Mr STEPHEN JONES (Whitlam) (17:53): I rise to speak on the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016. I agree the challenge is for us to do what is right for the country. We have before the House, we have before the parliament and we have for the people of Australia two propositions. One is to give a $50 billion unaffordable tax cut to Australia's largest companies. The other is to improve school education funding to ensure that our kids have the resources in their schools to grow up, to get the education that will enable them to participate fully in the modern world. I cannot support an unaffordable tax cut to the biggest companies in this world and I challenge the government's proposition that this is going to benefit the Australian economy.
We have looked at the idea that this is going to add to jobs and growth and it has been found wanting on both counts. In fact, the government's own modelling has showed that the net contribution to growth of this initiative over 10 years will be less than one per cent. The benefits to the economy simply do not stack up. The costs to the budget and to the Australian people are obvious.
The member for Rankin and the government's finance spokesperson have released data this week which show the cost that this reckless initiative is going to have on the Australian economy and on the Australian budget. It has been revealed that the government has tripled the budget deficit—and we have a significant budget deficit—so we cannot afford this tax cut. It means we are going to have to borrow to fund it and we are going to have to pay interest on those borrowings somewhere in the order of $4 billion in additional interest charges. That is right. We are going to cost the budget $50 billion for the tax cut and we are going to accrue an interest bill of an additional $4 billion to give the wealthiest companies in Australia that $60 billion tax cut. If you break that down to a per capita level, that is going to cost every man, woman and child in Australia around $162 to give a $60 billion tax cut to some of Australia's wealthiest companies. We on this side simply cannot support this proposition. We will not be supporting it.
There are some propositions within this bill that Labor could support. We do believe that there is evidence that, if we give a tax cut to small businesses, it will support them and it will improve their competitiveness. But we do not support the proposition that you can redefine what a small business is to something with a turnover of $10 million. We propose a turnover of $2 million, much in keeping with what the average person in the street would understand to be a small business. Labor supports maintaining the thresholds for small business at $2 million, which is consistent with the ATO determinations. Small businesses do need support. They do not need to be squeezed out by their larger rivals reaping the rewards of the government's small business definitional change.
We learned in December through the MYEFO that deficits have blown out by another $10 billion over the forward estimates. The budget deficit for 2017-18 has blown out tenfold to $28.7 billion from $2.8 billion since the LNP's first budget. Our AAA credit rating is already under pressure and this is going to blow it out of the water. We know, because of the projected deficit, this is going to ensure it will be the nail in the coffin for the AAA credit rating, thereby ensuring that Australians are paying more interest on the debt that this government is racking up because of these unaffordable or corporate tax cuts.
I have the great privilege of representing a regional electorate. Like so many people that I represent, I understand that it is important that we do whatever we can to ensure that they have the same sorts of opportunities available to them as are enjoyed by people in the capital cities and in the big urban centres. In regional Australia, people are often making do with circumstances that our metropolitan cousins take for granted or are living in circumstances that they simply would not tolerate. It is a great shame that the Liberal and National parties that represent many regional seats have failed to represent these regional areas adequately, and this bill is another example of that. I am yet to hear the case from any member who has spoken in this debate how these tax cuts are going to be good for regional Australia. The regional MPs on the government side are virtually silent on this issue. I asked the minister, in his closing remarks, if he could inform the House and through it the nation what proportion of businesses in regional Australia will benefit from the bill that is before the House today.
I submit my own figures based on some research that I have done—very simple research—but I will yield to anyone who can provide better data. I understand that in 2015 there were just over 2.1 million businesses in Australia, and just under a third of those could be found outside our capital cities. My deep concern is that, once implemented, this will be yet another policy which disproportionately advantages those capital city economies, leaving regions and their small businesses behind. Let us not forget that a tax cut is the same as government spending because it is money that is not available for another purpose.
Let us have a look at small business income. I am going to use income from unincorporated small businesses as a proxy for small business. Looking at this income data from 2012-13 and extrapolating forward, we can see where the benefits are going to flow from this government policy. They will overwhelmingly go to big businesses and businesses that are located in the capital cities, skewing against people who are operating businesses in regional Australia. The simple fact is that businesses in regional Australia are earning less. I have had a look at the Prime Minister's electorate. Average income from an unincorporated business in the electorate of Wentworth is $61,000 per annum. The national average is a little bit closer to $23,000, but in regional electorates it is a completely different story altogether. In some areas that you will be very familiar with, Mr Deputy Speaker Coulton—the electorate of Page and the Richmond Valley—it is around $17,000 per annum. In the Clarence Valley, it is closer to $7,000 per annum. In Robertson, in Gosford, it is closer to $24,000 per annum. Down the coast from me in Gilmore on the south coast, it is a similar story—around $17,000 per annum. In that small snapshot, we can see that the benefits of this tax cut are overwhelmingly going to go to businesses that operate out of electorates like the Prime Minister's and, overwhelmingly disproportionately, not to electorates such as the one that you and I represent, where businesses are not earning the same level of income.
As I said, any tax cut is the same as government expenditure because it is money that is not available for another purpose. I have already said that this is money that could well and truly be spent in the area of education. That is, literally, the debate we are having. Today we have had people from around Australia visit us and lobby parliamentarians on the importance of additional school funding to provide higher standards of education for every child in the country, no matter where they live. These are the choices we have. We can deliver this $50 billion tax cut to, overwhelmingly, large businesses and skewed towards benefits in the capital cities, or we can provide funding for needs based education for every school in the country.
The numbers are roughly equivalent, I have to say. The government's own figures show the savings that they are booking for cancelling the final years of the Gonski school-funding formula are in the order of $30 billion. That is $30 billion that they are not going to be funding to our schools—savings that they are claiming and savings that will perhaps go to giving these big businesses a $50 billion tax cut. Most of that tax cut is going to go to overseas shareholders, by the way. It can hardly be argued that this is a benefit that is going to be captured 100 per cent within this country. That is simply not the case. I think most Australians will look at this and say: 'Well, if I've got a choice between investing in education, investing in our health and our hospital systems and investing in infrastructure which is going to truly make a difference to the productivity of regional areas, and providing a $50 billion tax cut to the big end of town, that's not a hard thing. You don't have to chew over that for too long.'
The argument is pretty simple to make. I have challenged the minister, when he sums up debate on this bill, to contradict what I have said—to contradict that simple proposition that the overwhelming benefit of this tax cut is going to go to businesses that operate in electorates like the Treasurer's or the Prime Minister's, certainly not in electorates like yours or mine, Deputy Speaker Coulton. I see the member for Wakefield is in the chamber at the moment. It certainly will not be going to businesses in his electorate. This is at a time when we know that regional disadvantage and inequality are growing. We have some choices to make in this parliament. We can advocate for policies and vote in favour of legislation which are entrenching that disadvantage, or we can advocate policies and advance legislation which mitigate that disadvantage and reduce inequality. I, for one, know the sorts of policies that each and every Labor member is going to be supporting. We will not be supporting this bill. If the government want to get any measures through that are going to provide some support to small business in this country, they will do the right thing. They will drop the unaffordable measures, and they will enter into discussions with Australian Labor about ensuring that we can deliver some benefits to small businesses at the same time as preserving our AAA credit rating and preserving some equity in the budget propositions.
There are challenges for the government. I very much doubt that this proposition is going to go much further than the distance between this House and the other place. The government have a choice as they frame the budget over the next few weeks. Will they include this measure in the budget and in the forward estimates, or will they do the right thing by Australians and drop it and move on to a more sensible proposition?