Michael Ferguson (Bass, Liberal Party) Share this | Link to this | Hansard source

My question today is addressed to the Treasurer. In thanking him for an excellent budget, I ask: would the Treasurer inform the House about the impact of the government’s tax and family assistance policies on middle-income earners? Is the Treasurer aware of any alternative policies?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Bass for his question. I thank him for the endorsement of the budget, and for his vote in passing the budget; I appreciate that very much.

From 1 July, every Australian taxpayer will receive an income tax cut, and that is because of this year’s budget, which lifts the low income tax offset and which increases the threshold for the 15 per cent rate, taking it up to $30,000. As we continue the countdown to ‘fundamental injustice day’, which is the day before 1 July, we can remember on ‘fundamental injustice day’ itself that every Australian will be receiving another income tax cut on 1 July.

I am asked whether I am aware of any alternative tax policies. The answer is this: it depends what day of the week it is, because on some days of the week there are alternative tax policies and there are not on other days of the week. For example, back in February 2006, the member for Lilley said this:

Labor recognises the need for root and branch tax reform ...

It was going to be ‘root and branch’ back in February 2006. At the National Press Club on 16 May, the member for Lilley said this:

I’m not anticipating taking forward any significant change to the personal-income tax system at this stage.

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! Would the member for Melbourne Ports remove himself from the chamber and finish his lunch outside.

The member for Melbourne Ports then left the chamber.

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

So ‘root and branch’ tax reform disappeared on 16 May. I read in the Adelaide Advertiser on Thursday, 7 June that tax policy was back on: ‘Swan hints at tax cuts if Labor elected’. That was what appeared in the Adelaide Advertiser. Then, on Saturday, in the Australian Financial Review, as reported by Laura Tingle—get a load of this!—Mr Swan said:

... we will certainly have a tax policy. I just wasn’t going to raise expectations ...

Well, producing a policy—wouldn’t that raise expectations! It would really raise expectations if Labor came out with a policy on tax. ‘I wasn’t going to raise expectations’!

When I made the point that there was no tax policy, I was wrong about that, too. This was picked up in a document published by the member for Lilley. He said that one of the myths that I was propagating was that Labor does not have a tax policy. That was a ‘myth’ that I was propagating; it was a ‘myth’ that Labor did not have a tax policy. He said this was a myth because in May 2005 Labor outlined its alternative tax plan. So on one day you are going to have root and branch; on the next you are not even going to have a leaf; on the next you are going to cut tax; and on the next you don’t want to raise expectations but there might be a policy. But it is a myth to say there is no policy because Labor has its 2005 tax plan.

I invite members of the public and members of the press to have a look at this 2005 tax plan because a document was released last week saying it was a myth to say that Labor did not have a tax plan because it has got one—the 2005 tax plan. Let me say this: the 2005 tax plan would increase the marginal tax rate for the lowest earners in our community by increasing the 15 per cent rate to 17 per cent, and it would increase the marginal tax rate for middle-income earners in our community from 40c to 42c and 45c to 47c.

Let me say it again: Labor’s 2005 tax plan would have three higher marginal tax rates and every threshold would be lower. For example, under the coalition, the top marginal tax rate of 45c cuts in over $150,000; under Labor’s 2005 tax policy, the top rate would be 47c and it would cut in over $100,000. Under the coalition, the rate of 40 per cent applies between $75,000 and $150,000; Labor would have a higher rate of 42 per cent applying between $67,000 and $100,000.

Mr Speaker, I do not make this up; this was published by the member for Lilley last week. He said that it was a myth to say Labor did not have a tax policy: ‘In May 2005 Labor outlined its alternative tax plan.’ The Labor alternative tax plan is for higher taxes. There is no point in the member for Lilley saying in the Adelaide Advertiser that he would like lower taxes. The member for Lilley is one of those white-bread politicians who will tell a journalist anything he thinks the journalist wants to hear. And it will vary from day to day, according to who the journalist is and which outlet it is.

In politics, you need a policy. In politics, you have to be able to put it out, you have to be able to cost it and you have to be able to defend it. The member for Lilley and the Labor Party are playing games with the Australian people. They will not come forward and have a policy properly costed; they will not put themselves under scrutiny because they are not fit to form a government and they are not fit to be trusted with economic policy.