Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

Two months ago the member for Wentworth told the Australian people that he needed to be Prime Minister to provide Australia with economic leadership—economic leadership we were not apparently receiving from the member for Warringah and the former member for North Sydney. He told the Australian people he was going to change things, he was going to turn the economy around. Well, it turns out that economic leadership involves lecturing the Australian people, low- and middle-income earners, that they have to pay more tax. That is what the economic leadership is: lecturing the Australian people, particularly low- and middle-income earners, that they should be doing more for his budget.

He says he wants a national conversation about increasing the GST. It turns out it is a rather one-sided conversation. It could perhaps best be described as a national monologue from the Prime Minister, as opposed to a national conversation, because he lectures, he condescends, he stands at the dispatch box and he explains why low- and middle-income earners should be doing more, but, when you ask him a question, he is quite offended to be asked a question about the detail. We saw it again from the Treasurer today, saying: 'We have no plans. We have no policy. We have no proposal.' So it is a national conversation about nothing—a bit like a Seinfeld episode. It is a national conversation about nothing that the Prime Minister and the Treasurer have engineered as part of this new economic leadership for Australia.

But, when the Prime Minister is lecturing us, he does acknowledge at least one fact—that a GST increase would hit those who can least afford it the most. That is what we know and that is what it all comes down to. It is regressive. It hits low-income earners much more than it hits high-income earners. The Prime Minister, in his own special way, said it at the dispatch box earlier in the week. He said:

So the fact is, whether it is goods that are taxed with GST or goods that are free from GST, invariably there is a regressive element in it.

We know that, and that is why we are against it. That is the point—because it affects those who can least afford it the most.

Let us talk about what sort of impact it would have. We know, because of economic modelling from NATSEM, what sort of impact it would have. People in the lowest 20 per cent income bracket will pay seven per cent more, but people in the highest 20 per cent income bracket will pay just three per cent more of their income. That is regressive. There is nothing fair about that. We know that those earning around $26,000, who are in the lowest quintile of income earners, would pay $3,000 extra in costs each and every year. A middle-income earner of around $75,000 would face around $5,200 in extra costs. These are people who cannot be asked, should not be asked, to pay at this level, when the government rejects and argues against tax changes which would be fair and progressive, as it has done consistently for these two years.

The government says, 'Yes, but it's all right because we're going to cut income tax, you see.' They lecture: 'It's okay; we're going to cut tax.' The fact is: the modelling shows that that would actually make the changes the government is proposing even more regressive. That is what the modelling tells us. Two-thirds of households would be worse off. That would be the average impact for the bottom three quintiles, while it would be positive for the top two quintiles. That is what the impact of this government's policies would be.

Of course, the Prime Minister again lectures us—whether it is glasses on or glasses off, whatever the mode of the lecture is at any particular time. 'It's okay because there would be compensation,' he tells us. We have asked the Treasurer today for some of the details, and it is quite clear he does not know what the compensation would look like—what it would look like for self-funded retirees; what it would look like for people in remote areas, who would be particularly impacted; or what it would look like for people who work but work perhaps casually or part time and are not in the personal income tax system. The government have not thought that through.

The one thing we do know is that any compensation delivered through the tax system would be temporary, because what we have is bracket creep. The increase in the GST is permanent. Once the GST is up, it is with us forever. But the personal income tax cuts would be eaten away by bracket creep, and the Australian people know that. That is why the Australian people are so against this Prime Minister's plans.

We also know that the Prime Minister would put up the price of some things compared to others, and there is no compensation package which would not deal with the price signal that that sends. We know the government likes price signals—the Liberals and Nationals like price signals.

They tried to put a price signal on going to the doctor—$7 to go to the doctor. They love price signals when they affect people on lower middle incomes and they are trying it again, except this time, what would their price signals do? They would send a price signal that Australians should eat less fresh food. They would send a price signal that families on a tight budget going to the supermarket want their fresh food to be comparatively more expensive. There are no compensation deals with that when you have got one million Australians with diabetes and families working hard, trying to do their best to get fresh food on the table for their kids—and what does this Prime Minister do? Lectures them on how they should be paying more for it; sending a price signal.

Then we have got a price signal on education. Never has there been a more important time for Australians to be engaging in self-education and better education. Never has there been a more important time for Australians to be getting ahead by going the extra mile with study and getting some additional qualifications. What does the government want to do? The old price signal: make it more expensive. Send the signal that you should not be doing that—exactly the wrong sort of policy, exactly the wrong sort of message to be sending to the Australian people.

And of course health—again, we know that they just want a price signal in health. They have tried so hard. They have worked so hard. They have put so much effort into trying to make health more expensive since the day they were elected. We had the whole Commission of Audit. They had plans to make going to the doctor more expensive. They failed. They failed, because the Australian people and this parliament said no, so they are going to have another go. But this time it is through the tax system via the GST.

The government says they need to deliver personal income tax cuts. That is the best they can do—really? The only way they can deliver personal income tax cuts is to jack up the GST. That is how they are going to deal with bracket creep. It is a signal to the Australian people: 'If ever you want a personal income tax cut, we're going to have to increase the GST to do it.' That is all they have got.

Of course we were told—not that long ago in the greater scheme of things—that the GST would fix everything. Prime Minister Howard and Treasurer Costello stood there and said that the GST would be a growth tax for the states and it would provide the states with the income they need. And they said it would not need to be increased. In fact in order to show the Australian people that they would not increase it, they legislated that every state and territory would have to agree to an increase in the GST. That is in the legislation, but now they say, of course: 'We'll go to an election and we'll increase the GST, if we win that election.' What they will need to do is amend the legislation, if they do not get the agreement of every state and territory. Once that happens, it is open slather: every time the government has got a problem, increase the GST. Change the legislation so they can increase the GST whenever they like, every time they have got a problem. Every time they have got something they want to fund, up goes to GST. That is the situation this Prime Minister wants. That is the situation he is going to engineer.

So the government says that they need to fix these problems. They need to provide personal income tax cuts, to cut the company tax rate, to make up for their $80 billion worth of cuts to health and education, to abolish stamp duty, to abolish payroll tax—sometimes we hear some of them say they have spent the GST money seven or eight times over. At some point, the Prime Minister has got to stop Turnbull's talkathon and absolutely announce to the Australian people what this GST money will do.

When he does, they are not going to like it. When he does, he actually has to come clean with the Australian people and explain that all the things that they have been talking about, they cannot do and the devil is in the detail.

We have got the Treasurer saying, 'It's all right. The tax to GDP ratio won't go up. I'll give you a firm guarantee. We'll only take the same amount of tax. We might take it a bit differently.'

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