Once again, the Business Council of Australia (BCA) has hypocritically called for ‘urgent’ Budget repair while at the same time demanding expensive company tax cuts. From The Australian:
The Australian business community is “fearful” of what could happen to the country if the budget deficit cannot be brought under control and “frustrated” that the political process is unable to deliver policy change, says Business Council of Australia president Grant King.
“There is a fear that if we don’t get things more right than they are today, the country will be worse off for it,” Mr King said in an interview with The Australian.
“There is a frustration with the policy political process, which is clearly not delivering some of the critical decisions we need to make.”
But he said business was “hopeful” that the country would make the changes that would ensure it continued to be the best place in the world to live…The decision to have a group of business leaders, including BHP’s Andrew Mackenzie, Wesfarmers’ Richard Goyder, Energy Australia chief Catherine Tanna and Mr King appear at a press conference in Canberra on Wednesday to argue the case for the corporate tax cut is a sign of the change in strategy…
“There a fear that if we don’t make changes, if we don’t get on top of the budget deficit, debt is going to be rising and it will be a burden for generations to come,” he said…
He said it was important that the budget “shows a resolve to start driving spending down and reducing the deficit”…
Mr King said he was particularly concerned at the high rate of youth unemployment in Australia, which is now almost 14 per cent and “getting close to being a tragedy”.
Righto, so Australia needs to urgently repair the federal Budget, but it still makes sense to cut the company tax rate to 25% from 30% over a decade, even though:
- the Budget would lose an estimated $8.2 billion per year in revenue, resulting in a blow-out in the deficit, tax rises and/or expenditure cuts elsewhere (lowering jobs and growth);
- most of the benefits would flow offshore;
- national income would be reduced; and
- Treasury’s own modelling showed almost no benefits to jobs and growth.
With the Federal Budget facing immense structural pressures and a “revenue problem”, and Australia’s AAA credit rating on the line, there is absolutely no sense in gifting tens-of-billions of dollars to foreign owners/shareholders, and in the process worsening the Budget position and lowering national income.
Fairfax’s Michael Pascoe nailed it earlier this month when he noted:
The BCA would be better served investigating what loopholes, rorts and deductions should be axed as a trade-off for lower rates, finding ways to ensure BCA members actually pay tax on the money they earn in Australia, rather than churning out trashed platitudes.
Build up some credibility in overall tax policy – buy into the negative-gearing/CGT interaction, for example, or denounce the novated lease rort – and come up with a plan that makes sense to the Australian people, that is equitable and in the nation’s best interests and then we could well be interested. Until then, forget it.
Too right. Instead of feigning concern over the Budget deficit while demanding a tax cut, how about lobbying for policy reforms that would actually improve Australian’s living standards. You know, basic stuff like:
- Unwinding inefficient, inequitable and expensive tax lurks like negative gearing, the capital gains tax discount, fringe-benefits taxes on company cars, etc.
- Reducing immigration and foreign worker visas, which are crush-loading Australia’s cities and lowering living standards, as well as depriving Australia’s youth of job opportunities.
- Or even addressing the east coast energy crisis that Grant King was central to creating by building his Curtis Island white elephant.
And while you are at it, how about demanding some wage restraint from CEOs, senior executives and politicians, rather than demanding that lower income Australians bear the full burden of adjustment?
Until the BCA leads by example, and starts promoting equitable reform in the interests of ordinary Australians, they will continue to be looked upon with derision – as just another fat cat in a flashy suit.
