Fatal flaw in Bill Shorten's "New Jobs Tax Cut" policy


Within a day of its release, Labor’s “New Jobs Tax Cut” policy is unravelling. Labor’s policy is unfunded and won’t work.

Labor’s policy fails on financial grounds.

Labor says its policy will be funded from funding currently set aside for existing wage subsidy programmes, yet it says it will retain those programmes in full.

Labor cannot simply invent a way to fund a $257 million promise when the money is already budgeted for programmes Labor says it will keep.

Labor’s policy also fails on a number of practical grounds:

First, it provides less support to employers that the Coalition’s PaTH policy to get young people into a job. Under PaTH, employers receive up to $11,000 per employee in direct financial assistance, which they can start accessing straight away.

Under Labor’s policy, support is limited to a maximum tax deduction of $5,500, assuming the business is profitable, the highest deductible amount of $20,000 is claimed, and the company pays the proposed company tax rate of 27.5 per cent.

Second, Labor’s policy is limited to small businesses with less than $2 million turnover. In contrast, PaTH is available to businesses of all sizes. Australia’s larger employers have a greater capacity to employ new workers, yet Labor’s plan inexplicably excludes such companies.

Third, Labor’s policy fails to provide training and work experience to people who need it most through internships, which are at the heart of the Coalition’s PaTH programme.

Finally, and most importantly, Labor’s policy does not provide support to businesses when they need it most. Under Labor’s policy, businesses can only receive financial support as a tax deduction. This can only occur months after they have employed a person and only if they have made a pre-tax profit.

The Coalition has a carefully structured plan to get Australians into a job, through the Youth Employment Package. The Coalition offers a $6,500 to $10,000 accelerated wage subsidy over six months, payable from day one.

The Coalition understands the importance of cash flow for small business, which is why under PaTH financial assistance will flow from the time a person is first employed. Labor’s policy shows they fundamentally misunderstand how small businesses operate and they fail to understand what employers and young Australians actually need.

Mr Shorten is hoping that the Australian people have short memories. Their track record of getting people into a job is dismal.

More than 460,000 jobs have been created under the Coalition.

Only the Coalition can be trusted to deliver jobs and growth for Australia.