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Category: Business, Economics and Finance / Company News / Economic Trends / Banking / Money and Monetary Policy / Multinationals / Regulation

Reserve Bank warns Australia needs to remain competitive

Friday, 10 Feb 2017 06:12:33 | Peter Ryan

Dr Philip Lowe says a review of corporate tax is an "important factor". (Will Burgess, file photo: Reuters)

The governor of the Reserve Bank has backed the Government's campaign to lower the corporate tax rate, warning Australia needs to remain internationally competitive.

Speaking in Sydney last night, Dr Philip Lowe described the current corporate tax rate is a "complication" as the Federal Government works to retain fiscal buffers in the budget.

"We need to make sure that our tax system is internationally competitive. One example of this complication is in the area of corporate tax where there is a form of international tax competition going on in an effort to attract foreign investment," Dr Lowe told a dinner last night in Sydney.

"Like other countries, we face the difficult challenge of responding to this international competition."

Dr Lowe did not directly endorse the Federal Government's push for a corporate tax cut to 25 per cent over ten years, nor did he comment on Labor's claims that a corporate tax cut could not be afforded.

External Link: Peter Ryan on Dr Lowe's speech

However, Dr Lowe mentioned that a review of corporate tax was an important factor in "ensuring that our public finances are on the right track".

Dr Lowe said strong fiscal policy played a stabilising role in retaining an "insurance" that helped Australia during the global financial crisis.

The RBA governor also cautiously welcomed President Donald Trump's economic policies on corporate tax, infrastructure and regulation.

"It's very difficult to predict how the new US administration is going to affect economic policies," Dr Lowe said.

"It's quite possible that the outcomes are good. It could turn out very badly though if we do see a retreat from open, international order."

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