Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

We support the Treasury Laws Amendment (Income Tax Relief) Bill 2016 and, of course, I support the amendment proposed by my colleague, the member for Fenner. We support the intentions of the bill because it increases the personal income tax threshold for middle-income Australians, and that does a little bit to help combat some of the effects of bracket creep. We on this side of the House are always prepared to consider and support measures that offer fair tax relief for those who need it.

Of course, those opportunities are pretty hard to come by under this current government. We have this absurd situation right now where the government cannot confirm whether it is going ahead with the centrepiece of its so-called economic plan, this $50 billion gift to big multinational corporations, which is the typically shambolic way that they have gone about tax policy not only over the last year under Malcolm Turnbull but over the three years of the coalition government. We also have a government that is offering, at the same time, tax cuts to the top three per cent of earners from 1 July next year while the bottom 75 per cent of people—people that I am proud to represent—miss out.

We have a government which is hopelessly divided over super. As I was coming in here to address the chamber, I walked past the press conference being given by the member for Dawson, who is obviously taking a big victory lap, having shredded the policy that the Prime Minister, the Treasurer and the Minister for Revenue and Financial Services said was ironclad. They said that the policy was ironclad and would not change, and there is George out there, the member for Dawson, claiming credit for shredding the policy and humiliating the Prime Minister, the Treasurer and the Minister for Revenue and Financial Services. It is not that difficult to humiliate those three when it comes to economic policy, and particularly tax policy, but it is very interesting to see this big backdown today, after crisis meeting after crisis meeting and the member for Warringah leaking to The Australian that he had shirtfronted the Treasurer about these changes. There is all of this sort of absurdity, which has become, unfortunately and disappointingly, the norm under this government rather than the exception.

This is a bill which both sides support—this modest relief for people on middle incomes to give them some relief from bracket creep. Even on something as simple as that, with bipartisan support, the implementation has been stuffed up in a way that we have become all too familiar with when it comes to this government. The tax cuts contained in this bill were promised to take effect from 1 July, but those affected will have to wait another three months thanks to the government's incompetence.

We have led the conversation on tax reform and budget repair. We will continue to take the initiative, because there is an absence of leadership when it comes to economic policy in this country. We will continue to fill that vacuum left by the absence of that leadership that was promised one year and one day ago. We will be constructive, of course, as we always are. We are supporting the changes in this bill. It seeks to increase the 32½ per cent personal income tax threshold from $80,001 to $87,000. The measure will stop about 500,000 taxpayers from hitting the 37 per cent marginal tax rate this financial year. Without the change, the average full-time worker would move into that 37 per cent bracket, the second highest one, in 2016-17. The measure will provide a maximum tax cut—a modest tax cut, but worthy—of $315 a year for people on incomes of $87,000 and higher. The changes are expected to benefit around 3.1 million taxpayers this financial year.

But it speaks volumes about this government that it could not even manage to implement a tax cut that both sides agree on without stuffing it up. As I said, it was promised to come into effect on 1 July this year. The Treasurer said that on budget night. A day later—it did not even last a full day—the Prime Minister said the change would be 'covered administratively' after the election. But the 2016 Pre-election Economic and Fiscal Outlook showed the tax commissioner had indicated the measure would require relevant legislation to be passed before it could take effect, and that is why we are here today, and that is why we are in a hurry, frankly. It means the start date for middle-income tax relief has been pushed out by three months. That means that people will be effectively overtaxed in the interim, as they fall under the old rate. They will have to wait until after they lodge their tax return to recoup that hard-earned income that they were told they would not have to cough up in the first place.

This delay comes despite the government still planning to end the temporary budget repair levy on time, in 2017, for those earning over $180,000—this tax cut for the top three per cent of earners. So I think it speaks volumes that they can ensure that they give that tax cut to people earning more than 180 grand a year. That will be on time; do not worry about that. That will definitely be delivered on time.

But, when it comes to a bit of a modest tax relief for those in the middle, they are forced to wait. We are disappointed about that, but we are not entirely surprised. It is, as other members have noted this week, on the one-year anniversary of the Prime Minister taking over from the member for Warringah, this is a government that stumbles from one stuff-up to another.

Take superannuation, which I touched on briefly before. We have had this infighting and a backbench uprising that has left the policy in tatters. The Prime Minister said it was an ironclad policy. It has proven to be anything but, and they have had this humiliating backdown after the backbench shredded the policy. As recently as yesterday, they were unable to confirm even what the superannuation policy was, because the member for Dawson and the member for Warringah had not finished rewriting it yet. It appears that they have finished rewriting it now—

Mr Craig Kelly interjecting—

Yes, we do—I take that interjection from the member opposite. We announced our policy at the Press Club straight after the election. We gave them a way out of this humiliating mess, which they have partially agreed with now.

Mr Craig Kelly interjecting—

The member might want to check what the Treasurer said this morning. He might want to catch up or get someone to explain it to him. He would understand that the sorts of things we were worried about are the sorts of things that have been addressed now. We will take our time to go through our usual processes, of course. But it is really quite entertaining to get interjections from those opposite, following this humiliating backflip. We have had a policy on the table longer than they have. The member needs to keep up. He really needs to keep up. He is embarrassing himself again.

Beyond superannuation, there is this obsession with favouring the big end of town. At the same time, we get these lectures about the moral responsibility of budget repair, when the centrepiece of the policy—really, the only element of their policy—is this $50 billion tax cut. We read in the paper today, under the cover of the superannuation changes, that maybe that is not going ahead. We will wait and see. It is certainly their intention to take $50 billion out of hospitals and schools and give it to big multinational corporations. But it is typical, disappointingly, of this government that we have this shambolic half-measure and we do not know whether the government will continue with it or not. It is a total shambles. It reminds us of the 15 per cent GST that was on the table and then off the table.

Announced in the member for Lindsay's electorate is this other one, the double income-taxing of people, by the state and federally. The electorate now represented by the outstanding new member for Lindsay was unfortunately let down by the former member for Lindsay. She was not a bad person, but she was a pretty bad representative to let the Prime Minister come to her seat and say, 'Hey, I've got a great idea; why don't we get everyone to pay double income tax,' and poor old Fiona had to stand behind him and nod like she agreed with it. I am sure she would not have. The people of Lindsay have traded up in really quite a spectacular way to someone who would never let a leader go to her seat and say, 'We should jack up the GST on people,' hurting the most vulnerable people in our community.

The way that the government have mangled the implementation of this measure is symptomatic. We will do what we can. We will do our best to continue to be constructive. We do want to see fair and responsible tax reform. We have proven we are serious. We have put a whole bunch of suggestions on the table about super in this space, right across the economic policy front. We will continue to do that. We are always in the cart for a conversation about fairer taxes, especially ones that do not exacerbate some of the challenges we have in our economy, and this measure in our economy that we are talking about today really is the best of a bad lot.

We will continue, whenever there is choice between people on modest or middle incomes and people at the top end of town, to always stand up for the people on modest and middle incomes. That is what this bill is about. As I said, it is not the worst tax measure on the government's agenda—if they could implement it properly. But saying that is not giving it much of a rap, really. It is not much of a claim when so many of their other measures in tax have been so shambolic, so unfair and so much designed to exacerbate inequality and division in our society.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

It is interesting to follow the member for Rankin. We see from that speech why the six years of Labor policy were so disastrous—because they simply do not understand the concept of incentives. We have to grow the economic pie and create more wealth in this economy to pay for all those things that we need to do, to pay for our schools and our hospitals and our roads and our public transport and the National Disability Insurance Scheme.

If we are going to fund all of those things, we need to grow the economy. The only way we can grow the economy is to have incentives for people to take entrepreneurial risks, to go out there and to put their own capital on the line—to chance their arm, as the member for Berowra said in such a wonderful speech yesterday. That is what grows the economy. That is what creates wealth. That is why this bill goes a small way to improving those incentives that we need.

Currently, on our marginal tax rates in this country, if you earn less than $18,200, you pay zero income tax—not one cent. From $18,000 to $37,000, you pay 19c for every dollar above that $18,200 threshold. Once you get to $37,000, you pay 32½c for every cent above that. Once you get above $80,000, you actually pay 37c in every dollar that you earn.

We recognise that that rate of tax is a disincentive for people to go out there and produce. If we are to grow the economy, we cannot grow it from the demand side. We must grow it—and can only grow it—from the supply side. What we are doing is lifting that $80,000 threshold to $87,000. Now, for every dollar that you earn between $80,000 and $87,000, the marginal tax rate you will pay will be 32½c.

It is important that we talk about incentives. The member for Fenner—I think he is the shadow Assistant Treasurer—talked about how we have an open economy. It is important to have a look at how our marginal tax rates compare with those of our competitors. We as a nation are in an competitive international marketplace. We compete for people's talent. People have never been more mobile or had more options to travel and take their businesses or their ideas overseas. If we look at New Zealand, their top rate of marginal tax is 33 per cent. Our top rate of marginal tax is currently 45c in every dollar, plus the two per cent Medicare levy, plus the two per cent temporary budget repair levy. So our effective top rate of marginal tax is 49 per cent. In New Zealand, it is only 33 per cent.

Looking at Singapore, if someone earns more than the equivalent of $80,000—without having a quick look at the exchange rates, I understand the Singapore dollar is pretty similar to the Australian dollar at the moment—their marginal tax rate is just 11.5 per cent. So we are taxing someone who earns above $80,000 an extra 37c for every dollar up to $180,000. In Singapore, it is only 11½ Singaporean cents, and the top marginal rate of tax is 20 per cent. These massive differentials in taxation rates, in personal taxes, create a disincentive in the Australian economy. The ultimate victims of that disincentive are the very people that we want to help. It is those people on pensions. It is those people on low incomes. It is those people that need all the government resources that this government can muster.

I have been asked to keep my comments on this bill short so it can get through to the Senate. I will leave them at that, but I would say I commend this bill strongly to the House.

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

I am pleased to add my contribution to the debate regarding the Treasury Laws Amendment (Income Tax Relief) Bill. This bill perfectly highlights the lack of cohesion and commitment from this government to getting on with the job of undertaking budget repair but, importantly, to putting in place the necessary taxation reform measures that will boost our economy, grow jobs, contribute to economic growth and improve productivity.

This bill introduces legislation to implement the government's 2016-17 budget measure to increase to 32½ per cent the personal income tax threshold from $80,001 to $87,000. This measure is aimed at dealing with the issue of bracket creep, the phenomenon whereby the combination of wage increases and inflation over time pushes PAYG taxpayers into a higher tax bracket and they pay more tax than they otherwise would have if the brackets for progressive income tax had been adjusted for inflation and indexed.

On budget night, the Treasurer boasted that he would deliver these income tax cuts from 1 July 2016 and he did not introduce any legislation. There was no legislation for the implementation of measures to deal with this issue of bracket creep and the increase in the marginal tax rate prior to the parliament being prorogued and an election being called. Later, when the Prime Minister was asked on ABC radio about the likelihood of delivering the promised tax cuts, he confirmed that, in the absence of legislation, these would be delivered administratively after the election. So we got no legislation and the Prime Minister gave a commitment that they will deal with these tax cuts administratively after the election. Then we had the Commissioner of Taxation confirm in the Pre-election Economic and Fiscal Outlook that the Treasurer had over-promised. This is not the first time that this Treasurer has over-promised, but this is one of the most monumental stuff-ups from a Treasurer in recent times. The tax commissioner has confirmed that the tax cuts could only be implemented when the relevant legislation had passed parliament, as was the view of the Labor Party prior to the last election and why we were asking why the legislation had not been introduced.

This government has made some shocking stuff-ups over the course of the last four years, but this is in a league all of its own. Here we have a non-controversial measure, a measure that is backed by the opposition and could have gone through the parliament prior to the last election, but what do this Treasurer and this government do? They fail to introduce and pass the necessary legislation before the election and, incredibly, find a way to break their promise to the Australian people, many of whom were desperately looking forward to receiving a tax cut on 1 July this year. Eligible taxpayers will need to wait until the middle of next year to receive the benefit in full of the income tax cuts for this financial year. So, many people are worse off because, really, of an administrative stuff-up by the Treasurer and this government. It does amount to a broken commitment to the Australian people that was delivered by the Treasurer on budget night, and it highlights that this government has its priorities all wrong and is all at sea when it comes to developing a coherent economic plan to take the nation forward.

This is made further clear by the $48 billion giveaway to multinational corporations that the government are undertaking through their company tax change and their redefinition of small businesses in the Australian economy. That includes $7.4 billion direct to the profit and the bottom line of big banks. Regarding this policy of a tax cut for multinationals, the government's own Treasury's modelling demonstrates that there is very little economic benefit of this to the Australian people. Their modelling indicates that GDP growth will only increase by 0.05 per cent per annum. Employment will only increase by 0.1 per cent over 20 years—very little benefit when it comes to creating jobs in the economy. Treasury modelling further indicates that wages will only grow by 0.1 per cent per annum. So there is very little to show in terms of economic development and so-called jobs and growth from this government's multinational tax plan.

Just last week, a collection of business leaders, former Liberal politicians, academics, economists, administrators, lawyers and lobbyists berated the Prime Minister for his performance over the last 12 months in The Australian Financial Review. They gave him a D-plus, and that is from friends! 'He is in danger of being seen as a total fizzer,' said one former Liberal MP, Warwick Smith, who also failed to nominate Turnbull's greatest success in government, saying, 'The search continues!'

When it comes to developing and implementing policy designed to bolster the economy, there is much to be said about a steady hand, consistency and predictability. But, unfortunately, this government has been all over the place with thought bubbles, rising and popping at an alarming rate. Firstly, we had the increase in the GST. That lasted about a month, then that was taken off the table. Then we had the prospect of the states raising their own income tax, and that lasted about a day. The lack of a clear, coherent economic plan is harming Australia. We have seen that, although the economy continues to grow, it is mainly due to external factors such as a bottoming out in the reduction in the terms of trade—our exports comparative to our imports. That has generated some growth in the economy, but, domestically, conditions remain quite uncertain. Australians are reflecting that. A lot of people are underemployed, and real incomes have not increased for many, many years now.

This government has smashed private capital expenditure. Over the last quarter, it decreased by 7.4 per cent. It has decreased by a whopping 17½ per cent over the course of the last year. Business investment is going backwards. When you talk about creating the conditions to grow jobs and encouraging businesses to invest, this government is simply not up to the job. It is reflected in the way that they have approached this bill. Through an administrative stuff-up, they managed to deny Australians 12 months of a tax cut that, importantly, alleviates some of the sorrow of bracket creep.

By contrast, Bill Shorten and the Labor Party have outlined a clear, concise and responsible way to undertake budget repair, but it is one that will also, importantly, grow our economy over time, invest in new businesses and create jobs. Labor are committed to an economic plan that would save $8.1 billion over the forward years and $80 billion over the next decade. This includes $37 billion in savings from overhauling negative gearing and capital gains tax. That is something that we all know, in terms of housing growth in our economy, is a big problem, but it is one that this government is afraid to tackle. There is also $4.7 billion in an increase in the tobacco excise and a $8,000 per year cap on VET FEE-HELP loans. We also oppose three of the government's superannuation measures which will actually cost the budget $1.5 billion over the forward estimates. At the same time, we will invest in those areas of the economy that will grow the economy and create jobs. They include: protecting Medicare, investing in education from early childhood right through to university and, of course, investing in renewable energy and tackling climate change. Labor have a clear, concise plan for our economy. It is reflected in the fact that we have had a lot of these policies for a long period of time and that we took them to the election and they were well received.

Unfortunately, this government is all at sea. It is reflected in their performance in the parliament—the fact that they lost votes in the House of Representatives a couple of weeks ago and the fact that they had nothing to debate in the Senate on Monday and all the senators talked about was what they did on the weekend. That is the reason they stuffed up passing on this tax cut to Australians in a timely manner, and that is the reason we are debating this legislation today. It should have been done in the last parliament. Nonetheless, I am happy to support this important tax relief for Australian taxpayers.

Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Acting Deputy Speaker Hogan, it is good to see the member for Page from The Nationals in the chair.

Before I get to the fundamental issues that we speak on today in the Treasury Laws Amendment (Income Tax Relief) Bill 2016, I would like to address some of the comments by the member for Kingsford Smith. Just like the 'Mediscare' campaign, it is—as I am sure you are aware, Deputy Speaker Hogan—just wrong. They are just making it up. In fact, this bill will, from 1 July 2016, provide a tax cut to 3.1 million taxpayers—that is the reality. There will be a tax cut from 1 July 2016. So Labor are wrong once again. They are wrong to state that taxpayers will not receive a benefit from this tax cut until the end of the financial year. Page three of the explanatory memorandum says just this.

The Australian Taxation Office (ATO) will issue new income tax withholding schedules once the Commissioner of Taxation (Commissioner) is confident that Parliament will pass these amendments.

I am very pleased that the member for Kingsford Smith has said that Labor will support this bill.

The commissioner has already amended the pay-as-you-go withholding schedules, and all affected taxpayers will be able to obtain the benefit cut not at the end of the year but from 1 October. This is already published online. It means that the tax cut will be reflected immediately at this point in the take-home pay of all Australian taxpayers.

As I am sure you know, Deputy Speaker Hogan, as someone who comes from the real world and as someone who has been employed, who has employed people and who has been in business—in fact, I believe you are an economist; one of two we have in the Nationals party room—things change over a financial year. They change constantly. They change depending on how much work you do. They change depending on how much overtime you work. They depend on whether you get ill, whether you do less work or more work, whether you take holidays, whether you get leave loading, whether you get a lump sum payout, whether you retire. Consequently, this is exactly what happens in normal working life for normal working people who are employed. So there will be a tax cut. It will be effective from 1 July 2016, and people will see the benefits. They will see the benefits. So there are no real differences there at all. Labor, in their statements, are fundamentally wrong on this issue.

This was announced in the budget by the Treasurer. It will be a course of tax reduction for hardworking Australians and it does deliver on the coalition government's commitment to bring down personal income taxes, because we are about less taxes for hardworking Australians. This is an important step in modernising the tax system. It means that individuals of taxable incomes from $80,001 up to $87,000 will be subjected to the lower tax rate of 32.5 per cent rather than the rate of 37 per cent.

I know, as someone in this place who has actually paid taxes for most of his working life, that is an important change, because that trigger point is critical to many families and many earners in this mid-range level. If you earn an extra $1 because you do decide to work extra time and to work harder, to be driven into a higher tax bracket is usually very difficult. Around 500,000 taxpayers—many of them, as I said, are working families—will be kept out of the 37 per cent tax bracket in this financial year. About 3.1 million taxpayers will receive an annual tax cut of up to $315 in 2016-17 and beyond. This tax measure will reward hardworking Australians for doing more overtime, taking a promotion or a better, new job without being penalised by paying more tax through the higher rate. We do not want a tax system in this country that limits opportunity or that punishes those who work hard or take risks in their business, particularly those who take risks in small business.

Small business is the economic life blood of regional communities like mine and like yours, Deputy Speaker Hogan. On this side of the house, we want to see them prosper. There are some 8,600 small businesses in the Hinkler electorate operating across a range of sectors, including construction, manufacturing and agriculture. Most of those are family-run businesses run by mums and dads, aunts and uncles and their siblings. They work long hours, they take few holidays and they, sometimes, take enormous risks to provide important services and products to our community.

Across the country, small businesses employ more than four million people. Four million Australians are employed in small business. In Queensland, small business is responsible for over 90 per cent of all employment. We want those small businesses to have confidence because businesses with confidence are businesses which expand and they are businesses which employ more Australians. Small businesses, as I am sure you know, are the backbone of the nation, and they will drag us forward. The more support we can provide to them, the better off as a country we will be.

The coalition government is focusing on building a strong economy which will help working families and small businesses with tax cuts right now. As a government, we have already delivered free trade agreements with China, Japan and Korea, and they have provided unprecedented trade and export opportunities for producers and businesses in our regions. Those opportunities are helping their bottom line, and stronger bottom lines means more confidence. Those free trade agreements result in giving local producers the better return that we want them to have, and the more that we can give to their bottom line, the better the opportunities for them to employ more of our people, particularly in regional areas. That is what as a government we are about—providing more employment.

Just recently I had the pleasure of visiting the member for Capricornia in her electorate, in my capacity as the Assistant Minister for Trade, Tourism and Investment, after an invitation from my colleague Michelle Landry. Well, it is not really an invitation; it is usually a phone call that says, 'You'll need to come to my electorate as soon as possible,' which, of course, we always try to do. So we visited tropical fruit grower Ian Groves, one of these small business owners, and discussed new market opportunities in Asia for Central Queensland producers of things like mangoes. Mangoes are an important fruit export for Queensland, and the China-Australia FTA has already cut the tariff for Australian mangoes from 15 per cent to nine per cent. That means that the forward-looking price to those people who are purchasing this product has the capacity to be lower, which means more products, which means more products sold, which is great for our producers. Trade data shows that in the early part is this year Chinese imports of fresh Australian mangoes more than doubled compared to the previous growing season. This meant that Australia overtook Thailand as China's principal supplier of mangoes in the first half of 2016, and that is a fabulous result. We are increasing our exports, which is great for this nation.

Under the KAFTA—the Korea-Australia FTA—the 30 per cent tariff which Korea charged on shelled macadamias is down to 12 per cent already. You might not have heard, Mr Deputy Speaker Hogan, but my area is now the largest producer of macadamias in the country. This was only just recently announced. I see you are looking sceptical, but it is in the press, so you have to believe it! We have enormous growth in this country in macadamia exports. These tariff cuts contributed to a tripling of macadamia exports to Korea in the first half of 2015 compared to 2014, and they maintained that higher export level into the first half of this year. To give you an example, some years ago the high-quality kernel for macadamias was only worth about $3 to $3.50; now I have heard of prices as high as $8.60 a kilo for high-quality kernel. That is an enormous turnaround in price, which means that these businesses are being very, very successful. As I have said, the Bundaberg region is now the largest macadamia-producing region in Australia, and of course it is still the home of the world's best rum—officially.

The beef outcomes in these FTAs have been a boon for Queensland. Australia is now the only major global beef exporter that has preferential access into all three of these large North Asian markets, meaning we have the jump on our competitors, and that is where we need to be. Australia needs to be positioned so we are first and foremost in these trade agreements.

Another success story under ChAFTA is the Geraldton Fishermen's Co-operative in Perth, which I toured last week as part of my role. They are the biggest rock lobster processor and exporter in the world, selling around $450 million worth of rock lobsters each year—almost half a billion dollars worth. ChAFTA opened doors almost overnight to allow the co-op to export directly to any port in China, which was previously not commercially viable due to the high tariffs. Not only do they produce $450 million worth of rock lobsters; they employ 350 hardworking people. So GFC have invested heavily in response to the FTA to recently become the first Australian seafood exporter to own a live holding facility in China. They have gone and built a facility within the grounds of Guangzhou airport which will be paired with another under construction alongside the Perth airport. When complete, the latter will be the largest facility of its kind anywhere in the world, aiming to have the shortest tank-to-tank flight time of just 14 hours. This literally means that in 14 hours they can take fresh, live Australian produce from tank to tank into China—one of the biggest markets in the world.

We will continue to work on free trade agreements that provide advantages for our producers, because the stronger they are the more Australians they employ. These types of investments will continue to happen when there is a strong economy, and right now business confidence is up, and that is a result of strong coalition policies which have helped to build this economy. There has been over three per cent growth, according to the most recent figures, because we have a plan for the economy. We have a plan to make a stronger economy for Australia. The stronger the economy is, of course, the more people are employed, the higher confidence is and the more services we can deliver as a government.

But what has the opposition got? Bill Shorten and Labor have a debt wish. That is all they have. They have a debt wish. They wish to ensure that future generations of Australians cannot pay off the debts of this nation. We need to control the budget, and I would certainly thank the Labor Party for seeing sense in terms of the omnibus bill, because we do need to work together. The Australian people expect it of us, and we need to deliver for them. Mr Deputy Speaker, I conclude my contribution and thank you very much. I commend the bill to the House.

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

I make the point that, while production may be what it is, the electorate of Page will always be the home of the macadamia industry.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

I am pleased to stand and speak on the Treasury Laws Amendment (Income Tax Relief) Bill 2016. Actually, I am particularly pleased that I was in the House to hear the member for Hinkler, because I want to make a few comments on his remarks.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

He's not interested.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

Yes, I know. Well, he is not interested in very much, obviously, because he does not know what this bill actually does.

First, I want to start with the comments at the end of his speech about the government's record in managing the debt. I would like to point out yet again, as we have in the House many, many times—and it is clearly in the budget papers, so cannot be refuted—that under the Liberal Party, the deficit has tripled since they won government in 2013 and the debt has doubled. Far from tackling debt and deficit, which seems to be their mantra—every day they get out and say they are doing it—the actual results are completely the opposite. They have tripled the deficit and doubled this country's debt, and they are not on a path to reducing that. In fact, they are far from it, so let's call them on that every time they stand up in this place and make these statements about their great management of the economy. It is really not that good.

The second point I would like to challenge him on is when he called us on the Labor side liars. I get really tired of being called a liar for pointing out that people are not receiving the benefits of this tax cut at this point. I would just like to read the statement from the Treasurer that confirms absolutely that people are not currently receiving the benefits of this tax cut, which is what Labor has been saying. Here is the statement from Friday 2 September 2016:

The Australian Tax Office has confirmed they will now issue the new PAYG withholding tax schedules next week.

So the schedules are not even out. Businesses are operating on the old schedules according to the current law, which is what the ATO was supposed to do. The ATO was supposed to issue schedules according to the law as it is. That is what they did, so businesses are currently using the PAYG withholding schedules according to current law, which do not include this tax cut because it is not law yet.

The ATO has now said they are actually going to bring that forward and issue new schedules, but expect taxpayers to factor in the new lower tax rate from 1 October. There it is in the words of the Treasurer, proving that the statements by the Labor opposition are accurate and proving that the member for Hinkler either does not know what is happening with this bill or is deliberately trying to imply that Labor does not. They are the words of the Treasurer. They prove absolutely what we are saying in this House and what I am about to continue talking about.

This government, in its previous three years and in this term, is proving a level of incompetence that few of us could have imagined. Few of us could have imagined the level of incompetence. We expected some, but I doubt that there is anybody on either side of politics that expected this level of incompetence, whether you are talking about the NBN, whether you are talking about the decimation of Australian science, whether you are talking about goading Australia's car manufacturing industry to leave the country or whether you are talking about the vocational education shambles which is costing the budget billions and putting people in my community and communities right across the country in personal debt that they do not even know about to the tax office. I suspect that all of us who represent communities that have large disadvantaged groups or groups for whom English is not a first language are finding hundreds of people that have been exploited by very shonky providers, without any real remedy offered by this government. Whether you are talking about the census—the mighty institution that we have all been so proud of; that we have all so relied on—disassembled before our eyes in this screaming heap—

Ms Vamvakinou interjecting—

The member sitting beside me is quite right: they did not want to do it. The previous Prime Minister talked about not doing it—doing it in a different way, effectively abolishing the census, before they finally came to their senses but gave us something which has damaged the reputation of one of our incredibly important pieces of infrastructure. The census and our knowledge of ourselves and where we are is an incredibly important piece of the puzzle. Whether it is the uncertainty and the thought bubbles about whether or not the GST will increase to 15 per cent or double taxation—you name it—you can make a list as wide as this room of the things the Turnbull government and its predecessor, under Abbott, tried to do and failed or botched badly.

This week we have seen two new forms of incompetence and I am going to draw them together. One is the Cancer Screening Register and the other is this one. The reason why I am drawing them together is that both of them involved announcements or actions before the election about pieces of legislation that had not passed. This government knew they could not pass them, because they knew they were calling an election.

The management of the Cancer Screening Register, for example—which they gagged and rushed through the House in the last couple of days, trying to get it passed—was outsourced and privatised during the election campaign. The contract was signed four days before the calling of the election and then it was announced during the election campaign that they had given the contract to manage the Cancer Screening Register to Telstra—before there even was a register. Until that bill passes through parliament, there is no Cancer Screening Register. What kind of government—what kind of business, for that matter—lets a contract for something that does not actually exist when they cannot guarantee that it will?

This is another case. There was an announcement in the budget about a tax cut from 1 July, when they knew full well that they were not going to pass the legislation to make that law until well after 1 July. They knew that. They had the opportunity to deal with it. Immediately after the budget there was bipartisan agreement on this very modest tax cut to assist a particular group of taxpayers with bracket creep. They knew immediately after the budget that they had the bipartisan support of the opposition and that this could have passed. It is a very simple amendment. It is just a tax schedule—not a biggie, very easy to draft and very simple—and, with bipartisan agreement, it could have gone through at the speed of light. They even called us back for a special sitting a couple of weeks after the budget. They had the time to do this and they did not. Yet they announced that this tax cut would apply from 1 July even though the law would not have been passed. They were expecting the tax office to apply a law that had not passed to the tax schedules from 1 July.

So there are two instances where this government have either been ridiculously incompetent—I suspect that is part of it—or had a profound disrespect for the parliament. They thought that they had the right to actually move ahead and let contracts for things that did not exist because the parliament had not approved them. They expected the tax office to apply a law which did not exist, because it was their wish that they would. They also showed overwhelming arrogance back in May last year, believing that they were going to win the election and that therefore they could get whatever they wanted, whether parliament agreed or not. It was one of those three: sheer incompetence, profound disrespect for the parliament or incredible arrogance that they were going to be in power and they were going to be able to push whatever they wanted through. It turns out that that is not the case. But, as the colleague sitting beside me said, I suspect it is all three.

So here we have this really simple bill before us, the Treasury Laws Amendment (Income Tax Relief) Bill 2016, which changes the tax schedule for a group of taxpayers whose income is between $80,000 and $87,000. It is legislation to implement the budget measure to increase the 32.5 per cent personal income tax threshold from $80,000 to $87,000. Again, it could have been done in a couple of hours in both houses. We understood the deadline; we were ready to do it. There was no legislation. By the way, a lack of legislation was a symptom of the last parliament altogether. We were ready to do it and they did not do it.

However, the Prime Minister and the Treasurer, even though they knew the bill would not pass until much later, both said that the tax schedule would apply from 1 July. Of course, the Treasury and the Department of Finance thought differently. This does not surprise me. The tax commissioner confirmed it in the Pre-Election Economic and Fiscal Outlook—and remember that the PEFO, as it is called, is done by Treasury and Finance independently of government. That is the one time in the whole electoral cycle where those two extraordinarily experienced departments actually get together and speak entirely on their own behalf. There is no political interference in the PEFO, and this is what the tax commissioner confirmed then: that these tax cuts would not be delivered from 1 July, as promised by the Treasurer, but instead would only be implemented when the relevant legislation had passed the parliament. Again, that is pretty standard for the tax office. Tax office stuff, in many ways, is really simple. You wait for the law to be passed and then you apply it according to the schedule—very simple. The Pre-election Economic and Fiscal Outlook, prepared by the secretaries of the departments of Treasury and finance, says on page 40:

There are a number of tax measures included in the 2016-17 Budget that take effect on or before 1 July 2016. Many of these measures can be legislated at a later time within 2016-17 without materially affecting the estimates. However, the Commissioner has indicated that the Ten Year Enterprise Tax Plan—targeted personal income tax relief measure requires the relevant legislation to be passed before the change will be incorporated into the income tax withholding schedules.

Of course it does.

Then we seemed to see the Prime Minister and the Treasurer a little concerned about this difference between what they were saying and what the tax office was saying, and so then, on Friday, 2 September 2016, we had this extraordinary circumstance where the Australian tax office indicated it would apply tax schedules on the assumption that they will be passed into law. They are going to apply them from 1 October. Again, this is not usual behaviour; it is extraordinary and it does mean that, from 1 October, small businesses, which have already entered their tax schedules for the year, are going to have to enter new ones. All those small businesses—and I ran one too, like the member opposite and, I know, many others—set up their regular payroll as automatic payments from the banks so they do not have to do it every fortnight or every month or every week. They will have to go back and redo all of those automatic payments. In some cases, this will be for many, many staff members. So there will be this extraordinary paperwork burden on small business and big business as the schedules change over the next month or so. Then, of course, every taxpayer who earns between $80,000 and $87,000 over this financial year will have their tax adjusted at the end of the year. So there will be a great new job for the tax office at the end of the year—again, this is not something that usually happens, because tax schedules usually come out for the start of the financial year and remain in place.

Again, this is a really interesting situation that we have and it can only be explained by incompetence. If this was the only incident that we could find of a government stuffing up the implementation of something, then perhaps we would not have as many speakers on this side calling it for what it is. If it was just this, I think we could all kind of say, 'Well, yes, every now and again it happens. Maybe the Treasurer didn't know when the election was going to be called, so maybe he thought he would have time to put it to the parliament. Maybe Prime Minister Turnbull had not brought the Treasurer into the loop. Maybe, in the great communication that they seemed to have last year, he just forgot to tell the Treasurer, so, when the Treasurer said it would apply from 1 July, he actually thought the parliament would be back in session.' Maybe we could write it off that way, but, given the number of instances of this government botching simple implementation and failing to act when things start to go wrong until they are chronically in appalling circumstances, we have to call this for what it is.

As I said, I do not know whether it is sheer incompetence. I do not know whether it is disrespect for the parliament and parliamentary processes and the fact that parliament makes laws—not the Treasurer and not the Treasurer's office but the parliament makes laws—or an extraordinary arrogance that just assumed that it did not matter what they wanted to do, they would win the election so convincingly that they could ram anything through. But this is yet another case that demonstrates exactly how incompetent this government is.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

If you had a pot of money of $4 billion and you knew that that was going to grow bigger and bigger over time, what would you spend it on? There would be some who might say, 'Well, if there's $4 billion and rising that can be found in the budget, let's put it into Medicare.' Some might say, 'Let's put $4 billion into hospitals so that whoever gets sick in this country knows that they have a hospital to go to. Let's put it into schools. We know public schools are incredibly underfunded, so let's put it there.' Some might say, 'If there's a spare $4 billion and rising lying around, let's put it into lifting the level of Newstart for people who are trying to find a job, because they're living below the poverty line, which means they can't afford to buy new clothes or get a haircut or go into training and do all the things that you need to do in order to get yourself a job.' Some might say, 'Well, if there's $4 billion to be found in the budget and rising, let's put it into building renewable energy, getting solar plants and wind turbines going around this country and creating the thousands of jobs that come with that in places like South Australia, where we know they are needed, or Victoria, where very high unemployment is looming as the manufacturing crisis hits.' If you are a deficit hawk on the government's side, you might say, 'If you have a spare $4 billion or more lying around, let's put $4 billion into paying off the deficit,' given how important they keep reminding us it is.

If you asked the majority of Australians how they would spend an extra $4 billion and rising, what most people would not think is, 'Well, let's give a tax cut to above average income earners.' But that is exactly what the government and Labor have just stitched up in a deal. In these times when the government has told us that we need to get the budget into shape and when Labor has said we need budget repair that is fair, they have said, 'As the first expenditure item straight after the election, let's spend $4 billion on tax cuts for above average income earners that they won't even notice.' The Australian Bureau of Statistics told us a couple of months ago that the average annual wage in this country is about $60,000. This bill that we are dealing with talks about people who earn above $80,000. One report that I read suggested that that is the top 25 per cent of taxpayers. So the top 25 per cent of taxpayers are going to benefit from this bill. In one fell swoop, Labor and the Liberals are saying: 'Let's take a scarce $4 billion and give it not to the bottom 25 per cent or the bottom 50 per cent but to the top 25 per cent of taxpayers in this country. Let's not put $4 billion into schools. Let's not put $4 billion into hospitals. Let's not put $4 billion into nation-building infrastructure. Let's give it to above average income earners.'

Do you know how much the people who are earning above $80,000 are going to benefit? You are talking about, for many of them, around $6 a week. They used to talk about the 'sandwich and a milkshake' tax cut. In most inner city cafes in Melbourne you cannot really get a sandwich for $6. Six dollars a week is something people who are in the top 25 per cent of taxpayers probably will not even notice.

But I tell you what would be noticed: $4 billion going into propping up Medicare so that average income earners do not have to keeping paying more and more to see the doctor. I tell you want would be noticed: $4 billion going into schools so that parents do not have to keep paying these so-called voluntary fees every year as the cost of a public education goes up and up and up.

To rub salt into the wounds, not only are Labor and Liberal saying that the first big act of this parliament—the first big expenditure—is to give a tax break to those who are doing very well comparatively, thank you very much, and ignore those at the bottom, we know the other thing they have done this week is work out how they are going to fund this money going to the top. They are going to rip money out of renewable energy to pay for it. They ripped half a billion dollars out of renewable energy yesterday to pay for this. They are ripping money out of the Student Start-up Scholarships to pay for this. So university students—who are not exactly the richest in this country, who are living under enormous pressure with rising rents, who are finding it hard to find work and to balance work and study—are going to end up with less money. They are getting cut to pay for this.

We know, because Labor and the Liberals agreed to it yesterday, they are going to take money out of aged care to pay for this. We know, because they agreed to it yesterday, that newly arrived migrants to this country are going to suffer because they have to wait longer to get payments. This is all to pay for a tax cut for the top 25 per cent of income earners. What is this rubbish from Labor about repairing the budget fairly, when the first thing they do is crawl over to the government benches and ask, 'How can we help you give a tax cut to a high-income earners who probably won't even notice it?'

We also know that this is going to be paid for by cutting funding for research and development. There is a research and development tax break which is going to help create the jobs of the present and of the future in this country. It is actually making a difference. Companies in Australia say that the research and development concessions that we get make Australia an attractive destination to come and set up and to continue to do business. We hear all this talk and this rhetoric about becoming an innovation nation. The way that you do it, and the way that other countries do it, is to give tax breaks to companies that want to come and invest in research and development here. And what are we doing with this? The Liberals and Labor are saying they will cut the R&D tax concession to give a tax break of $6 a week to people who probably will not even notice it.

I suggest to the Australian people this is probably how the next couple of years are going to roll out. You might hear stuff before the election such as: 'Oh, they're going to privatise Medicare. You can't vote for them. Oh, they're going to wreck the economy. You can't vote for them.' But as soon as the election results are declared, as soon as we are back here, within a fortnight, what happens? There is a dirty deal between Labor and the Liberals to rip money out of renewables and off low-income earners to fund an income tax cut for those on above-average incomes, and everyone else can go and get stuffed. There is nothing in the first couple of weeks from parliament for you. It is a dirty deal that is rammed through quickly. Why are we here in the Federation Chamber with everyone speaking for only a few minutes on one of the most significant expenditure items that we are probably going to see this year? It is going to mean $4 billion less in the budget—it is $4 billion and rising—to spend on all the services that Australians expect.

I expect this kind of Thatcherite economics from the government. I expect this kind of Thatcherite economics from the Liberal Party, because they say: 'If we just keep cutting taxes and cutting taxes then it will mean less money available to spend on social services—less money for schools, less money for health, less money for hospitals.' But what astounds me is that every time the Labor Party falls for it! The Labor Party says, 'Oh, well, we don't want to be accused of not wanting to give tax cuts, so we'll sign up to whatever the Liberal Party suggests.'

What does that mean? When you do that, two things happen. One is that you end up with less money in the kitty to spend on services, and you have to go and do ridiculous stuff like cutting support for students, aged care and research and development in order to pay for it. Secondly—and I plead with the Labor Party to rethink their position on this—you shift the terrain of the political debate. It becomes normal to turn every election into a tax cuts arms race in which we ask, 'Who can compete on tax cuts?'

The problem is we know that we have a looming revenue crisis in this country. We know it because organisations as diverse as the Business Council of Australia and left-wing economists, and also the rating agencies, are telling us, 'Look, Australia needs to address the revenue side of the equation as much as the expenditure side of the equation.' So we should be having a discussion in this country about what a reasonable level of tax is that people would be prepared to pay in return for which kinds of services. What kind of social welfare safety net do we want? What kind of access to schools and hospitals do we want? How much are we prepared to pay for it?

If we had that kind of discussion, I suggest to those sitting on the opposition benches that it would be much, much easier. If we could have a sensible and honest discussion with the Australian people about the appropriate level of tax and who it should come from, it would be much, much easier to fund things like an expanded Medicare system. It would be much, much easier to deliver on the Gonski reforms. But, instead, Labor keeps creating a rod for its own back by signing up to unnecessary tax cuts and then doing what must come next—signing up to unfair cuts to social spending to pay for it.

If we keep going down this road, the right is going to win. The hard right is going to win. Because if every time they bowl up a tax cut for above average income earners and the Labor Party says, 'Yes, let's get this through parliament as quickly as we possibly can,' then we are going to find ourselves in trouble. There are better ways of spending $4 billion than a $6-a-week half a sandwich for people on above average incomes. But we do need to ask ourselves: where should we be bringing the money from to fund the services that Australians expect? There are plenty of places where we can find that money. We could go and ask the likes of Gina Rinehart in the mining sector and say, 'If you paid the same on your diesel fuel as every Australian pays on their petrol when they go and fill up, and we stopped giving you that tax break, that's an extra couple of billion dollars a year.' Keep the tax break for farmers and those in agriculture—there is a legitimate case there. But what possibly is the case for subsidising the likes of Gina Rinehart to buy cheap diesel fuel? It does not exist. We could go to the banks and we could say, 'You have your world-leading record profits, and you're doing it, the IMF tells us, off the back of implicit support from the government and the public, so you could probably afford to pay a bit more,' instead of taking the axe to renewable energy or taking the axe to students in higher education.

We could have that debate, but, the thing is, that requires a bit of spine. It was interesting that yesterday on the first anniversary of the Prime Minister's time in power, one Labor wag went out and presented the Prime Minister with a backbone. It is interesting that they took it back after the stunt was done and took it back into their office because, on many occasions, that is where it belongs. One of the jobs of an opposition should be to oppose when the government is doing something bad. The clue is in the job title—'opposition'. When the government says, despite all the rhetoric of tight budgetary restraint, we are going to give a tax cut to high income earners who probably do not need it, truth be told, as much as many others in our society, the job of a good opposition should be to say, 'No, that's not something that we're going to support.'

From here on in, let it be known that the Greens are not going to be participating in this tax cut arms race, and we are going to hold Labor and Liberal to account when they do these dirty deals to fund tax cuts for the top 25 per cent of income earners at the expense of low-income earners, because that is what Labor has done this week. Labor has helped the government redistribute wealth upwards. Labor this week has said: 'We don't mind if you take money off students to give to those on $100,000 or $200,000 a year. We don't mind if you take money out of aged care to give it to those on $300,000 a year.' That is what they have done this week. Bravo, Labor! You expect this from the Liberals, but you expect better from the Labor Party.

The Greens are very, very happy to call this out for what it is: it is unfair and it is bad economics because it slices out a big chunk of revenue from the government's coffers at the time when we are looking for ways to fund the services that people expect, and it sets an extraordinarily bad precedent. If this is what can be done in the first couple of weeks of this parliament—if Labor is not going to oppose it but they are going to crawl cravenly over to the government benches and sign up with every bad idea—I fear for what is going to happen over the next couple of years in this place.

Question negatived.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

The question now is that this bill be now read a second time. All those in favour say aye, to the contrary no. I think the ayes have it.

An honourable member: The noes have it.

As it is necessary to resolve this question to enable further questions to be considered in relation to this bill, in accordance with standing order 195 the bill will be returned to the House for further consideration.