At a Business Council of Australia dinner tonight, PM Albanese will promise corporate tax reform if big companies recommit to Labor polices on emissions reduction and AI.

Prime Minister Anthony Albanese will go into a Business Council of Australia dinner tonight promising corporate tax reform, provided big Australian companies recommit to being green and supportive of Labor’s polices on emissions reduction and AI regulation.

The PM says this offering is a consequence of the productivity roundtable held last month in Canberra.

This comes at a time when The Australian’s Matthew Cranston reports that 54 of the 81 largest companies in the country have issued annual reports so far this year that eliminated mentions of environmental and social governance (ESG) and diversity, equity and inclusion (DEI).

This implies big business is less committed to these new age demands from governments and so-called progressive groups.

Holding up what he thinks was a successful economic reform roundtable, the PM is offering business:

1. Tax reform.
2. Australia being a global data destination centre.
3. Support for Artificial Intelligence (AI).
4. Consultation with business on deregulation.

While the PM says his government wants “fair and affordable” tax reform, the Treasurer is on the public record talking about intergenerational equity, which doesn’t sound like tax reform that will help businesses now.

Against that, Albanese is promoting the government’s interest in addressing the current uncompetitive tax regime facing Australian businesses.

What does that imply? The Roundtable put forward the following tax changes to help businesses compete with global rivals:

1. Cuts to the company tax rate.
2. The introduction of a cashflow tax that allows new capital added to a business to be a tax deduction. With this, cash put into a business and out of a business becomes a deduction (or taxable rather than simply taxing profit).

These dangling carrots for business are designed to get big business support for, as The Australian says, Labor’s “ambitious 2035 emissions-reduction target”.

These offerings from the PM might need to be more attractive to get business support for anything on emissions that add excessively to costs. Possibly that will come with the detail in tonight’s speech, but you can bet CEOs on companies will be looking at the real cost of signing up to the government’s plans on emissions reduction and green-based energy.

One of the great problems for the Albanese government (and others in the past) is that they haven’t done what Spain’s governments have done.

CNBC reports that “Spain’s booming economy is outpacing its European neighbours, as tourism, foreign investment and immigration helps fuel growth.”

But wait, there’s more to this story — this economy has lower energy costs. “Since investing in green energy in the 2000s, Spain has benefited from low energy costs and has seen less impact from the European energy crisis that followed Russia’s invasion of Ukraine in 2022,” CNBC’s Gaelle Legrand explains. “The increase in the renewable share in the electricity mix over the past five, six years has implied a drop of 40% in wholesale electricity prices.”

Until our government can link support for renewables with lower energy costs and not higher power bills, business and consumers will be suspicious of this brave new world that wants to sensibly protect the environment.

As the CNBC report said: “Low production costs are an attractive criterion for companies, particularly foreign investors, who also supply the sector.”

Until our governments get this, there will be half-hearted interest in investing in projects that will come with profit-killing costs.