Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Hansard source

This budget contains more elements of practical reform than most of the previous 11 Costello budgets. Ordinarily that sort of statement would get an opposition frontbencher in trouble, but it is not really a very big statement because previous Costello budgets have contained precious little reform, and the truth is that something is better than nothing. But under the Howard government, the reform stakes have failed to graduate beyond a class 1 midweek handicap. And if you think that a class 1 is high, it is in fact the lowest of the classes. There is also a class 2, 3, 4, 5 and 6 and then the horses graduate, if they are good enough, to a listed race or to a group 3 after that, then a group 2 or a group 1 race. Certainly this Treasurer is not competing in a group 1 race; he is back in the midweeks in the class 1 handicap.

However, this budget does contain some worthwhile reforms. For example, it has increased childcare benefit, which is a good measure both on social justice grounds and in order to lift workforce participation. All of the international and national research shows that if you increase childcare benefits to lower income earners—and that is to whom the childcare benefit is directed—then you will get a greater response in workforce participation by mothers returning to work or increasing their hours than you will if you target those benefits at higher income earners. So let us give credit where credit is due. It is a good measure. It is small, but it is welcome.

There is extra funding for remedial literacy and numeracy programs, and that is also good social policy and good economic policy. But I would add that the best way of delivering literacy and numeracy programs is through our schools rather than through the system that is proposed in this budget. Nevertheless, any benefit that goes to the disadvantaged young people in our community is certainly welcome.

In the area of the taxation, increasing the low-income tax offset from $600 to $750 per annum has the effect of increasing the tax-free threshold for low-income earners from $10,000 to $11,000 and I acknowledge that in the previous budget the low-income tax offset was increased from $235 to $600. The effect of all that is that it improves the incentives for people on low incomes to move from welfare to work by providing a substantially increased tax-free threshold for those earners and therefore stripping away 15 percentage points from effective marginal tax rates. They get to keep 15c more of every extra dollar earned. That is a good thing. We acknowledge that. There is another very good reason for acknowledging it and that is that it has been Labor Party policy for some considerable time. But if the government wants to pick up our good policies and take them as its own, that is the democracy in which we live and we will give credit where credit is due.

Also, increasing the income threshold at which the 30c rate cuts in from $25,000 to $30,000 is another area in which work incentives are improved because that cuts, again, 15c from the effective marginal tax rate over that income range, leaving people who are moving from a low-income job perhaps into overtime or extra hours another 15c in the dollar better off. So that is a good thing. The government has increased the threshold for the 40c rate but that has more to do with politics than it does with anything else. The reason I say that is that Access Economics produces a budget monitor just before the annual budget each year and it showed a huge spike in taxpayers earning incomes just beneath that threshold for the 40c rate. The government did not want those people swamping across the 40c rate in an election year so it increased the threshold. It was politically motivated, but I am sure it is very welcome as far as those taxpayers are concerned.

Beyond those few measures, it is difficult to think of a large number of other reforms contained in this budget. Labor does welcome the $5 billion that has been set aside for a Higher Education Endowment Fund. That will generate incomes of several hundreds of millions of dollars which will be used, we expect, to improve the quality of higher education in this country—something that Labor has been calling for for 11 years. I record here again my annoyance and frustration at government frontbenchers claiming time and time again that Labor frontbenchers and backbenchers are snobs for suggesting that we should invest more in higher education. It is a strange thing, an election year—the conversion on the road to Damascus has been quite spectacular. Suddenly, after 11 years, the government has found university education, and we may not hear any more about Labor’s alleged snobbery in arguing for increases in funding for higher education, an area of our society and economy that has been badly neglected. But again, we give credit where credit is due and we welcome that initiative.

That brings me to some of the initiatives that are within my portfolio of small business, and I am glad to see the Minister for Small Business and Tourism here tonight on chamber duty. The government has made a number of changes in relation to small business, and Labor will be supporting each and every one of those. An area where the government has time and time again ridiculed Labor policy is in the area of simplifying the business activity statement bookkeeping requirements.

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