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

I might start this contribution perhaps a little unusually by saying how grateful we are on this side of the House to the Prime Minister for highlighting the differences in our approach on taxation today. He was down at CEDA, doubling down he was, in defence of the government's tax plans. And he was highlighting the difference in approach between the government and the alternative government, and we welcome that very much.

We welcome the opportunity to debate the competing tax plans between the government and the alternative government, because they are different. The Australian people do face a choice at the next election between the plans of the government and the plans of the opposition. It is very clear that the government's plans are inconsistent, incoherent and, most of all, unfair. They are unfair and they are completely inconsistent with everything they have said previously.

We used to hear how the Liberal Party was the party of low tax. Just a few weeks ago we heard about how they were the party of low tax. In fact, they even tried it at question time, somewhat unusually, like those $20 billion worth of tax rises in the budget just did not happen. But in the spirit in which I started, I give credit where it is due. We try to be fair on this side! The government is half right: they are the party of low tax for high-income people. They are half right! And they are the party of high tax for low-income people. That is where it goes wrong. There is a rather important caveat now, a rather important little footnote on the slogan 'party of low tax'—footnote: 'but not for low-income earners'. We need to make sure we have truth in advertising; there has to be a caveat every time they say it.

We even saw it in question time. The Treasurer was asked about plans to reduce tax and asked about alternative policies. Well, he could have said, 'Yes, there are alternatives,' like his own! Like his own, which increases tax on people earning $21,000 in Australia today. The Treasurer got himself into all sorts of bother during question time because he was outraged—outraged!—at Labor's policies. He said that Labor believes that if you earn $87,000 you are rich, and that Labor will increase the tax on people who earn $87,000 and more. And he is right. The trouble is that so will he, by the same amount, for $87,000! The difference is that he will also increase tax for Australians earning $21,000 and more. On the logic that the Treasurer applied he thinks that people on $21,000 are rich! That is the only logical conclusion that you could reach from the Treasurer's remarks at question time.

The fact of the matter is that there are 10 million people in Australia for whom the government wants to increase tax while we do not. That is the fact of the matter. That is the key choice for the Australian people. Somebody earning $60,000 will pay $300 more under this government but high-income earners will get a tax cut. They say, 'Yes, but the deficit levy was only ever meant to be temporary.' It was also meant to exist while there was a deficit, and the deficit now is 10 times bigger than what it was predicted to be in Treasurer Hockey's first budget. Remember him? Treasurer Hockey? I will come back to him in a little bit.

It is 10 times bigger than it was predicted to be in his first budget and yet they find it within themselves to lift the deficit levy and give high-income people a tax cut. Somebody earning $190,000 will get a $200 tax cut, somebody earning half a million dollars will get a $6,400 a year tax cut and somebody earning a million dollars will get $16,400. We asked the Prime Minister in question time: how many people on $60,000 a year will have to pay increased tax to fund the tax cut for one person earning a million? He could not answer; he did not answer. We will answer it for him: 55. Fifty-five people earning $60,000 will pay more tax just to fund the tax cut for one person earning more than $1 million.

It is not just about the Medicare levy. It gets worse. They did not stop there when that is comes to tax rises for low-income earners. It has not received as much attention, but the government wants to change the arrangements for people who commit the crime of going to university in Australia. That is what they want to do. They say: if you work hard and get yourself into university, you should start paying more tax at $42,000 a year—the princely sum of $42,000 a year. So, if you are a graduate, for example, on $50,000 a year, you will pay $250 more on the Medicare levy increase and you will pay $1,000 more on the HELP repayments. So much for a housing affordability plan if you happen to go to university! That is what the government's contribution is. For those people who went to university, it is more debt. As the old saying goes: if debt is the problem, more debt is not the answer. They could apply that to university graduates as well. We saw this as the centrepiece.

The Prime Minister was out again this morning. Taking his glasses off and putting them back on again—spirit and passion, arguing against an increase to the top marginal tax rate. It was going to be a prosperity killer and the of end Western civilisation if the tax rate went up to 49½ per cent. It is fine at 49 until July 1, but on July 2 when we proposed taking it to 49½ per cent, it is a prosperity killer. That is a problem for the government. Again, we saw the government arguing that the deficit levy was only temporary. That was their intention. When it comes to low-income earners, the pension cuts were permanent. When it comes to family tax benefit cuts for low-income earners, they were permanent. When it comes to unemployed people, those cuts were permanent. They managed to make the only measure which applies to high-income earners temporary. Well, in this situation it should not be temporary. In this situation, where we have the government at sixes and sevens—they have lost $2 billion since budget day on the bank tax, and yet they say they can afford to find the money for a high-income tax cut.

Again the Prime Minister was out today saying the government will take half your money. I thought I had heard this before, this confusion between marginal tax rates and average tax rates. I thought 'I've heard this before'. I thought, 'Who said that?' It was our old friend Joe Hockey. He is back! The former Treasurer is back. He argued this and he got pilloried. Commentators put it out that the Treasurer did not understand the difference between marginal tax rates and average tax rates. The fact of the matter is that under Labor's plan, for somebody on, say, $200,000, their average tax rate would be 34 per cent. That is not a punitive tax rate. That is the average tax rate. And the Prime Minister, I suspect, understands that. When the Treasurer says something like that, you are never quite sure if he understands or if he is being dishonest. But with the Prime Minister we have a better idea; he actually does understand it but he chooses to misrepresent. That is not even taking into account the tax concessions which benefit high-income earners, which this side of the House will reform in government—like negative gearing, like capital gains tax, like superannuation, like accountants' fees and lawyers' fees, which this side of the House will reform and that side of the House simply refuses to do.

Again we see the Prime Minister crying crocodile tears for high-income earners, saying how terrible it is to have a marginal tax rate of 49½ per cent. But the member for Jagajaga quite correctly asked the Prime Minister about women in particular on $50,000, who, as a result of this Prime Minister and this Treasurer's decisions and policies and as a result of their budget, will have an effective marginal tax rate of 100 per cent. The Prime Minister clearly had not worked this out at question time. He had no idea, not the foggiest idea did the poor old Prime Minister have. It was his budget and he clearly simply did not understand. I will tell you what: 100 is a bigger number than 49½. And an effective marginal tax rate is a problem if you are talking about incentives to work. So this government, if they are fair dinkum, will go back and review their policies and fix that effective marginal tax rate. But I do not like our chances, because these are women on $50,000 and they just do not cut the mustard when it comes to the priorities of this Prime Minister and this Treasurer.

So here we have this government that comes in here and says, 'Let's have a debate about tax', and we say, 'You betcha! You betcha, we will have a debate about tax.' While we are at it we will have a debate about your $65 billion worth of corporate tax cuts. They say they cannot afford $22 billion for schools. They could not possibly afford that. But $65 billion for a corporate tax cut? No worries! 'Where do we sign?' say government members opposite. It is completely unfunded and completely unaffordable.

This government has its priorities wrong. On 1 July they are happy to see penalty rates cut. On 1 July they are happy to see workers who work on a Sunday go backwards, losing money, losing their pay for working on Sundays. This government is happy to see it happen, just as they are happy to see millionaires get a tax cut. That says it all about the values of this government. They are values which are wrong, twisted and not right for Australia's future.

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