In the Liberal-National party coalition we believe, among other important and worthwhile things, in a stronger economy—an economy that supports its people, one that provides the building blocks for aspiration and for achievement. But what makes a stronger economy? What gives an economy the life it needs to support a country in this way? We need to be competitive. If an economy is not competitive, it is not alive. It's not supporting the people who depend on it. A healthy, vibrant, plentiful economy is essential to the quality of life I know everyone on this side of the chamber wants to see all Australians enjoy.
Even a basic economic education reveals the production line nature of producing an effective economy. Let's start at the beginning. High company tax rates repel investment. It causes international investors to take their capital and the resultant jobs to countries where it's cheaper to operate. The flow-on effect is that Australia doesn't receive the investment it needs and the income from the businesses that would have operated here. Australians are not employed by these investors. Subsequently, unemployment rises and, as demand for labour falls, so too do wages. Hardworking Australians, who we are in this place to represent, are worse off when we have high company tax rates. The government's enterprise tax plan would see by 2026-27 a 25 per cent company tax rate implemented for all companies, the lowest rate since the 1960s. It's a fully funded plan that seeks to accommodate, for the long-term, coalition company tax cuts to promote growth, jobs and innovation in our economy, which will help all Australians reach their Australian dream.
High company tax rates strangle our economy and prevent it from achieving the things that are needed for Australian people. The coalition government is attempting to let the economy breathe again, to revive it from the top down and to let the benefits flow to all Australians. That's because we have some of the highest company tax rates in the world. We need only look to our friends in Canada, the UK, New Zealand, Norway, Israel, Japan and France to see the benefits of maximising competitiveness to revive the economy. In December 2017, our closest ally, the United States of America, lowered their company tax rate from 35 per cent to 21 per cent. Britain reduced its tax rate to 19 per cent and is tracking towards 17 per cent by 2020. France is moving to lower its tax rate from 33 per cent to 25 per cent by 2022. These are all countries that we must observe and learn from. They are also countries we directly compete with. The world is taunting Australia to assert its place once again as a competitive nation.
Speaking of our friends across the seas, the Tax Foundation found in the United States that for every $1 that the company tax rose, for every $1 collected, real wages fell by $2.50 five years later. That's not an equation that works for workers. Back at home, 2016 Treasury analysis provided that a 25 per cent business tax rate here would mean the average yearly earnings of full-time working Australians would increase by $750. The uncomfortable reality for some is that high company taxes hurt employees—not big business, not the banks and not the multinationals but the average Australian worker. The Labor Party knows it too. That's why so many Labor members of parliament are on the record, recently and in the past, supporting reductions in the corporate tax rate. When companies have to pay more tax, they can't invest, they can't grow, they can't create the labour demand that's necessary for wages to rise and workers are not paid higher wages. It really is that simple.
Many struggling families are depending on this parliament to deliver for them. How can we possibly say no? Corporate taxes are the most harmful type of tax for economic growth. That's not me talking; that's the OECD. It's part of the reason why our government is working to reduce them. Canadian tax expert Jack Mintz put it this way:
…companies do not bear the taxes they pay but people do.
On this side of the chamber, we understand that. Approximately nine out of 10 Queenslanders work in a private sector role. These businesses and their employees want to see these company tax cuts passed. Small- and medium-sized businesses particularly want to see them passed. These businesses don't operate in a vacuum, just as economics doesn't. Combined, small- and medium-sized businesses contribute around half a trillion dollars a year. That would only increase if company tax rates were lowered. If big business can afford to invest more, small- and medium-sized businesses benefit as their major customers and suppliers. We know that trade between small and big business is worth more than $550 billion a year. The head of the Council of Small Business recently called for full implementation of the enterprise tax plan, because 'we want to see business succeed, we want to see them get the cut, because they will put the money into us'—'us' being small business. All sectors of our workforce are calling for this plan. We can't let the politics of envy, the politics of populism, stand in the way.
Labor incessantly rails against what they call the big end of town and the multinationals, but they never talk about the way these businesses help small business. They never talk about the way encouraging investment by big business in Australia helps small and medium-size businesses get along. According to the Small Business and Family Enterprise Ombudsman, the vast majority of Australian businesses are small businesses. They account for 33 per cent of Australian GDP, they employ over 40 per cent of Australia's workforce and they pay around 12 per cent of total company tax revenue. Reducing their burden should be supported by all right-thinking politicians. And we shouldn't forget the way that small business will benefit when we help all businesses by lowering their tax rate. As the ombudsman observes:
A healthy small business sector is a prerequisite for a growing economy with high employment opportunities.
The people in our community who need opportunity most—the people who have been on the unemployment line for too long, the people who have been desperately searching for work—they are counting on us to deliver those employment opportunities, counting on us to keep creating jobs.
This government has set the conditions to create over a million jobs—brand-new jobs for this country, and over 75 per cent of them full-time. Why would we stop now? It is in this very real sense that small business counts. Labor's refusal to support this relief to businesses small and large, but particularly to small business, really reflects the fact that the sectors it is most likely to support are not small business. It doesn't care for the largely un-unionised small business sector, because the flourishing of small business is of no value to Labor's union masters.
The US Tax Foundation has highlighted a range of benefits associated with lowering corporate tax, and it's valuable to repeat them here. They include cutting the corporate tax rate, which will have the impact of promoting higher long-term economic growth. The Australian community keeps begging for politicians to look to the long term and to abandon short-term populism but to do what is needed and not necessarily politically easy but in the long-term interests of this country. So, when we have evidence like this we simply must listen. The same institute has demonstrated that cutting the corporate tax rate will improve competitiveness for those who adopt it. It will lead to higher wages and living standards. It will boost entrepreneurship, investment and productivity. It will lower the tax burden on low-income taxpayers and seniors. It will attract foreign direct investment, which will create more jobs for Australians. It will lead to lower corporate debt and reduce compliance costs.
With all of those benefits, it's remarkable that anyone would stand in the way. Australia could be experiencing these benefits within the year if the enterprise tax plan is implemented. This government wants to see the economy and our society thrive in these ways. On this side of the chamber, it's what we work every day to achieve. But, regrettably, those on the opposite side of the chamber are working towards increasing the tax burden, limiting investment, reducing Australian jobs, lowering wages and strangling our economy. Previous Labor governments didn't strive to do this. Even former Prime Minister Julia Gillard said:
If you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.
She's not the only one from Labor's team who has said words to that effect over and over in past years. No doubt she would be disappointed to see a Labor government, if elected, imposing around $200 billion worth of new taxes on households and workers, demonstrating that they are, in fact, against economic growth and jobs.
Mr Shorten himself expressed the view that cutting the company tax rate increases domestic productivity and domestic investment. It wasn't that long ago that he had a comment as adamant as this, but now one can only assume that the flip-flop to oppose this proposal is purely about obtaining political advantage. It's an attempt to short-sightedly turn one Australian against another using the most base of emotions, envy. He's seen an opportunity to divide and grabbed it with both hands. What a disregard for the people who would have otherwise seen and felt the benefits of this policy on their dinner tables and in their pockets, instead of seeing their wellbeing used as a class warfare tool, as a bargaining chip to advantage his union mates! Now Mr Shorten stands in the way of investment and growth and higher wages, and what makes it worse is that he knows it. Let us all call on him to stop and instead support a policy that will aid Australian people and their businesses.
As a result of well-thought-out, balanced and intelligent economic policy, Australia's economy is only growing under the coalition government, and our tax plan will increase the size of the economy, clearly highlighting how this government goes from one economic strength to the next. So we want to continue to encourage investment and innovation, growth and employment. We are doing just that with this company tax plan. Of course, we have already delivered on the Personal Income Tax Plan, we have opened up new markets through free trade agreements, we have invested $70 billion in productivity by enhancing infrastructure, we are delivering on a comprehensive 20-year defence industry plan, and we are securing record funding for schools and for hospitals. I could keep going on, but there's really no need, because the coalition government's achievements in securing our future and creating jobs for Australians are absolutely plain. This will support our people and our economy as we manage the transition to a modern and competitive domestic business environment. The only plan, though, that Labor has is one of obstruction and a commitment to funding and creating black holes that would be the envy of Stephen Hawking.
Small and medium-sized businesses contribute well over $22 billion in company tax every year. At this scale of business, every dollar saved goes back into growing the business, contributing to exports and employing more people. This enterprise tax plan is all about giving small and medium-sized businesses what they need, including greater trade with bigger businesses. The benefit of reducing the tax burden on small and medium-sized businesses is the positive message of encouragement that this government sends every day that all businesses are important to growing our economy.
So I encourage the Labor Party and the crossbench to get behind this plan and help the Australian people. It's time to recognise the naked politicking of the politics of envy for what it is and to get behind the growth of our economy, the creation of jobs, and the investment in the next generation of Australian workers and their prosperity.