Cutting bureaucracy, regulation & taxes will get industry moving again

Senate on 9/10/2024
BILLS – Future Made in Australia Bill 2024, Future Made in Australia (Omnibus Amendments No. 1) Bill 2024 – Second Reading

Senator RENNICK (Queensland) (11:09): I rise today to speak on the government’s planned investment in the Future Made in Australia Bill 2024, which is effectively nothing but a pork-barrelling exercise whereby you rob money from Peter and give it to Paul. Effectively, the idea that you can give subsidies to somehow encourage industry in this country is a flawed assumption. If you want to actually get a long-term sustainable industry and manufacturing going in this country, you need to lower taxes and regulation and you need to level the playing field. I have touched on this many times. The People First Party is the only party that actually has a taxation plan and a soon-to-be monetary policy capital markets plan on how to get Australia moving again.

If you really want to get Australia moving again, the first thing you need to do is lower income taxes. Our income taxes in this country are way too high both on a comparative basis to other countries across the world and as a percentage of tax collected in the budget. It’s the actual people that get out of bed and put their nose to the grindstone who are the ones that actually make the goods and services in this country. There is no point taxing them at a very high income tax rate if you are only going to then clip the ticket through more bureaucracy and more departments to hand back, say, 70 per cent or 80 per cent of that as some subsidies picking winners. That is just not going to work.

The best way to lower income taxes is to actually lower the amount of bureaucracy in this country. Yet again, two weeks ago, I moved a motion that we ask the Senate Legal and Constitutional Affairs References Committee to look at the duplication of roles and responsibilities of bureaucratic departments in this country. That’s because the amount of regulation in this country is killing business. If it is not high taxes, it is high regulation. Here’s the beauty: if you cut the bureaucracy, you can cut regulation and you can cut taxes. This is my policy, or the People First policy, whereby we intend to cut the level of bureaucracy in Canberra. We think the level of bureaucracy is way too high in Canberra. We do not need two environment departments. We don’t need two education departments in this country. We don’t need two health departments in this country. Constant blame-shifting and a vertical fiscal imbalance is only sending this country broke and making it harder for businesses and hardworking Australians to keep their heads above water. I suggest that we do that rather than having all these handouts.

I might add, if you actually read through what a lot of this is, there is $134 million to prioritise approvals for renewable energy, working with the states and territories through the Energy and Climate Change Ministerial Council to accelerate electricity grid connection and $20 million to improve engagement with communities impacted by the energy transition. There are lots of these little rats and mice, with millions of dollars here and millions of dollars there. All up, it is going to add up to about $22.7 billion. To put that into context, for 14 million Australian workers $1,500 of their income tax is going to be spent on this bill alone. If you want to actually get the country moving again, I suggest you cut the income tax by $1,500 and let the Australian people keep their hard-earned dollars. That is how you would actually get the country moving again. Yet again, there are no real sustainable solutions in any of this.

Another thing we need to look at is why did we get rid of stamp duty on share trading when we introduced the GST and not payroll tax? All we have done is encourage foreign speculators to come in here and buy up a percentage of Australian shares and assets and not have to pay stamp duty. That is not fair to Australian businesses, Australian householders and Australian farmers, who all have to pay stamp duty on their real assets. We have allowed the stock market, of which 50 per cent is high-frequency foreign traders, to come in here and manipulate prices and scalp prices. Why not—and this is one of our policies—bring back stamp duty on share trading and abolish payroll tax? This is a tax on speculation, and then that tax would help remove a tax on productivity. Payroll tax would be the dumbest tax in this country and the dumbest form of regulation. You are taxing employers to basically employ people. Not only that but they then have to comply with the six different states as to the different thresholds and different rules as to the definition of ‘contractor’ and who is a full-time employee and who isn’t. These laws are ridiculous. Yet again, I will emphasise this: forget the pork-barrelling and let’s get serious about reducing regulation.

Another thing is that I will contradict the statement by Senator Reynolds that we need to attract foreign capital. We do not need to attract foreign capital into this country. The words of our national anthem are ‘wealth for toil’. We have this thing called equity. There are two types of capital: debt and equity. Our forefathers built the equity in this country. Equity is title. As a sovereign country, we have title over all the natural resources in this country; we do not need to go out and tap financial markets for foreign debt or have foreigners come in here and buy our infrastructure. That is fundamentally flawed.

If you want to tap the wealth in this country—our untapped wealth—you need to create an infrastructure bank. If I was to come in here today and say I was going to put forward a private senator’s bill to stop private companies from issuing new shares—let’s say BHP wanted to issue new shares to start a new iron ore, coal or nickel mine—people would think that was ridiculous. And it is ridiculous, mind you, yet governments will not issue new shares to build infrastructure.

People often come back at me that I don’t understand anything about finance and say, ‘That’s MMT.’ No, modern monetary theory is where you issue credit without actually securing it against an asset. This policy that I’m suggesting is to have an infrastructure bank that will only issue infrastructure bonds against seven sovereign assets: dams, power stations, roads, rail, ports, airports and telecommunications. That is how you go about unlocking the wealth of this country, whilst actually retaining title over that wealth.

The continual verbal diarrhoea I hear from many politicians in this country saying that we have to rely on foreign capital needs to stop. When Paul Keating lifted the capital controls in 1985, we saw Australia flooded with foreign debt. We saw foreign debt rise amongst the four major banks from $8 billion to $800 billion. All that did was to double house prices relative to income, which meant two parents had to go to work, which meant, of course, that children had to go into child care. We’ve now got a whole childcare industry which is sucking 200,000 people out of other industries in order to prop up the banks, because Australia’s household debt relative to income is 120 per cent. We’ve got one of the highest household debt levels in the world because Paul Keating lifted capital controls. We’ve now got a massive immigration Ponzi scheme. I heard from a real estate agent this morning who said that, basically, immigrants are being used to buy houses. Australians are having to sell their houses because they can’t meet the mortgage and they’re going back into the rental market. Rather than getting more Australians into housing, our lax capital controls are actually causing Australians to now end up as renters. That is not a country we want to see.

If we want to encourage productivity in this country, we need to start building infrastructure and we need to internally fund that infrastructure. If you build more dams, more power stations, better roads and more ports, not only will you supply essential services to the Australian people but you will actually push down the cost of doing business—and that is the true way to make us compete on manufacturing. If we build more power stations—for example, out near my home town of Chinchilla, where there are 400 million tonnes of coal sitting just below the surface—we can provide cheaper energy. I know that strategy works because I grew up in a state that used to run on the back of about 10 coal-fired power stations that provided cheap and reliable energy. Indeed, Queensland in the late eighties had the cheapest energy in the world as a result of the power stations that were built across the state. That is the way.

With cheap energy, removing payroll tax, having lower income tax and having fewer regulations, businesses can be more competitive. They can’t compete, at the moment, when we’ve got a government that inserts itself into every little thing in not just business but peoples’ personal lives—that is increasing the size of bureaucracy. We are now hitting combined GDP spending across three levels of government of almost 40 per cent. It was 36 per cent when I first came into this chamber, back in 2019. The combined government spending in this country, as a percentage of GDP, is higher than that of China—and China’s considered a communist country. Well, if China is considered a communist country, what do you call Australia with that level of government spending? Think about it; it’s not right.

The last piece of this puzzle is that we need to level the playing field for Australian business. Australian businesses cannot compete against foreign business in this country, because foreign businesses can send their profits offshore—and I’ve spoken about this many times—and use the withholding tax rates that are favoured to send capital offshore. This is what drives me mad when I hear politicians talk about how we’ve got to attract foreign capital. Whilst they’re saying that, the reality is that our domestic earnings that should be retained here in Australia to build up our equity is being sent offshore.

We’re allowing the likes of Facebook and Pfizer—and I’ve quoted Pfizer in this chamber before—who, in 2022, had an operating profit ratio of just seven per cent here in Australia against a worldwide operating profit ratio of 35 per cent. Why? Because they sent a billion dollars of their earnings offshore back to Ireland, of all places. Why did they do that? Because the withholding tax on royalties in this country is 10 per cent; Ireland has a company tax rate of 12½ per cent. Ten plus 12½ is 22½. If you subtract the 30 per cent tax deduction that they pay here, you’ve got a 7½ per cent tax arbitrage. Put that across a billion dollars worth of earnings sent offshore and voila! For the sake of a couple of accounting journals and setting up a few subsidiaries here and there, you’ve just saved yourself $75 million. This stuff goes on across a heap of multinational companies. This won’t stop unless we lift the rate of withholding tax on profits sent offshore.

I notice here that there’s $15.7 million to strengthen scrutiny of high-risk foreign investment proposals. If you want to spend $15 million, I suggest you spend it on rewriting our tax treaties so we stop giving our profits away to foreign countries for nothing. That’s what we are doing. We have title over the assets in this country. We have title over the wealth. That’s what a sovereign country is, and yet we let the profits go offshore for next to nothing. We tax it very little. I can assure you that Australian businesses, when they have to pay 30 cents on the dollar, can’t compete against foreign multinationals who can get away with lowering their true company tax here in Australia down to one or two cents because they’re allowed to shift most of their profits offshore.

The rorts have to stop. This is nothing but doublespeak here. Ultimately, you’ve had to collect the money you’re paying out in this program, which is $22 billion, out of the pockets of hardworking Australians. The idea that you can rob Peter to pay Paul doesn’t work. What I would suggest is that you get serious about making some genuine structural improvements to the way our economy is run, put sovereignty in front of bowing down to foreign interests, put Australians and active, actual income in front of passive income, reduce the red tape and get serious about cutting down the bureaucracy in this country.