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

I am pleased to add my contribution to the debate regarding the Treasury Laws Amendment (Income Tax Relief) Bill. This bill perfectly highlights the lack of cohesion and commitment from this government to getting on with the job of undertaking budget repair but, importantly, to putting in place the necessary taxation reform measures that will boost our economy, grow jobs, contribute to economic growth and improve productivity.

This bill introduces legislation to implement the government's 2016-17 budget measure to increase to 32½ per cent the personal income tax threshold from $80,001 to $87,000. This measure is aimed at dealing with the issue of bracket creep, the phenomenon whereby the combination of wage increases and inflation over time pushes PAYG taxpayers into a higher tax bracket and they pay more tax than they otherwise would have if the brackets for progressive income tax had been adjusted for inflation and indexed.

On budget night, the Treasurer boasted that he would deliver these income tax cuts from 1 July 2016 and he did not introduce any legislation. There was no legislation for the implementation of measures to deal with this issue of bracket creep and the increase in the marginal tax rate prior to the parliament being prorogued and an election being called. Later, when the Prime Minister was asked on ABC radio about the likelihood of delivering the promised tax cuts, he confirmed that, in the absence of legislation, these would be delivered administratively after the election. So we got no legislation and the Prime Minister gave a commitment that they will deal with these tax cuts administratively after the election. Then we had the Commissioner of Taxation confirm in the Pre-election Economic and Fiscal Outlook that the Treasurer had over-promised. This is not the first time that this Treasurer has over-promised, but this is one of the most monumental stuff-ups from a Treasurer in recent times. The tax commissioner has confirmed that the tax cuts could only be implemented when the relevant legislation had passed parliament, as was the view of the Labor Party prior to the last election and why we were asking why the legislation had not been introduced.

This government has made some shocking stuff-ups over the course of the last four years, but this is in a league all of its own. Here we have a non-controversial measure, a measure that is backed by the opposition and could have gone through the parliament prior to the last election, but what do this Treasurer and this government do? They fail to introduce and pass the necessary legislation before the election and, incredibly, find a way to break their promise to the Australian people, many of whom were desperately looking forward to receiving a tax cut on 1 July this year. Eligible taxpayers will need to wait until the middle of next year to receive the benefit in full of the income tax cuts for this financial year. So, many people are worse off because, really, of an administrative stuff-up by the Treasurer and this government. It does amount to a broken commitment to the Australian people that was delivered by the Treasurer on budget night, and it highlights that this government has its priorities all wrong and is all at sea when it comes to developing a coherent economic plan to take the nation forward.

This is made further clear by the $48 billion giveaway to multinational corporations that the government are undertaking through their company tax change and their redefinition of small businesses in the Australian economy. That includes $7.4 billion direct to the profit and the bottom line of big banks. Regarding this policy of a tax cut for multinationals, the government's own Treasury's modelling demonstrates that there is very little economic benefit of this to the Australian people. Their modelling indicates that GDP growth will only increase by 0.05 per cent per annum. Employment will only increase by 0.1 per cent over 20 years—very little benefit when it comes to creating jobs in the economy. Treasury modelling further indicates that wages will only grow by 0.1 per cent per annum. So there is very little to show in terms of economic development and so-called jobs and growth from this government's multinational tax plan.

Just last week, a collection of business leaders, former Liberal politicians, academics, economists, administrators, lawyers and lobbyists berated the Prime Minister for his performance over the last 12 months in The Australian Financial Review. They gave him a D-plus, and that is from friends! 'He is in danger of being seen as a total fizzer,' said one former Liberal MP, Warwick Smith, who also failed to nominate Turnbull's greatest success in government, saying, 'The search continues!'

When it comes to developing and implementing policy designed to bolster the economy, there is much to be said about a steady hand, consistency and predictability. But, unfortunately, this government has been all over the place with thought bubbles, rising and popping at an alarming rate. Firstly, we had the increase in the GST. That lasted about a month, then that was taken off the table. Then we had the prospect of the states raising their own income tax, and that lasted about a day. The lack of a clear, coherent economic plan is harming Australia. We have seen that, although the economy continues to grow, it is mainly due to external factors such as a bottoming out in the reduction in the terms of trade—our exports comparative to our imports. That has generated some growth in the economy, but, domestically, conditions remain quite uncertain. Australians are reflecting that. A lot of people are underemployed, and real incomes have not increased for many, many years now.

This government has smashed private capital expenditure. Over the last quarter, it decreased by 7.4 per cent. It has decreased by a whopping 17½ per cent over the course of the last year. Business investment is going backwards. When you talk about creating the conditions to grow jobs and encouraging businesses to invest, this government is simply not up to the job. It is reflected in the way that they have approached this bill. Through an administrative stuff-up, they managed to deny Australians 12 months of a tax cut that, importantly, alleviates some of the sorrow of bracket creep.

By contrast, Bill Shorten and the Labor Party have outlined a clear, concise and responsible way to undertake budget repair, but it is one that will also, importantly, grow our economy over time, invest in new businesses and create jobs. Labor are committed to an economic plan that would save $8.1 billion over the forward years and $80 billion over the next decade. This includes $37 billion in savings from overhauling negative gearing and capital gains tax. That is something that we all know, in terms of housing growth in our economy, is a big problem, but it is one that this government is afraid to tackle. There is also $4.7 billion in an increase in the tobacco excise and a $8,000 per year cap on VET FEE-HELP loans. We also oppose three of the government's superannuation measures which will actually cost the budget $1.5 billion over the forward estimates. At the same time, we will invest in those areas of the economy that will grow the economy and create jobs. They include: protecting Medicare, investing in education from early childhood right through to university and, of course, investing in renewable energy and tackling climate change. Labor have a clear, concise plan for our economy. It is reflected in the fact that we have had a lot of these policies for a long period of time and that we took them to the election and they were well received.

Unfortunately, this government is all at sea. It is reflected in their performance in the parliament—the fact that they lost votes in the House of Representatives a couple of weeks ago and the fact that they had nothing to debate in the Senate on Monday and all the senators talked about was what they did on the weekend. That is the reason they stuffed up passing on this tax cut to Australians in a timely manner, and that is the reason we are debating this legislation today. It should have been done in the last parliament. Nonetheless, I am happy to support this important tax relief for Australian taxpayers.

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