Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Hansard source

The member opposite says that things change. We hope they do. We all live in hope but so far we are not getting much realisation on that hope and neither is he, of course. Moving on to the Treasurer, in the Sydney Morning Herald on 1 September 2007 Mr Swan was quoted as saying:

No one knew what an effective marginal tax rate was in this country until I came along.

The concept of an effective marginal tax rate—the rate at which the last dollar of welfare benefits is clawed back from an individual or family as their income increases—has been around for years. In fact, former Senator Peter Walsh discussed them as far back as 1981. The Treasurer’s self-proclaimed invention of EMTRs was so significant that his official parliamentary biography does not even mention them, and he did not mention them in his second reading speech on this bill. Is he the Al Gore of Australian politics? Al Gore is alleged to have claimed, famously, that he invented the internet. Here we have the Treasurer claiming that he invented the concept of effective marginal tax rates and yet he does not seem to talk about them. This boast of September last year may just have been a one-off moment of self-delusion.

Instead, we have a Treasurer who seems to be stuck in his own rather odd episode of I Dream of Jeannie, with his inflation genie and the bottle. He sits over there every day in question time nervously rubbing the bottle, and the day before the Reserve Bank of Australia board meets he announces on national television that the genie has popped out. That is a really constructive contribution to an economy facing an inflation challenge! We have a Treasurer who sets out to exacerbate inflationary expectations. We have a Reserve Bank endeavouring to manage inflationary expectations and we have a Treasurer who stands up the day before the meeting and says, ‘The inflation genie is out of the bottle.’

Let us consider the genie. What does the Treasurer ask his genie for? Well, he has asked him for an industrial relations reform—a rollback of industrial relations laws—that magically will not fuel inflation. Contrary to every accepted principle of labour market economics, the Treasurer hopes his genie will deliver a re-regulation of the labour market that will not fuel wage inflation. He has asked for a petrol bureaucrat who is supposed to keep petrol prices low and he has asked for a huge budget surplus—I think he is going to get that—which Labor can hoard and use for political purposes before the next election and which is magically supposed to make us better off by denying Australians their own taxes. He is denying them those funds that are in addition to what the government needs to spend. Finally, he asks the genie for a five-point plan—or, I should say, a five-point sham—which is supposed to reduce inflation, even though it is perfectly plain that not one element in the five-point plan will have any impact on inflation in the short or medium term, which is when inflation is a challenge for our economy.

Labor is a policy-free zone on tax. After 11½ years in opposition it does not have a coherent, or indeed any, tax policy. As far as we know, the Prime Minister does not know what the current tax system looks like. He may well have worked out a bit more about it—he may well have brushed up on his thresholds and rates—but he has shown no sign of it. And the current Treasurer appears to be suffering from delusions of grandeur. In his second reading speech on this bill the Treasurer said:

The amendments contained in this bill will cut personal income tax for all Australian taxpayers from 1 July 2008, and implement important taxation reforms that have been long championed by the newly elected government.

Really? On the very first Monday of the 2007 election campaign—15 October—John Howard and Peter Costello announced a $31 billion program of tax cuts. It caught Labor completely by surprise. Remember that, less than a month before, the now Prime Minister, Mr Cascade, could not name a single tax rate or threshold. But what happened next? The prime ministerial debate was scheduled for the Sunday and Mr Rudd, the then opposition leader, could not debate Prime Minister Howard without a tax policy. So, true to form, he faked it and it came to pass that Labor copied 92 per cent of the coalition’s policy, and this is what is before the House today. I suppose former Prime Minister Howard and former Treasurer Costello should be gratified—after all, it is truly said that plagiarism is the sincerest form of flattery.

The coalition’s ‘strategically visionless’ policy, to quote Mr Rudd, was apparently good enough for Labor to plagiarise. Just think about this: here we have a Prime Minister who said in January of this year that, throughout the 11½ years of the Howard government, there was no strategic vision for tax reform, yet the largest, most comprehensive and far-reaching tax reform of our generation—A New Tax System—was one he opposed and described as an example of ‘fundamental injustice’. ‘No vision’, he said. It was the biggest tax reform of our generation.

Then, when we came to the election campaign, Labor had no tax policy at all—none at all—until 15 October, when John Howard and Peter Costello announced our tax policy. Then immediately, far from criticising it, far from putting up an alternative, they embraced it—92 per cent of it. Australians are not mugs. They will not forget that we would not be discussing these tax cuts today if it was not for the coalition. They will not forget that the coalition cut taxes every year since 2003. They will not forget that the Labor Party, including the man who is now the Prime Minister, voted against the tax cuts in 2005. They will not forget and we will not let them forget that Labor has now walked away from the idea of future tax cuts and has stated that it will hoard any additional revenues in Mr Swan’s slush fund.

Unlike those who sit opposite, we on this side have always believed that, in a free society, economic wealth and prosperity is generated by the Australian people, not by the government. In a free society, individuals create wealth and pursue happiness by working, taking risks and exchanging the fruits of their own labour and entrepreneurial effort with others by trade. That is what good economic management means: allowing individuals maximum freedom to generate wealth for themselves, their families and their community in order to save for retirement, to save for a house deposit, to spend on their children’s education, to donate to charities and so on. Freedom is the underpinning principle of our political philosophy. There is an important moral justification for cutting taxes: it allows individuals to keep more of their own earnings and gives them more freedom to do what they want to fulfil their ambitions with the money they have earned.

The Treasurer needs to come to grips with this moral argument. How can he rule out further cuts in income taxes when revenues come in higher than expected? Instead he wants to hoard that extra revenue in a government slush fund. How will that be invested? What market will that be invested on? Do we really trust Wayne Swan to invest our savings—really? The honourable member over there is nodding his head. We will see if they want to give their superannuation to Wayne Swan. I doubt it; I very much doubt it!

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