Michael Keenan (Stirling, Liberal Party) Share this | Hansard source

I would like to thank the member for Richmond for that contribution. In her speech, she reminded us all about how little there is to attack in this budget and why the Labor Party abandoned their sustained attack after about 40 minutes on the day after the budget was delivered. I am quite thrilled to be able to speak on this budget as it contains many measures that will improve the lives of my constituents in Stirling. This is the 11th budget of this government and the 11th brought down by this Treasurer, and it needs to be seen in that light, as a budget that delivers the dividends of over 10 years of sound economic management.

The generous tax cuts; the radical slashing of taxes on superannuation; the record spending on defence and national security; the massive investments in our road, rail and water infrastructure—none of this would have been possible without the prudent management that has been displayed by the coalition since we came to government in 1996. It would not have been possible to have such a generous 11th budget without having had 10 previous budgets that have steered Australia into its present economic good times. It certainly would not have been possible if the Australian community were still lumbered with Labor’s debt. It would not have been possible if this government succumbed to the cheap populism that has occasionally gripped the desperate Labor Party at various stages throughout the past 10 years. It would not have been possible if our leadership always took the easy road or the popular option, if we decided we did not want to make any waves or we meekly followed polls.

Instead, the leadership of this government has decided to govern in the public interest, to do the difficult things, to tackle the vested interests and to do what is right to improve the lives of my constituents in Stirling. This 11th budget is a continuation of what has come before, and what a budget it is. There is a tax cut for every single Australian. There is a plan that simplifies and slashes taxes on superannuation. There are improvements that encourage businesses to invest and grow. There are benefits for Australian families through increased government assistance. There are benefits for working parents from the removal of the cap on outside school hours care and family day care places.

The people of Stirling know the real and practical benefits that have come out of budget 2006. The Treasurer, the Hon. Peter Costello, recently took time out of his post-budget tour of Western Australia to officially open my new electorate office in Stirling. I am pleased to report that he received a rousing welcome from local community leaders, families and business owners. For the people of Stirling, this budget will go a long way towards helping to resolve a number of important local issues. One of these is broadband black spots, a problem that affects hundreds of homes along the coastline and in other parts of my electorate. Another important local measure is an improvement in road safety. I am pleased to say that the local council, the City of Stirling, will receive double its Roads to Recovery funding under the AusLink program.

Let me discuss these improvements further. The Australian government will provide $3.4 million over four years for the telecommunications consumer representation and research grants program, bringing the total funding allocated since its inception in 1998 to $9.8 million. The consumer representation grants are recognised as a world-leading initiative, supporting consumer organisations to participate in developing communications policy and legislation, as well as providing better information for consumers about their legal rights and the available service options. Solving the problem of broadband black spots is an important local concern for my constituents. Indeed, I regularly receive correspondence about it. The funding that I have outlined above will help address this issue as it targets the supply of and demand for broadband services.

Turning to road safety in my electorate, there is a massive windfall provided in this budget to the City of Stirling. The council’s slice of the AusLink Roads to Recovery pie has been doubled, from $961,000 to $1.9 million. This major funding will see much needed improvements to our local transport network. It will allow the City of Stirling to take a look at what needs doing, assess the community’s priorities and get the relevant projects under way. The Australian government is very aware of the pressures facing local government throughout Australia in providing adequate services to the people and communities for which they are responsible. However, in saying that, I would like to call upon the state Labor government of Western Australia to match this federal commitment to our local roads.

It is sometimes very difficult for anyone in my electorate to work out what the current state government take responsibility for. They seem to do very little, apart from running around, complaining about the Commonwealth and insisting that the federal government fix every local problem. Complaining about the Commonwealth government has a long and glorious history in Western Australia, and often these complaints have been justified. But the current state government take this fine tradition of federalism to a quite ridiculous extent, and I am astonished that they find time to do much else apart from issuing press releases complaining about the federal government. The reality is that the state government have basically abrogated their legitimate responsibilities to the people of Western Australia. Many important projects within our local communities could be fast tracked, but only if the government of Western Australia were prepared to contribute a bigger slice of their massive economic boom to fulfil their duty and take action on their own responsibilities.

The Commonwealth government has increased to $1.67 billion its land transport funding to Western Australia over the past five years of AusLink, the national land transport plan. This includes $323 million to be paid to WA for this financial year. Of the $1.67 billion, $934 million is directed to major land transport construction projects, an increase of 242 per cent compared with the preceding five years. The remainder is for AusLink national network maintenance, local road upgrades and—very importantly for my electorate of Stirling—the elimination of crash black spots. The government has already helped to make the roads in my electorate of Stirling safer, with black spot funding from this year alone targeting dangerous intersections in Karrinyup, Osborne Park, Nollamara and Mirrabooka, and now it is very important that the Western Australian government do its part for our local communities also.

The centrepiece of this budget is a personal income tax cut for every single Australian taxpayer. From 1 July this year, the government will reduce the 47 and 42 per cent rates to 45 and 40 per cent respectively. In addition, the government will increase the tax thresholds so that the 15 per cent rate will apply to up to $25,000 of income, the 30 per cent rate will apply to up to $75,000 of income, the 40 per cent rate will apply to up to $150,000 of income and the 45 per cent rate will apply to income earned beyond that. The fringe benefits tax rate will be cut from 48.5 per cent to 46.5 per cent, bringing it into line with the top marginal rate including the Medicare levy.

The low-income tax offset will be enhanced by increasing it from $235 to $600. It will begin to phase out at $25,000 from 1 July 2006, compared to $21,600 currently. This means that those eligible for the full low-income tax offset will not pay tax until their annual income exceeds $10,000. The Medicare levy low-income phase-in rate will be cut from 20 per cent to 10 per cent, ensuring more low-income taxpayers pay a reduced rate of Medicare levy. Australians who are eligible for the senior Australian tax offset will now pay no tax on annual income up to $24,867 for singles and up to $41,360 for couples. Overall, in percentage terms, the greatest tax cuts have been provided to low-income earners.

These tax changes will ensure that more than 80 per cent of taxpayers face a top marginal rate of 30 per cent or less. This increases the 30 per cent threshold and the low-income tax offset and will provide more incentive for those outside the workforce to re-enter it and for those on part-time work to take on additional hours. Under these new arrangements, a taxpayer will need to earn $121½ thousand to pay an average tax rate of 30 per cent. This is a truly remarkable advance on the days when Australians paid the top rate of tax on earnings over $50,000, a state of affairs that existed merely six years ago. From 1 July this year, the top marginal tax rates will apply to around two per cent of Australian taxpayers. Taxpayers will not reach the highest marginal tax rate until they earn more than three times average weekly earnings. Through previous reforms and this bill, by 1 July this year that threshold will be $150,000.

This package provides $36.7 billion of benefits to taxpayers over the next four years. It will enhance incentives for workforce participation and it will improve Australia’s competitiveness. It will put cash back into the pockets of Australian workers. In my electorate of Stirling, this will mean that more than 50,000 workers on average wages can expect to get $40 in tax savings each month and around 25,000 workers on high salaries can expect to get up to $80 each month. This is a hugely important saving; if there is an extra $40 to $80 in your wallet each month, that is a real benefit. More money in people’s back pockets gives them choices and allows them to start making plans for the future. Workers can choose to put these savings away for a rainy day or they can use them simply to pay the bills. It is a level of relief that will be working throughout the whole Stirling community.

In this debate there has been some talk about bracket creep, but this argument does not stand up to even basic scrutiny. Eighty per cent of Australians are on taxable incomes of $75,000 or less. As people move up in income, they do not go into a higher marginal tax rate. The great bulk of people can move through the income tax range of $25,000 to $75,000—remembering that this is where the great bulk of Australians are—without moving their marginal tax rate. Some contributions have said that these tax cuts might be inflationary and hence will fuel pressure on interest rates. The idea that it is inflationary to give people back some of their own money is clearly ridiculous. It is far better to return a surplus to taxpayers than it is for government to think up more weird and wonderful ways in which to spend people’s money.

There is more to be done with regard to tax in Australia, and many have argued that further taxes are needed in our tax system, but it has been noted by organisations such as the Australian Chamber of Commerce and Industry that these changes in personal income tax are a good start on further tax reform. The Business Council of Australia has also agreed that these changes will improve the personal tax system and provide additional incentives to work and to save. If we look at these tax cuts in the context of what has happened over the past five years, we see that this is just another part of a long-term strategy being implemented by the Howard government. This is the fifth instalment of personal tax cuts, as part of a long-term plan with more room for adjustment and reform in the future.

Small businesses are also big winners from this budget. In my electorate of Stirling we have a thriving small business network. The Stirling Business Association is one of the biggest organisations of its kind in Australia. We have important research and development organisations across many fields, from aviation technology to cancer drug research, in our light industrial areas of Osborne Park and Balcatta. This budget will substantially improve depreciation arrangements by increasing the diminishing value rate for determining depreciation deductions from 150 per cent to 200 per cent. It will cut business taxes by $3.7 billion over the next four years. The effect of this measure will be to provide the equivalent of a 33 per cent increase in the allowable depreciation rate for all eligible assets. This will increase incentives for Australian businesses to invest in new plant and equipment and make it easier to keep pace with new technology and to remain competitive.

Investment is a key element of productivity growth and therefore of economic growth. The increased depreciation rates under the diminishing value method align the depreciation deduction for tax purposes more closely with the actual decline in the economic value of the asset, which will lead to improved resource allocation within the whole economy. This is consistent with the government’s tax policy and strategy of ensuring that the tax system has a minimal effect on the allocation of resources throughout the economy. The measure will apply to assets acquired on or after 10 May this year and includes appropriate integrity measures to ensure assets held prior to that date will not be able to be brought into the new arrangements.

Some of the most important changes in this budget relate to superannuation. Alterations to the superannuation system will encourage people to save for their retirement and increase their retirement incomes. I think everyone will agree that, formerly, super arrangements in Australia have been excessively complicated. The new arrangements will abolish all tax on benefits paid to retirees aged 60 years or over. This is a huge advance on the previous system and will allow people in Stirling new options to retire earlier and to have more disposable income once they do. Because Australians aged 60 and over who have already paid tax on their contributions and earnings will not pay tax on their superannuation benefits the need to disclose superannuation in tax returns will be negated, greatly simplifying the system.

Seniors will also benefit from a utilities allowance—a biannual payment of $102.80 for eligible households. In Stirling this means 2,152 households will receive this additional payment. The utilities allowance has also been included for each self-funded retiree eligible for the seniors concessional allowance as well as for those who receive mature age allowance, partner allowance or widow allowance, meaning there are more than 820 people in Stirling who will be eligible for this payment. This payment will be made by the end of the financial year.

Also set to benefit from this budget are the 2,700 carers in Stirling, a group of people that I believe are amongst the most deserving of some extra help. Carers of people with disabilities—whether those with disabilities are children or older people—make a selfless contribution to our society. In recognition of this, as has been done in the past two budgets, an additional $1,000 will be paid this financial year to the over-100,000 people eligible for the carer payment. This year the $1,000 bonus will also be extended to carers who receive either the wife pension or the veterans’ affairs partner pension.

Other important initiatives in this budget include $152 million to provide care for older patients in public hospitals around Australia; a fairer assets test for age pensioners; and tax relief so that those who are eligible for the senior Australians tax offset will pay no tax on annual income of up to $24,867 for singles and over $41,000 for couples. We will also increase availability of new innovative drugs on the PBS; there is money for more training for doctors and nurses; and there is $1.9 billion to improve services for people with a mental illness, their families and carers.

One of the other areas that will benefit greatly from this budget is our armed services. This budget allows $19.6 billion, or an increase of $1.9 billion on last year’s funding allocation. This is an increase of 37 per cent in real terms since we came to government. A commitment to a real increase in funding of three per cent every year for the next 10 years for the Defence Force means that the budget for Defence is on track to grow to be almost $27 billion by 2015. This will provide the Australian armed services with the ability to plan with certainty and to create a more combat focused, better equipped and more mobile and operationally ready Defence Force, including new air warfare destroyers, large amphibious ships, helicopters and a Joint Strike Fighter. It will give the Australian armed services an enhanced ability to identify and respond to emerging threats through a further $973 million over five years to strengthen Australia’s intelligence capabilities. Events this week have shown that we live in an unpredictable world and an unpredictable region. The Australian people can be justifiably proud of the role their Defence Force plays in defending our freedom and also, importantly, in defending the freedom of others. This budget will enhance that capability.

This budget is one of the biggest for investing in this country for a very long time. It is part of an overarching plan designed to meet the many challenges that lay ahead. It takes the opportunity now to strengthen our economy so that we are ready for future opportunities. It is about making our nation and its people secure. I congratulate the government and the Treasurer for what is an important achievement for the people of Stirling.

Debate (on motion by Mrs Gash) adjourned.

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