Company Tax Cuts and the National Energy Guarantee

What a week it’s been. We now have a new Prime Minister after a week where we saw the government confirm it will not proceed with pushing company tax cuts through the Senate nor bring them to the next election. Similarly, the National Energy Guarantee has been put on the back burner.
We have to wonder whether politics and votes now have greater influence on policy, than convictions and what is best for the economy.

I recall attending a breakfast where John Howard was the keynote speaker, not long after he had left politics. I won’t forget when he was asked what an important quality of a Prime Minister was, he replied “convictions”. Convictions; what are convictions? The definition of a conviction is a “firmly held belief or opinion”.

Admittedly, politics of today is ruled by the polls more than ever before in history, where leaders of countries use twitter to communicate their thoughts with voters and the latest poll results are enough to strike fear in any leader. John Howard did not have social media and the polls to contend with (at least not to the same degree), as today’s leaders. My fear is, the polls are destroying our ability to engage in compelling conversations about what is best for the country?
Let’s take the 2 most recent casualties: -
Company tax cuts – business needs certainty. Advisors need to know where they stand when giving advice to their clients and to remain competitive in the region, we need to provide compelling reasons to invest in Australia. Australia has a small population and is dependent upon foreign investment. The fight for capital is fierce and our region provides numerous options for investors and businesses. Australia has many factors in its favour; low sovereign risk (the rule of law is followed), large amounts of land and arguably everything the world wants (clean air, quality food, commodities, energy, etc). However, investors still consider after tax returns and if our corporate tax rate is not competitive in the region, our attractiveness fades.
National Energy Guarantee – if ever there was a political hot potato this is one. Both sides have contradictory arguments and to make matters worse, emissions targets, the Paris Agreement and environment impacts further confuse matters. Environmental issues aside (because this piece is written from an economic perspective), all businesses ask for is once again, certainty. Certainty over direction and policy will mean businesses can plan where to place future investment, model what industries they think will grow and plan for the future. This entire debate has been caught up in the argument of “what price savings will the consumer (read voter) enjoy”, versus what is the best for Australia in the long term, both from a sustainable energy, global competitiveness and growth perspective.
The world is literally “our oyster”. We are the envy of other countries by virtue of the standard of living we enjoy (just do the “how rich am I” test on the Giving What we Can website to put this into context), the resources we have (gas, oil, iron ore, uranium (sensitive topic), rare earth, lithium, coal, to name a few), plentiful land on which to grow food, and the security we enjoy. We also sit in a time zone shared with 60% of the world’s population.

Are the leaders on both sides of politics willing to put aside the polls and consider policy that is truly in the long term interest and benefit of our country? My experience is most people recognise authenticity and honesty, and appreciate it. Is there enough faith in the Australian voter to push forward on policy that will be to our benefit in the long term? Mr Morrison, over to you.