Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I am speaking in opposition to this bill because it is cruel and unfair. It seeks to take benefits from some of the weakest and most vulnerable people in our community—pensioners—under the guise of repairing the budget. It seeks to remove from pensioners benefits and incentives which support their education and enable their participation in society, to keep pace with technological change and to be able to live fulfilling lives. This is lazy politics from the government. It is attacking and targeting some of the weakest and most vulnerable people in our community—people who they see as easy targets when it comes to reining in spending. These reforms are unjustified and unfair. I am intending to stand up for pensioners in the community I represent; I intend to say no and vote against these reforms.

The bill seeks to reduce access to a number of important payments that support pensioners and provide them with access to greater education and the opportunity to participate in society. The first change is to proportional payments of pensions outside Australia; the government will reduce the period from 26 weeks to six weeks that some recipients of the age and other pensions can be paid their full basic, means tested pension rate whilst they are absent from Australia. The second element of the bill is the abolition of pensioner education supplement. This is a payment of between $31 and $61 a fortnight, depending on the level of study, for the disability support pensioners and carers payments for people who are studying. The measure will see 41,130 recipients lose this supplement, and more than three-quarters of those recipients are women. So women will be disproportionately affected by this change. The third element is the abolition of the education entry payment. This is a payment goes to recipients of Newstart, parenting payment, partner or widow allowance. In 2013-14 there were around 87,000 recipients of the payment, which is $208 a year to assist people with study costs. Again, it is an unjustified change. The final element of this bill is to reintroduce measures from the 2014-15 budget but amend the starting date and maintain that level for three years the income free areas for all working age allowances and for parenting payment single for a new start date of 1 July 2016. The same applies to the income free areas and other means tested thresholds for student payments, including student income bank limits, from 1 January 2016.

As I said in my opening remarks, these reforms target some of the weakest and most vulnerable in our community—people who are on low incomes and who survive from week to week. They rely on such payments to continue to be in education and to participate in society. It is really weak that the government sees these people as easy targets. When the government talks about budget repair, it always goes after the weakest and most vulnerable in our community. That is what it is seeking to do again through this bill. I understand the need for fiscal consolidation. I understand, given the position of the budget at the moment—the weakening of the economy and the worsening of the terms of trade—that if we are going to continue to fund programs we need to raise more revenue and we need to cut expenditure. I am acutely aware of that, as are my colleagues on this side of the House. That is why Labor has agreed, over the course of the last year or so, to $20 billion worth of savings in the budget.

In achieving fiscal consolidation, the important thing is how you go about it—the approach to take in doing that and who you target in our community to raise more revenue or to cut expenditure. When it comes to the Liberals, their philosophy unfortunately is to attack the weakest and most vulnerable in our community—to attack the poorest, the people they see as the easiest target in our community. In doing so they are ignoring some of the real deficiencies that exist in our budget position. If some of these deficiencies are not tackled, they will balloon in the coming years and swallow some of the current social security expenditure. In doing this they are ignoring the real and unjustifiable tax concessions that exist for many in our community, particularly those with large superannuation balances and multinational companies which shift profits overseas before they pay tax here in Australia on their domestic operations. The Liberals do not require those who have the capacity to pay more to pay more—to pay additional revenue and ensure they are paying their fair share. These are the people the government tends to let off the hook. They say, 'No, there isn't a problem with those sorts of issues.'

There are some areas where we can raise more revenue through the budget that would not harm growth, would not be unfair and would certainly be justified in terms of people paying their fair share of tax in this country. The first is multinational companies. In figures recently released we see what some of the largest companies operating in Australia are paying in tax. In December last year, under new legislation that was introduced by the Labor government to improve tax transparency in this country, bigger companies were forced to publish and publicly reveal the amount of revenue they make in Australia and the effective rate of tax they pay. Some of the figures are quite startling, and they highlight the imbalance that exists in our taxation system. For instance, Google made $357 million in revenue in Australia last year and paid $9.2 million in tax, an effective tax rate of 2½ per cent. Apple—this is the big one—made $6.1 billion from their domestic operations in Australia last year and paid a minuscule $74 million in tax, an effective tax rate of 1.2 per cent.

Go and ask the average Australian, a tradesman who battles away from week to week to earn an income, whether they would like to pay 1.2 per cent in tax. Go and ask a PAYE income owner, an employee who works for a company, whether they would like to pay 1.2 per in cent tax. Go and ask the subcontractors, the small business men and women in this country, whether they would like to pay 1.2 per cent in tax. I know what the answer would be.

Microsoft made $567 million in revenue in Australia last year and paid $31 million in tax, an effective tax rate of 5.4 per cent. Although that is much better than those other two, in comparison to other Australians it is minuscule and it does not represent those organisations paying their fair share. What we see occurring is that a lot of those companies will shift to overseas the money they make as profits from domestic operations here in Australia in the form of loans to jurisdictions where company tax rates are not as high as they are in Australia and effectively avoid paying their fair share of tax in this country.

A person who may have a superannuation balance of more than $1 million can earn an effective income from that balance simply through the interest payments and earnings on the investments in that super. It is not unusual for someone who has a superannuation balance of more than $1 million to earn an income of $50,000 or $60,000 a year simply from that balance—not by drawing down on that balance but through the interest and income they can earn on that balance through share portfolios and the like. They pay no tax whatsoever on the income they receive from that superannuation balance. This has been identified by experts in many fields, by economists, as unsustainable in the future. Those superannuation tax concessions on high-end balances are growing, and they will eventually swallow the whole social security payment system in this country if nothing is done about it. Again, all we have got from the government is silence on this issue because they have plenty of mates who have very large superannuation balances they do not what the government to touch and ensure people pay their fair share of tax. In contrast, one of the first policies the Shorten Labor opposition released was to raise more revenue from people with more a superannuation balance of more than $1 million.

You can see the difference in philosophies when it comes to tackling the issue of fiscal consolidation. The Liberal and National parties have the trickle-down economics approach, the outdated philosophy that, if you reduce taxes for businesses, businesses will earn more profits and employ more people and the economy will grow. It sounds good in theory but throughout history it has been proven to be wrong and it does not work. We have seen classic examples of that in recent years. At the end of the day, not all those businesses reinvest those profits. In fact, a lot of them will pocket the profits and not reinvest them in the particular business they have set up and the country in which they are operating. So we get this uneven growth situation in our economy. This reduces the spending power of the majority of people in our economy. The largest group who spend in our economy are being unfairly attacked by this government with reforms such as the proposal to broaden the base of the GST and increase it to 15 per cent. These are people who work and pay taxes in our economy, and this government wants to attack them rather than tackle the big issue of unsustainable tax concessions in our community.

It has been proven that Australia's pension and welfare system operates well. It is targeted, it is means tested and it is efficient in terms of a tax transfer system. This has been identified in numerous reports by the OECD, the World Bank and the like. Australia operates an efficient and effective tax transfer system when it comes to pensions, disability support and the like. Yet we have the Liberals, with the philosophy of trickle-down economics, wanting to target those most vulnerable people in our community in terms of fiscal consolidation, and it has come up again in this bill. It was the whole focus of the government's first budget, which was a disaster when they attempted to increase the Medicare co-payment—again targeting some of the weak in our community—and their second budget, which has fallen flat and they have been unable to get through the parliament.

In conclusion, I am speaking in opposition to this bill. It attacks the most vulnerable, low-income pensioners in our community, who are seeking to better themselves by accessing education and participating in our society. Coupled with a GST, a lack of action on superannuation tax concessions and multinational tax shifting overseas, this represents this government's ideological attack on the weakest in our community and it, therefore, should be voted down.

See this speech in context