Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Hansard source

Thank you to the member for Goldstein for her question, and I also say thank you to the member for the way she has engaged with her community about Labor's cost-of-living tax cuts for middle Australia. Right across the crossbench, the way parliamentary colleagues have engaged on this with their own community and with the arguments for our bigger tax cuts for more people to help with the cost of living has been a very good thing. I also want to thank the member for Goldstein for the opportunity to engage with her about it in the last day or so.

When it comes to bracket creep, we do acknowledge the impact that bracket creep has on take-home pay. What the parliament also needs to acknowledge and recognise is that there is more than one way to return bracket creep to hardworking Australians. There is the way that the member for Goldstein asks about. There is the way that was legislated five years ago by the previous government, and there is the way that this government is going about it. We acknowledge that there are a number of ways to go about it. We're not proposing to index the thresholds as the member for Goldstein is suggesting. But we think we have found a very effective way to return bracket creep to more people. What the parliament needs to understand—I'm confident that the crossbench does and I know for a fact that our side of the parliament does but I'm not so sure that those opposite do—is that you can return bracket creep in a number of ways. It doesn't just have to be returned disproportionately to people who are already on the highest incomes. What the Treasury advice makes really clear—the Treasury advice that we released at the same time we announced our position and our policy—is that what we are doing is returning bracket creep where bracket creep does the most damage, and that's through the middle incomes.

One of the motivations for the design of the tax package that we released almost a couple of weeks ago is that, as the average tax rates of people on lower and middle incomes climb faster, and as their incomes rise, bracket creep does the most damage, so our responsibility and our objective is to return more bracket creep to middle Australia. That's why, I think, from memory, average tax rates go, as a consequence of what we're proposing, from 25.4 per cent to 23.9 per cent. Getting those average tax rates down is an indication that we're doing something about bracket creep, even if we're not doing it exactly the way that the member for Goldstein proposes.

See this speech in context