Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

Labor supports this Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2018, which amends the Medicare Levy Act 1986 and A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999.

As members would be aware, the parliament has not, with the exception of a brief period under the Fraser government, indexed income tax brackets but we do on a regular basis increase the Medicare levy low-income thresholds and the phase-in limit in accordance with movements in the consumer price index. That means that under this bill: the individual income threshold for the Medicare levy will move from $21,655 to $21,980; the family income threshold will move from $36,541 to $37,089; the individual SAPTO threshold will move from $34,244 to $34,758; the SAPTO family threshold will move from $47,670 to $48,345; and the child student component of the income threshold for families, whether eligible for SAPTO or not, will move from $3,356 to $3,406, commensurate with changes to the phase-in limits. These measures, which will amount to hundreds of dollars, are certainly warranted—they will provide modest relief to low-income households—but should not be oversold. This is a regular process. It ensures the most vulnerable Australians are not disadvantaged. It maintains their access to Medicare, Australia's world-class universal health system.

At the same time as this bill is before the House, there is much more significant debate around tackling inequality through true progressive tax changes. That debate, which is in the public domain—indeed, it was before the House in the last sittings—is over whether to change the income tax scales in a way that would see middle Australia see a significant tax cut. We on this side of the House have a commitment to providing a bigger, better and fairer tax cut. It would go to those earning less than $125,000. Those 10 million Australians would be $400 better off under the Labor proposal than under the coalition proposal. What is extraordinary is that the government refuses to split its bill; it refuses to split tax changes scheduled to take effect on 1 July this year from tax cuts that will not take effect for another two election cycles. The government needs to do the right thing on that. It needs to split the bill. It needs to provide low- and middle-income taxpayers that immediate tax relief.

The difference between the short-term and the long-term tax packages can be seen in the analysis that Danielle Wood has done for the Grattan Institute. This analysis looks at the impact on tax progressivity of the early stage and the late stage of that package. The early stage improves tax progressivity. Indeed, Labor's proposal would be an even greater improvement in tax progressivity. Under Labor's proposal, the tax system would do even more to ameliorate inequality than it currently does. But the late stage makes our tax system more regressive. According to the modelling carried out by the Grattan Institute, Australia's tax system would do less than it currently does to ameliorate inequality under that third stage of the government's tax proposals, which are not due to take effect until the 2024-25 tax year.

Tackling inequality is a huge priority not just for Australia but globally. Last week saw the release of the World Inequality Report 2018 by economists Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman. That report compiles a series of new studies, including work that has been done for Australia by the late Sir Tony Atkinson and me, and now updated by Roger Wilkins, and work on wealth inequality for Australia, which Pamela Katic and I conducted. The overall picture of global inequality is summed up by Branko Milanovic, of the City University of New York, as being 'an elephant curve'. If you plot the increase in world income distribution, you see sluggish growth at the very bottom, the tail of the elephant; more rapid growth for most of the 20th to 30th percentiles, reflecting the income growth that has occurred in China and India in particular; weak growth for the middle, the downward curve of the trunk, reflecting the squeeze on middle classes in advanced countries; and spectacular growth among the top 10 per cent, being the tip of the trunk.

To enter the top one per cent of the world's wealthiest earners requires wealth of around one million euros. The wealthiest one per cent of the world now have one-third of world wealth, up from one-quarter in the mid-1990s. If you look at the wealth share of the top one in 100 million in the world, the top 75 people or so, those billionaires have seen wealth increases of around three times the global average.

I want to pay tribute to Australia21 and the Australia Institute for their work in drawing attention to the scale of the inequality challenge. In January 2014, Australia21 held an inequality roundtable in Canberra, bringing together 35 senior government officials; five parliamentarians, myself included; non-government organisations; academics; community leaders; and stakeholders. Today, Australia21 is holding another roundtable here in Parliament House on the theme, 'Dealing with economic inequality in Australia'. It's being hosted by Emeritus Professor Bob Douglas and the member for Lilley, Wayne Swan, and it is bringing together 40 experts to discuss not only the scale of the inequality challenge but what can be done to address it. The key questions being discussed are: how serious is the inequality issue in Australia? What are the factors contributing to it? What changes will be needed in Australian society to make it highly likely that economic inequality will be declining in the next 10 years? And what changes are now needed to address the problem? I again commend Australia21 and The Australia Institute for this important report.

We face multiple futures when it comes to inequality. As the World inequality report 2018 has made clear, if the world follows a trajectory of business as usual in which inequality rises in each country, as it's done since 1980, then we are going to see the global top one per cent increase its share of world income from 20 per cent to 24 per cent, and we will see the bottom half of the world income distribution decrease their share of world income. If we see the world follow the United States' trajectory, a high-inequality-growth trajectory, then that would mean that the global top one per cent share would go from 20 per cent to 28 per cent by 2050, and the bottom 50 per cent share would fall significantly. However, were inequality to follow the European style low-inequality-growth trajectory, then the global one per cent share would shrink to 19 per cent, and there would be significant growth in the income share of the bottom half of the population. They are the multiple futures facing the world. Do we want to go ahead and see a business-as-usual or an American trajectory in which inequality widens, where the top one per cent have more and the bottom half have less? Or do we want to consider a different path forward in which we crack down on tax havens and ensure that there are strong unions able to check inequality, that we have access to an education and healthcare system for all and that the benefits of growth are fairly shared across the community?

One of the contributions of the world inequality report has been to use the massive data leaks from Panama, Switzerland and Luxembourg to look at tax evasion by the very top. In the Scandinavian countries, where it is possible to match up the data leaks with individual taxpayers, it appears that the richest 0.01 per cent of Scandinavians evade over one-quarter of the personal taxes they owe by using tax havens, suggesting that the use of tax havens may be an even bigger problem in other nations.

And we see, too, multinational corporations up to the same tricks. In research recently released in parallel with the world inequality report, Thomas Torslov, Ludvig Wier and Gabriel Zucman find that there is significant multinational profit-shifting occurring among the world's biggest firms. They give the example of the events in 2016 when Google Alphabet reported revenues of $19 billion in Bermuda. This is a small island in the Atlantic where Google Alphabet barely employs any workers and barely owns any tangible assets but where the corporate tax rate is zero per cent. The estimates from Torslov, Wier and Zucman are that around 40 per cent of the profits of large multinationals are shifted to low-tax jurisdictions. And this doesn't simply mean shifting where the tax is paid; it means shifting from jurisdictions where tax is paid to jurisdictions where very little tax is paid. They estimate that, for every $1 of corporate tax paid in a tax haven, $5 of corporate tax is avoided in countries with regular corporate tax rates. So we must crack down on the abuse of tax havens if we are to see more egalitarianism across the world.

Egalitarianism is a fundamentally Australian value. We know that when people like Mark Twain, Anthony Trollope and DH Lawrence visited Australia they remarked on Australian egalitarianism. Australian egalitarianism isn't just a Labor story, though it certainly is that. It is an Australian story, one of a nation in which we're proud not to have private areas on our beaches and not to stand up when the Prime Minister enters the room. We're proud to use the word 'mate' rather than the word 'sir'.

But all of that is at threat from the rise in inequality that we've seen across the globe and in Australia over the past generation. We also see this in the area of health care. We are debating today a bill relating to Medicare, and we know that the cost of seeing both GPs and specialists has hit a new record under the Turnbull government. We know that Australians are paying more for their health. They are paying an average of $38 out of their pocket to see a GP, and it is up to $47 in some jurisdictions. That's almost a $4 increase since Prime Minister Turnbull promised that no-one would pay more to see a GP. Out-of-pocket fees to see specialists have soared even higher. They are up to almost $88 on average, an increase of about $12 since the election, and there are jurisdictions in Australia where the average out-of-pocket cost of seeing a specialist has now soared above $90.

The Australian people realise that, when you have higher out-of-pocket costs, that means that people don't go to see their doctor for those essential check-ups. We have figures from the Australian Bureau of Statistics showing that a million Australians delay or avoid seeing their GPs every year due to cost, and another 1.7 million Australians skip specialist appointments. We're yet to see the government lifting any part of its damaging Medicare rebate freeze. Rebates for GPs, specialists and allied health services all remain fully frozen until 2020. All remain fully frozen and the freeze won't be fully lifted until 2020. As a result of this freeze, the Turnbull government is cutting more than $3 billion out of Medicare.

Medicare is a fundamental part of Australian egalitarianism. Australian egalitarianism is built on the notion that we pay our fair share of tax, we make sure that multinational firms aren't able to shift their profits to tax havens and we ensure that any child who has the smarts to go to university gets a place there. But, under this government, we're seeing $17 billion being ripped out of schools and $17 billion being given to the big banks. Every dollar that is going to the big banks under Prime Minister Turnbull's corporate tax cut is coming out of Australian schools. At a time when we've got Australian test scores going backwards, according to the PISA study, and we have our banks facing an unprecedented royal commission, is it really right to take money from schools and give it to banks? The government's priorities are completely wrong. If they care about egalitarianism, as every Australian should, we need fairer tax policies, fairer education policies and fairer health policies.

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