Prime Minister Malcolm Turnbull says the company tax cut is key to the government’s agenda. Photo: Alex Ellinghausen Opposition employment spokesman Brendan O’Connor. Photo: Alex Ellinghausen
Company profits have surged to record highs at the same time wages suffered their sharpest decline in eight years, new figures show, as the Turnbull government prepares to argue the case on Tuesday for a $50 billion company tax cut.
The three months to December 2016 saw a 20 per cent jump in profits, while wages fell 0.5 per cent – the largest decline since mid-2009, according to the n Bureau of Statistics Wage Price Index. Over the course of 2016, company profits rose 26 per cent.
On Tuesday, Parliament will resume debating the government’s cut to corporate tax rates, a key plank of its 2016 re-election pitch. The Coalition argues the $48.2 billion plan will result in higher wages being passed onto employees.
But Labor claims the move will only be another boon for business after the Fair Work Commission’s decision to slash Sunday penalty rates last week for up to 600,000 workers in the retail, hospitality and fast food industries.
Labor has described the cuts, which will see the company tax rate reduced from 30 per cent to 25 per cent over 10 years, as an attack on workers.
“This slap in the face to workers by the Turnbull government comes as inequality is at a 75-year high, wages growth at historic lows and underemployment at record highs,” said Labor’s employment spokesman, Brendan O’Connor.
In Question Time on Monday, Prime Minister Malcolm Turnbull accused Opposition Leader Bill Shorten of “pure hypocrisy” for opposing the tax reduction.
“We have seen a complete backflip,” Mr Turnbull said. “The case for company tax cuts was made very eloquently by the leader of the opposition in this place only a few years ago when he said that everybody knows that cutting company tax increases investment, productivity, employment and jobs.”
The tax cut has initially been targeted at small to medium businesses with a turnover of up to $10 million, but under the government’s plan that threshold will be removed by 2023.
A report from independent think tank the Grattan Institute, released on Monday, found the proposed company tax cut would lower national income for years before it returned a positive and would never be self-funding.
Commsec chief economist Craig James said the 26 per cent annual climb in business profits was driven by gains in the finance and mining sectors, and the economy’s bounceback from Brexit, the 2016 federal election and US presidential election, but wage growth remained low at 1 per cent.
The wages figures released by the ABS on Monday are different from the official 1.9 per cent measure of wage inflation, because it takes into account the number of people employed and the hours worked.