Ten of Australia’s biggest companies have failed to provide any detail on a vague pledge to “invest more in Australia” if the Senate passes legislation to cut the company tax rate.
On Thursday, the 10 companies, along with the Business Council of Australia, made the promise in the hope it would sway crossbench senators to pass the government’s ‘enterprise tax plan’, which would slash the tax on company profits from 30 cents in every dollar to 25 cents.
“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 two-sentence letter stated.
But targeted questioning by The New Daily revealed the companies in question had no specific plans to change their behaviour if taxes were lowered, and that they had in fact promised to do absolutely nothing concrete.
This means there is no guarantee a company tax cut would have any tangible effect on the lives of ordinary Australians or on the economy in general.
Currently, Pauline Hanson’s One Nation has said it will support the legislation, and independent senators Derryn Hinch and Tim Storer have indicated they may do so, meaning a tax cut is close to becoming law.
What they promised
The companies that signed the letter were BHP Billiton, Fortescue Metals, JBS Australia, MYOB, Origin Energy, Qantas, Wesfarmers, Woodside and Woolworths.
The New Daily asked each of the 10 companies to give concrete examples of how they would change their behaviour if tax rates were slashed.
The questions focused on two areas: capital expenditure and job creation. Not one could provide a satisfactory answer.
Only Qantas and Fortescue Metals provided on-the-record responses.
A Qantas spokesperson avoided the question, saying: “The Qantas Group’s commitment to keep growing jobs and investing in our people depends on the health of the Australian economy. Competitive tax rates are key to that.”
Despite reports Fortescue Metals had told One Nation’s Pauline Hanson it would re-invest all the savings from a tax cut, at 6:30pm on Thursday chief executive Elizabeth Gaines made no such commitment to The New Daily.
A seven-paragraph written response from Ms Gaines contained no firm commitment to invest in the Australian economy in any way, with only a vague statement that a reduction in corporate tax would “facilitate … investment decisions” in a Western Australian mine that is already being considered independently of any tax cuts.
Woodside, meanwhile, told The New Daily that its “current investment plans” were announced on February 14.
The remaining seven said nothing at all.
The final signatory to the letter, and the group that organised it to be written, was the Business Council of Australia – the peak body for Australia’s biggest corporations, a large chunk of which are foreign-owned multinationals.
Overseas shareholders are the only group guaranteed to benefit from a company tax cut.
The BCA claims its members pay 40 per cent of Australia’s company tax.
What is capital expenditure?
‘Capital expenditure’ refers to money spent on new equipment, property, land and so on. It’s the sort of spending intended to grow the business and, by default, the economy.
Capital expenditure and job creation are the main ways companies can use earnings to “invest in Australia”. The alternative is to return profits to shareholders, which is regarded as the opposite of investing.
Critics of the Turnbull government’s tax cuts have warned the proceeds will end up in the pockets of shareholders, most of whom are wealthier Australians or overseas investors. The letter to the Senate was an attempt to allay those concerns.
The New Daily asked the 10 companies to provide “firm and unequivocal” assurances that they intended either to increase capital expenditure or employ more Australians. Not one did so.