Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

I rise to support this bill, the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024, but, in doing so, I wish to talk about the need for bipartisan support for genuine taxation reform. This is not the first time I've spoken about this need for taxation reform, and nor am I alone in this place. It was, in fact, only today that I spoke on the member for Curtin's matter of public importance on tax reform, citing the need for a fairer, more efficient and simpler system.

In making the announcement that the legislated stage 3 tax cuts would be replaced with the proposal before us, the Prime Minister justified the changes on the need to assist with the cost-of-living crisis that's faced by so many Australians—a crisis that I believe is, in some part, of the government's making. In this term of government, we have had successive rate rises, that have seen the repayments on a mortgage of $750,000 rise by around $2,000 a month—a staggering $24,000 of after-tax money per year that Australians must find. Inflation, the driver of these mortgage rate rises, has been running hot, and part of that is because the government has added $209 billion of new spending.

We have also had record immigration, which has put enormous pressure on infrastructure demand. Anyone in the market for a new house will be immediately aware of the absurd price rises over the last couple of years. Housing has contributed more than six per cent to inflation and is a direct consequence of a migration strategy that is poorly timed and simply too large. Adopting a 'big Australia' policy at a time when we do not have sufficient supply was always going to result in upward pressure on prices. That is simple economics.

In 2002, the Intergenerational report projected that Australia's population would reach about 25 million by the year 2042, an increase of around 30 per cent, and it assumed a net migration of 90,000 people per year. Now here we are in 2024, and we have already reached 27 million, nearly 20 years ahead of projections. In the last 12 months, our population increased by a record 624,000. To put this into perspective, this is greater than the population of the ACT or Tasmania. Consequently, we are having to add the equivalent of an entire state or territory every year. Last year, we recorded 737,200 overseas arrivals and 219,100 departures—a net migration of 518,100. This equates to more than 80 per cent of the population increase.

The government controls migration; therefore, it is on the government to explain why it has allowed so many people to settle at a time when we already have housing pressures and natural demand that have flowed on from this. It is inflationary. Much of last year reminds me of the inflation that we suffered during the Whitlam years that I remember studying at university.

This approach to migration is not sustainable and is unfair to the most marginalised in our community, who now find themselves homeless, or living in poverty, or with rents or mortgages consuming most of their take-home pay. I receive emails every day from people who cannot find a place to live. They are unable to access medical appointments or find places for their children in schools. Is this really the Australia that we want?

These tax cuts are due to take effect on 1 July this year. Yet, in the same week that we are discussing personal tax changes we've had an increase to the fuel excise rate from 48.8 cents per litre to 49.6 cents per litre. Beer, spirits and pre-mixed drinks have also risen this week. The tax on a pint of beer has increased by 90 cents, while the tax on a slab has risen to $20.

In the year to September 2023, bread prices were up 12.6 per cent, fish prices rose 8.7 per cent and dairy by 10.2 per cent. These increases, along with mortgage and rent rises, are already being experienced by everyday Australians. Don't even get me started on energy price hikes! I've spoken at length in this place, detailing awful stories of elderly constituents going to bed after dinner because they could no longer afford to run their heaters during winter.

So, yes, a tax break is necessary, but it doesn't even come close to covering the additional costs that every household has experienced in the last couple of years, and this will not be assisting any age pensioners or people on disability support pensions.

The debate we are now having highlights the structural problem of our taxation system. It is inefficient, unfair and overly complex. It is broken and requires immediate reform. We are over-reliant on personal and corporation tax, which account for more than 60 per cent of total tax receipts in the country. With respect to personal tax, it is prosecuted time and time again within the lens of political and class warfare. Our personal tax regime is progressive, and that is appropriate, but our over-reliance on personal tax has resulted in much higher tax rates and lower income bands to which they apply. The median weekly earning in Australia is $1,300 per week and attracts a tax rate of 30 per cent. The equivalent earnings in the United States are a mere 12 per cent. The top tax bracket under this bill is imposed on incomes exceeding $190,000 with a rate of 45 per cent, plus the Medicare levy. In contrast, the top tax bracket in the United States is only 33 per cent and applies to incomes exceeding $890,000 when converted to Australian dollars. In the United Kingdom, a worker on A$95,000 is in the 20 per cent tax bracket. To reach the top tax bracket of 45 per cent he would need to be earning more than A$240,000.

This legislation will see Australians earning more than $190,000 paying the top marginal rate of 45 per cent, plus the Medicare levy. I don't deny that this is considered a high income, but it's hard to justify that for every two hours of work that one is rewarded with payment, the other is gifted to the Taxation Office. I recognise many of the jobs that earn a higher income are often hot and very difficult jobs to do, such as in mining or construction; jobs where people are away from their families, or health professionals who work long hours and long hours overnight—particularly doctors.

Let's not reduce this debate to a discussion of rich versus poor. We all accept that a progressive taxation system appropriately taxes higher income earners more than lower income earners, but we shouldn't accept an inefficient tax system that overtaxes individuals, stifles productivity and neuters incentives to work harder.

We also need to look at incomes at the household level. Many households are limited to one income for various reasons. For instance, one partner may stay home to care for children or may not be able to work due to a disability or caring for another person with a disability. Because we tax at the personal level, we can have two households earning the same aggregate income but paying completely different levels of income tax. For example, a household with one primary caregiver and one primary income of $130,000 per annum will pay $35,767 per year in tax. If this legislation passes, they'll pay $32,388. However, a household with two incomes of $65,000, totalling $130,000, will only pay $25,000 tax per year, or $23,126 if this legislation passes. That's a difference of $10,033 and $9,262, respectively.

If you're in the highest tax bracket it's even worse. A household of one primary care giver and one primary income earner on $190,000 per annum will pay $59,967 in tax per year, or $55,438 if this legislation passes. However, a household with the same amount of money coming but with two people earning $85,000 each will only pay $39,584 in tax, or $35,976 if this passes. That's a difference of $20,000 or $19,000, respectively.

It is inconceivable that two households with the same gross income can have a difference of $20,000 in tax paid. How is it fair that the family in one household can have an extra $20,000 in disposable income because of the way we treat personal taxation? We spend billions of dollars on childcare assistance, but if a mother or father cares for their children at home and relies on a primary income earner they are financially penalised thousands of dollars each year. To me, this is a tax on family values.

Many years ago, we had a dependent spouse rebate which gave some taxation relief to households that I've just described. We need to give more choice back to families and not follow a policy pathway that only rewards parents that work to the detriment of parents that are sharing working and child-rearing responsibilities. I regularly receive emails about this, and I call on the government to give serious consideration to the adoption of a household taxation threshold for couples in addition to the existing personal threshold taxation rates.

The electorate of Mayo has 76,000 taxpayers who will receive an average cut of $1,475. Around 65,000 Mayo taxpayers will be better off under this proposal, representing 86 per cent of taxpayers in my electorate. But I do respect that there will be 14 per cent that will not receive what they were expecting to receive, and some of them will be quite disappointed. It's important that we also remember that the benefit that will be felt by this will not flow for another five months, and I hope that in the coming budget we will see relief for working families, and age and disability pensioners in particular.

This bill will result in a small but better outcome for the majority of taxpayers in the electorate of Mayo. I support the bill, but I call on the government—in fact, I call on everyone in this parliament—to consider broader taxation reforms so that everybody can be rewarded for their hard work.

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