Originally published in The Australian Financial Review on February 19, 2018

I’m proud that The Australian Financial Review thinks that my colleague Ben Oquist and I ran a “well-orchestrated thought campaign” against the BCA’s call for a $65 billion tax cut, but, to be honest, defeating it in that debate wasn’t difficult.

[First published by the Australian Financial Review – here]

Indeed, while Aaron Patrick’s piece titled “How company tax cuts got killed” was interesting, I’m sure Financial Review readers would be even more interested in an article titled “How the BCA lost the battle of ideas to a small think tank”. I’d be happy to help any journalist that wants to write it.

But the most pressing national issue is not why the BCA is failing to get tax cuts for its members.

There are over 700,000 unemployed and more than 1 million underemployed Australians. And increasingly even working Australians are struggling to access high-quality health, education and transport services.

While BCA CEO Jennifer Westacott is free to argue that cutting taxes for her members is the best way to solve these problems, the Australian public are also free to ignore that advice.

The idea that the best way to create jobs is to cut the corporate tax rate is as absurd as Chris Richardson’s recent claim that there is “consensus” support among economists for such an idea. The BCA has tried to create a false binary between those who support its demand for a tax cuts and those who it claims don’t care about the economy, the unemployed or the future. It’s a simple rhetorical trick, but as the polls make clear, it simply isn’t working.

For all of the talk of Donald Trump’s tax cuts there has been surprisingly little discussion of the benefits of his enormous budget deficit.

Trump is behaving like an old-fashioned Keynesian and using unfunded tax cuts to put far more into the pockets of shareholders than he’s taking from the pockets of other citizens.

The result is a US budget deficit heading for $US1 trillion and an economy that is creating jobs.

If the BCA supports Trumpenomics then it should spell out its views on enormous budget deficits.

Five years ago the BCA said Australia had a “budget emergency” and that big spending cuts were necessary. Indeed, the former BCA head Tony Shepherd went on to lead Abbott’s Commission of Audit to slash the deficit. But after five consecutive years of Coalition budget deficits the BCA is now arguing that big tax cuts are just what the economists ordered.

Leaving aside the stunning backflip, the public has heard all of this before. After decades of empty promises and soaring CEO pay the public simply doesn’t believe that corporate Australia is looking after anyone other than itself.

So having failed to convince the public of the wisdom of cutting the corporate tax rate the BCA is now shifting its focus to the Senate crossbench in general, and Senator Pauline Hanson in particular. Oh to be a fly on the wall at that meeting.

Thirty years of the privatisation, deregulation and trickle-down economics advocated by the BCA has driven the divide between the regions and the capital cities.

The BCA membership have grown their head offices in Australia’s capital cities while sending regional manufacturing jobs offshore. And the only thing the small farmers and corner store owners that vote for One Nation hate more than the big banks that Westacott represents are the big grocery retailers that she represents.

The whole point of cutting taxes for small business was to give them an advantage over big business, an advantage that Westacott now wants One Nation and the other crossbenchers to vote away.

So, where to from here?

Australia is one of the richest countries in the world and has avoided recession for 26 years, yet the state of our public finances is regularly used as an excuse to keep cutting spending on education, health, public transport and renewable energy.

The BCA says that the best way to help those doing it tough is to cut taxes and a multitude of economists as well as the public are determined not to believe it.

The BCA can blame economists at The Australia Institute for its failures to win the public debate, but that will simply lengthen its pain and delay more important reforms. Westacott is worried that Australians now “hate” business, but she needn’t. They simply hate the idea of the tax cuts. It’s nothing personal.

Richard Denniss is the chief economist for The Australia Institute

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