Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

Today I speak in support of the amendments contained in the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008. These amendments will cut personal income tax for all Australian taxpayers from 1 July 2008 and will honour another of the Rudd Labor government’s commitments. Labor supports real and genuine improvements to our system of taxation, and these tax reforms are designed to reward the hard work and crucial efforts of Australians in keeping our economy strong. Quite frankly, these adjustments are a down payment on a more internationally competitive tax system that will enhance the economy’s productive capacity and help attract and retain highly skilled workers in this country.

Lifting the supply of labour is a key component to the government’s five-point plan to tackle inflation. We know that labour shortages are now widespread. Employers in my electorate of Werriwa are frequently reporting that labour shortages are the No. 1 constraint to their businesses expanding. If you put that in a national context, it is also the factor which is imposing economic constraints on our economy and putting pressure on inflation; and as a consequence we are seeing a rise in interest rates. The government’s tax reforms will boost participation in the labour market, and we have long championed that as a cause.

In line with Labor’s tax plan, which was issued in the lead-up to the election, this bill will: firstly, amend the Income Tax Rates Act 1986 to reduce personal income tax; secondly, amend the Income Tax Assessment Act 1936 to increase the maximum amount of low income tax offset; and, thirdly, amend the Medicare Levy Act 1986 by increasing the income threshold at which the Medicare levy becomes payable for those eligible for the senior Australians tax offset.

As the amendments in this bill are of particular interest to people in my electorate of Werriwa, I will make this the focus of my comments. According to the 2006 census, Werriwa has a population in excess of 143,000 residents, and they fit into just about every cultural, ethnic and religious demographic there is. Werriwa covers a wide expanse of south-western Sydney and has a very diverse population. The last census found that 33 per cent of residents were born overseas and more than 60,000 people speak a first language other than English. There are people from all parts of Europe and Asia as well as from smaller Pacific nations like Fiji, Tonga and Samoa. We also have one of the largest Koori communities in New South Wales. This rich mixture combines to produce a cultural diversity that lends depth to the south-west of Sydney while reinforcing a very strong sense of local community.

Werriwa is full of young families, and it is a sought-after place to raise a family. Perhaps the member for Macarthur—known locally as the ‘mayor of Mosman’—does not think so these days, but it truly is a great place to raise a family. I should know, because my wife and I have resided there for the last 30 years. It is where we have raised our family, and we have been part of building our community in the south-west of Sydney. Just as we did, young families continue the same process of raising their families, building their communities and contributing in all walks of life. Whether they be members of the Islamic community, based around Sule College; the Bangladeshi community of Minto; the Filipino communities of Ingleburn, Eagle Vale and Campbelltown; or the Fijian-Indian community of Liverpool, they are all Australians working together to build their communities for their families. I remain as committed as ever to community-building in south-western Sydney. It is an area where there are no pretensions. People simply get on and do their bit.

Today, starting a family goes hand in hand with the added responsibilities of home ownership, mortgage repayments and paying the rent. I know the pressures this can place on young families, and I know that Australian families are doing it tough and feeling the effects of the 10th increase in interest rates. The families in my electorate are struggling to meet their repayments, let alone being able to afford the little extras like shoes, holidays and school fees—things that ought to be factored into raising a family. The important thing to know is that families in Werriwa are working hard—but they cannot do it alone. That is why this particular bill is so important.

As I said earlier, this bill will reduce personal income tax. From July this year, the government will increase the threshold for the 30 per cent rate from $30,000 to $37,000 and reduce the existing 40c rate to 37c by 2010-11. These tax cuts restore fairness to the personal income tax system, with the greatest proportion of income tax cuts flowing to low- and middle-income earners. That is where it will make an impact in my electorate of Werriwa—where, according to the 2006 census, the mean individual weekly income in 2006 was $464 per week. These people will increasingly feel the effects of this tax regime. The Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008 will also increase the maximum amount of the low income tax offset. From 1 July this year, it will increase from $750 to $1,200; from 1 July 2009, it will increase from $1,200 to $1,350; and from 1 July 2010, it will increase to $1,500.

Importantly, this plan provides the greatest tax cuts in percentage terms to those who need it most. I know full well how these reforms will significantly improve the financial position of working families in my electorate. They will now have the ability to make decisions—particularly second-income earners in a household—as to whether to return to the workforce. This legislation provides a positive incentive to encourage participation in the workforce. It will enhance the incentives for them to upgrade their skills and gain higher qualifications, and it will allow them to keep more of their wages and become more highly skilled and productive. That has to be an overall benefit for our community generally. But to a household it crosses a threshold by encouraging greater participation in the workforce. That has to be a good thing not only for the local economy of Werriwa but also, on a global scale, for the economy of this country.

Almost 10 per cent of people in my electorate are aged 65 years or older. Fortunately, I do not fall into that category as yet, but I am sure that some time off I will fit into that statistic and I will benefit from this government’s commitment to support the aged population by increasing the income threshold at which the Medicare levy becomes payable for taxpayers who are eligible for the senior Australians tax offset. This ought not to be taken for granted. After talking to many seniors in Werriwa, I know that they think it is not only sensible reform but also well overdue. As a consequence of the increase in the low income tax offset, those eligible will not be liable to pay income tax until they reach an income of $28,867 for singles and $24,680 for couples in 2008-09. In 2009-10 those rates will increase up to $29,867 for singles and $25,680 for couples. In 2010-11 those rates further increase to $30,685 for singles and $26,680 for couples. As a result of the low income tax offset, senior Australians will not be liable to pay income tax until they reach those income levels. In addition, senior Australians will not be liable to pay the Medicare levy until they reach those same levels.

In conclusion, I welcome this amending bill because it will deliver assistance to working families in my electorate, particularly low- and middle-income earners. The government is listening and understands that these amendments are carefully designed to enhance the incentives for labour force participation. As I said earlier, it is crucial to encourage greater participation in the labour force in order to increase our national productivity. The impact of the tax cuts on taxpayers will depend entirely upon their taxable income level and the measures will increase the disposable income of families. For us in the south-west of Sydney, an area heavily dominated by families, this will be much welcomed. The overall tax cuts will deliver assistance to working Australians under financial pressure and will help prepare Australia to meet its economic challenges. I commend the bill to the House.

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