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

This is very good news. Six years ago the threshold for the top marginal tax rate stood at $50,000. If the threshold for the top marginal rate had been indexed when this government came to office in 1996, as it was under the previous government, it would now stand at only $64,000. Through previous reforms and this bill, by 1 July this year the threshold will be $150,000. (Quorum formed) Again, let the record show that the Australian Labor Party wants to close this House down whilst the government is trying to pass personal tax cuts.

This package provides $36.7 billion of benefit to Australian taxpayers over four years and it reinforces our reputation as a low-tax country. These tax cuts significantly restructure the personal income tax system to increase disposable incomes, to enhance incentives for participation and to improve Australia’s international competitiveness. Australian workers are set to benefit from these personal income tax cuts that will put much needed cash back into their pockets. In my electorate of Stirling this will mean that more than 50,000 workers on average wages can expect to get up to $40 in tax savings each month and around 25,000 workers in my electorate who are on higher incomes can expect to save up to $80 each month. This is an important saving for local workers.

More money in people’s pockets gives them more choices and allows them to start making plans for the future. Workers can choose to save these deductions or they can use them just to help pay the bills. I have heard some talk from the opposition of bracket creep in this debate. I think we need to reiterate the point that 80 per cent of Australians are on taxable incomes of less than $75,000. As people move up in income, they do not automatically move to a higher marginal tax rate under these new arrangements. The great bulk of people will move through the income range from $25,000 to $75,000 without altering their marginal tax rate. In fact, under these reforms, as I have said before, only two per cent of Australians will have taxable incomes over $150,000.

There is more to be done in the area of tax, but it has been noted by organisations such as the Australian Chamber of Commerce and Industry that these changes are a good start for future tax reform. The Business Council of Australia has stated that the changes to the personal tax system will provide additional incentives to work and to save.

Mr Deputy Speaker, if you look at the tax cuts in the context of what has happened over the past five years, this is just another part of a long-term strategy that has been implemented by this government. This is the fifth instalment of personal tax cuts, and there is more room for adjustment and reform in the future. The structure of our tax system is a vitally important element to create our national prosperity. Get the tax system wrong and you rob people of incentives to work. You rob them of the opportunity to work harder to earn more. Tax cuts are all about giving people incentives. They are about encouraging people to work overtime, to work harder, to study, to push for advancement and to try and earn a better life for themselves and their families. Tax cuts are about giving people choices and about improving the quality of people’s lives. At a local level, I would hope that this reinvigoration will have a positive ripple effect.

Under this bill, the big winners will also be our small businesses. In my electorate of Stirling we have a thriving small business network, with the Stirling Business Association being one of the biggest organisations of its kind in Australia. We also have important research and development organisations, across all fields, from aviation technology to cancer drug research. This bill will implement the budget measure which substantially improves Australia’s depreciation arrangements by increasing the diminishing value rate for determining depreciation deductions from 150 per cent to 200 per cent. This will cut business taxes by $3.7 billion over the next four years. The effect of the measure will be to provide the equivalent of a 33 per cent increase in the allowable depreciation rate for all eligible assets. This is going to increase incentives for Australian businesses to invest in new plant and equipment and it will make it easier to keep pace with new technology and remain internationally competitive. Investment is a key element of productivity growth and, therefore, of economic growth.

These changes are consistent with the government’s tax policy strategy of making sure that the tax system has a minimal effect on the allocation of resources in 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 are not able to be brought into the new arrangements. This means that, under the new depreciation arrangements, businesses can write off eligible assets at an accelerated depreciation rate on their diminishing value—allowing for higher deductions in the early part of the asset’s life and increasing their new present value. This accelerated allowance is offering incentives for businesses to invest in plant and equipment to improve their overall operations.

In my electorate of Stirling I would like to think that a healthy level of business investment will be reached in the coming year, as small business owners make the most of these amendments that are designed to assist them to grow their business. This bill is a help to all Australians. It redistributes surplus taxation revenues and increases the disposable income of all Australian taxpayers. It increases incentives for people to undertake additional work or to start a new business and increases productivity and employment throughout the whole economy. As we are not a low-wage economy, increasing capital investment is an important way for us to remain competitive in world export markets. The reduction in the phase-in rate for the Medicare levy for low-income earners reduces the impact of this levy on the most vulnerable sector of our community.

This bill is another chapter in the progress that has been made over the last 10 years. It is part of one of the biggest investing budgets in this country for a long time. And what a budget it was. I will just take a moment to remind the House of what it contained: a tax cut for every single Australian, a plan to simplify and slash taxes on superannuation and improvements that encourage businesses to invest and grow. This budget continues to build on the policies that have been put in place over the past decade to keep our economy strong. None of the generous tax cuts, the radical slashing of taxation on superannuation, the record spending on defence and national security, the massive investments in our road, rail and water infrastructure would be possible without the prudent management that has been displayed by the coalition since 1996. It would not have been possible to introduce this bill into the House or to have such a generous 11th budget without having had the previous 10 budgets that have steered Australia into the current economic good times. This bill, which delivers to taxpayers the surplus revenue the government has collected, is a vitally important part of that strategy. This bill is about taking the opportunity now to strengthen our economy for future opportunities and future challenges. I commend it to the House. (Time expired)

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