Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Hansard source

I thank the member for Lyne for his very important question. It goes to the heart of the sustainability of our tax system and the future prosperity of our economy. This government has already delivered three rounds of personal income tax reforms—or cuts, if you like—and we did put in place a comprehensive review of the tax system, encompassing both federal and state matters. So all of that is on the public record. And one of the first recommendations of that report in terms of priorities was putting in place a resource rent tax, which we have done and which we have passed through the parliament. But the revenue from that is also funding further tax reform—for example, the $6,500 instant asset write-off is being funded from that fundamental tax reform.

The government has also embraced loss carry-back, a fundamental reform, particularly for many small businesses which are facing structural pressures in our economy. We have also boosted our national savings, which I think is very important not only as a part of tax reform but also in ensuring that we have national savings to buttress our prosperity into the future. Most fundamentally, we have tripled the tax-free threshold. You do not pay a dollar of tax until you earn something like $18,200. The other thing we have done is to keep tax as a share of GDP below the level that we have inherited. Tax is 22.1 per cent of GDP—well below the 23.7 per cent of GDP that we inherited. In fact, if we were taxing like those opposite were taxing, revenue would be up by well over an additional $20 billion.

But we understand that there is a need to continue with tax reform, and the member would be very familiar with the tax forum that we held last year—a very constructive process. And coming out of that, we have put in place the Business Tax Working Group, which is looking very seriously at how we progress tax reform in the company tax area. We also have the superannuation roundtable going, which is looking, in particular, at ways to target and deliver concessions within the superannuation system, as well as the Not-for-profit Sector Tax Concession Working Group.

As the member would also be aware we have the GST review, which is having a look at how the GST distributions impact on state tax reform. Finally, we have the work which is being done by Mr Baird and Mr Snelling—having a look at how we harmonise state taxation and how we reinforce state taxation bases. I am looking forward to seeing a report from them in the not-too-distant future about what the states intend to do in all of those areas.

This is a pretty fundamental agenda. We have gone a long way down the road for tax reform but, as the member has indicated, we have got some way to go. Of course there is a very stark contrast with those opposite, who are proposing to put up company tax— (Time expired)

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