Good afternoon. At the last election, we took an economic plan that was designed to deliver stronger economic growth and more jobs; and it has done exactly that.
Australia has the strongest economic growth for many years, and stronger than any G7 economy.
We have the strongest jobs growth last year of any year in our history.
Now, part of our economic plan was the enterprise tax plan, to reduce company tax, beginning with small and medium businesses and then extending to all businesses over time. Mathias skilfully negotiated the first part of the company tax plan through the Senate, and so, as a consequence now, businesses with turnovers up to $50 million are paying less tax. There's 3.3 million of them and they employ most of the private sector workforce, and that is one of the reasons, a big reason, why we're seeing this strong jobs growth.
Now, we sought to extend this tax cut to the rest of the corporate sector. And the goal was simply to ensure that Australia's company tax rate is competitive. The United States, as you know, has reduced its company tax rate to 21 per cent. The UK has gone down to 17 per cent. France has gone to 25 per cent. By 2020, in the absence of further reform, we'll have the highest company tax rate in the OECD other than Portugal.
Now having said that, we have to recognise in this and all contexts, the iron laws of arithmetic and we have not been able to secure the support of the Senate.
Now, we've negotiated very hard. We've offered to exclude the big banks. We offered an amendment to do that. And while that would be subject to some criticism, and I know some Senators on the crossbench did not favour it, it does have a precedent in the United Kingdom where the banks pay a higher rate of company tax.
However, the reality is that it cannot pass the Senate and I think the truth is, that the political climate which used to have a broad bipartisan consensus - as you heard from so many Labor leaders and Treasurers - that lower company tax creates more investment, higher productivity, more jobs and higher wages, a proposition that has been proved again and again.
While that consensus used to be there, it is there no longer and there is a lot more work that needs to be done.
So, we will not be taking the tax cuts for larger companies to the next election. We are going to review our enterprise tax plan insofar as it applies to small and medium businesses and focus on how we can provide enhanced support, or perhaps an acceleration of the tax cuts for the small and medium businesses and the Treasurer and I with the Finance Minister and the ERC will be working on that.
I want to also say that we have, part of our negotiations, as I think everybody knows, has involved the Energy Supplement which is part of the compensation for the carbon tax, of course, the carbon tax having been abolished, has long been an item that has been subject of our policy to repeal, or at least to reduce.
Again, it is absolutely clear to us that with the issue of energy prices being so prominent, we will not move to repeal the Energy Supplement.
Now, as you can imagine, this is not a rash decision. We have provided for that in the contingency reserve, so there is no adverse budget impact by that change in policy that I'm announcing now.
I want to thank Mathias for his hard work in the Senate. I want to thank Scott for his work in designing and promoting the enterprise tax plan. It is part of our economic plan. We've not been able to secure the package of the tax cuts for the larger companies, and what we will now focus on is the small and medium businesses, overwhelmingly Australian family-owned, which employ most of the Australian private sector workforce.
So, I'll ask the Treasurer and the Finance Minister to say a few words.
TREASURER, THE HON. SCOTT MORRISON MP:
Thank you, Prime Minister, and thank you also for your role which has been significant in leading us at the last election where we took that policy to the election and we were successful.
We made a promise together that we wanted more competitive business taxes in Australia. The Australian people affirmed that at the election and we have been working to implement that promise every day from now until then.
And I want to commend Mathias Cormann for the role he has played in seeking to have that promise kept.
We're a government that keeps its promises; that works hard to keep its promises and we will continue to keep that promise for lower, more competitive taxes, not just for small and medium sized businesses, but for all Australians.
Because we believe, we believe, Australians should keep more of what they earn. We believe in a fair go for those who have a go and that's what our enterprise tax plan was all about.
Labor used to believe in those things. They don't believe in them anymore. And that's why they're such a risk and a threat to the Australian economy.
I'm often asked about what the risks and threats are to the Australian economy, and they are certainly a very big one, not just to our triple A credit rating, but to the growth and the increase in employment that we've seen.
Youth unemployment today is at its lowest level, its lowest level since 2012. Hundreds of thousands of young people in jobs, which is why we come to work every day.
Our stronger plan for a stronger economy is delivering on those outcomes. The enterprise tax plan was a part, a key part of that plan and we've already been able to legislate a very significant part of it for small and medium sized enterprises.
But it's also about the Defence Industry Plan, it's also about the medical industry plan, it's the infrastructure plan for $75 billion which is investing in Australia's productive capacity. It's about the personal income tax relief that we've been able to legislate through both Houses of Parliament with great opposition from the Labor Party. It's about what we've done for start-up businesses. Under the new Angel Investing Provisions, we've seen $300 million of additional investment go in. Under the enterprise early venture arrangements, we've seen that go from $600 million to $1 billion, backing in businesses who have great ideas, who want to take our economy forward and create jobs. So that's what this plan was all about.
We still believe in having lower, more competitive taxes. It is a great shame that the Labor Party and the One Nation Party and others who voted to ensure that Australia has the second highest corporate tax rate in the world is what those businesses are now facing. That's not a great position to be in, but you have to work in the realm of the possible in government and that's what we've done, that's why we've been able to get so much done.
And on the pensioner supplement and the other supplements that go with the energy, just to let you know, $14.10, and $10.60 is what those payments are for single at $14.10 and for a married couple, $10.60, they are payments that will continue to be eligible for new entrants in the payments.
Remember the proposal was not that anyone currently who was getting those supplement payments would have them removed. That was a lie from the Labor Party to scare pensioners, which is what they do.
No pensioner was ever having a payment they were currently receiving being taken away.
What this means is those who would go onto the payments into the future, they will now continue to get that same level of payment and that's what those rates are. And as the Prime Minister has said, that decision was taken in the lead-up to this year's Budget and it's held in the contingency reserve, it has no impact on the numbers that we outlined at the time of the Budget.
MINISTER FOR FINANCE, SENATOR THE HON. MATHIAS CORMANN:
Thank you very much, Prime Minister. Our economic mission, as a Government, is to ensure that families around Australia have the best possible opportunity to succeed and get ahead. We understand that for families around Australia to have the best possible opportunity to get ahead, we need to ensure that the businesses that employ them and pay their wages have the best possible opportunity to be viable, to be competitive, to be profitable into the future. That is why we were so committed to secure the passage of this ten-year enterprise tax plan through the Senate. It is fair to say and I think nobody in the Senate would question that we did everything we could to secure the passage of that legislation. We truly left no stone unturned. I am personally disappointed that we failed to secure the necessary support. But it is now important to pragmatically take stock of where we are and to make judgements about the best direction into the future. Our commitment remains unchanged. If we want to ensure that working families around Australia have the best possible opportunity to get ahead, we need to ensure that the businesses that employ nine out of ten working Australians have the best possible opportunity to be viable, to be competitive and successful into the future. We need to continue to focus, in particular, on our international competitiveness. When it comes to big business, there is no doubt that big business needs to do work to make sure that people across Australia actually better understand the importance of their contribution to our future economic security, to our future economic prosperity and success. Not only do they employ many millions of Australians directly, they buy products and services from millions of small and medium sized businesses here in Australia. If we make it harder in Australia for big business to be successful into the future, that ultimately has a flow-on effect across the whole economy. So we accept that we have not been able to secure this through the Senate and as the Prime Minister and the Treasurer have indicated, we will now focus on how best to proceed into the future, prioritising small and medium sized business.
Can we deal with company tax, even if only briefly?
On the bringing forward to 25 per cent for SME's that's currently scheduled for 26-27, will that be your intention to bring it forward to the next term of Parliament, and make it an election issue?
All of this is under consideration but the focus will be on small and medium companies, Australian family-owned businesses.
I think, as I said, there used to be a consensus that with the lower company taxes, as I said, led to higher productivity and more investment and more jobs and higher wages. I think I'm quoting something Bill Shorten said actually, almost word-for-word.
So there's always been a consensus on that. But you can see that there are many reasons for that which you all write about, but the consensus is no longer there.
So it's important, I think, to recognise that reality, focus on the small and medium part of the business sector, which, while none of these companies are giant corporations, they do employ more than half of the Australian workers in the private sector.
Prime Minister, what do you think of Peter Dutton's idea of dropping the GST from energy bills? And is that policy on the run from your leadership rival?
Well, it's certainly very expensive, but I might ask the Treasurer to describe what it would cost, and also, needless to say, the states would definitely expect to be reimbursed.
Look, we've just done a big reform of the GST, let's be frank. We have, one of the many wicked problems we've dealt with in recent times is the inequitable distribution of the GST under the existing formula to Western Australia.
In order to make that work, we have had to contribute a substantial amount, in the order of about $1 billion a year, from existing other federal revenues to the GST pool.
So if one were to remove a big item like that from the GST pool, obviously it would have to - the states would expect to be reimbursed and that would have to come from other federal taxes.
So the cost of that, based on the work that the Parliamentary Budget Office did on Senator Leyonhjelm's proposal would be around over $7.5 billion over four years. So the Prime Minister is right.
Any change to the GST, as you know, to its rate or its base has to be agreed by all states and territories and I'm sure that they would say: "well, if you want to do it, that's fine, send us $7.5 billion."
Now, that would be a budget blower, an absolute budget blower and on top of that, or the alternative would be to scuttle the WA GST package.
So I mean, these are the difficult choices that you have to make in government and you can make all sorts of promises about how much money you're going to spend, but at the end of the day, you've got to account for it.
And so, the other thing that I would say is this - this is how you get electricity prices down for all of these people. It's exactly what the Prime Minister and I were talking about yesterday. You have the safety net price to ensure that the standard offer comes down to the default price. Saving that money for all Australians, not just some, all Australians who are paying energy bills. You do it by having a big stick to keep the energy companies in line and you do it by having backing in investment in new generation.
And the other thing you do is you give people personal income tax cuts, which we've legislated, and for a modest income household, that's over $1,000 a year they're getting in income tax cuts in this financial year, and that is half a household's power bill.
That is how you help households. You give them tax cuts and get electricity prices down.
Prime Minister, on the iron laws of arithmetic Peter Dutton says when the numbers add up for him, he's coming to get your job. How do you respond?
Well, we had a ballot earlier this week, as you know, yesterday, in fact.
The iron laws of arithmetic confirmed my leadership of the Liberal Party.
Prime Minister, the NEG is dead, your company tax policy is dead, what do you fight the next election on? What policies do you have left?
Well can I say to you that we have delivered, we've delivered on our platform that we took to the election, and the larger end of the company tax cuts is one part that we couldn't get through the Senate.
But we have got so much more through this Parliament than anyone imagined.
I can't describe how many press conferences I've had out here where one of you have said, "Why don't you admit you'll never get this through the Senate?" And then, due to the charm of Mathias Cormann and his colleagues in the Senate, the impossible has been achieved.
And so, the reality is, as Scott described, our economic plan goes well beyond company tax cuts.
Look, I know that the Labor Party want to represent it like that, but you know, Scott mentioned trade.
I mean our commitment to free trade and open markets alone is creating thousands of jobs. I mean look at the Trans-Pacific Partnership - that was another project that was written off as dead and I was told to stop flogging a dead horse. John Key and I decided that if the horse was dead, it wouldn't mind the flogging, so it was worth standing up for Australian and New Zealand jobs, and we did. We persuaded Shinzo Abe to come on board and now you've got it, the TPP-11
Hang on, we'll go to Laura and the gentleman there in the middle.
Prime Minister, you've said that the consensus has been broken on company tax, so you're not taking it to the next election.
You've talked about a shift to the focus of small to medium sized business. But there's a lot of money that was tied up in those tax cuts. Do you see some of it going into the delivery of services, into health and education? And possibly infrastructure? Or is it all just going into more tax relief for small and medium sized businesses?
I'll ask the Treasurer to address that.
Just on the fiscals, the broader points, I'm sure that the Prime Minister would make the same observations.
But on the plan that's in the Senate, over the Budget and forward estimates on what was presented, it's $600 million. That's what it is, it's not $80 billion, that's a complete nonsense and another Labor lie. It's $600 million. And on the Bill that is before the Senate, which has been before the Senate over the current budget, on that basis, it's $1.3 billion.
So, this is not a sum of money that delivers large personal income tax and things like that. You've seen the cost of those in the bills we've already passed.
What the Prime Minister has said is we'll be focussing what we now do on tax going to the next election, consistent with what we believe about people keeping what they earn, and particularly small businesses, on small and medium sized businesses.
The Turnbull Government has been the best friend of small business in generations; instant asset write-off, start-up support, lower company taxes for small businesses. All of these things are the most generous arrangements for small business.
Section 46 of the Consumer and Competition Act. All of these things have been about revving up small business.
You know where the jobs are coming from? It's come from the confidence the Turnbull Government has given small and medium sized business. It's just a shame that one of my favourites, Coxon's Radio up in Rockhampton, not Google, not IBM, not BHP, they will have to pay higher tax because they will click over that $50 million mark. And that's a great shame for that family business and I don't think that they deserve that treatment from the Labor Party or One Nation.
Hang on, the gentleman here.
Are you anticipating another leadership challenge this week?
Treasurer, can you rule out any having any leadership ambitions?
Me, this is my leader and I'm ambitious for him!
Good on you, thanks ScoMo.
I think now that we've moved on, I think we'll take one more.
Mr Cormann, can you rule out shifting your support to Peter Dutton?
MINISTER FOR FINANCE:
I support the Prime Minister Malcolm Turnbull.
But can you rule out a change in the future?
MINISTER FOR FINANCE:
You're asking me a hypothetical. I support Malcolm Turnbull as Prime Minister.
It's not a hypothetical. There was a leadership ballot yesterday, are you going to rule out shifting your support?
MINISTER FOR FINANCE:
I was very grateful when Malcolm invited me to serve in his Cabinet in September 2015. I have served Malcolm loyally ever since. I will continue to serve him loyally into the future.
Thank you very much.
Prime Minister, what are you doing to do about all the frontbenchers who offered to resign?
Just to be clear, as you already know, there are, a number of frontbenchers offered to resign. I've had discussions with all of them.
Look, what I'm endeavouring to do is to obviously ensure that the party is stable, to maintain the stability of the Government of Australia. That's critically important.
And so, the Cabinet ministers, apart from Peter Dutton of course, who came to me and told me that they had voted for Mr Dutton in the leadership ballot, have given me unequivocal assurances of continuing loyalty and support.
So thank you very much.