Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

We move on to the part of the agenda for the resumption of the debate on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. Potentially, the bill implements Labor's 2013 budget policy of repealing the second round of carbon tax related personal income tax cuts that are due to start on 1 July this year. In opposition we committed to keeping the first round of the personal income tax cuts and associated pensions and benefits increase, and they have been retained by this government. We have then delivered further savings to Australian households by removing the carbon tax itself, an issue we campaigned heavily on. The removal of the carbon tax is a savings to the typical Australian family of approximately $550 this year alone.

This is implementing a measure first announced by the Labor Party—by the previous Treasurer—in their final budget, handed down on 14 May 2013, where the former government deferred a second round of personal income tax cuts, resulting in a $1.5 billion saving over the then forward estimates. Due to the addition of two further years in the forward estimates since then, the measure is now worth approximately $2.8 billion to the budget over the next four years.

The former government never bothered to legislate this May 2013 budget measure. Upon coming to government, we attempted to legislate this measure as a matter of urgency. As such, the measure had been introduced into the parliament twice under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. However, Labor have now voted not once but twice against the legislation, which implements this budget repair measure, without outlining an alternative plan to pay for it.

We must do this because we are committed to repairing the budget. The government inherited an unsustainable budget position from the previous government. The deficits inherited from the former government that were outlined in the 2013-14 MYEFO totalled $123 billion. We have now brought that down to approximately $82 billion over the next forward estimates period. This is despite the fact that we have lost about $90 billion in expected revenue over the same period of time. Oh, to have the revenue streams that our previous government had through their terms of trade!

Government debt, if left unchecked and allowed to continue on the inherent trajectories, would have been $667 billion within a decade. On a daily basis we borrow approximately $96 million just to pay our interest bill, which is down from the $133 million a day we inherited when we came to office. Under the budget settings Labor left, the budget would never get to surplus and the debt would never start to be repaid.

Our budget is a budget about building a stronger economy. The focus of the Abbott coalition government is on the passage of our responsible, measured and fair budget through the parliament. Since the last election, our economy has created a quarter of a million new jobs, and the centrepiece of this budget is a plan to create even more. Jobs are now growing at well over three times the pace under Labor. That is an incredible statistic. We are creating three times more jobs in the marketplace than the previous government.

The coalition's budget cut the small business company tax rate to the lowest in almost 50 years. And, for two years, we are giving small businesses an immediate tax deduction on any asset they buy costing up to $20,000. This benefits more than 95 per cent of all Australian businesses.

The budget also delivers for families. Our Jobs for Families reforms will deliver a simpler, more affordable and more accessible childcare system, giving parents more choice when it comes to balancing work and family. Low- and middle-income families will be $1,500 a year better off using this childcare system. Families using child care in 2017 on family incomes of between $65,000 and $170,000 will be around $30 a week better off.

The Abbott coalition government budget in 2015 delivers for families, for small business and for our economy. It is responsible and measured, and it is fair. It has cut taxes and will create jobs, and it delivers a responsible path back to surplus. I commend the bill to the House.

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

Mr Deputy Speaker, I seek leave to withdraw the second reading amendment in my name for the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014.

Leave granted.

I withdraw the amendment.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

The amendment is withdrawn by the honourable member for Fraser. The question now is that the bill be now read a second time.

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

As we know, the Abbott government has doubled the budget deficit in just 12 months, after having promised to fix the budget. Of course, the change which is the subject of the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 has already been factored into the forward estimates, meaning that, if the legislation does not pass before 30 June, there will be a further blow-out in the budget deficit, which already is at $35 billion. If you put aside how much worse the budget deficit is since the last election, even over the last 12 months, the budget deficit forecast for 2015-16 is now $35 billion.

The budget is built on a house of cards, as we all know: unfair measures which will never pass the Senate and a projected budget surplus built on a change of the accounting as to how the earnings of the Future Fund are recorded in the deficit. So what we have faced here is a difficult situation and a difficult decision. If this legislation does not pass before 30 June, the deficit will blow out even further. The opposition has reflected on this. The opposition note that the tax-free threshold trebled from $6,000 to $18,200 during our time in office. This change, while it would have been welcome, would have been a small percentage of that increase, so this is not something we would have done in office, despite the spin that the government has put on it.

The government has put a quite unfortunate spin on this particular matter, but the Labor Party is prepared to be responsible. Because of the blow-out in the budget deficit on the watch of the Treasurer, it is the case that we will facilitate and support this legislation. This will save the budget approximately $7 billion over 10 years, in addition to the measures I announced we would support—at the Press Club recently—which would save another $7 billion over 10 years. We are the party which takes a long-term view of these measures, unlike the Assistant Treasurer, at the table, who does not take a long-term view of these matters. He takes a short-term view.

Of course, we have already outlined alternative savings of $21 billion over the decade, which are available to the government if they choose to take them. If the government choose to be responsible, we will facilitate the passage of those pieces of legislation very quickly: our multinational tax package and our superannuation package. We will be prepared to facilitate those through the House, but of course the government have their head in the sand, taking an irresponsible approach to these measures.

We know that the Assistant Treasurer and the Treasurer do not agree with their Prime Minister. We know that they would rather see the government accept those measures, but they have been nobbled by the Prime Minister. They have been told to pull their head in—that they are not going to take the responsible point of view. This Prime Minister does not understand superannuation and does not support superannuation but is pretending and claiming to be a friend of superannuation.

For those reasons, this legislation will be facilitated.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

Can I just start with what I believe to be one of the great truths about this place: there is not one person in this place who does not want to leave this country a better place than before they got through the front doors here. We all want to do the right thing. We have differing opinions and ideas on how that will happen, but, generally speaking, we all believe that we should live within our means, that the budget should be run in surplus and debt kept as low as humanly possible, to protect us against the unforeseen headwinds which may come along from time to time. That is what households must do. That is what business must do. We must have a plan for the future. The bills have to get paid and the wages have to get paid before you take the profit. The way we decide on how the bills get paid and who pays them is that we have an election. We won the election in 2013 on a basis of fixing the budget mess.

I welcome the withdrawal of the amendment, and I welcome the words of the shadow Treasurer, the member for McMahon, about the more conciliatory and rational approach. Governments are elected to fix these things, and we have our say in this House of Representatives. What we have to do is make sure that the Senate understand that they are there to represent the states, not their individual constituencies. The Senate are there to represent the states' interests and not some small sliver of the population in a state or around Australia. That is what we must do in this place. We have to be held to account for the actions that we do—and, when we go to the people next, we will be held accountable for the actions that we do.

We all make sure that we live within our means as much as possible, but, if you do rattle up a debt, sooner or later it has to be repaid. There was an Andy Capp cartoon years ago where Andy Capp was walking down the street and he yelled back at the bloke at the TV store, 'I'll have you up on false advertising!' He said, 'Anyone who believes any repayment is easy is a liar.' When you pay it back, any loan repayment you make comes out of your net income, and all payments hurt. What we have done through a number of parliaments—not just through the 43rd Parliament or in the response to the GFC but over a number of parliaments—is to saddle the taxpayers and the people of this country with an unsustainable budget into the future. If we do not face up to it and do the right thing by the people of Australia, we will be as bad as anybody else in the world.

So what we have done here is accept that, when we pass things, we have to stand up and take responsibility for them. I commend the bill to the House, and I welcome the change of heart from the people on the opposite benches and hope that the Senate will pay due deference to the words that have been said in this place about how we balance our budget. I thank the House.

Josh Frydenberg (Kooyong, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

The Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 repeals the second round of carbon tax related personal income tax cuts, which are due to start on 1 July 2015. This measure was originally announced by the former government. In their final budget, in 2013-14, Labor announced they would repeal the second round of personal income tax cuts, due to take effect from 1 July 2015. Labor banked $1.5 billion to the budget bottom line over the then forward estimates period, to 30 June 2017. Due to the addition of two further years to the forward estimates, this means the measure will now boost the budget bottom line by $2.8 billion. But, as we all know, they did not get around to legislating their own repeal. This measure has now been introduced to the parliament twice, under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. The Senate has now twice voted down this measure put forward by the former government. I welcome the recent commitment from the opposition members to support their own budget repair measure. They have an opportunity to now contribute to the task of budget repair our nation must undertake.

The 1 July 2015 round of personal income tax cuts were originally introduced to provide additional assistance to households following an expected increase in the carbon price from a fixed price of $25.40 in this financial year to a floating price of $29 next financial year. In their final budget, the former government revised their carbon price estimates for the next financial year, and this had fallen to around $12. But the former government never followed through by unwinding legislation they put through the parliament to implement the personal income tax cuts due to take effect from 1 July 2015. The former government did not reverse their decision to defer the second round of personal income tax cuts in a 2013 economic statement or in their document outlining their costings for the 2013 federal election. Since coming to opposition, Labor have now twice voted against legislation which implements their own budget repair measure, without outlining an alternative plan to pay for the measure they are now choosing to keep.

When we came to government, we inherited an unsustainable budget position from the previous government. It was plain for all to see. It is now time for parliament to get serious about repairing the budget. This bill gives the opposition the opportunity to show they are serious by supporting their own measure from the 2013-14 budget. Above all, it gives them the opportunity to keep their commitment to the Australian people. We all know now, of course, that the former government never delivered on their promise of a surplus last financial year, but they did talk the talk about the principle of returning the budget to surplus. Supporting this bill gives them an opportunity to finally take a small step in the direction of action.

We inherited $123 billion of deficits when we came to office. We have now brought that down to $82 billion over the next four years. This is despite the fact that we lost $90 billion in expected tax revenue over the same period. A $40 billion improvement in the budget bottom line is good, but we need to do more. If we had not taken action to address government debt—if we had left it to continue on the trajectory of deficits and excessive spending we inherited from the former government—debt would have been $667 billion at the end of the medium term. Without action, the budget outlook is rising debt for at least another 10 years. The budget would never get to surplus, and the debt would never, ever begin to be repaid.

While Labor promised a real spending cap of two per cent per annum, they actually delivered 3.6 per cent per annum, or almost double the cap that they promised. In contrast, we are keeping real spending growth in check at 1½ per cent on average over the five years to 2018-19. We have taken some tough decisions. We have taken them in order to change course and put the budget back onto a secure and sustainable footing. The benefit of making these decision now is that in the years ahead we will be able to afford a sustainable quality of life. Every generation before us has helped to build the quality of life we enjoy, and we can do no less for future generations. Budget repair is about government living within its means and ensuring the sustainability of government services. This government is committed to living within its means. We refuse to keep borrowing money to pay for consumption today at the expense of generations of taxpayers into the future. It is unsustainable and, frankly, immoral.

The government is redirecting spending to measures that will boost productivity and workforce participation to build a stronger economy. This includes the Infrastructure Growth Package, the Asset Recycling Initiative and other new investments in infrastructure. It includes building a new Medical Research Future Fund within the next six years. We are eliminating waste by reducing the government's share of the economy over time so that we can keep providing assistance to those who need it most and free up resources for private investment. Our plan will allow us to start paying down public debt. We want to reduce the amount Australian taxpayers spend on their interest repayments while also making sure that more of their tax dollar is spent on delivering front-line services.

The repeal of the carbon tax has helped all Australian households, with households better off by $550 on average this year alone. But the government understands households will continue to face cost-of-living pressures in spite of that repeal. That is why we will keep the current personal income tax thresholds and fortnightly pension and benefit increases. This bill amends the Clean Energy (Income Tax Rates) Amendments Act 2011 to repeal the personal income tax cuts that were legislated to commence on 1 July 2015. It also amends the Clean Energy (Tax Laws Amendments) Act 2011 to repeal associated amendments to the low-income tax offset which were also legislated to commence on 1 July 2015. After repealing these amendments, the tax-free threshold will remain at $18,200, the second personal marginal tax rate will remain at 32½ per cent and the maximum value of the low-income tax offset will remain at $445.

This bill is an important step towards getting the budget back on track. This bill will help to ensure that future generations will enjoy the high standard of living that we enjoy and that they will not be shackled with debt. It is time for this parliament to repair the budget and ensure Australia's prosperous future. I commend this bill to the House.

Question agreed to.

Bill read a second time.