Group rejects $65bn cuts in ‘any fiscal environment’, challenging shadow treasurer Chris Bowen’s suggestion of possible cuts if budget in surplus

A caucus of the ALP’s national left faction has resolved to strongly oppose the Turnbull government’s proposed corporate tax cuts for big companies, in a warning to the shadow treasurer Chris Bowen, who has recently countenanced revisiting that issue once the budget returns to surplus.

Members of the left faction met in Sydney over the weekend to workshop proposals for the ALP’s national conference, due mid year, and there was strong opposition at the gathering to softening Labor’s line on company tax cuts.

The left faction convenor, Pat Conroy, said after the meeting that a $65bn cut in company taxes was not the correct policy “in any fiscal environment”.

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“There is no case for the reduction in the corporate tax rate,” Conroy said. “This issue is not about timing, instead it is about a rejection of trickle-down economics.

“Governing is about choices and Labor should choose to invest in vitally needed infrastructure, both physical and social, such as education.

“We will be perceived, and rightly so, as just a pale imitation of the Liberals if we support the tax cuts for large corporations but just say: ‘Let’s wait a few years.’”

Labor has opposed the Turnbull government’s corporate tax cuts on the basis that they are unaffordable, but in the middle of February, Bowen held out the prospect of adjustments once the budget had returned to surplus.

“While our main focus is returning the budget to balance, when the budget has returned to surplus then you can look at further tax reform for both personal and company tax,” Bowen told the ABC mid-month.

“But you’ve got to be able to afford it. You’ve got to pay for it.”

The Turnbull government has dug in behind its plan to reduce the corporate rate, and big business has intensified its lobbying effort in the hope of persuading the Senate to drop its current opposition to tax relief for big corporates.

Turnbull travelled to Washington with a substantial delegation of Australian business leaders, and the Coalition has pointed to the Trump administration’s decision to cut company tax as a rationale for following suit here, arguing the current headline rate is too high for Australia to remain internally competitive.

At a business roundtable in Washington over the weekend, Turnbull said his government had been “inspired ... and encouraged by the tax reforms here”.

“You know, it used to not be contentious actually, even in the contentious environment of Australian politics that if you reduce business taxes and increase the return on investment you get more investment,” the prime minister said.

“It’s kind of obvious, and if you get more investment, you get more jobs”.

Trump cut the US company tax rate from 35% to 21%. In Australia the Coalition has secured a tax cut for businesses with turnovers of up to $50m, but it lacks the requisite parliamentary support to cut the rate to 25% for all companies by 2026-27.