking reduce it to 17 per cent.
It’s similar in the United States, where the Senate has just passed legislation to reduce the federal rate from 35 per cent to 20 per cent.
And, closer to home, our friends in New Zealand have lowered their rate by 5 per cent in the past several years.
The fact is, we are competing with other nations. And a high company tax rate only encourages bright-eyed entrepreneurs to pass us by; for job-creating enterprises to look elsewhere.
That is why we have a second bill sitting before the Parliament that outlines the full schedule of tax cuts — something the Government remains committed to delivering.
We know exactly just how important reducing the company tax rate is to Australia’s economic growth, confidence, and job creation and we will continue to pursue it.
Of course, the Labor Opposition remains opposed to the Government’s plan to implement our entire package. I don’t need to remind anyone here that this sits in stark contrast to previous commitments and views expressed by many in the Labor Party leadership and economic team – Bill Shorten, Chris Bowen, Andrew Leigh, Wayne Swan, and more.
The Turnbull Government’s list of tax achievements also extends to income tax.
A bit over a year ago, the Government increased the middle income tax bracket from $80,000 to $87,000.
This prevented around 500,000 taxpayers going onto the higher 37 per cent marginal tax rate, and provided tax relief of up to $315 per year for 3.1 million people.6
This modest tax relief demonstrates that, wherever possible, we will leave the money that Australians earn in their pockets.
We are, instinctively, a tax-cutting party.
We know that growth comes from innovation and risk-taking. And high taxes affect how much people work; how willing they are to take risks and invest.
This is why, a few weeks ago, the Prime Minister said, that along with the Treasurer and myself, we are actively working to further ease the burden on middle-income Australians.
As the Prime Minister said, “Just because we’re in challenging fiscal times doesn’t mean we should raise the white flag on making the tax system work better.”
But we will do so in a prudent, responsible manner.
Our commitment to returning the budget to surplus has not wavered. Every improvement to the bottom-line we make — and every bit of growth we generate — takes us closer to that goal.
Now, I should also say that while easing the tax burden on business and individuals is at the core of the Turnbull Government’s economic agenda, we are also determined to make sure that everyone is paying the right amount of tax.
We must have a level playing field.
Large multinationals must pay their share of tax. Deliberate tax avoidance will not be tolerated. Tax cheats will be tracked down and will face the full force of the law.
The Turnbull Government has introduced new laws to close loopholes and ensure profits are taxed here.
We’ve introduced a Diverted Profits Tax, which addresses profit shifting by multinationals with annual global income of $1 billion or more, by applying a penalty tax of 40%.
We’ve established the Tax Avoidance Taskforce and increased the resources of the ATO so they can undertake enhanced compliance activities targeting multinationals, large public and private groups and high wealth individuals.
We’ve implemented new country-by-country reporting rules so multinationals report to the ATO on their global operations. The Commissioner of Taxation Chris Jordan recently described this regime as being of ‘enormous value’ to the ATO’s international tax work,7 but Labor wants to put this intelligence at threat by publishing it.
We’ve also implemented the Multinational Anti-Avoidance Law to address artificial arrangements designed to avoid a taxable presence in Australia – a measure that Labor voted against in the Parliament.
As a result of this tough stance, the ATO more than doubled its usual compliance results and raised tax debts over $4 billion from large corporates and multinationals in 2016-17, with an extra billion dollars raised so far this financial year for good measure.
In addition, 36 multinationals have brought, or are in the process of bringing, their sales onshore to Australia in order to comply with the Government’s new laws. This has delivered hundreds of millions of dollars of additional GST and will return around $7 billion in sales per annum from Australian customers to the Australian tax base for the first time.
Combined, these achievements give Australians confidence that profits earned here, are taxed here.
So that is a brief overview of our tax achievements and plans —which are, as I’ve said, at the core of the Turnbull Government’s economic agenda.
It is an agenda that is true to who we are as a party; a reflection of our values.
In his closing lines back in 1942, Menzies spoke of the importance of individual enterprise driving Australia forward, guided by the motto “to strive, to seek, to find, and not to yield”.8
Those words are not forgotten. The pursuit of opportunity, the belief in fair reward and the defence of hard work remains unchanged.
It is an approach that has served Australians well, and that is why the Turnbull Government’s economic agenda — its support of entrepreneurship and enterprise — is right.
Let me finishing by thanking you for welcoming me today, and for the good work the Chamber continues to do.
Yours is a valued voice, and I very much look forward to your continued support and ideas in the year ahead.
And, of course, I hope you all have a safe and joyous Christmas.
1 Switzer, T 2017, ‘How one speech brought Menzies out of the political wilderness’, ABC News, 22 May.
3 Profits including both financial and non-financial private corps grew by 14.6 per cent in the last year.
4 Morrison, S (Treasurer) 2017, ‘Making the right choices for better days ahead’.
7 Estimates Hearing, 25 October 2017.