Treasurer Scott Morrison says businesses are free to say how they will use the tax cuts he's hoping to give them, but he won't be insisting they offer wage rises to their workers.
As the Turnbull government pushes ahead with plans to extend corporate tax cuts to companies with turnover above $50 million, Commonwealth Bank chief economist Michael Blythe has told the ABC politicians should consider striking a deal with business to guarantee wages growth.
He cited the example of Japan, where the government is cutting taxes from 30 per cent to 20 per cent for businesses that aggressively raise wages and increase capital investment.
"It's really just an idea at the moment, the practicalities would have to be worked out," Mr Morrison said on Tuesday.
But he rejected the idea as a "highly regulated approach".
"Businesses can make comments to that effect right now, they would be able to outline what they believe they would do in the event of the tax package passing the parliament," he told ABC radio.
Every business would have a different reaction to tax cuts, he said.
"What I want to see is businesses be able to pay their employees more and they're not going to be able to do that if they're kept on a high-tax island."
Deputy Labor leader Tanya Plibersek says the treasurer's assumption that lower taxes will translate into higher wages or more jobs had not been borne out in recent times.
"Our recent history is that Australian companies are very profitable, they're not passing that on as wages increases," she told ABC radio.
