Industry Minister Ed Husic says Feds open to corporate tax rate review on condition of labour benefits

The Federal Government is open to discussing changes to Australia’s corporate tax rate, Industry Minister Ed Husic says — but it must also include benefits for the labour market.

Among comments welcomed by business groups, Mr Husic on Tuesday said lower taxes could also come through business incentives for manufacturing. Such a suggestion is critical given the Government’s push to encourage its Future Made in Australia package of measures to confront the changing structure of the economy.

Attempts under the previous Government for discussion or to actually lower corporate tax rates had been a challenge, Mr Husic said at a forum in Sydney, “largely because where people felt that where profits pre-pandemic were performing quite well and wages were stagnating, that it was really tricky to have that conversation”.

Business groups have long called for a lower company tax rate, arguing Australia’s 30 per cent is one of the highest in the OECD and stymied investment and productivity measures.

The Government expects even small lifts in robotics and automation processes could aid productivity. Mr Husic said low manufacturing capital stock rates was an issue that needed to be confronted.

“How we do that, either through corporate tax reform or the way in which we provide investment allowances for the uptick in manufacturing capital, that is something long-term that does need to be considered,” he said at a forum hosted by The Australian Financial Review.

“We need to see business be able to invest, and free up capital to do that and if they’re committed to do that, then be able to see that enabled . . . but in a way where we see peoples’ wages and their security of employment improve.

“That is going to be the test. Any discussion around corporate tax reform needs to be able to entwine both the benefits for capital and for labour to be able to have that successful discussion.”

Business Council of Australia chief executive Bran Black said high corporate taxes were affecting the nation’s global competitiveness and ability to attract investment.

“If we want to attract investment into emerging sectors, then we need to address our out-of-date taxation system, which includes company tax and other productivity-enhancing tax changes,” he said.

“Modelling shows a 20 per cent investment allowance would grow GDP by $17 billion and boost wages.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said businesses needed the ability to free up capital to invest, particularly given the sluggish productivity growth for much of the past decade.

“Lowering the corporate tax rate or introducing investment allowances are critical measures that can drive business investment, spur economic growth and ultimately benefit all Australians,” he said.

Mr Husic said the Federal Government had worked on labour reforms, including lifting low-paid wages, and workers’ security of employment.

“In the strongest Labor traditions, we need to bring business and labour together and show that everyone wins,” he said.

“That has been the legacy, that has been the hallmark of previous Labor governments and we need to consider that.”

The ACCI believes tax reform or investment allowances would create incentives for technology upgrades, as well as enhance productivity and create new jobs.

“An approach that enhances productivity and ensures sustainable economic growth would be a win-win for all Australians,” Mr McKellar said.