(Australian Associated Press)
Malcolm Turnbull and Treasurer Scott Morrison are seizing on better global growth forecasts on the back of US tax cuts, as the government pushes for greater relief for Australian companies.
The International Monetary Fund has revised up its forecast for world economic growth to 3.9 per cent this year, following cuts in company tax in the United States.
However, it has warned US growth will start weakening after 2022 as temporary spending incentives brought about by the tax cuts expire.
Mr Turnbull, who visited a Brisbane business on Tuesday, said company tax cuts made sense.
“If you give businesses the incentive to invest more … they will employ more,” Mr Turnbull told reporters.
“It’s always worked in the past. It’s pretty basic. It’s Economics 101, really … so that’s why we’re pressing on with our enterprise tax program, because we know that it will result in more investment and more jobs.”
Mr Morrison seized on the IMF’s revised outlook, using it as a sledgehammer to bash the opposition.
“The IMF report directly contradicts Labor’s assertions the United States’ cut to company tax would have no impact on the rate of global economic growth,” Mr Morrison said on Tuesday.
However, Opposition Leader Bill Shorten dismissed the findings, saying the government’s plan to give away $65 billion in tax cuts to large companies and multinationals was neither smart nor fair.
He accused Mr Turnbull of copying US President Donald Trump.
“What Mr Trump does in America is up to him. I’m interested in Australia,” Mr Shorten told reporters in Cairns.
“Australians say to me in the street, ‘Why is Malcolm Turnbull copying America with $65 billion tax cuts for rich companies?’”
Labor frontbencher Brendan O’Connor played down the impact of US tax cuts on IMF forecasts as a “sugar hit”, saying the Trump administration’s tax plan would widen the gap between the rich and poor.
Mr Turnbull rejected describing the tax cuts as a sugar hit or trickle-down economics.
“(Labor) want everyone’s earnings to trickle, to flood actually, into the government’s coffers so they can spend it on their own objectives.”
The government will make a fresh bid to legislate the second tranche of company tax cuts when parliament resumes in February.