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

A face-saving measure maybe, as the honourable member for Chifley points out—because they didn't like what it said. That was the reason for the withdrawal of those graphs. I don't think they want us to know what the graphs would indicate for the two and three later stages of the government's tax scheme either. The government are really failing the responsibility test because they are asking us to write a cheque today when we do not know whether the funds will be in the account in seven years time to pay for that cheque. They're asking us to vote for a scheme about which they cannot or will not tell us the cost, and they are endangering the sustainability of strong and healthy surpluses as they do so. It's good that the budget is projected to get back to balance in 2019-20 if wages growth comes back to a level we have not seen in this country for a long time and assuming no downturn internationally. That's good, but we need surpluses which are healthy and sustainable. The government, having engaged in the process of trying to avoid attention on the 2018 tax cuts, because they are relatively modest, particularly compared to the Labor Party's, by engaging the 2022 and 2024 tax cuts, are failing the responsibility test and the fairness test. I'll get to the fairness test now.

The government has not been keen to provide information, but where there's a vacuum it shall be filled, and modellers around the country have been filling that vacuum. We've seen that Ben Phillips, a respected modeller from the Australian National University, has estimated that when the government's full plan is in place the highest quintile will receive a 2.2 per cent rise, the middle-income quintile will receive 1.1 per cent and the lowest will receive 0.2 per cent. That's what the ANU modelling indicates. We've also seen NATSEM determine that the government's plan worsens the progressivity of the tax system. That is their conclusion. And of course we had the Grattan Institute find that, when the scheme reaches its maturity—that is, when it is costing, on their calculations, $25 billion—$15 billion of the annual cost will go to the top 20 per cent of income earners. That all makes sense. That's the way the Treasurer has designed it. That's what he meant to do. It's not a mistake, it's not a bug, it's not a kink in the system; it's what he set out to do. But he should own it. He should be honest about it. I'm happy to have a debate with him about it, but instead he refuses to admit that's the case.

So, just as in so many other matters, the government finds that they're being too clever by half. They thought, 'We know what we'll do. We'll have modest tax cuts in 2018. We'll be able to say they're targeted on low- and middle-income earners. The Labor Party won't match them.' In fact, the Labor Party has matched them and exceeded them. We have exceeded them because of our priorities. Our priorities and our values tell us that's the right thing to do—to have bigger tax cuts focused on low- and middle-income earners—because, firstly, they certainly deserve them; and, secondly, these are people that drive the economy through their spending. Low- and middle-income earners, by definition, have to consume a high degree of what they earn to put food on the table, to send kids to school. A tax cut for them will be spent, by and large. That helps drive the economy.

Whatever claim the government had on fiscal responsibility was pretty thin. But, whatever claim they had, they have mortgaged it by refusing to get us to one per cent of GDF surpluses on a realistic and sustainable time frame by writing into the budget now tax cuts in 2022 and 2024 which may or may not be affordable. The revenue may or may not be there to engage sensible, sustainable tax cuts at that time. And their mortgage responsibility is at the exact time that we should be strengthening the budget. As the IMF said:

Decisive action is needed now to strengthen fiscal buffers, taking full advantage of the cyclical upswing in economic activity.

That's the point: there is a global cyclical upswing in activity. It will not last forever. Anybody who thinks it can be built into the budget, baked in to the estimates for the next four or 10 years is wrong.

There are risks in the global economy. Global debt is at record levels, much higher than it was in 2009. We're seeing that reflected in the bond rate and in its impact on the world economy. We don't know what's going happen in the global trade situation. We hope for the best, but the risks are material and the impacts on Australia would be very significant indeed if there was a trade war. And yet the government say, 'Don't worry about that; we know better. We know better than to provision now for sensible tax cuts which can be afforded and to see what can be done down the track in future years as to what could be afforded. And you must take it all; you can't get the tax cuts in 2018 unless you sign on to the tax cuts in 2022 and 2024.' That's what the government's position is. That is an unsustainable position. I say to the government: that is an unsustainable position.

Just as the government said it was all or nothing on corporate tax and they had to give in, so they will have to give in on personal income tax and they will have to split this bill. If they don't, if they actually think that they can stand in the way of personal income tax cuts in 2018 and the Australian people say, 'Yes, we don't want those tax cuts in 2018 because we're holding out for the tax cuts in 2024', they are kidding themselves. I'm going give the government the opportunity to vote for a second reading amendment to split the bill. I think the honourable minister at the table has supported other Labor Party second reading amendments in the past. She can support this one; that wouldn't be a problem.

This is a very sensible amendment which, while not declining to give the bill a second reading, calls on the government to: amend the bill into separate measures which implement personal income tax relief from 1 July 2018 so these measures can be passed by the parliament without delay; introduce new legislation implementing the remainder of the measures in the bill only when further financial information—call us radical, but we want to see the impact on the budget—including year-on-year costs of each step of the government's full seven-year personal income tax scheme is made available to the parliament; and support the opposition's personal income tax plan to deliver bigger, better tax relief to the Australians. I move:

That all words after “That” be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House calls on the Government to:

(1)amend the bill to separate the measures which implement personal income tax relief from 1 July 2018, so that these measures can be passed by the Parliament without delay;

(2)introduce new legislation implementing the remainder of the measures in the bill only when further financial information, including year-on-year costs of each step of the Government’s full seven-year personal income tax scheme, is made available to the Parliament; and

(3)support the Opposition’s personal income tax plan to deliver bigger, better and fairer tax relief to Australians".

We will then give the government other opportunities when we get to the consideration in detail stage. I flag that I will move amendments to take out the 2022 and 2024 tranches of income tax cuts from this legislation. Bring them back in. Let us have a debate just on those. Let's argue about it. Let's see the data. Let's shine a light upon the government's plans. Let's have a good look at them. I am more than happy for them to be debated, if that's what the government wants. But separate them; don't hold the tax cuts hostage to the 2022 and 2024 tax cuts.

Finally, I will move an amendment to implement Labor's tax plans for 2019. The government talks the talk on lower tax. They keep telling us they're the party of lower tax. They keep telling us they're the party of tax relief for hardworking low- and middle-income Australians. Well, here's an opportunity to vote for it—to vote for better tax cuts for those people who are earning less than $125,000 a year. We'll give the opportunity to the government to vote on those. If they choose to vote against them, their names will be recorded as people who oppose those better, bigger personal income tax cuts for Australians who earn less than $125,000 a year.

These are the amendments that we'll move in the House. In the unlikely and unfortunate event that those amendments aren't carried—if the government doesn't see sense—of course we'll facilitate the passage of this bill through the House to send it to the other place, and the other place will be able, with their different working conditions and different numbers, to pull apart the legislation if they see fit and send it back to the House. If the government isn't able to get the entire package through but can only get the 2018 package through the Senate, we'll be encouraging it to accept the will of the Senate. That's what we'll be doing: encouraging the government to accept the will of the Senate. But we'll facilitate passage of the bill through this House, because I'm a realist about how this vote will end up. We'll send it to the other place and let the other place do its job, and we'll be prosecuting the same case in the other house as we have in this House: better tax cuts, better targeted, and more responsible budgeting for Australia's future, without risking Australia's financial and fiscal stability but delivering real tax relief where it's needed, and delivering it now.

See this speech in context