Lisa Chesters (Bendigo, Australian Labor Party) Share this | Hansard source

I do not believe there is an area of public policy that differentiates between Labor and the coalition more starkly than that of tax and tax reform. One side believes in tax reform that benefits the most wealthy; and we have seen that not only in some of the measures in this bill but also in their budget. We have also seen it in some of the measures that they have pushed through this parliament already. The other side, the Labor side, believes in a fair, sustainable and equitable system—not just because it is fair, sustainable and supports those on the lowest incomes but because by supporting those on lower incomes we also help grow our economy. To me, that is one of the fundamental differences between our side of the House and the other side. When you give tax breaks and tax reform to those on the smallest incomes, that money goes back into the local economy. Every single dollar that is put into a low-income budget is spent, because they need to spend it to survive, to make sure that they get food on their table and to make sure that they get their kids off to school. That does not happen when you apply tax reform to those at the highest end; their extra income just goes into the bank; it is put away for a rainy day. If you are serious about growing the economy and if you are serious about creating local jobs, then tax reform that supports those on the lowest incomes helps deliver that.

In the bills before us there are some sensible reforms, which we support, some silly reforms and some reforms that only tinker with the broader tax issues. Let us be frank: in relation to multinational tax avoidance, this is just another government stunt. It is a stunt to distract from its inaction on this issue and it is a stunt to distract from its unfair budget. The government wants to blame, and continues to blame, Labor for its tax increases and its attacks on low- and middle-income Australia. It continues to say that we are in debt and deficit over and over again like a broken record, but that is just a smokescreen for its real agenda—that is, its twisted priorities in supporting those at the highest end, instead of supporting those most in need at the lowest end.

Some of the changes that we have seen include tax of up to $6,000 a year on families. The burden of this budget is not being fairly shared. It is estimated that the $6,000 a year in tax will disproportionately impact families in our regional areas—regions like my own. Research shows that these attacks on income will see a single parent in the bottom quartile of income pushed further into poverty. I have seen this when people in my local community come to see me in my office. A single parent from Castlemaine walked in with her bills and said: 'I've got $2,000 worth of bills due. It does not matter how much I save, I literally don't have the capacity in my budget to pay them. Which bill should I pay, Lisa? I am going to have to ask family to support me.' That is part of the problem with this budget; it shifts the burden back onto those who are at risk and those on the lowest incomes. Those opposite are doing that by giving tax breaks and support to those at the highest end.

Another single parent who could be hit hard by the government's proposal to hit people's income by $6,000 said that she says to her children, 'Look, we can't go to that birthday party on the weekend.' The reason for that is that they cannot afford to buy a birthday present for the child whose birthday it is. These are real stories about real people in regional communities who are struggling—struggling to pay the bills and struggling to keep their head up. These are the people who will be hit even harder by the reforms of this government in its budget and in the bills and the measures that have been introduced.

An example of how our community understands the importance of ensuring that tax reform is targeted at those most in need is Country Cob Bakery in Kyneton. They fear every time the government talks about decreasing the pension, and they fear every time the government talks about winding back tax reform that helps those on the lowest incomes, because that is their customer base. Their customer base is people on the lowest incomes, people who come in and have a cup of coffee and a cake. When we attack those on the smallest incomes, we start to slow the growth in the community and we start to hurt those local businesses that rely on families with small incomes to survive.

Low-income households tend to spend every single dollar in their income, whilst high-income households tend to save as much as $1 in every $5. That is where this government does not understand that, if you want to get the economy growing, then the more support you give to those on the lowest incomes, the more money will be spent in our local economy.

This government's budget and its tax reform agenda are built on the flawed principle of giving support to those at the high end. That does not create the growth that we need to continue to ensure that Australians remain employed and that our economy grows. The redistribution of money from the bottom to the top as a result of this government's budget is just not fair; it is also bad for our economy.

Compare the government's agenda and its plan for our tax system and our economy to Labor's approach in government. It demonstrates, again, the difference between that side of the House and this side of the House. Labor was the government that tripled the tax-free threshold from $6,000 to over $18,000. It was a reform that rewarded hard work and put back into the pockets of low-paid workers money which they then spent. At the time that this measure was introduced, more than seven million people received tax cuts, with more than six million receiving a tax cut of at least $300. That money went straight back into the local economy, because we know that when you use tax reform and tax relief to increase the income of those on the lowest incomes—as opposed to those on the highest incomes—every dollar is spent.

Another example of Labor tax reform is in the area of wealthy self-funded retirees

The reform introduced by the former government said that those self-funded retirees whose income was over $100,000 a year were to pay some tax, but the tax rate was 15 per cent. That is the same as somebody who was on an income of $68,000. This was only on the amounts that exceeded $100,000 in a tax year. There are not too many self-funded retirees in the Bendigo electorate—in fact, across regional Victoria—that receive more than $100,000 a year from their superannuation. These changes addressed an anomaly that provided open-ended tax concessions for some of our highest income earners. The plan was that from this year superannuation payments of up to $100,000 would still be tax-free but after that those who are living on the highest superannuation incomes would pay some tax.

This is one of the first changes that this government made when they came in—an example of twisted priorities, of taking away a reform that would have seen people receiving more than that $100,000 paying some form of fair tax. This is the difference between our sides. One side is really helps their own—those on the highest income; whereas the other side tries to lift everybody up. This reform alone was subsidised by people on the lowest incomes. Pick any measure, whether it be their changes to the family tax benefit, whether it be the repeal and removal of super contributions up to 12 per cent, this government funded the tax change to self-funded retirees by taking from those on the lowest incomes.

Labor is committed to a fair and sustainable tax system—a system that provides incentives for all Australians to work, to undertake productive enterprise, whilst guaranteeing adequate revenue to provide quality public services and ensuring a more equal distribution of income and wealth. There are not too many people that you meet out there in community who do not believe in good, well-funded public services. People get that, particularly in regional areas. They get and want well-funded public services. Yet in this era of, 'Lets focus on smaller and smaller government,' this government is completely ignoring the wishes of the community.

In this bill Labor does support sensible measures but not the silly ones, sensible savings they do not unfairly impact those who can least afford it. Labor does support abolishing the mature age worker tax offset. It was actually a reform that was started by the previous Labor government, who commenced the phase-out of this particular tax offset. We need to increase the workforce participation of older Australians. What we also need to do, apart from this measure, is to start talking about jobs plan for older Australians. It is not enough to have this reform and then to offer money to employers to take on older workers; we have actually got to help create the jobs—the industries that will create those jobs.

What Labor does not support is the abolition of the seafarer tax offset. The abolition of the seafarer tax offset is the start of the coalition's attempt to remove the support that Labor put in place to revitalise Australian shipping. The object of this offset was to stimulate opportunities for Australian seafarers to be employed or engaged on overseas voyages and to acquire the maritime skills. That is what I am talking about when I talk about creating jobs plan, linking it in with these kinds of reforms that actually encourage and create opportunity and employment. Even before this offset is two years old the government is moving for its abolition. It must be given the opportunity to work, to give ourselves the opportunity to create those jobs, to create the skilled workforce that we need to maintain and expand our maritime skills base. Even the Australian Shipowners Association strongly oppose the abolition of this offset. Currently, companies who are eligible to claim the seafarer tax offset are saying this creates uncertainty. This will actually challenge their ability to ensure that they give opportunities to Australians first.

Fair tax reform will boost growth and our economy. Our tax system should be fair and sustainable. It should be a system that rewards hard work but at the same time guarantees that we have the revenue to provide those quality public services. We need a progressive tax system that ensures that those who can afford to pay more, do. We need to ensure that we have a tax system that is not focused on tax incentives for those at the highest income, whether they are working or whether they are retired. Public confidence in Australia's tax system depends on a simple and transparent tax system where everybody pays their fair share of tax.

Implementing important and fair tax reforms will improve competitiveness, will boost savings through superannuation, will make superannuation fairer, will signify personal tax and reduce barriers to participation in the workforce. We need to ensure that tax reform is focused on ensuring our system is fair and sustainable. We need a fair and sustainable tax system that encourages and provides incentives for people to work and to undertake productive enterprise. We need to ensure that there is a link between our tax system, our economy and between what we are introducing in future budgets between industry. But what we have seen from this government is an endless list of stunts. What we have seen is some small sensible measures that we support, some very silly measures and then some other measures that only tinker at the edges.

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