Tony Smith (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for McMahon proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government's plan to hit the household budgets of all Australians by jacking up the GST.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

Two months ago the member for Wentworth told the Australian people that he needed to be Prime Minister to provide Australia with economic leadership—economic leadership we were not apparently receiving from the member for Warringah and the former member for North Sydney. He told the Australian people he was going to change things, he was going to turn the economy around. Well, it turns out that economic leadership involves lecturing the Australian people, low- and middle-income earners, that they have to pay more tax. That is what the economic leadership is: lecturing the Australian people, particularly low- and middle-income earners, that they should be doing more for his budget.

He says he wants a national conversation about increasing the GST. It turns out it is a rather one-sided conversation. It could perhaps best be described as a national monologue from the Prime Minister, as opposed to a national conversation, because he lectures, he condescends, he stands at the dispatch box and he explains why low- and middle-income earners should be doing more, but, when you ask him a question, he is quite offended to be asked a question about the detail. We saw it again from the Treasurer today, saying: 'We have no plans. We have no policy. We have no proposal.' So it is a national conversation about nothing—a bit like a Seinfeld episode. It is a national conversation about nothing that the Prime Minister and the Treasurer have engineered as part of this new economic leadership for Australia.

But, when the Prime Minister is lecturing us, he does acknowledge at least one fact—that a GST increase would hit those who can least afford it the most. That is what we know and that is what it all comes down to. It is regressive. It hits low-income earners much more than it hits high-income earners. The Prime Minister, in his own special way, said it at the dispatch box earlier in the week. He said:

So the fact is, whether it is goods that are taxed with GST or goods that are free from GST, invariably there is a regressive element in it.

We know that, and that is why we are against it. That is the point—because it affects those who can least afford it the most.

Let us talk about what sort of impact it would have. We know, because of economic modelling from NATSEM, what sort of impact it would have. People in the lowest 20 per cent income bracket will pay seven per cent more, but people in the highest 20 per cent income bracket will pay just three per cent more of their income. That is regressive. There is nothing fair about that. We know that those earning around $26,000, who are in the lowest quintile of income earners, would pay $3,000 extra in costs each and every year. A middle-income earner of around $75,000 would face around $5,200 in extra costs. These are people who cannot be asked, should not be asked, to pay at this level, when the government rejects and argues against tax changes which would be fair and progressive, as it has done consistently for these two years.

The government says, 'Yes, but it's all right because we're going to cut income tax, you see.' They lecture: 'It's okay; we're going to cut tax.' The fact is: the modelling shows that that would actually make the changes the government is proposing even more regressive. That is what the modelling tells us. Two-thirds of households would be worse off. That would be the average impact for the bottom three quintiles, while it would be positive for the top two quintiles. That is what the impact of this government's policies would be.

Of course, the Prime Minister again lectures us—whether it is glasses on or glasses off, whatever the mode of the lecture is at any particular time. 'It's okay because there would be compensation,' he tells us. We have asked the Treasurer today for some of the details, and it is quite clear he does not know what the compensation would look like—what it would look like for self-funded retirees; what it would look like for people in remote areas, who would be particularly impacted; or what it would look like for people who work but work perhaps casually or part time and are not in the personal income tax system. The government have not thought that through.

The one thing we do know is that any compensation delivered through the tax system would be temporary, because what we have is bracket creep. The increase in the GST is permanent. Once the GST is up, it is with us forever. But the personal income tax cuts would be eaten away by bracket creep, and the Australian people know that. That is why the Australian people are so against this Prime Minister's plans.

We also know that the Prime Minister would put up the price of some things compared to others, and there is no compensation package which would not deal with the price signal that that sends. We know the government likes price signals—the Liberals and Nationals like price signals.

They tried to put a price signal on going to the doctor—$7 to go to the doctor. They love price signals when they affect people on lower middle incomes and they are trying it again, except this time, what would their price signals do? They would send a price signal that Australians should eat less fresh food. They would send a price signal that families on a tight budget going to the supermarket want their fresh food to be comparatively more expensive. There are no compensation deals with that when you have got one million Australians with diabetes and families working hard, trying to do their best to get fresh food on the table for their kids—and what does this Prime Minister do? Lectures them on how they should be paying more for it; sending a price signal.

Then we have got a price signal on education. Never has there been a more important time for Australians to be engaging in self-education and better education. Never has there been a more important time for Australians to be getting ahead by going the extra mile with study and getting some additional qualifications. What does the government want to do? The old price signal: make it more expensive. Send the signal that you should not be doing that—exactly the wrong sort of policy, exactly the wrong sort of message to be sending to the Australian people.

And of course health—again, we know that they just want a price signal in health. They have tried so hard. They have worked so hard. They have put so much effort into trying to make health more expensive since the day they were elected. We had the whole Commission of Audit. They had plans to make going to the doctor more expensive. They failed. They failed, because the Australian people and this parliament said no, so they are going to have another go. But this time it is through the tax system via the GST.

The government says they need to deliver personal income tax cuts. That is the best they can do—really? The only way they can deliver personal income tax cuts is to jack up the GST. That is how they are going to deal with bracket creep. It is a signal to the Australian people: 'If ever you want a personal income tax cut, we're going to have to increase the GST to do it.' That is all they have got.

Of course we were told—not that long ago in the greater scheme of things—that the GST would fix everything. Prime Minister Howard and Treasurer Costello stood there and said that the GST would be a growth tax for the states and it would provide the states with the income they need. And they said it would not need to be increased. In fact in order to show the Australian people that they would not increase it, they legislated that every state and territory would have to agree to an increase in the GST. That is in the legislation, but now they say, of course: 'We'll go to an election and we'll increase the GST, if we win that election.' What they will need to do is amend the legislation, if they do not get the agreement of every state and territory. Once that happens, it is open slather: every time the government has got a problem, increase the GST. Change the legislation so they can increase the GST whenever they like, every time they have got a problem. Every time they have got something they want to fund, up goes to GST. That is the situation this Prime Minister wants. That is the situation he is going to engineer.

So the government says that they need to fix these problems. They need to provide personal income tax cuts, to cut the company tax rate, to make up for their $80 billion worth of cuts to health and education, to abolish stamp duty, to abolish payroll tax—sometimes we hear some of them say they have spent the GST money seven or eight times over. At some point, the Prime Minister has got to stop Turnbull's talkathon and absolutely announce to the Australian people what this GST money will do.

When he does, they are not going to like it. When he does, he actually has to come clean with the Australian people and explain that all the things that they have been talking about, they cannot do and the devil is in the detail.

We have got the Treasurer saying, 'It's all right. The tax to GDP ratio won't go up. I'll give you a firm guarantee. We'll only take the same amount of tax. We might take it a bit differently.'

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

It's the end of compensation.

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

There goes the compensation, as the shadow minister for finance points out. If you are a pensioner, a carer or a veteran, you are not often in the personal income tax system and therefore you need some other compensation. If every dollar goes on tax cuts, then there is no compensation for pensioners, no compensation for carers and no compensation for veterans.

So either the Treasurer is wrong, which I suspect he is—

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

It often happens.

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

it often happens—or he is planning something very different to what he promises the Australian people. And this is a Treasurer who says Australia does not have a revenue problem. He says that while he is planning an increase in the GST to jack up revenue. The government says they want a debate. Well, let's have it; let's have a debate and we will have a tax plan for the Australian people to vote on, as you will. Let the Australian people decide. If you want a debate on tax, we cannot think of anything better. We cannot think of anything better than having a debate about tax, because it is a debate where you will have to show your values to the Australian people—your values and prejudices which will say: 'We want to increase tax on lower middle income earners. We want to make Australia's pensioners pay more. We want to see Australian veterans and carers pay more without compensation.' That is what your values tell us. You want a debate: bring it on.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

You would be a fun guy to have at a party, Shadow Treasurer: things are so bad, bad, bad—everything is so bad. You would be the life of any party, I can tell you. You would not think that on a day when 58,600 people gained employment in this country we would have the shadow Treasurer enter this chamber and lecture us about how bad things are in the Australian economy. You would not think at a time when consumer confidence is on the rise and we see in the consumer confidence figures that consumers in the next month are planning the biggest Christmas spend in seven years. That is what is forecast for the next month.

You would think that the shadow Treasurer would come in here with a plan to explain to the Australian people how they can make it easier to work, save and invest for those Australians who are doing it tough and working hard. But what we heard from the shadow Treasurer is an attack on plans that the government do not have, an attack on policies that we have not announced and an attack on mythical tax policies that they have created, completely isolated from everything that the Prime Minister has been talking about. It is so misleading that I think it is not fooling ordinary people. It is so misleading to the Australian people that it will not go down well when the shadow Treasurer returns to Fowler or McMahon, or wherever he goes back to, and says, 'This is our plan and this is your plan.'

You said you had a tax plan but you just had 10 minutes, shadow Treasurer, to tell the Australian people what that tax plan is. What did you say about your tax plan? Well, you did not say anything about your tax plan. You did not have one word to say about your tax plan.

What the government has said is: we have a process in place, a white paper process, which is underway currently, where we are putting all things back on the table. We are considering the tax mix, absolutely, and that of course is in response to the fact that people on average wages today are now in the second-highest tax bracket. There is nobody in this chamber, listening to this debate today who would think it is okay that average wage earners are now in the highest tax bracket. It is a critical concern for Australians. It is a critical concern for those Australians working very hard, paying an even higher rate of tax now. That is the one thing you will never hear from the Labor Party. They talk a lot about fairness to those on welfare. They talk a lot about fairness to those on lower incomes. Of course, as the Prime Minister says, any changes to the tax system must be fair. But the Labor Party never talks about fairness to those people who work for a living, fairness to those people on average incomes who are paying more and more of their tax in income tax.

Where is the shadow Treasurer saying this is unfair? It is unfair that average income earners are now in the second highest tax bracket. Why won't the Labor Party just say it? Why won't they acknowledge that something has to be done to address bracket creep, to address the fact that people are working harder and harder for less and less of their own money? That is the principle that any tax system must be constructed on. Australia has the second highest reliance on income tax in the world. We have one of the highest reliances on corporate tax as well. If we do not lower our corporate taxes and become competitive with our international neighbours here in the Asia-Pacific region and around the world—if we have one of the highest corporate tax rates in the world—we will not be able to compete effectively. We will not be able to attract more investment and more jobs or have more prosperity for all Australians.

Yet you will not hear this challenge that confronts Australians crossing the opposition's lips. Instead they criticise any attempt to have a national debate, any constructive process that the government has to bring forward plans.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

What about pensioners?

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

The member for Watson mentions pensioners, of course. It was their government that brought in the carbon tax. The shadow Treasurer had a lot to say about pricing signals. We know that, more than any other party in Australian political history, it is the Labor Party that does not understand price signals. Why would you introduce a carbon tax at the world's highest price? It indicates how little you understand price signals. Why would you start a market mechanism with the world's highest price for your carbon tax? How fair was that to pensioners, I say to the member for Watson. How fair was introducing a carbon price at the world's highest price?

When we abolished the carbon tax, we kept those compensation measures, and pensioners are better off with the abolition of the carbon tax.

Ms Henderson interjecting—

The member for Corangamite asks what was fair to small business when you brought in the carbon tax. There was no consideration to the two million small businesses in this country that generate most of the employment, generate most of the growth in employment and keep Australians in jobs. Again there was no thought for small business. It is this government, of course, that brought in the reduction in company tax for small business, and that has from May this year led to growth in employment. Today we saw that 58,600 people have jobs who did not have jobs at the last figures, and I think that is fantastic. It goes to show that, when you do lower taxes, when you do get small business taxes down, if you could get company taxes down a bit, if you could reduce bracket creep and get average wage earners' taxes down and back into a sensible tax bracket, you would generate more jobs, wealth and prosperity. But it is not something that ever comes to mind when the Labor Party discusses tax

Tax is about one thing for the Australian Labor Party. Tax is about revenue. Tax is about taking more from people. It is only to fund ever-increasing government expenditure. They take and take and take from Australians' pockets. It is not the approach of this government, of course.

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

You've still got four minutes to go.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

Thanks for the heads up on that! It's nice of you to do that! The tax mix here, of course, has been completely disconnected from the government's expenditure.

We have seen that we do have a fiscal challenge ahead of us. The Minister for Social Services is here and he knows that to fund just the increase in the welfare budget that we have coming up—just the gap from where we are today to where we will be in 10 years—requires great growth in government revenue and also a reduction in our expenditures. That is the challenge the government faces. That is why we are having this conversation with the Australian people. That is why all the mixes are on the table. That is why tax reform is a key part of the government's policy agenda. We have to build that growth and opportunity, and we have to reform the tax system to do that. I think there is not an Australian, a small business owner, a big business or a medium company that will not tell you that they need tax reform to do their jobs better to enable them to grow and employ.

We know that, with some of the highest living standards in the world and the greatest competition in the world, we need to face ways to become more competitive and innovative. That is why we will not be distracted—

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

There's no shame in sitting down now!

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

We won't be distracted by the shadow Treasurer, that's for sure! We won't be distracted by the member for Watson and their 'vuvuzela of negativity', to quote the member for Grayndler. That vuvuzela has been barking very loudly in this chamber in recent weeks.

Every single question about the GST, of course, has missed the mark. Why has it missed the mark? It is because there is no Australian government that would propose changes to the tax system that would not provide for greater fairness for those on low incomes, that would not provide for greater fairness for those who could not afford it. But what about the fairness for the middle class? What about for those on average incomes? What about fairness for small business? These are the things the Labor Party never considers.

I think the Labor Party and all Australians know that, to meet the challenges and to capitalise on the opportunities, we have to develop a more agile economy. We have to incentivise innovation. We have to renew business processes, improve quality and value for customers and reform the way that government operates. That means dealing with our tax system. It means reforming it in a way that Australians accept.

We are here having a debate about the tax system, but the shadow Treasurer will not outline one single measure that he thinks should be reformed in the Australian tax system. This is a party that has never lowered tax rates in Australian history. You have never brought tax down. You have never returned bracket creep to Australians. You have never said to Australians, 'You are working hard enough.' You have never said, 'You are working and delivering tax for the government; we will lower your tax.' You have never said thank you to Australian businesses—those two million small businesses out there who work, save and invest every day to create the prosperity that you take. You only have one message for the Australian people and the business community: 'We want to increase tax. We want to take more out of your pocket and we're going to continue to do nothing about government expenditure.'

In contrast, the Turnbull government is capping government expenditure. We are restraining it and reducing it. Unlike some people in the opposition, we understand the difference between net debt and gross debt. We are not confused about net debt and gross debt. We know what it is. We know how it operates. We know what the tax brackets are. We know what the income tax-free threshold is. We know it is $18,200—

Mr Bowen interjecting—

Do you want me to tell you? I will school you again! I am happy to be the Prime Minister for a second and school you. If I had glasses, I would take them off at this point and I would offer you a lecture. The income-free tax threshold is $18,200. That is where it sits. Surely you know that by now, shadow Treasurer.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

It pains me to interrupt the member for Mitchell. He was on a roll—an absolute roll. I feel pity for them on that side because the government has come up with an argument that says, 'We're having a conversation, but you're only a serious participant in the conversation if you don't have a view.' That is effectively what the government is saying. The problem that those opposite have is that Labor has a very strong view on what happens if you expand the GST. It might upset them that in a conversation participants will often have a different view. On this one, our view is diametrically opposed to the direction that the government clearly wants to go. We will participate in that conversation for one very simple reason: those opposite should not think for a minute that what they are now talking about with the GST is simply a mere extension of what happened under the Howard government.

When the Howard government introduced the GST, yes, we opposed it then and, yes, there was an inflationary impact then. What they are talking about now is way beyond that and far more regressive than what happened then, and for one very simple reason. Look at what was abolished at the same time the Howard government introduced the GST. There was the abolition of the wholesale sales tax and there was a 7c reduction in the fuel excise. Price pressures were being taken off at the same time as taxation was being overlaid with a GST. It was still inflationary. It was still unfair. We still opposed it. But it has nothing on what they are talking about now.

What they are talking about now is expanding the remit of the GST, expanding the base to areas where it is currently zero and where there is no wholesale sales tax. The full impact of the GST gets added to the price. What happens to people on incomes is that they say, 'We can do the same thing as what happened when the carbon price was introduced in terms of compensation'. Sorry, you cannot. You cannot again triple the tax-free threshold. We took one million people out of the tax system. The member for Mitchell said, 'Oh they did nothing about tax reform for people.' Well, when it is at the bottom end, they just do not count it. They ignore that even at the top end it was Paul Keating who came into office and dealt with the 60 per cent top marginal tax rate when the Liberals gave him that. But at the other end, they will not touch the fact that we had the tripling of the tax-free threshold.

So what does that mean? It means that if you are not part of the payment system, if you do not have children under 13 years of age, if you are in the workforce as a part-timer, and if you earn $18,000 a year, then tax relief means nothing for you. A change in the income tax scale delivers you absolutely nothing. What those opposite then say is, 'We'll get tax reform and we can shift the scales.' Yes, you can, but for part-time workers and people on modest incomes, they will simply feel the full impact of the price increase.

For those in the payment system, the government is saying to them that right now they will cut their payments. The government will go through all the cuts they are talking about at the moment and then introduce a GST and say, 'Hey, we increased your payments', that they had cut only a year before. For people who are not in the payment system, if they are on modest incomes, the room is no longer there for the benefit to be felt for people on low and modest incomes on a tax cut to compensate for a shift in prices. The shift in prices would be more severe, much more severe, than what happened when the GST was first introduced. It would be much more serious than what happened when the GST was first introduced. Added to that, if they want to use the Howard model, look at what happened to the budget. The Commonwealth budget ended up $20 billion worse off after all the compensation was dealt with.

If the government is saying this is about balancing the budget, they can only be saying they will not be doing compensation properly. If they are saying they will do all of the compensation through the tax system, they can only be saying that people on lower incomes are going to be ditched. If they are saying it will all come through in tax cuts and there will be no increase in the net tax take, then they can only be saying there will be nothing done for people in the payment system. When you look at the different proposals that are in front of us, unfairness is there every step of the way. That is why a plan from the Liberals is this transparent.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

I have to say that whilst it is always a great pleasure to speak during an MPI, this one really puzzles me. The tacticians on the Labor Party side must have been a bit tired on Thursday. They were out at the Latika Bourke's party last night, had a few too many drinks and they started talking about a plan that I cannot find anything about. I cannot find anything about this plan. So, I went to the morning note—the morning note has been a bit thin over the last few weeks, but we are left to run on our own a bit more than perhaps we used to be—and I could not find anything about this plan. There was nothing there! Then I had a look at Google. I typed it in, and I looked for this plan. I could not find it there either. I went through every press release and every interview that we had done in the last two weeks, and there were no plans to raise the GST.

So, who does want to raise the GST? Who does want to raise taxes? I googled this, and I found that a number of premiers want to raise the GST. That is not surprising. Premiers love money for nothing—a little bit of Dire Straits is good for the premiers—because managing your spending is hard. Jay Weatherill supports an increase in the GST, and he wants to apply it to financial services—he wants the money. Andrew Barr supports a rise in the GST—he wants the money as well. Even Mike Baird favours the idea of a GST hike, but I could not find our plan anywhere.

I thought to myself, who else wants to raise taxes? I was confused about what those opposite might want to do, and it struck me that when the Treasurer was speaking earlier he pointed out that those opposite plan to spend $55 billion more than they have. Last time I looked, when you spend $55 billion, you have to tax $55 billion. So I started to think about what sort of tax those opposite might want to go with. Will it be a carbon tax? Will it be a mining tax? Will it be a smoking tax? We have heard about little bit about that this week—they want to have a smoking tax. Will it be a hike to the fuel excise on farmers and miners? Will it be a tax on everyone who has confessed to be Liberal voter? Will it be a tax on those who flush out corrupt union officials? We do not know but $55-billion worth of tax has got a come from somewhere, so we are looking forward to hearing about their plan.

Labor's view of the economy, I think, can be summed up in a wonderful phrase first brought to us by Ronald Reagan: if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidise it. Because that is the kind of high-taxing, high subsidisation government that we can expect from those opposite—if they ever get back to this side of the chamber. On this side of the chamber, we want to grow the economy, we want to create jobs and we want to invest. Central to that is the need to contain taxes. I ask the government to innovate and deliver the sorts of productivity gains, particularly from government, that we have seen in the private sector for many years. Those opposite grew spending by five per cent per annum in their time in government. We are keeping it below two per cent. If spending goes up faster than income, you have to raise taxes and that is exactly what those opposite are proposing.

Most of all, we know that lower taxes will deliver a stronger economy and particularly lower personal income taxes. In the last 10 years, the average weekly earnings have gone up twice but tax paid has gone up three times. That is not good enough. It is time to look at lower taxes, not higher taxes and that is what we are focused on. We have heard from the Treasurer today that the average weekly earner now is going to pay 37 cents in the dollar for tax and that is simply too much. So we are the party of lower taxes. We are the party that can deliver that because we know how to control spending. It is time for those opposite to fess up on their plan for higher taxes and not to ask us about our plan for a stronger economy.

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

Before I begin, may I ask the honourable member for Hume to table the morning note to which he referred.

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

He is actually not a minister so he will not have to.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

Mr Acting Deputy Speaker, I rise on a point of order. I ask the shadow Treasurer to table a copy of his book as well while he is at it, if he has it.

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

There is no point of order. The member for Fraser has the call and will be heard in silence.

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

Australia faces a number of serious economic challenges right now. We have growth running below trend and recently downgraded by the OECD. Growth has been steadily downgraded in every budget since the first Abbott-Turnbull budget. We have got inequality now running at a 75-year high. We have had a generation in which earnings have risen three times as fast for the top 10th as for the bottom 10th of income earners. We have got housing affordability increasingly pushing out of reach of average Australian households, with young families in Sydney now facing the prospect of median house prices at more than $1 million. These are big challenges for Australia and the GST at 15 per cent would make all of them worse.

Let us take growth. We have just seen Japan raise its consumption tax. What happened to that economy? It went into recession, just the same as what happened after Japan last pushed up its consumption tax. What would a GST rise do to inequality? Clearly it would make it worse. Even Tony Shepherd acknowledges that the GST is a heavily regressive tax. What would it do to housing affordability? It would certainly make that worse with the Housing Industry Association numbers suggesting that a 15 per cent GST would add tens of thousands of dollars to the cost of a new home or, it could well add to the cost of every mortgage—if the member for Wannon had his way of putting the GST on financial services.

If a 15 per cent GST is the answer, you are asking the wrong question. To sum up the 15 per cent GST in a single word, that word is 'apophony'. 'Apophony'? I hear you ask. Is that when a blinding flash of positive insight comes to you? No, that is an epiphany. An epiphany is when a clever blinding flash of positive insight comes to you. An 'apophony' is when an idea comes to you that is exactly wrong. And 'apophony' is an idea that strikes you on the head that you think is right but is in fact deeply wrong. That is what those opposite have given us. They have given us an answer to the wrong question for Australia because the GST is no more efficient than an income tax, contrary to what the Prime Minister has been saying.

The Prime Minister has been standing at the opposite dispatch box all week saying that the thing about a GST is more efficient than the income tax. But that is not what his rethink document says. His rethink document says that the excess burden, dead weight loss, of raising $5 through an income tax is $1. And the excess burden of raising $5 through a GST is also $1 so the GST, according to the government's own modelling, is no more efficient than income tax but it is certainly less equitable.

We know from NATSEM modelling, the shadow Treasurer has pointed out, that if you raise the GST to 15 per cent, it costs the top quintile three per cent of their disposable income, but it costs the bottom quintile seven per cent of their disposable income. We have heard those opposite say that is okay because there will be compensation. There cannot be compensation if the member for Cook is right and raising the GST is going to decrease the total tax burden or at least not increase it. Because if you do not increase the total tax burden, by definition, you are not giving compensation to those on fixed incomes. That means those on fixed incomes should be terrified when they hear the prospect of a 15 per cent GST because a 15 per cent GST and a lowering of the tax burden means that low- and middle-income earners will be slugged just as they were in the 2014 and 2015 budgets. A 15 per cent GST is an 'apophony' on this House and it should be opposed.

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

I thank the member for Fraser for a delightful contribution! I appreciate the opportunity to make a contribution to this debate. What we do in this place is encourage those around our country to make a contribution to this debate, and I take the opportunity to encourage Labor to make a sound contribution to this debate.

It has become ever apparent that the Australian Labor Party and the Australian trade union movement, from a distance, are that intertwined that you can no longer differentiate between the two identities. So Australians should not be surprised that, when we enter into a debate about taxation, the techniques of intimidation, thuggery, corruption, coercion—all of the issues that have been spoken about in a royal commission—are their weapons of choice to try to intimidate the Australian public, to try to coerce them into unfounded truths. I welcome the Australian debate. I welcome the opportunity to stand and have the conversation around the fact that—and honourable members probably support this—we have an expenditure problem and not a revenue problem. We need, as a country, to start to address some of our expenditure issues. When we come to a position of consensus through those conversations, we will take our position on taxation to an election, for the Australian public to have the ultimate determination.

This year was to be the year of big ideas from the Australian Labor Party. This is the time in the debate that they should be bringing them out. This is the time that we need to see the big ideas coming forward from Labor. I would love to hear a contribution from the other side, something imaginative about, say, income splitting—having just returned from Canada. Why are we not having a conversation about income splitting and the benefits of trying to offset bracket creep, similar to what the Canadians do? Why are we not having a conversation about the participation rate of women in Canada being much higher than ours? There are some underlying factors to that. We have 1.9 per cent fertility; they have 1.6 per cent. Why are we not having a conversation about super? Why are we not talking about concessional tax rates? Bring those to the table.

We heard from the Treasurer recently about the average wage earner shifting into the second-highest tax bracket. We do not have a complex tax bracket. We have nil tax to $18,200. We have 19c, 32.5c, 37c and 47c tax brackets. It is not a complex system. We will have the majority of our average wage earners in the second-highest tax bracket. That is unacceptable as we move forward in an economy that we are looking to grow.

We are getting on with the job of growing the economy and growing jobs. We heard today, in question time, that 58,600 jobs were created in October—the largest monthly increase in employment since March 2012. So, in response to previous speakers about how we are getting on and growing the economy and can we be trusted, the proof is in our pudding. This brings the total number of jobs created over the past year to 315,000. It is the strongest pace of annual jobs growth since 2010. The youth unemployment rate fell to 12.2 per cent in October, falling more than two percentage points from its peak in November 2014, when it was 14.5 per cent. Yes, it is still too high in my electorate and it is still too high across the country. These jobs are being found in the tourism, hospitality and agricultural sectors.

There is room for a greater debate. I look forward to the epiphany debate to bring back the carbon tax. That is one of Labor's increased taxes—increase the Medicare levy, increase tax on cigarettes, a tax grab on superannuation savings and, of course, the mining tax was a cracker. (Time expired)

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Only the Liberal Party could ask Australians to have a serious policy discussion on tax, without one single policy. They have not released a policy on broadening the tax base. They talk about new policies on superannuation, new policies on company tax, but they have not released any. And they accuse us of running a scare campaign. I would like to enlighten those opposite about a few facts regarding this so-called tax policy debate that we are having at the moment.

These individuals have advocated increasing the goods and services tax or broadening its base: Mike Baird, Gladys Berejiklian, Joe Hockey, Dan Tehan, who described it as 'unfinished business', James McGrath, Treasurer Scott Morrison and Andrew Robb. Last time I looked, those individuals had one thing in common: they are all members of the Liberal Party! It is not us. It is not us out there advocating a change to the GST. I might remind those opposite: you raised this issue. You brought it back into the political discourse in Australia.

Opposition Members:

Opposition members interjecting—

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

Order!

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

It is not us that brought this issue back. You have made this an issue. You put the goods and services tax back on the agenda. It was not just backbenchers; it was leaders of your party. It was the Premier of New South Wales. It was the former Prime Minister of Australia that put this issue on the agenda. You are the ones that want to make poor and middleclass Australians pay more tax. You want to increase the GST. That is a fact. It was not us that put this issue on the agenda; it was you.

In fact, the Labor Party has been very clear and consistent with the Australian public for some time now. We took this position to the last election. We are opposed to an increase in the GST. That is Labor's position. Why? Because, when you increase the GST, you increase a regressive tax. You make poor and middle-income families in Australia pay more. That is a fact. The pensioner on a fixed income pays more every time they pay their electricity bill, pays more every time they pay their gas bill, pays more every time they pay their telephone bill. If you increase the GST, the tradie that fills up their ute every week will pay more. They will pay more every time they buy new tools. They will pay more every time they buy new work boots. If you increase the GST, families in Australia will pay more. Every time a mum goes to buy new clothes and shoes for her kids, she will pay more. Every time a mum and dad go to the movies for a night out, they will pay more. Every time they pay for their internet or their mobile phone bill, they will pay more. The GST hurts those in our society who can least afford it.

At the same time that the government are floating this idea that poor people should pay more through the GST, what are they doing to those who are well off in our community? They are giving them a tax break. They have actually given them a tax break. They got rid of the low-income superannuation contribution. You got rid of the minerals resource rent tax. In 2007, your Treasurer, Peter Costello, brought in massive tax concessions for people with more than a million dollars in their superannuation accounts—unfunded, I might add. You never funded those in the budget, did you? But you brought in those massive tax concessions, so we now have the situation where, for someone who has more than a million dollars in their superannuation account in Australia and earns interest off that balance—they are not drawing down on the balance; they just earn interest off it—say they earn $80,000 interest off that balance per year, have a guess how much tax they pay. Zero! A big fat rissole! Zero! They pay no tax. Do you think that that is fair? Do you think that you want to go and slug the pensioner, the tradie and the family more? Wake up to yourselves.

It was Labor that tried to introduce greater transparency into our taxation system. We introduced a reform that said that the wealthiest companies, which earn more than $100 million each year, should disclose to the Australian public the tax that they pay. They should disclose. They should be open and honest. But what did you do when you came to government? You got rid of it—a law in which big companies disclose the amount of money that they pay in tax. You got rid of it. You want to keep that sort of stuff secret. Apple made $6 billion in local revenue last year, and they paid $80.3 million in tax. You want to let those sorts of people off, and you want to ask pensioners, tradies and families to pay more. You are a disgrace.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

What we are seeing today is a Labor Party who are so bereft of ideas that they have gone for: 'In an emergency, break the glass and find the best scare campaign you can run.' Well, guys, it is not going to work. It is not going to work. We are the party of lower taxes. Your record is so shambolic that nobody will believe a word that comes out of your mouths on tax policy. They are the party which raised the carbon tax when they had promised that they would never introduce a carbon tax, leaving every single home $550 worse off. They are the party that introduced the mining tax. They picked one recommendation out of the Henry tax review, which had about 150 recommendations. The mining tax that they introduced had $16 billion worth of associated spending, whereas it ultimately raised some very miniscule percentage of that spending. So your credibility on tax is absolutely shot.

We on this side of the House have lower taxes ingrained in our DNA. Our history is extraordinarily proud, and nothing will change. When we have undertaken ambitious tax reform, it has been for the benefit of this country. I remember as a young man watching Kim Beazley, the heir of Whitlam, standing out the front with cans of baked beans, arguing against the GST introduction. I think roll-back was the policy for two elections. And then, when the Labor Party finally got back into government in 2007, we never heard a word from them about the GST because every single Labor state Premier and politician is on the drip of the GST now.

If the GST is so bad, take a policy to the next election that you will repeal the GST. No, they all have their heads down now. If the GST is so bad, then absolutely go down that path and see how the Australian people mark you. But I can tell you that this party has lower taxes ingrained in its very fibre.

When we talk about fairness, it also has to be fairness for the middle class of this country, who carry the entire tax burden. It is the middle class who carry this country, pay for our education and pay for our health services. When we talk about fairness on this side of the House, any proposal that we take to the next election, however it may look, will be to benefit those people and to encourage them to work, encourage them to save and encourage them to invest, because they are the people, ultimately, who this country is built on.

The Labor Party have $60 billion of spending commitments that they have made. Very notably, the shadow foreign minister has promised to reinstate $16 billion of foreign aid. Yet they have $5 billion of savings, so where is that $55 billion going to come from? Some people think that they will be raising taxes. That is a possibility. They might just bung it on the credit card. That is Labor: 'Just put it on the credit card. Just whack a bit more on the credit card; that's okay. We're already borrowing $100 million a day and paying a billion dollars a month in interest. Just bung a bit more on the credit card.' That is because ingrained in Labor's DNA is that they think: 'That's okay; the Liberal Party will be in government, and they'll fix it for us. The Liberals will come back into government; they'll fix it, then we'll just bung it on the credit card again.' Where are you going to find that $55 billion? We are still 12 months away, and we have not even got into a campaign yet. That $55 billion will probably turn into $100 billion by the election. Where is that $100 billion going to come from?

On this side of the House we have a party which has a track record. We matched our words in opposition when we argued against the carbon tax, and we repealed it. We saved households $550 on average a year. At every opportunity the Labor Party argues against the GST, yet they have never, ever uttered a word about the GST in government. We will take a policy to the next election that encourages Australians to work harder and that will not continue to punish people in 10 years' time, when 43 per cent of Australians will be in the top two tax brackets. This is outrageous, and we will deal with that—that is certain. We will make sure that those people who are working very hard, who are the PAYE earners on whom this system relies, will be rewarded. It will not be just empty rhetoric, like from the Labor Party, which is panicking—

Ms Butler interjecting—

I know you are panicking, but we will have a plan and the Australian people will back it. (Time expired)

Justine Elliot (Richmond, Australian Labor Party) Share this | Link to this | Hansard source

The Turnbull government's plan to increase the GST shows just how out of touch they are with Australians, particularly those people living in regional and rural areas. I have made it very clear to my constituents in Richmond on the New South Wales North Coast that I am fighting hard against the Prime Minister's and the National Party's unfair plan to increase the GST to 15 per cent.

The people of regional Australia will be hit hardest by this plan. As I have said often, National Party choices hurt—and their choices really hurt the people of regional and rural Australians. In my area the National Party have already made the choice to cut unfairly the age pension, to cut unfairly family payments, to cut cruelly local jobs and to slash funding for health services. And now what do they want to do? Now they want to increase the GST to 15 per cent.

Since it became clear that this was on the government's agenda—and, indeed on the National Party's agenda as well—I have been inundated with concerns by locals, especially from pensioners and families. Make no mistake about it, Mr Deputy Speaker: a 15 per cent GST will severely hurt the people of the North Coast of New South Wales. There is nothing fair at all about increasing the GST—nothing fair at all.

As we have made it very clear on this side, Labor will not support this increase to the GST. Increasing the tax would inflict the heaviest punishment on those least able to afford it—that is a fact. For the people on the North Coast of New South Wales and right throughout the country it will be very clear at the next election that it is only Labor that opposes raising the GST to 15 per cent, and that it is the National Party and the Liberal Party that actually want to increase the GST to 15 per cent. That will be a very clear choice.

The Prime Minister has confirmed on many occasions that an increase to the GST is definitely on the table. The GST is a regressive and unfair tax that hits everybody, but it hits low- and middle-income families and pensioners the hardest. It hurts those people on fixed incomes the most.

The fact is that the Prime Minister, the Liberals and the Nationals are just so out of touch. They just do not understand that people are already struggling to make ends meet—just to make it through each week and just to get by. I do not think that any of those on other side understand that. Independent analysis shows that increasing the GST will hurt so many families. As I said, it will particularly hurt low- and middle-income families. The independent modelling shows that an increase in the rate of the GST to 15 per cent would require people in the lowest 20 per cent income bracket to pay seven per cent more, whilst people in the highest 20 per cent income bracket would pay just three per cent more of their income. That is just not fair.

Lifting the GST to 15 per cent will slug average households almost $8,800 a year. The average household already pays about $5,800 a year in GST. So, obviously, raising it to 15 per cent would increase that figure by $3,000—a very large amount for so many families. The fact is that the Prime Minister, the Liberals and the Nationals would rather tax hardworking Australians and pensioners than tackle multinational tax avoidance. That is the reality for them.

Increasing the GST would also have a major impact across a whole range of different services. Let's run through some of those basic services which will be impacted. It means that there will be increases in things like health care, dental care, rent, electricity bills, university fees, aged care and child care—the list goes on and on. They will all have increases. Indeed, of particular concern is the increase of 15 per cent tax every time you visit the doctor. Imagine what that would mean, particularly to pensioners? Or a new 15 per cent tax every time you do the shopping—every time you go there? Imagine if it is put on fresh food and what that will mean to families?

The imposition of a GST on visits to the doctor will particularly hit hard in regional areas, and this has been acknowledged by so many health professionals as well. The AMA president, Professor Owler, said:

A GST on health would penalise the poorest and the sickest in the community when they are ill.

That is the reality of increasing the GST.

Other areas of major concern are the potential increases in costs for child care and aged care. We saw in question time this week the government refusing to rule out extending the GST to those areas, and today refusing to rule it out in TAFE fees.

As I have said, we know that the GST is a regressive tax and that it will really hurt those people from lower- and middle-income households. For this reason we on this side of the House will continue to fight very hard against their unfair plan to increase the GST. It really hits families and pensioners hard. The reality is that raising a family is expensive and that the cost of living keeps going up. That is the reality, and they just do not seem to understand it. It is clear they do not understand it, as they are pursuing this plan to increase in the GST to 15 per cent. But people, particularly in regional areas like mine, really understand it very clearly. What they know is that National Party choices hurt, and that this particular choice of increasing the GST to 15 per cent—the National Party's choice—will really hurt the people of regional Australia.

Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

This is really quite a bizarre discussion we are having because, as many people have already mentioned, there is no policy position to increase the GST to 15 per cent. So it makes this all a little farcical. But what it does demonstrate is that on this side of the House we have the politics of ideas and we have the politics of discussion, and on the other side we have the politics of fear. That is what this is about. This is about the politics of ideas versus the politics of fear.

So, what are we talking about? With the politics of ideas we know that we need to have a strong, growing economy. We need jobs growth, we need people to employ people, we need people to be confident and we need, obviously, people to be out there spending—growing jobs and the economy in general. Obviously, as part of the whole discussion we are having, we also need to curtail debt levels. What is often said, and which is very true, is that we do not want to have intergenerational theft by leaving future generations with large debt levels.

On both sides of politics we often talk about the fact that we need to give our kids a good education and that we need to give our kids good health systems. But it is only on this side of politics that we talk about the fact that we do not want to burden our future generations and those same children with debt levels that are going to really harm them and their generation. Only this side of politics talks about that.

We obviously, in this whole discussion and this whole policy mix of trying to grow the economy and trying to have jobs growth, are not going to play a game of ruling things out or in straightaway. That just locks you into a corner and inhibits the whole discussion. But we obviously will take to an election policies that will promote jobs and growth, and obviously we then hopefully will have some more sensible MPIs that will be about fixed policy and planned positions.

The unfortunate thing about this is that this fear campaign not only belittles the Labor Party but belittles and is demeaning to the Australian public. I want to just remind the current Labor Party of some of their champions of the past who have been reformist and have been happy to have big picture conversations. Let's go back to the Hawke and Keating governments. If we had been in government then talking about those things, the current Labor opposition would have opposed everything that the Hawke-Keating governments did. If you were going to be talking about tariff reform, the current populist, fearmongering opposition would be running around saying, 'You can't lower tariffs, because that would lose Australian jobs.' The current Labor opposition would run a fear campaign against privatisation. Let's remember: it was the Labor governments of Hawke and Keating that privatised Qantas and the Commonwealth Bank. The current Labor opposition, if they had been in opposition then, would have run a fear campaign against that. It was the Hawke-Keating governments that brought in HECS, where a university student would pay for some of their degree. You can imagine the current Labor opposition running a complete fear campaign on that as well, because they are not about reform and the politics of ideas; they are about the politics of fear. As I said, it demeans not only the current Labor Party but the Australian public, because the Australian public want us to have the politics of ideas about growing our economy and growing jobs.

What are we doing on that? We are doing much on that. Not only are we having policy discussions but we have already—as you know, Mr Deputy Speaker—implemented four free trade agreements, which are going to grow our economy and have job growth associated with them. We have much infrastructure spending as well, especially in my electorate. The free trade agreements are helping agricultural producers in my electorate and, indeed, other small businesses that have niche markets, and the infrastructure spending on the Pacific Highway is certainly helping that as well.

We as a country do face challenges. We have revenue write-downs as prices for the commodities we export are falling. We have commitments that are locked in, like the NDIS and others, and we have to have the politics of ideas in here, not the politics of fear being run by the Labor Party.

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

The discussion has concluded.