THE clock is ticking on a historic bid to secure tax cuts for Australian businesses.
But the Turnbull government is standing firm against a key senator’s demand to exempt the major banks from the legislation.
The only crossbenchers yet to sign on are Derryn Hinch and newcomer Tim Storer, with Mr Hinch wanting the big four banks exempted from cutting the rate to 25 per cent from 30 per cent.
Finance Minister Mathias Cormann, who is leading negotiations with the crossbench, said Mr Hinch’s demand will not be met as parliament sits for the final three days this week. It won’t sit again until May.
“The government is not prepared to exempt the banks from our business tax cut,” he told reporters in Perth yesterday.
Asked about the likeliness of the deal going through at a press conference this morning, Treasurer Scott Morrison said the government has no reason to panic.
“We’ll just see what the week brings. We’ve been in this situation before, and … we’re just going through the process we always do — methodically, patiently and respectfully working with the crossbench.”
Mr Cormann has also endorsed the right of crossbenchers to horsetrade on the cuts.
The Australian reports he accepted the process of crossbenchers seeking special side deals over the tax, saying they “of course are entitled to pursue their policy priorities in the same way as the government”.
He also said negotiations were continuing “in good faith and constructively” with the crossbenchers.
Cory Bernardi, David Leyonhjelm, Fraser Anning and Steve Martin, as well as the three One Nation senators, are already on board.
Australian business leaders have launched a final plea to get the remaining senators on board.
On Qantas’ inaugural Perth to London direct flight, the airline’s CEO Alan Joyce said the outcome of the bill could affect its aircraft decision, the Australian Financial Review reported this morning.
“It does have an impact — we are looking at things like Project Sunrise, making aircraft decisions for 25 years and if we think the Australian economy is going to be bad, we will not buy those aircraft — and that will have a knock-on effect because we won’t be employing and recruiting as many people,” Mr Joyce said.
“All the business leaders are talking about it — we’re all talking about it to each other. We’re all thinking can we make those investments for 10-20 years, because this economy is so dependant on those decisions. A number of us — myself, Andrew Mackenzie and Twiggy Forrest — have spoken to a number of the senators.”
Qantas, BHP, Wesfarmers and Woolworths bosses are among chiefs of almost a dozen big Australian companies who signed an open letter last week urging politicians to support the legislation, which will reduce the tax rate for big businesses from 30 to 25 per cent.
The letter read: “We believe that a reduction in the corporate tax rate, as proposed through the Government’s enterprise tax plan, is urgent and vital to keep Australia competitive.
“If the Senate passes this important legislation, we, as some of the nation’s largest employers, commit to invest more in Australia which will lead to employing more Australians and therefore stronger wage growth as the tax cut takes effect.”
The heads of Fortescue Metals Group, Origin Energy, Woodside Energy, Energy Australia, JBS Australia, MYOB and the Business Council of Australia were also signatories.
The government has consistently argued its $65 billion tax cut package will lead to more business investment in Australia, lifting stagnant wage growth and boosting the number of jobs on offer.
Mr Cormann again warned yesterday that Australia would remain uncompetitive if the tax rate didn’t drop.
“That would mean less investment, fewer jobs … over time, higher unemployment which would mean less competition for workers here across Australia, which would mean a drop in wages,” he said.
However, Opposition employment spokesman Brendan O’Connor said it was unlikely wages would rise as a result.
“The overwhelming bulk of the $65 billion … will go to multinational companies. The majority of the largesse will go to foreign shareholders, it will go to banks.”
One of the key supporters of the Turnbull government’s business tax cut also doesn’t believe it will lead to more jobs or higher wages, but he’s sticking by the need for it anyway.
Liberal Democrat senator David Leyonhjelm said Australia was uncompetitive at the moment and the cut would only protect existing jobs and investment.
“If a company is profitable, growing, expanding, (and) needs skilled people, they’re going to pay more for those people, but it is an oversimplification to say ‘today tax cuts, tomorrow wage rises’,” the crossbencher told the ABC on Sunday.
“It is not going to increase the number of jobs and investment in Australia. It’s just going to protect what we’ve got.”