AADA Chief Executive Officer, David Blackhall, and Executive Director Operations, Brian Savage, were among guests at the Australian British Chamber of Commerce breakfast on 3 November to hear Federal Treasurer, Scott Morrison, deliver an address on Australia’s ongoing economic performance.
The Treasurer was bullish in his remarks, stating how in January this year he forecast a real GDP growth of 2 per cent in 2016-17 that turned out to be right and further predicted a 2.75 per cent growth for 2017-18 due to the economic pick-up.
Mr Morrison said the Government was focused on jobs growth and pointed out Australia had just experienced the strongest full-time jobs growth on record, with nearly 20,000 jobs created in September. This was the twelfth consecutive month of jobs growth and the longest run in over 23 years.
Mr Morrison reminded the audience the Turnbull Government had already legislated progressive tax cuts for businesses with a turnover less than $50 million, taking their tax rates down from 30 per cent to 25 per cent over a 10-year period.
“Now we need that extended to all businesses by freeing them from the shackles of high tax and allow them to grow their businesses and deliver more better-paid jobs to Australians,” he said.
“This would generate a sustained lift in GDP of just over one per cent,” he added.
“The UK has dropped its tax rate from 30 per cent to its current rate of 19 per cent in 10 years and it still has a few more per cent to go.
“In resource-rich Canada, the corporate rate has plummeted from over 40 per cent in the early 2000s to 26.7 per cent,” he said.
Mr Morrison said that France and China also believe in lowering taxation and President Trump has declared a target of 20 per cent.
He said the growing gap between our corporate tax rate and those of some of our trading partners is an obvious barrier for new investment which is steadily leaving our businesses uncompetitive.
The Treasurer’s commitment to extending corporate tax cuts would have been welcome news to automotive dealers, many of which have a turnover exceeding $50 million, but operate on relatively low profit margins.
Investment capital not flowing sufficiently to drive economic activity has had a numbing effect on jobs, wage growth, inflation and non-mining profits.
He said, however, the final budget outcome for 2016-17 was $4 billion smaller than forecast and that real growth in government expenditure was running under 2 per cent – the lowest of any government for 50 years.
His comprehensive speech only allowed time for two questions from the packed audience, one of which came from Mr Blackhall.
Mr Blackhall asked the Treasurer about the likelihood of the abolition of the 5 per cent import duty and the dropping of the LCT as part of as post-Brexit Free Trade Agreement negotiation.
Obviously not wanting to make any firm promises, the Treasurer said his priority was to continue to build towards a budget surplus and that when that is achieved the LNP Government will be keen to reduce as many taxes as possible.
Mr Morrison said Australia has one of the highest corporate tax revenue as a percentage of GDP in the world at 4.4 per cent due to its resource bias, compared to the vast majority of Europe and the US, which are under 3 per cent.
In summary, the Treasurer said that opportunities abound as the shackles of uncompetitive tax rates are being released.
There is evidence of more jobs, investment and more exports, from the economic data we have seen in recent months, he said.