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

The minister at the table says small family businesses. Peter Costello tried this and failed. Joe Hockey tried this and failed. Out of all the last Liberal treasurers, the only one who doesn't believe in dealing with family trusts is the incumbent. John Howard dealt with it when he was Treasurer. He had the courage to stand up to vested interests. John Howard had the courage to deal with family trusts. He applied a minimum tax rate to distributions for minors, but he did not apply it to adults. That was the unfinished business that John Howard left when he was Treasurer. I give him credit for at least attempting against the vested interests which were rampant in the Liberal Party at the time. He showed considerable courage in doing that. Then Peter Costello tried to deal with family trusts. In fact, Peter Costello wrote a letter to the Labor Party promising to deal with family trusts as part of the arrangements at that time. He was forced to renege on that agreement by his party room. Then we had Joe Hockey, when he held my role as shadow Treasurer, giving a speech saying that discretionary trusts needed to be dealt with. The policy was junked the next day. All of these Liberal treasurers have recognised that family trusts needed to be dealt with, but they have not had the courage or conviction to follow it through. Again, this is Labor continuing to lead the economic and policy debate.

I mentioned, before, the matter of competence, which is something that leaves the Labor Party plenty to talk about when it comes to the incompetence of this government. In relation specifically to corporate tax and the legislation before the House, we have seen very considerable confusion over recent weeks about the government's approach: which businesses are eligible; the contrasts between active trading businesses; companies holding passive investments. You would have thought that, on the centrepiece of economic policy which was announced in last year's budget, the government could've got the detail right. But here we have, in this case, the minister for revenue playing desperate catch-up, saying: 'Oh, no, you've misunderstood the law. That's not what we mean.' Well, there are plenty of experts out there who will point out that the legislation, in their reading of it, has a different impact from the one that the minister for revenue and the government would assert it has. So it goes to the heart of the competence of the government—let alone their wrong priorities—that they have not been able to get that policy detail right.

When it comes down to it, this is a government with the wrong priorities—a government determined to reduce the tax on businesses, and big businesses in particular, while, at the same time, increasing the tax on working Australians. I've made the point elsewhere that, in technical terms, in detail terms, this is an unfunded corporate tax cut, because it is. There is no funding plan to pay for this. This is what Paul Keating, for example, has pointed out—that this is an unfunded corporate tax cut, quite different from what he did when he was Treasurer, which was to broaden the base, go after loopholes and deal with the inequities in the tax system. He was paying for his policies. This Treasurer has a thought bubble and says: 'Well, we're in political difficulty. We know what we'll do. We will give away $65 billion, completely unfunded.'

But in another sense it is funded, because it's funded by tax increases on working Australians. We know that the tax burden on PAYG taxpayers will increase in coming years, and it will increase partly because this government is increasing the tax rate through the increase in the Medicare levy. This is very different from what the Treasurer told us would be his approach when he took his current office. He said he was passionate about personal income tax cuts.

I saw the member for Reid on Lateline with the member for Chifley a few weeks ago. They are very fine entertainers, the pair of them. The member for Chifley towelled up the member for Reid, in fairness. But I saw the member for Reid say, 'We support lower personal tax'. The trouble is: he's going to vote for higher personal tax when he votes for the increase in the Medicare levy, and he's going to do that to fund the corporate tax cut. There was a small hole in the member for Reid's argument—just a little, small hole: that the lower personal tax that he believes in will not be delivered by increasing tax rates. There is a little tip for the member for Reid. The member for Reid has maybe forgotten that policy, but I don't hold it against him. He can't be blamed for it because he looks to his leadership—he looks to the Treasurer—and he gets very mixed signals from the leadership in the government, because the Treasurer told us he was passionate about personal income tax cuts. He told us that it was something that was a priority for him and that he was going to introduce big, swingeing personal tax cuts. He told us that it was a key goal and that bracket creep was an inflation tax and that he was passionate about dealing with it.

He did deliver a modest degree of personal income tax cuts in his first budget. He announced that, from 1 July 2016, the tax threshold would rise from $80,000 to $87,000, as some tax relief to middle Australia, and the Labor Party supported that. But he has taken it all back—and more—a year later with the Medicare levy increase, which actually raises more than the tax cut that he delivered the year before, but actually applies to different people, because the tax cut that he delivered only applies to people earning more than $80,000, but the tax rise that he wants to deliver applies to all those earning more than $21,000, and that is clearly linked to the legislation which is before us today, which is the $65 billion corporate tax cut, because they have to fund it somehow. The way they're funding it is: an increase in the pressure on PAYG earners, despite what the Treasurer and the government told us would be their approach. Their approach is the complete opposite of what they said that they would do.

We actually want to ensure that the PAYG taxpayer gets a fair go, which is why we've worked so hard to announce policies which are dealing with those tax concessions which aren't available or aren't used primarily by your average PAYG taxpayer. The average PAYG taxpayer—maybe a nurse or a teacher or any number of occupations—can't, for example, start a family trust and distribute the income they've made through the PAYG system to members of their family on a lower tax rate. They can't say to their university-aged child, 'Look, you're under the tax-free threshold; we're going to give you $18,000 so that you don't have to pay any tax on that.' They can't say to their parents, 'You don't pay tax, so therefore we'll distribute some income to you to minimise your tax.' They can't do that. Only people who have access to family trusts can do that. How is it fair that some people can do that and other people can't? The fact of the matter is that we've looked at that and said, 'Well, this is about making the tax system fairer,' but we actually carry through with what we say about the tax system.

The Treasurer makes outlandish claims and sweeping promises that he's going to massively reduce personal income tax and deliver tax cuts and do this and do that, and then he does the exact opposite. What the Labor Party has done is lay out the challenges and problems that we see in the tax system and then deliver detailed policy prescriptions which follow through on that.

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