Treasurer echoes analysis warning GDP growth could fall 1% if the corporate rate isn’t lowered in response to the US move

This article is more than 2 years old

This article is more than 2 years old

The treasurer, Scott Morrison, has claimed Australia’s economy will be deprived of 1% growth in GDP if parliament does not follow the lead of the US president, Donald Trump, and slash Australia’s headline corporate tax rate.

He has seized on Trump’s tax cuts, overhauling his justification for his proposed $65bn tax cuts to say they are now necessary not because they will add 1% Australia’s GDP growth, but because they will offset a damaging 1% hit to GDP that will supposedly flow from the huge tax cuts in the US without Australia responding.

Republicans celebrate with Trump after House passes tax bill – again Read more

He said Treasury analysis, which was handed to the government this week but not released publicly, has pointed out that Australia may experience a significant recessionary impact and a potential downgrade in revenues if it does not lower its corporate tax rate from 30% to 25% in coming years, in response to Trump’s cuts.

The Treasury analysis, which was given to Morrison’s office, was also given to the Australian, which wrote a story warning that Australia could be “marooned” with one of the highest company tax rates in the world.

Morrison is quoted in the story as saying: “The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment and wages with them.

“Bill Shorten’s refusal to support the government to reduce taxes and support Australian businesses to be competitive will send jobs, higher wages and growth offshore.”

Morrison organised a press conference on Thursday so he could call on Labor to support his tax cuts for the good of the country.

“My summer’s homework will be focused on how I can deliver personal income tax cuts and personal income relief for middle- and low-income workers,” he said.

“[Bill Shorten’s] homework is to ensure he gets over himself and over economic envy and face up to the real challenges Australia has when we are facing a competitive environment all around the world.”

Company tax cuts won't solve anything – getting them to pay up might Read more

The shadow treasurer, Chris Bowen, has slammed Morrison for politicising the Treasury.

“Scott Morrison needs to stop politicising the Australian Treasury because it risks undermining the confidence and credibility of the work it produces, much of which Australian markets, businesses and consumers rely upon,” Bowen said in a statement.

“It says a lot about the quality of Scott Morrison as treasurer that he is incapable of making an argument without politicising the Treasury and as he gets more desperate, the intensity of the politicisation is increasing.

“The most recent and egregious example of this politicisation was on 30 November when the treasurer released Treasury costings of Labor tax policies based on assumptions he’d given to Treasury.

“Today we see this approach again with selective quotes from a Treasury submission given to the Australian newspaper.

“On most occasions, just like today, Mr Morrison refuses to release whatever he has commissioned from Treasury for public scrutiny.”