Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

On budget night, the Treasurer started his speech with the rhetorical questions:

What are you going to do now? What does it mean for me?

We know that these were rhetorical questions because, clearly, he doesn't want to actually answer them. Indeed, so concerned is the Treasurer that he's also refused to even answer the simplest questions about the centrepiece of his budget: the tax cuts that this legislation seeks to implement.

To be clear, there are parts of this plan that we can get behind. Labor will support the government's proposed changes that are to take effect from 1 July this year. If the government split the bill so that we could vote for the 1 July changes only, it could have our full support and they could pass instantly. Low- and middle-income earners could walk away with an extra $530 a year for the next few years, but they won't this year as long as the government continues to be unable and unwilling to provide, or is perhaps deliberately hiding, specific details of its plan, including the year-by-year cost beyond the forward estimates. After getting nowhere with the Treasurer himself, Labor have now asked Treasury for more detailed financial information so that we can have better information about what the government is actually proposing with these cuts.

2022 is a long way away. 2024 is even further away. For the government to say that they are certain they can deliver tax cuts for 2024 is really a bit of a joke. The government are locking in policy commitments that will not come into force for seven years. That's more than two elections away. We don't know what the world will look like then. It seems apparent they have no idea what the world will look like then because they seem unable, or at least completely unwilling, to provide any of their modelling to support what the costs of this plan will look like. The Treasurer contradicts himself in the budget papers, stating, 'Risks appear more balanced in the short term,' but also stating, 'In the longer term, the global economy faces further challenges.' The Treasurer knows that this plan becomes more and more unstable the further it gets from now. It's no secret the upcoming election is essentially now going to be fought on tax. The government are hoping that, by dangling the carrot of up-front tax cuts before ordinary working people of Australia, they will accept even bigger tax cuts for higher income earners. But the people of Australia are clearly more wily than this Prime Minister or the Treasurer.

Not only does the income tax plan pander to the top end of town, leaving low- to middle-income earners wanting, but under the Liberals the costs of living are also rising. Workers in retail, food and accommodation industries are losing up to $77 a week in penalty rates under this government. Pensioners are being slugged around $20 a week for private health insurance, and the government wants to remove their energy supplement. Some families are even copping an extra $40 a week for childcare fees. The budget also fails the fairness test on Medicare. The Prime Minister's freeze on the rebate for specialists means that Aussies will have to pay even more as they go to visit a doctor for specialist care. This plan by this government is not about fairness for families, it's not about being fair for pensioners and it certainly isn't fair for low-income earners. This budget looks after big business at the expense of those people who work and struggle.

The people of Armadale and Gosnells have an average income of just over $60,000 a year, meaning that the vast majority of residents are effectively now at the mercy of this budget. The people of Burt elected me to this parliament and I'm here to do my utmost to represent them and fight for them. I note the jeers coming from the member opposite, the member for Tangney. I'm sure that he will be very happy with this budget because the average income of those in his electorate is quite a bit higher. But, with more than 168,000 people in the electorate of Burt, the vast majority of whom will be worse off under the way this budget is constructed, I'm not going to let these issues slide.

Perhaps if the Liberal Party had been responsible in this budget and in the tax plan that they're introducing in this legislation, we would be having a different conversation. After all, the initial plan for those tax cuts to come in from 1 July is not that bad, and we support that part of the proposal, but, instead, down the track the Liberals are once again doing their utmost to pander to the top end of town. It's Malcolm's 'mates rates' under this tax plan. While we haven't been given the full picture by this government, early indications are that, once the government's three-stage package is fully in place, it will deliver larger benefits to those on higher incomes—disproportionately so. As part of the new proposal, low- and middle-income earners will get a tax offset in 2018-19, with high-income earners getting very little. This part of the plan still remains somewhat progressive. More money will go to lower earners in that tax cut. But we're asking for more information about the proposals for 2022. If the government wants to be judged on the fairness of its package, the government should provide the distributional analysis for the year that the full package is in place.

The tax cuts mean that by 2024-25 high-income earners will gain $7,000 per year in tax cuts while those earning between $50,000 and $90,000 a year will gain only $540 a year and, wait for it, those earning $30,000 a year will see only a $200 gain. Where's the fairness in that? In fact, 60 per cent of the cost of this tax plan comes from stage 3, which is when the high-income earners will receive the largest tax cuts. The cost to the budget over the medium term, we understand, is out at $140 billion, but the government refuses to give us any breakdown as to what the costs are as part of each of those three stages. Prime Minister, Treasurer, will you now be willing to provide that more detailed information—a year-by-year breakdown, the individual components of the stages—so that we, as a parliament, who you are now asking to vote on this tax plan, can help put the people of Australia in the best financial position?

While the Liberals are being stingy on their tax cuts for ordinary working Australians, you may ask the question, almost as the Treasurer did on budget night: what are the Liberals spending their money on if it's not on ordinary Australians? Well, it seems they're spending $50 million on the commemoration of the 250th anniversary of James Cook's first voyage to Australia. I'm sure that, like me, the member for Tangney—being a good representative of Western Australia, an area of the continent discovered and examined by European settlement long before Captain Cook made his way over to the east coast of Australia—will raise an eyebrow as I did, because the Treasurer will splash money on this anniversary to make sure that he creates a four-year program to be covered as part of this budget. There'll be a plethora of new facilities and activities down at Port Botany to celebrate the event. I'm sure when people fly into the airport they'll see it all happening. Where is this location? Where is Port Botany? Where will this be celebrated? It will be in the Treasurer's own electorate.

What's the alternative, Australians ask. A Shorten Labor government will deliver bigger, better and fairer tax cuts for more than 10 million working Australians. In many cases these tax cuts will be nearly double what the government is putting on offer for low- and middle-income earners. Labor's tax refund for working Australians will increase the tax cuts that are on offer in the current government's proposal. Everyone earning less than $125,000 a year will receive a bigger tax cut under Labor compared to the Liberals, ensuring that more than four million people will be better off every year under Labor's tax plan. In addition to our commitment to a bigger, fairer and more affordable income tax cut, Labor will invest $2.8 billion for a better hospital fund to deliver more beds in emergency departments and wards, more doctors, more nurses—more health staff. We will restore the $17 billion that this government has decided to cut from school funding. We'll abolish up-front fees for 100,000 TAFE students who choose to learn the skills that Australia needs. That will be part of a $470 million investment in TAFEs and apprenticeships, which is much more than the $270 million that this government has decided in its budget this year to slash from TAFE. We can do this because there is one thing that the government is doing that we will not do, give an $80 billion tax cut to big business and the banks. Australians know the phrase: 'Well, compare the pair.' When it comes to tax cuts, when it comes to funding essential services and when it comes to budget repair that is not only effective but fair, Australians should compare the pair. They will find that this government will be left wanting, because only Labor will ensure that we have a fair go for all Australians.

Ben Morton (Tangney, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. This bill implements this government's responsible plan for personal income tax relief by making personal income tax lower, simpler and fairer. It is tax relief that encourages and rewards hardworking Australians and backs businesses to invest and create jobs. Reward for effort, that's what I'm about and that's what this government is about. We want more money in the pockets of those who work hard and apply their effort to make a better life for them and their family. It's a plan that by 2024-25 will see around 94 per cent of taxpayers projected to face a marginal tax rate of 32.5 per cent or less, compared with 63 per cent if we leave the tax system unchanged. This is a seven-year plan and the government is legislating the whole package now to provide certainty—certainty for hardworking taxpayers that they'll be protected from bracket creep into the future, and certainty that a coalition government will also back hardworking taxpayers with lower personal taxation.

Let's not forget this government is not spending—it's taxpayers' own money. This bill is about Australians keeping more of what they have worked hard for and earned themselves—money that can be saved and invested in better living standards, in saving for the future, in achieving things for individuals and their family, like buying a new home or starting or growing a small business and employing Australians. Money is always more productive and better invested in the private economy. Taxpayers always know how to spend their own money better than the government does. This side of politics wants people to keep as much of their hard-earned money as possible.

In making my contribution to this legislation, I'm proud to be part of a government making sure it lives within its means and making sure that it manages taxpayers' money in a disciplined way. This government has kept a tight rein on spending. Government spending is forecast to grow by an average of 1.9 per cent in real terms—half of the four per cent that we inherited from Labor The underlying cash balance is in the best position we've ever seen since the Howard government's final budget. The deficit has halved in the past two years. The budget returns to balance in 2019-20. Since the 2016 election, this government has legislated over $41 billion of budget repair measures.

With the financial leadership of the Treasurer; one of my local constituents, the finance minister; and the Prime Minister, the Australian economy continues to strengthen. Jobs are being created, investment is rising and the budget is strengthening. For the first time in a decade, the government is not borrowing to pay for essential services, with the lowest level of spending growth of any government in the last 50 years. Important programs such as Medicare, PBS medicines, the NDIS, school funding and hospital funding—essentials Australians rely on—are being funded sustainably and not through debt. The government is funding priority nation-building infrastructure that busts congestion, making our roads safer and getting what we produce to the market more efficiently. A balanced budget enables the government to do all of this and provide the responsible tax relief delivered by this bill.

This government recognises that the battle of balancing the budget is not just a challenge for governments. Every household faces that challenge too, and some find it much harder than others. It's even tougher when you haven't had too much of a pay rise in a while. To build a strong economy, it's vital that hardworking Australians are rewarded for their effort by our tax system. People need to feel confident that they can take on additional work, work extra hours and seek promotion, knowing that their extra hard work will be rewarded by extra income—that it doesn't just go to the government in higher taxes.

This bill outlines an affordable plan of income tax relief for hardworking Australians delivered in three steps. Without action, the personal income tax system increasingly will penalise Australians for earning more as they move into higher tax brackets. Over the seven years of this plan, the government will provide tax relief to encourage hardworking Australians and reduce household pressures. There is an immediate and permanent tax relief for low- and middle-income earners. In 2018-19, around 4.4 million Australians will get the full tax relief of $530 per year, and over 10 million taxpayers will get some tax relief. Many of these Australians will be young people leaving university and trades training to enter the workforce for the first time. Right from the start of their career, this permanent tax relief will leave them with more money of their own to invest in their future, for events like moving out of home, saving for a house or car, starting a family and managing their household budget. $530 in tax relief can go into the savings account, pay bills or pay down the mortgage.

The second step of the personal income tax plan locks in this tax relief for low- and middle-income earners and protects middle-income Australians from bracket creep. From 1 July 2018, this government will provide a tax cut of up to $135 per year to around three million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. From 1 July 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year. This will benefit 3.9 million Australians and prevent about 1.8 million from paying the second top marginal tax rate. In addition, the top threshold of the 19 per cent tax bracket will be increased from $37,000 to $41,000, providing a tax cut of to $540 a year. The low income tax offset will be increased from $545 to $645. The extension of the 19 per cent tax bracket, together with the increase to the low income tax offset, will guarantee the benefits of step 1 are permanent.

The third step finalises the government's plan for more Australians to pay less tax by making our tax system much simpler. From 1 July 2024, the government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000 and we'll remove the 37 per cent tax bracket completely. This is fantastic news for the people in my electorate of Tangney. Around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, in 2024-25. This provides certainty for taxpayers. Most will face the same marginal tax rate through their entire working life. Australians will know that they can take on extra hours, do overtime, accept a promotion, start a business, invest in a business or do better for themselves without their reward for hard work being eroded because they move into a higher tax bracket.

This plan for income tax relief absolutely rewards Australians who work hard. Permanent tax relief will fairly leave more Australians' hard-earned income in their own pockets. This government is committed to a tax system that rewards individual effort, a tax system that is internationally competitive and capable of driving stronger investment and stronger growth for our economy. I highlight also the tax cuts already legislated by this government for Australian businesses with a turnover of under $50 million, taking their rate from 30 per cent to 27.5 per cent and eventually to 25 per cent. We remain committed to extending those tax cuts to all businesses. That is relief for around 3.3 million small and medium businesses employing 6.8 million workers and adds to the personal tax relief that is implemented by this bill.

Small businesses that employ so many Australians also benefit from the extension of the $20,000 instant asset write-off—a policy, a commitment, something that is real and tangible—which is very much welcomed by businesses in my electorate. This is for businesses with a turnover of up to $10 million, not the $2 million under Labor's policy. Streamlined GST reporting for about 2.7 million small businesses is saving small businesses time and money so people can get on with running their businesses. Simpler BAS saves small businesses an average of $590 per year.

These measures support economic growth, create opportunity and boost living standards for all Australians. A balanced budget enables the government to provide responsible tax relief and encourage and reward hardworking Australians. It backs businesses to create and invest in jobs. These measures and the personal income tax relief plan reward Australians who work hard. Some of the best news around this budget and the personal income task relief legislated by this bill is the number of jobs and full-time jobs created. ABS data confirms that Australians created a record number of jobs in 2017—415,000 new jobs, the largest number in our country's history. Seventy five per cent of those jobs were full time. One million jobs have been created since the coalition government was elected in 2013, and jobseekers are taking advantage of the 1,100 new jobs created each and every day.

Our strengthening economy, along with the government's action to ensure our welfare system is well targeted, has resulted in welfare dependency for working-age Australians falling to its lowest levels in 25 years. Around 15 per cent of Australia's working-age population are currently receiving some form of welfare payment. This is down from around 25 per cent two decades ago. I'm the first to say that it's important we have a strong safety net to protect all Australians. The system must support those who are most vulnerable and genuinely in need, but working-age welfare must not be taken for granted. A strong economy is the only way to secure the quality social services we need and to pay for our generous welfare system. This government is committed to jobseekers and people who are supported by the safety net, as well as the taxpayers who make sure Australia is able to provide a generous welfare system.

The personal income tax plan implemented by this bill is a very important part of the government's plan for a stronger economy. The coalition government stands for responsible economic management, and we're delivering that for Australia, with lower taxes, a stronger economy, more jobs and essential services, all while the taxpayers' money is being managed in a more disciplined way. This side of the parliament is about responsible budgets and lower taxes. This bill is about making personal income taxes lower, simpler and fairer, because this government is committed to a tax system that rewards effort and promotes opportunity. The personal income tax plan is affordable. This personal income tax plan rewards those Australians. This personal income tax plan delivers for those hardworking, aspirational Australians.

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

There's one thing worse than right-wing ideologues, and that's unoriginal right-wing ideologues who have to borrow their tax-cutting strategy from overseas. The story of this government's personal income tax plan originates in United States Republican law, with people like Irving Kristol and Grover Norquist. To see the origins of this, you need to look back to the Bush tax cuts implemented in 2003, which saw 53 per cent of the cuts going to the top one per cent. American taxpayers making $10 million or more pocketed an average of $1 million a year. But, in order to hide from the American people the impact of that tax cut, a short-term stimulus was put in place, and so everybody saw an immediate handout but, over the long run, it was the most affluent who received the most.

We've seen President Trump recently pass through Congress a similar tax plan. According to the non-partisan Tax Policy Center, over the course of the long term, the impact of the Trump tax plan is to give multimillionaires more than $700,000 but those in the bottom fifth absolutely nothing. The middle class, over the long term, receive a smaller dollar amount from the Trump tax cut, and they receive a smaller percentage amount. The income boost for the very top can be as high as 10 per cent. The income boost for the middle is just one per cent.

Again, the Trump tax cuts' long-term impacts are hidden through short-term payments which are due to expire for the middle class. US economist Paul Krugman likens this to going out to dinner with a wealthy acquaintance. The dinner starts with the wealthy acquaintance promising to pay everything, and so you order a hamburger each, and then, as the meal goes on, the acquaintance turns around and orders the most expensive bottle of wine and a filet mignon steak and then says, 'Put it on the poor guy's credit card.'

That's what we've seen from the early 2000s Bush tax cuts and from these most recent Trump tax cuts. It is a strategy which has its origins going right back to Irving Kristol's 'starve-the-beast strategy'—the notion that if you cut down government revenue enough then you would have a political excuse to slash the politically popular social safety net. Grover Norquist's group, Americans for Tax Reform, required American Republican candidates to sign 'no new taxes' pledges. You saw movements in the early 2000s to shutdown so-called tax harmonisation—effectively, to go soft on tax havens like the Cayman Islands—costing American taxpayers up to $70 billion a year. I commend to the House the piece in Rolling Stone a couple of years ago, 'How the GOP became the party of the rich'.

We've seen in the Australian context exactly the same playbook. In the 2014 budget we saw permanent cuts to the social safety net but a temporary increase in taxes for the most affluent. The only temporary measure was the one that applied to the most affluent Australians. That debt levy lasted only from July 2014 to June 2017, despite the fact that—as the shadow minister for finance pointed out—the net debt has doubled under the Liberals. What we see now in this tax plan is something very similar to what we saw from the 2014 budget, from the early Bush tax cuts, from the most recent Trump tax cuts. It is a set of tax cuts whose early effect is to benefit middle Australia but whose later effect is considerably more regressive.

The government has been steadfast in refusing reasonable requests from Labor to provide distributional analysis. We didn't use to have to ask for these things. The budget used to contain a family impact statement, which was omitted with the 2014 budget—not surprising, given how regressive the measures in that budget were. I'll bet, as the Shadow Treasurer said in his speech today, that analysis was done but simply not released so others have stepped into the breach. Analysis from Ben Phillips at the Australian National University uses the relatively new model, the ANU PolicyMod model of the Australian tax and transfer system. That model estimates that, of the measures due to take effect in 2018-19, the average change in disposable income per household would be fairly similar across the distribution. A middle-quintile household would benefit to the tune of $508, a top-quintile household, $650. In proportionate terms for the middle-quintile household, that would be 0.6 per cent and, for the top-quintile household, that would be 0.3 per cent.

But it is a very different story when you look at the impact by 2024-25. In that year, the average change in disposable income per household for the middle quintile would be $913 but for the top quintile would be $4,925. That means the top would get more in dollar terms but they would also do better in proportionate terms. According to the ANU analysis, middle-income households would receive a one per cent increase in disposable income by 2024-24 while the top would receive a 2.2 per cent benefit in disposable income per household. As the ANU analysis concludes:

Initially these measures are tax cuts targeted at lower and middle income individuals but by the middle of the next decade the measures are weighted towards higher income individuals.

A similar analysis carried out by the Grattan Institute shows that the later measures would be more expensive and further skewed towards the top. Its estimate is that by 2024-25:

The income tax cuts are much larger for higher income earners in absolute terms. People in the top 20 per cent will get an average tax cut of $4,600 a year compared to $700 a year for someone in the second-lowest income quintile.

The Grattan Institute concludes that 60 per cent of revenue foregone goes to the top 20 per cent of income earners. The respected economic commentator Ross Gittins sums it up by saying, 'Morrison's tax cuts miss the middle'. He has made the point that over the long term the impact is considerably skewed towards the top.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Nonsense!

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

I hear those opposite saying 'nonsense'. You can change whatever laws you like, but the laws of mathematics are immutable. It is those laws that the coalition would desperately like to change, because they don't want Australians to know how regressive their long-term tax plan is.

NATSEM modelling suggests that the new tax system from 2024-25 is less progressive than the current tax system. This means we'll get higher inequality as a result of these cuts. There is a simple metric for progressivity. It's a measure that looks at how much the tax system reduces inequality. You have a fixed level of inequality that comes from the market, and then you can ask the question, 'How much does the tax system reduce that?' There are a bunch of indices one can use for this—like the Suits index and the Musgrave-Thin index—but the simplest is the Reynolds-Smolensky index, which simply says you've got a Gini coefficient, inequality before the tax system, and another Gini coefficient, inequality after the tax system takes effect. The difference between the two is the Reynolds-Smolensky index.

Danielle Wood from the Grattan Institute has simply calculated how much that index would change under business as usual or under the government's tax plan. Under the government's tax plan, you actually see an increase in that index over the short term. You see an increase in progressivity—the tax system does a little more to reduce income inequality in Australia. That's why Labor has said, on the measures that take effect from 1 July this year that we will be supporting those. But then, from 2024-25 onwards, you see something very different. The Grattan Institute analysis from that period onwards shows that the redistributive effect of taxation would be much lower—in other words, that we would have a higher level of inequality from 2024 onwards under the government's tax plan than we would get under a baseline measure. In rough terms, we're talking about half a Gini point of difference in inequality in Australia by the late 2020s under the government's tax plan compared to business as usual.

You can also see the difference looking across Australian suburbs. As work by NATSEM has shown, the biggest winners out of these tax proposals by 2024 are those in Sydney's eastern suburbs, inner harbour and north shore, as well as inner Melbourne suburbs. Households in Bellevue Hill gain $9,355. A household in Toorak by 2024-25 gains $9,057 according to NATSEM. Meanwhile, a household in Lakemba sees a disposable income increase of $2,693. A household in St Albans, in Melbourne's west, gains $2,800. The areas that benefit least include the far north of New South Wales and areas in Tasmania. There's also a gendered impact of the tax changes. The Australia Institute's analysis shows that roughly two-thirds of the benefit of the government's proposed income tax cuts flow to men, since men dominate the ranks of high-income earners. For every dollar in tax cuts that goes to women, men get $2.

That's why Labor has said very clearly that we see merit in supporting the first stage of this tax plan, the measures due to take effect on 1 July this year. In fact, we don't just support them; we're bettering them. We're offering more-generous tax cuts for 10 million Australians, under a Shorten Labor government. Those earning from $50,000 to $90,000 will see a tax cut under a Labor government nearly twice as generous as that which they would receive under the government's tax plan. Households earning from $50,000 to $90,000 would be around $400 a year better off.

There are some, notably the Australian Greens, who don't believe that 10 million middle Australians should receive a tax cut. They're wrong because, at a time when we are seeing real wages flatlining, middle Australia is doing it tough. The most recent wage price index is up only 2.1 per cent over the year. The quarterly number is the second lowest since the Australian Bureau of Statistics started calculating the wage price index in 1997. So most workers haven't seen any real growth in pay.

Drivers are also doing it tough as a result of increases in the cost of petrol in Australia. Analysis by economist Shane Oliver calculates that there's been around an $8 a week rise in the average cost of petrol in Australia, with petrol prices going up from around $1.25 a litre to $1.45 a litre and potentially rising another 3c or 4c a litre in the next week or so. Were that to occur, that would consume the entire benefits for a middle-income household of the government's proposed tax increase.

Labor will always be the party of equity. But we are also the party of productivity and growth. The way in which you get growth and productivity is by making sure that you are focused on the effective marginal tax rates of those who are on the margin and moving from welfare into work. That's why Labor make no apologies for focusing our tax cuts on middle Australia. We will not be following the Irving Kristol, Grover Norquist, George W Bush, Donald Trump, Tony Abbott playbook for taxes. We will not be offering middle Australia a short-term bauble and giving long-term, massive handouts to the top end of town.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Except that Labor will be! That's the whole problem now with what the member for Fenner has been saying. He spent a good 15 minutes and three seconds telling us how bad tax cuts are, but Labor will have bigger and better tax cuts than the coalition. In fact, I was so concerned by his obsession with size that I wondered what was going on. In order to justify why his tax cuts are better than our tax cuts, he quoted from the Grattan Institute at great length. One was wondering where the Australia Institute was today—or the Whitlam foundation or indeed any of the other front groups that the Labor Party have set up over the years to justify their policies. Then of course we had the coup de grace—but I'm afraid he buried it—with Ross Gittins. He quoted Ross Gittins.

Now, we know that the member for Fenner is somewhat upset that he has not yet had an opportunity to appear on the front pages of GQ, but I assure the member for Fenner that there is one person who will never bump him off the front page of GQ, and that's Ross Gittins, both in economic theory and in fashion. But, of course, he buried the lead. He quoted Rolling Stone. If I too may quote Rolling Stoneand I say this sincerely to the member for Fenner:

You can't always get what you want

But if you try sometimes you might find

You get what you need.

Honourable Member:

An honourable member interjecting—

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

That's right. I'm a crooner not a singer.

Honourable members interjecting—

None of us will, although I have to say that the member for Reid does an awesome karaoke night and it's not to be missed. I believe, Mr Deputy Speaker, I have seen you at a couple of those nights, and you've done very well—very well indeed.

I think what we have here—and the member for Fenner touched on it—is actually an ideological and philosophical issue for both sides of parliament. Do you believe that you create a fairer society when you cut taxes? We on this side would say, 'Yes; the answer is absolutely yes,' and we would point to the same experiences that the member for Fenner speaks of. When you look at the United States in the 1980s and the 1990s and you look at the United Kingdom in the 1980s and the 1990s, they had governments on both sides of this divide who instituted tax cuts—both personal and corporate tax cuts—which massively improved equality and fairness in both of those societies, both in the United States under Ronald Reagan and then Bill Clinton and in the United Kingdom under Margaret Thatcher and then under Tony Blair.

Tax cuts are the principle of improving equality of opportunity and fairness in our society. That's why the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 is so critical for what we do. If you want to reduce inequality and you want to quote the Royce-Walinksi model and know that you are going to improve matters, then you need to know that reducing taxes improves inequality in Australian society. Why do we say this? Because it's the only way inequality has ever been reduced anywhere in the world. If you want to go in the other direction—and the member for Fenner knows about this man but he dare not speak his name—just look at the policies of Hugo Chavez in Venezuela: massive taxes and massive government subsidies, and they have a refugee problem. Their people cannot wait to get out of the country, and every day neighbouring countries in South and Central America open their borders so the people of Venezuela can actually buy food across the border. Why? Because of high taxes and government interference. The Labor Party used to know this too. Under the Hawke-Keating government, they realised that as well, and the member for Fenner knows this as well. He wrote an entire book on it. I just looked up the index and not once did he reference Rolling Stone, Ross Gittins or the Royce-Walinksi model. I don't know, maybe it wasn't a well-researched book.

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

It's the Reynolds-Smolensky model!

Dr Leigh interjecting—

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

That's it, thank you—that one!

There are some simple questions. Do you believe that this parliament should allow people to keep what they have earned? Do you believe that any tax system should incentivise work and effort and risk? And do you believe in fairness? If you believe in any of those things—much less all of them—then you need to vote for this law. The Labor Party are saying that they will oppose this tax cut because it's not big enough. Well, let's see them vote for a tax cut that isn't for foreign backpackers. Let's see them vote for a tax cut that's for Australians.

Despite claiming to be progressive, Bill Shorten is succumbing to the archaic class warfare of centuries ago. Over the past five years, we've witnessed his efforts to snatch hard-earned money and relocate it to those apparently deemed more deserving. The Leader of the Opposition essentially seeks to align our democracy with redistributive ideologies, threatening our economic equality and wellbeing. However, any reasonable person would see that Labor's plan to further redistribute income is without valid justification. Australia's top 10 per cent today already contribute almost half of the total net tax paid. Moreover, the top one per cent, about 90,000 individuals, are liable for approximately 17 per cent of the government's income tax revenue. There is absolutely no need to propagate this existing inequality. There is also no need to increase income tax for any Australian, regardless of wealth. Our country needs lower, fairer and simpler taxes for every Australian. This bill, which seeks to impose the Personal Income Tax Plan, outlines a threefold strategy to alleviate household budget pressures and provide certainty for most working Australians. The changes strike the right balance between lower tax and equity. Simply put, this bill ensures that the top 10 per cent pay their fair share of tax without compromising their entitlement to lower rates.

We have to remember that this is the money of everyday Australians and not of the government. Taxpayers earn every dollar of income through laborious work and labour. They have the right to spend it as they wish with as little exogenous interference as possible. This seven-year plan allows them to do just that. In addition to lowering taxes, we are providing Australians with the certainty that they will face the same tax rate over the majority of their working lives. Unlike anything proposed by those on your left, Mr Deputy Speaker, this plan is affordable and fiscally responsible. Each dollar spared by taxpayers is not compensated by another increased tax, but also isn't the cause of a budget deficit. In fact, our federal budget is set to return to surplus in less than two years time. Whilst Labor has already announced over $200 billion of taxes in opposition—the housing tax, the savings tax, the family business tax and the retirees tax—we as the government have successfully sought to reduce our taxpayers' burden. At the same time we've put an end to the debt-creating machine initiated by the Rudd government.

As I mentioned earlier, this bill improves the welfare of taxpayers via three steps. Step 1 is to provide tax relief to low- and middle-income earners and thus help ease cost of living pressures. The bill will introduce the low- and middle-income tax offset, a new non-refundable tax offset for the 2018-19 to 2021-22 financial years. This counterbalance will provide a maximum benefit of $530 to 4.4 million taxpayers and assist more than 10 million Australians overall. The maximum $530 benefit will be distributed to those earning between $48,000 and $90,000. The offset will also provide a benefit of up to $200 for taxpayers earning up to $37,000. On the other end it will phase out at a rate of 1½ cents per dollar for those with incomes between $90,000 and $125,000 a year. Step 2 of the personal tax plan combats bracket creep. From 2018-19 the top threshold of the 32½ per cent bracket will be extended from $87,000 to $90,000 per annum, thereby reducing the taxes by up to $135 for those with incomes between these two figures. From 2022-23, the top threshold of the 32½ per cent tax bracket will be further increased from $90,000 to $120,000 while the upper threshold of the 19 per cent bracket will be increased from $37,000 to $41,000. Further, the low-income tax offset will be extended from $445 to $645. Such augmentations guarantee endurance of the benefits outlined in step 1. Finally, the third step proposed in this bill is the simplification and flattening of the tax system. From the 2024 financial year the upper threshold of the 32½ per cent bracket will be further extended from $120,000 to $200,000, consequently removing the 37 per cent tax bracket in its entirety. This results in a greater probability of a person remaining in the same tax bracket for their entire working life. Note that the top marginal rate of 45 per cent will remain, but only for those with incomes exceeding $200,000. As a result of these changes, more than nine in 10 taxpayers are projected to face a marginal rate of 32½ per cent or less in 2024-25. Compare this with the estimated 63 per cent under current settings and you'll notice that our tax plan delivers a utility-maximising equitable scheme for all Australians.

This bill can be summarised as a long-term sustainable plan to reduce income tax payable for nearly every Australian. It puts an end to bracket creep and provides long-lasting certainty in our tax system. The Personal Income Tax Plan is a package. We ask that the complete package, the complete promise, be legislated by this parliament. It is an all-or-nothing deal. If it is passed, taxpayers will be significantly ameliorated. If it is not, parliament will have failed the people it seeks to represent and will deepen it's budget deficit. Australians need this plan. They need lower income tax and stability in the same way that businesses need an equitable corporate tax system with decreased rates.

The Turnbull government has listened to the needs of taxpayers. We are providing relief where relief is needed and stricter policy where severity is due. Through legislation—both niche and expansive—our government is creating a prosperous economic environment. We are fulfilling our purpose as the great enabler not the great enforcer. To see how this is the case one need only look at any of the government's recent propositions.

The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill, for instance, aims to introduce criminal offences for the production, distribution, possession and use of electronic sales and suppression tools to falsify tax records. It proposes a specific method by which government can knuckle down on the underground economy. Fiscal crime such as sales suppression contributes to a black economy potentially as large as three per cent of GDP. This is $50 billion in unreported income, which results in approximately $4 billion of lost government revenue and abuse of our welfare system. It is thus highly significant that our government is tackling such a perverse market. Instead of targeting the compliant wealthy, we are knuckling down on lost revenue from those who rort the system, manipulate the cash economy, launder money, phoenix companies, commit fraud and underreport income.

In addition to such expansive bills, the government has proposed a number of nitty-gritty policy amendments, such as the Primary Industries Research and Development Amendment Bill. This incoming legislation aims to combat the ghastly cost of the statutory marketing levy by allowing R&D corporations to undertake marketing activities with funds raised by voluntary contributions. For rural industries, this reduced regulatory burden results in more time spent on productivity-enhancing innovation. For individual Australians, the removal of the levy, and thus lower costs, engenders lower prices. For this government, as always, reduced regulation results in more resources being devoted to higher priority areas.

It is not difficult to apply elementary economic theory to government policy. As we have just seen through the examples I have outlined, lower rates and tightened loopholes lead to an equitable taxation system which allows for increased consumption and investment. This is what drives our economy, and this is what drives Australia to a better future.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Looking at the speakers' list today for this debate on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, you would have thought that the government had given up on this tax plan weeks after it was introduced. We've seen the same kooky IPA robots get up in this place and talk about trickle-down economics.

Mr Falinski interjecting—

I'll take the interjection from the member for Mackellar. He's insulted about being described as an IPA supporter. I would take offence too. But I want to start straightaway by acknowledging what has already been placed on record by my Labor colleagues who spoke before me. As we have heard from speakers today, including the member for Fenner in his address to the parliament half an hour ago, Labor will support the government's proposed changes, which are to take effect on 1 July 2018, to lower taxes for millions of Australians by introducing the low- and middle-income tax offset, a non-refundable tax offset of up to $530 per year for taxpayers earning up to $125,333, and increasing the top threshold of the 32.5 per cent personal income tax bracket from $87,000 to $90,000.

We said right from the start that we would support these measures, and we were up-front with the Australian people on budget night about that. The Leader of the Opposition, in his outstanding budget reply speech, made that crystal clear. I want to say tonight that, contrary to popular belief in some circles, the Australian Labor Party is the party of lower taxes. In fact, when it comes to the overall tax-to-GDP ratio, the facts are startling, and I do hope those opposite are listening. The seven highest-taxing Australian governments since 1980 have been Liberal-National coalition governments—not the lowest; the highest. According to the Treasurer's own budget papers, by the time 2021 rolls around, the LNP coalition government will lay claim to having the top 10 all-time highest-taxing governments. That's not a party or a government of lower taxes, nor, certainly, is it a government of jobs and growth.

In complete contrast, the top 10 lowest-taxing governments since 1980 have all been Australian Labor Party governments. Let me repeat that. By 2021-22, the top 10 highest-taxing budgets will all have been from Liberal-National governments, while the top 10 lowest-taxing budgets will have been courtesy of the Australian Labor Party. That's why when it comes to providing real tax relief to low- and middle-income Australians we will go further than the Treasurer and those opposite. I was proud to see that a Shorten Labor government will not only match the raising of the $87,000 tax threshold to $90,000 but will deliver bigger, better and fairer tax cuts for 10 million working Australians.

Mr Falinski interjecting—

I understand that the member for Mackellar is not interested in real relief for working Australians. His concern while he serves in this parliament is about looking after the top end of town—the millionaires and billionaires of this country. I have a different perspective when I come into this place and the communities that I represent. My priorities are the hardworking men and women of Australia who have helped build this country—people who have gone out and set up businesses, people who have been teachers or nurses, people who have provided the essential services that our country has been built on.

I understand that for members like the member for Mackellar that is not their priority. From listening to the speeches tonight from speaker after speaker, they are interested in one thing: the so-called voodoo economics of trickle-down US-style economics. That has not been proven to be successful in any country in the world. But we're supposed to take their word for it that the Trump-style policies that this government has will somehow benefit the hardworking men and women of my community. Well, they can say all they want. They can get up and go on about it. I would suggest that the member for Mackellar and other members here tonight take a walk in their supermarkets, go down to their shops, talk to shopkeepers, talk to patrons buying a coffee and say: 'Do you feel you're better off under this government? Do you feel that banks and the millionaires of this country are not getting a fair go?' I'll tell you what the answer will be. It will not be that we need trickle-down economics. It will not be that the billionaires and millionaires of this country are doing it tough.

Nonetheless, I am pleased to see that everyone earning less than $125,000 a year will receive a bigger tax cut under a Shorten Labor government compared to the Liberal-National government and be better off by $398 a year compared to the Liberals. With Labor's tax refund a teacher on $65,000 will receive a tax cut of $928 a year and a couple earning $90,000 and $50,000 respectively will receive a tax cut of around $1,855 a year. This is achievable because the Labor Party has made tough calls but they've made the right calls. This includes dividend imputation reforms, negative gearing reforms and not going forward with the $80 billion handout that those opposite, like the member for Mackellar, are obsessed with. They have a laser-like focus on making sure the corporations and banks in this country get a tax break before the working men and women in my community get a tax break.

Mr Falinski interjecting—

We know that your priority is looking after the special interests of this country—making sure the ultra-wealthy are looked after.

Mr Falinski interjecting—

We know that's your policy. That is what you want to fight an election on. The member for Mackellar is welcome to come to the communities in Springfield, Springfield Lakes, Redbank and Redbank Plains—suburbs he would never think to visit or even know where they are. If he had a minute to visit the great communities in south-east Queensland that you and I both represent, Mr Deputy Speaker, he'd have a dose of reality given to him. I don't have a lot of millionaires in my community. I say good luck to someone making a million bucks.

Mr Falinski interjecting—

If the member for Mackellar believes they deserve a $16,500 tax cut, he's welcome to come to my community and explain that—because I can let them know what this government's priorities are. The government wants to be trusted with this bill; but we've heard no reason why it should not should be separated, why it has to be done in full. It will cost over $13 billion over the forward estimates and, according to the government, $140 billion over the medium term—which has received very little scrutiny. The truth is that they cannot be trusted with the Australian economy. Since coming to power, under their watch, net debt has doubled. They don't really talk about that a lot anymore. We don't hear about net debt. We don't hear about debt anymore. So, thanks to this government—thanks to the Prime Minister, the Treasurer, members of the cabinet and members of the backbench—the net debt in this country has doubled to more than $350 billion. Gross debt has now crashed through half a trillion dollars. That's right—half a trillion dollars on their watch, for the first time in history.

Time and time again, we heard about the dangers of debt and deficit—the debt truck driving around the country. Well, the wheels have fallen off that debt truck. It's parked behind someone's house, never to be seen again. It's locked up for good. Now that the debt has crashed through half a trillion dollars, we know that both types of debt are growing faster under this government than under any previous Labor government, which had a global financial crisis to contend with. And this year's deficit, in 2017-18, is six-and-a-half-times bigger than the Liberals predicted in their first horrific budget of 2014. All of this was confirmed through a recent OECD report which stated that the Australian government has added more to their debt over the past five years than almost any advanced company. So not only have we gone through the debt charts and delivered the highest amount of debt in Australia's history but we're now leading the globe in terms of how high our debt is. Throw in the fact that we now know that, by 2022, the top 10 taxing governments will all be LNP governments, and the evidence could not be any clearer that their economic credentials are an absolute shambles. This must be the reason why they're now holding low- and middle-income Australians in some sort of hostage scenario as they try to ram through this $140 billion tax package. Australians deserve better than this.

I now speak to the amendments moved to the bill by the shadow Treasurer that reflect Labor's current position on the government's legislation—namely, removing all elements of the bill that commence on 1 July 2022 and 1 July 2024. Australians deserve full certainty on tax, which is why the government should split the bill, and then the tax cuts scheduled to start on 1 July 2018 can pass without delay. We, as representatives in this place, are often asked by our constituents why we can't show more bipartisanship. Well, here is the evidence on the table, right here, right now. Both sides of parliament can work together to deliver immediate tax relief. If the government split the bill, we could vote for the 1 July 2018 changes only. The Leader of the Opposition and the shadow Treasurer have made it clear that it will receive our full support and this could past instantly. The offer is there and remains on the table for both sides of politics to work together to achieve this for the Australian people. But, like most times when offers of good faith are made, I won't be holding my breath. We know those opposite will always show their true colours when they're playing their political point-scoring games. They're looking after a certain element of the community, the top end of town. We see that in question time after question time, whether it is the Prime Minister or the Treasurer: they're unable, unwilling or deliberately hiding specific details of the plan, including the year-by-year cost beyond the forward estimates. Either the Treasurer doesn't know the answer or is refusing to provide that information. Yet they want the community in Australia, when they haven't released any true details of the overall $140 billion tax package, to just give them a blank cheque. This is a sign of a government that is desperate and, I believe, out of touch with the community.

I'm pleased that our senators have asked Treasury for more detailed financial information—the year-by-year breakdown of the tranches and the individual components of those tranches—so we, the Australian parliament and the community as a whole, can have better information about what the government is proposing. We've also asked for a breakdown by gender, as electorate based information, to ensure we have the best possible information before us, but of course that information has not been provided by the government. Rather than keeping the Australian people in the dark, we need to know what this will mean in the long term. We've already seen analysis by the Australia Institute that the bottom 30 per cent of income earners will receive only seven per cent of the tax cut, which includes the bottom 10 per cent of income earners receiving a mere 1.5 per cent of the tax cut. A simple way to look at it is to say that someone on $40,000 per year will get a tax cut of $445 while someone on $200,000 per year will get a tax cut of $7,255. Sure, those opposite are going to say, 'Well, that's because the person on the bigger salary pays more tax,' but consider this: while someone on $200,000 earns five times what someone on $40,000 earns, their tax cut will be a whopping 16 times bigger. Senior economists have gone further and said that these figures show how inequitable this tax plan is:

Even groups like the IMF and World Bank are warning of the detrimental effects of inequality, including hampering economic growth.

At a time when Australia is suffering record low wages growth and historically high inequality the government has proposed a radical plan to increase inequality.

That's why I was pleased to see that this bill has been referred to a Senate inquiry which will report back on 18 June. I'm hopeful that the inquiry will be used to garner further information from experts on the package. In particular, I believe the inquiry should assess the fairness of the three stages of the package together, with the fiscal risks associated with each stage of the tax cuts, given stage two and three will occur in several years time without an understanding of the prevailing economic conditions. But, considering this government now has a deficit 6½ times bigger than what was predict in their first budget in 2014—that's only four short years ago—how on earth can they be trusted to implement an unscrutinised $140 billion tax plan six years into the future?

If the Turnbull government wants to be judged on the fairness of its so-called package, the government should provide the distributional analysis in the year the full package is in place. 2022 is a long way away; 2024 is further away. For this government to say they're certain they can deliver those taxes in 2024 when they're barely able to hold the government together from week to week is just a joke.

I believe the government's budget fails the fairness test, it fails the families test, it fails the infrastructure test, it fails the health and hospital test and it fails the education test. We need to make sure a tax package delivers for all Australians, not just the wealthy few.

David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Link to this | Hansard source

I thank the honourable member for Oxley. I'm led to believe the south-east corner is a very spectacular part of the country.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

I am delighted to speak on Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 today, because this bill and tax plan more broadly for business and personal income tax cuts really demonstrates very clearly the large difference between the Liberal Party and the Labor Party in our approaches. I don't think we have seen such a clear distinction between our parties on a core issue for hardworking Australians for some time.

The Liberal Party, we on this side of the house, the government—we want hard working Australians to keep their hard-earned money and spend it as they see fit. Those opposite want to take their hard-earned money from them. They want to take the hard-earned money made by hardworking Australians and they want to spend it on behalf of those Australians. I would much prefer that hardworking Australians decided how to spend their money themselves than that it be done by those opposite, who would like to spend it on their behalf. So I'm very pleased to support this legislation that will ensure that the government takes less money away from hardworking Australians and leaves more in their pockets so that they can spend it out in the economy in their local communities, in their local newsagent or clothes shop, employing someone to renovate their house—whatever they might be doing to create economic growth and prosperity for all Australians.

As I said, I'm pleased that we're seeing such sharp points of differentiation between the government on this side and those on the other side, because we do believe in low taxation, personal freedom, small government and economic growth, and it's in stark contrast to the plan of those opposite for high-taxing, high-spending government were they ever to get back into government—and we'll be working very hard to make sure that they don't. I am very happy to be going into an election with this as the point of difference between our parties, because this is about, as I said, letting hardworking Australians keep more money in their pockets so they decide how to spend their money.

The government do have an excellent record. I was delighted to see that just late last week it was announced that we have now created over one million jobs since coming to office, with the highest rate of jobs growth since the Howard years just over a decade ago. Our personal income tax plan will build on our good work by making personal income taxes lower, simpler and fairer. In doing so, we will providing tax relief for millions of Australians, especially low- and middle-income earners. We're doing so while repairing the budget bottom line that we inherited from those opposite, which was disastrous, to say the least—a record deficit, some $48 billion deficit.

Julie Owens (Parramatta, Australian Labor Party, Shadow Assistant Minister for Citizenship and Multicultural Australia) Share this | Link to this | Hansard source

And then you doubled it!

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

We're not even talking about the debt; we're just talking about the deficit.

Ross Hart (Bass, Australian Labor Party) Share this | Link to this | Hansard source

You should talk about the debt. Let's talk about the debt.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

We can talk about the debt that you left us, if you like. We inherited terrible debt and deficit and it's made it very difficult to get the budget heading in the right direction, which we are, so we can provide essential services for all Australians. And this achievement cannot be understated.

We have some important but very expensive programs that we are managing to fund whilst establishing and creating more growth in the economy such as the National Disability Insurance Scheme, for example, that Labor did not fund. We have also introduced true needs-based school funding that Labor never fully negotiated or funded, as we know. They had done something like 27 different dodgy deals around Australia. We have commissioned dozens of naval vessels to be built in Australia which will encourage and create much needed local jobs, whereas those opposite commissioned zero. And we're still in a position to forecast a surplus within the forward estimates while also providing for and budgeting for our personal income tax and business tax cuts. All the while, we have: record funding for hospitals; thousands more home-care packages; record infrastructure investment, including for my home state of South Australia, with some critical infrastructure upgrades in my electorate of Boothby, including the Oaklands crossing rail underpass, which is a welcome relief for my residents, who have been waiting some 40 years for this to occur; and $1.7 billion to continue the South Road upgrades.

The government has even begun establishing our own space agency, which is really exciting. I attended an Adelaide University function on Friday night and heard from a wonderful Adelaide University graduate who is working very hard on the space project and she's quite an inspiration to women in the science area. We have been able to achieve all this not because we're trying to tax our way to prosperity, like those opposite, or because we believe the government can solve all of society's problems, but because of thoughtful public policy research and debate, which creates good economic management.

Because we have stuck to our promise of job creation for our citizens and economic prosperity for our nation, Australia is now better placed to reach new heights over the coming years. The Treasurer, the Minister for Finance and the Minister for Revenue and Financial Services have taken to the task of implementing our 2016 election platform with great enthusiasm and great skill, and I commend them all for their incredibly hard and careful work and for the results they're achieving.

Our personal income tax plan will be delivered in three steps. The first step is immediate tax relief for low- and middle-income earners, the second is protecting against bracket creep, and the third is making taxes simpler and flatter. This is an affordable plan and it is a responsible plan. From 1 July, the low- and middle-income tax offset will provide relief of up to $530 for low- and middle-income earners, covering 10 million Australians, with 4.4 million Australians receiving the full benefit. The next step will protect middle-income earners from bracket creep by immediately raising the top threshold of the 32½ per cent tax rate from $87,000 to $90,000, delivering modest relief of $135 to three million Australians. In 2021-22, we'll continue this relief by increasing the top threshold of the 19 per cent tax bracket from $37,000 to $40,000. And, from 2022-23, the 32½ per cent tax bracket will be raised from $90,000 to $125,000, providing a tax cut of $1,350. This money will flow straight back into the economy, spurring spending, further growth, investment and job creation. This is what a real stimulus package looks like: public policy that gives more money to hardworking Australians who will spend it wisely, responsibly and productively. This tax relief for hardworking Australians and the economic activity it will create are both desperately needed in my home state of South Australia. Only yesterday, I spoke in this place about the record number of homes having their power disconnected because they cannot afford to pay their bills and about a recent spike in families needing to use support organisations like Foodbank South Australia because of record high power prices.

We have been clear that this income tax plan is a package. That is how the legislation has been drafted, and it is guiding how the government—we on this side—plan our policy decisions for the next 10 years. Too often we receive feedback that governments don't look far enough into the future, that we're only planning for the next election cycle or three years in advance or over the forward estimates of four years. We are being responsible and setting out a long-term plan for hardworking Australians and to provide them with tax relief. Enshrining this whole tax plan in legislation provides certainty for taxpayers and, importantly, creates an important barrier to those opposite or, worse, the Australian Greens, with whom they have formed partnerships in the past, changing the goal posts for hardworking Australians if they are ever re-elected to government. Mr Deputy Speaker Buchholz, I know that you and I and my colleagues on this side, will be working very hard to make sure that's never the case.

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

I'd just remind the member for Boothby that the chair is an independent.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

Sorry, Mr Deputy Speaker, I apologise. Thank you for that reminder. As I mentioned, our Personal Income Tax Plan is just one part of a broad approach to taxation reform in our nation. We are also doing a range of things to encourage businesses to grow, and are trying our very best to cut the tax rates so we're internationally competitive for businesses. We have already passed legislation that sees the company tax rate for our small and medium businesses drop to a more competitive rate of 25 per cent for around 3.2 million businesses, who employ more than 6.5 million Australians. We're doing a range of other things as well, like opening up new markets for Australian exporters through comprehensive free trade agreements, investing $75 billion in productivity-enhancing infrastructure, implementing significant reforms to improve competition and choice for Australian consumers, protecting our revenue base through some of the world's toughest anti tax-avoidance laws for big business and stopping the tax burden in the economy from growing past 23.9 per cent.

I want now to reflect on the Personal Income Tax Plan in a slightly more philosophical manner. Today we heard a very fine speech from the Prime Minister about the remarkable contribution that Sir John Carrick made in his service to our nation. Sir John Carrick served during World War II and was held as a prisoner of war by the Japanese. He, along with his fellow soldiers and the 100,000 service men and women and their families who have served in all conflicts and made the ultimate sacrifice for our nation, fought for our freedom, and we owe them our freedom. I was particularly interested to hear from the Prime Minister today that Sir John Carrick was a protege of Menzies, another very fine Australian who made an incredible contribution to our nation. Today just happens to be the 76th anniversary of Sir Robert Menzies's radio address The Forgotten People, which he delivered on 22 May 1942. There are a few parts of his speech that are worth reflecting on in the context of this debate and the approach of those opposite, because it's funny how history tends to repeat at times. In his speech Sir Robert Menzies said:

Quite recently, a bishop wrote a letter to a great daily newspaper … He sought to divide the people of Australia into classes. He was obviously suffering from what has for years seemed to me to be our greatest political disease—the disease of thinking that the community is divided into the … rich and the relatively idle, and the laborious poor, and that every social and political controversy can be resolved into the question: What side are you on?

Now, the last thing that I want to do is to commence or take part in a false war of this kind. In a country like Australia the class war must always be a false war. But if we are to talk of classes, then the time has come to say something of the forgotten class—the middle class—those people who are constantly in danger of being ground between the upper and the nether millstones of the false class war: the middle class who, properly regarded, represent the backbone of this country.

I think that this is where we find ourselves in the tax debate at the moment. Those opposite want to take money from hardworking Australians who, through their own enterprise, through their hard work and through their ambition, effort, independent thought and readiness to serve—again, all words from Sir Robert Menzies—are doing their very best to earn money, provide for their families and give back to their community. Those opposite want to take that money from them. They want to spend it on their behalf. These are the sorts of people who Robert Menzies described as 'salary earners, shopkeepers, skilled artisans, professional men and women, farmers and so on'. He called them the 'backbone of our nation'.

Hardworking Australians are the backbone of our nation. Whether you're a chef, a waitress, a paralegal, a lawyer, a plumber or an engineer, possibly you're an employee, and that's why we are attempting to pass these personal income tax cuts, so that we can support these hardworking Australians to spend money as they see fit, as opposed to those opposite, who want to take their money from them and spend it on their behalf. It's about encouraging people to earn as much money as possible and to be rewarded for that effort, by keeping personal taxes as low as we can whilst also providing for the important social services that we provide for the nation, like education, health and the National Disability Insurance Scheme, helping those who really do need our assistance, but balancing that by also rewarding people who have done the hard yards, through their ambition, through their effort, through their independent thinking and through their service to the nation, to earn money and to succeed. I sincerely hope that we see these personal income tax cuts fully passed by the parliament, because they are going to reward hardworking Australians.

Ed Husic (Chifley, Australian Labor Party, Shadow Minister for the Digital Economy) Share this | Link to this | Hansard source

When we get to the point of talking about tax cuts—and I was thinking about this in the lead-up to my contribution today—it's probably worth thinking about where we've come from, because it's nearly 10 years since we were affected by the global financial crisis. Time does fly and people do tend to forget that stretch of time and how far we've come. When Labor were in government during that period, we had to undertake some fairly big moves to protect and shield our economy from what was affecting countries all over the world, and the economy wasn't quite the same after that time. Growth wasn't the same; it wasn't responding in the same way once things stabilised and it did take a while to get out of it. But, besides what Labor had done, it's also worth remembering what ordinary wage earners did through that period of time as well. Bear in mind that, to help ensure that unemployment didn't go through the roof, you had Labor in government making sure that stimulus was provided to keep the economy going, but, in workplaces around this nation, ordinary Australians were also playing their part. Remember, they cut back on overtime; they cut back on the number of hours that they would work—they made big sacrifices to ensure that their workmates were able to stay in a job. They did that with the view that this was the right thing for the firms that they worked for and the friends that they worked with. They made these sacrifices. The return for that was they would hold onto their jobs and they'd be able to make sure that their families didn't have to live through much worse times. Certainly my family and, I think, many others in the chamber would recall those up-and-down periods when Australians did suffer recessions and when parents lost work for stretches of time, where they had to bite into their own savings to hold themselves up, hope that they went through a boom and see what happened with the recession.

Fortunately, in this country, over a period of time, we've gone through a quarter of a century of uninterrupted economic growth, even in spite of a global financial crisis which in some parts of the world, like the US, was referred to as 'the Great Recession'. People made sacrifices. Things started to stabilise. We weathered some of the worst things. It's worth remembering that in some parts of the world, in Spain for example, youth unemployment in 2007 stood at just over 17 per cent and then grew to a phenomenal 56 per cent by 2013. Fifty-six per cent of Spain's young people were out of work. Now, we did have to deal with youth unemployment here, but nowhere like that. So we sidestepped that type of economic impact. We saw the economy stabilise.

But what happened afterwards? What happened afterwards was a very uneven return to normality, because capital seemed to go well; labour didn't. Capital, in terms of profits, was up. Corporate profits were up. Dividend flows to investors were up massively, by billions. Dividend flows between, for example, 2014 and 2017—off the top of my head—jumped from $40 billion to $70 billion. Again, investors were doing well. In terms of top professional income brackets and what was being scored by CEOs and professionals in companies, those were going up as well. And don't get me wrong. I know that there are people who will point to the bonuses or the salaries and the remuneration of CEOs and the like, and they will always be contestable, but you do understand that some CEOs will attract a pay packet commensurate with the skills and the experience that they bring. But people couldn't understand how things went out of whack so much, because—remember—while capital was doing well, ordinary wage earners were experiencing flat wages for years.

Wages growth was pretty much mirroring inflation. And people were being told, as I recall the Reserve Bank saying that they believed at that point in time, that unemployment, because it was high, was a sort of pressure keeping wages down. That was what was occurring. Then it became obvious, as wages kept getting stuck, that nothing else was moving, and people were getting frustrated by that. Unemployment was still at the same level. Mind you, when those opposite talk about unemployment, they never talk about the percentages; they only talk about numbers. But unemployment has still remained the same over many years. Underemployment is a big issue.

And then the coalition extend more sacrifice. They expect that the people who've sacrificed before have to sacrifice more through some of the budget cuts that they've undertaken in terms of income support, social investment in schools, hospitals et cetera, child care and the like. People are being asked to do more. While people were feeling the pinch, what was the government's big answer? The government's big answer was corporate tax cuts—corporate tax cuts that would puncture an $80 billion hole in the budget, with very little proof that, by making that huge shift in money from federal finances to corporate coffers, there'd be any longer term benefit to the economy in terms of growth, in terms of jobs or in terms of wages. In fact, Treasury revised down the economic impact of their own package. So we had that.

When they knew that it was a hard sell, what happened? This plan happened. This plan by the government to provide income tax cuts has come because they realise that, where people have been feeling the pinch for so long, where they don't feel like they're getting ahead, where their wages aren't moving, where capital is doing well and the government announces that it will give a big corporate tax cut, no-one wants to support that other than the business community. So they think, 'The only way we're going to get this through is to deliver a tax cut.' And they can't even do that right.

At the heart of their tax plan, for example, is the thing for which conservatives lather themselves up for years, which is to create essentially a flat tax, right in the heart of it, by changing the tax scales. They go for a flat tax arrangement. A play straight out of the Newt Gingrich playbook of the mid-nineties comes back and resurrects itself right here. So you can tell why people aren't necessarily cheering in the streets about what's being offered, because they see an $80 billion tax plan where corporates do well, and they see a plan being offered by the coalition that doesn't address all of those things that I mentioned earlier where people are feeling the pinch.

I pick up on the point from the member for Boothby, who was saying that she was happy that there was a divide and a difference between us and them. She's right, but the difference isn't favourable to them, because, when you look at the tax plan that has been put forward by this side of politics, the Labor opposition, people with up to $125,000 in earnings get up to $928 as a tax cut, compared to roughly $500 from the coalition. It's not just about a tax cut; it's also what Labor in government would be prepared to do in terms of social investment to help people with the things that they really want to see in their community—for example, restoring school funding, on which there is a $17 billion commitment by us; improving the way that we support TAFE, something people have been wanting to see after $3 billion has been cut by the coalition in government and another $300 million put on top of that; and a commitment to restore funding to hospitals and health, where the budget has a $2.1 billion cut by the coalition that we counter with a $2.8 billion investment in health. So from Labor you have bigger, better, fairer tax cuts, and you have a better option in terms of social investments across schools, TAFE and health.

If you want to talk about contrasts, as has been invited by some coalition MPs, one of the sharpest contrasts was delivered in the Leader of the Opposition's budget-in-reply speech where he quite simply, in the most devastating of lines, said, 'Well, if you want, we'll put $17 billion into schools and you can give $17 billion to the banks.' That's a pretty tough choice, because people know they want to see not just a tax cut but also what you can do in terms of the broader economy and, importantly, the broader community and that you have a longer term plan—because, given the changes that will happen down the track, how can you conceivably argue that cutting school funding, TAFE funding and university funding will help position us for the longer term? As I said, it's simply inconceivable. So, by way of contrast, we have a very thorough contrast that's been put right before the Australian people.

But having said that, and bearing in mind that they're the government and we're the opposition, we've been up-front since budget night. We've said we'll support the proposed changes that are to take effect from this year—no problem—but the government would need to split the bills. So it could vote for the cuts this year and it would get our support, and that could certainly pass instantly, but we do need details for the other tranches that are coming. What's it going to cost for tranches 2 and 3? The government has not been forthcoming in telling us how much it's going to cost. For a plan that costs $13 billion over the forward estimates and, according to the government, $140 billion over the medium term, I reckon you'd probably need some detail to be able to back that up. We have repeatedly pursued senior figures within the coalition government, from the Prime Minister to the Treasurer, asking them to be able to come up with that detail, and they've refused to do so. So how are you supposed to back a plan that is so big without the details for various components of that plan? It makes no sense. We're quite happy to say, as we have indicated earlier, that we'll back the first part—no problem—but you're going to have to come up with the detail. To be honest, I don't think most people in the general public would have a contrary view to that in any way whatsoever, and what I think is becoming apparent to the coalition as well is that there'll be people in the other place that will be asking the same question and will exert a great degree of influence to see that type of detail coming.

Again, taking the point from the member for Boothby, we relish the opportunity for difference. People often complain that they think that the two parties look too much the same. I don't think that's been the case for quite some time. I think there have been quite clear differences between our respective parties, and there could be no clearer difference in terms of our approaches than the way in which we tackle the nation's finances. We are in the position where we haven't put forward an $80 billion corporate tax cut. This has limited the options of those opposite. They can't walk away from it, they know the public's not buying it, and now they have very little flexibility in terms of trying to come up with a different or better proposition in terms of tax cuts for ordinary Australians. The best they're going to do is what they've got right now.

We'll cop the heat that has been extended to us so far by the coalition in terms of some of the positions we've put forward, but bear in mind that for some of the things that people thought would be too difficult to advance in the public space, be it negative gearing reform, changes to superannuation and the like, the reality is that Labor has been able to secure greater support for its reforms in terms of those things. The things that were screamed at by the coalition when we first announced them are generally finding favour in the public. You'll also find there will undoubtedly be some people who do not like the idea of making reforms to dividend imputation, but a lot of other people understand you can't get a tax refund if you're not paying any tax.

This is the type of thing that is going to find favour in the public, but it also strengthens our ability to do a number of things: (1) make sure we're in a position to bring the budget into surplus at the same time as the coalition; (2) make sure we're able to deliver stronger surpluses in the years ahead; and (3) be able to combine tax cuts that are better than the coalition's and also fund the social investments that people expect. That's what we've been able to do. It's done with a long-term view. The coalition is always having to basically scramble together one thing after the other to find favour for some other plan that didn't find favour—corporate tax one day, these tax cuts the next, with no detail provided on the personal income tax side. So the contrast couldn't be clearer.

We certainly do support to amendments moved by the shadow Treasurer. We welcome the difference. Again, as the Leader of the Opposition says, if it's a difference that comes down to this, we're happy to do it—we'll put $17 billion into schools, and those opposite can put $17 billion into banks, and we'll see what plan the public supports. I think they know and we know exactly which plan the public will support.

Tony Pasin (Barker, Liberal Party) Share this | Link to this | Hansard source

It's always lovely to follow the member for Chifley in this place, but it was a little painful to sit through what was effectively a 15-minute lecture on magic pudding economics. To summarise, I think the member for Chifley was saying, 'We will tax less, we will spend more and we will have more left over.' Forget about trickle-down economics—which is something they want to talk down as well—that's a recipe for magic pudding economics. You can't tax less, spend more and have more left over, unless they've found a money tree out the back of the building. I've spent a fair bit of time walking around the grounds and I haven't found it yet.

I love it when a plan comes together. When I came to this place for the first time in September 2013, we talked about a plan. We had a plan for a million jobs. We were going to transform the economy and take people from welfare to work. Those opposite don't want us to talk about that plan because—guess what?—it's coming together. We have the flexibility to do what we need to do in relation to the personal income tax regime in this country because our plan has come together. There are over a million people who woke up this morning and got ready for work who were looking for work this time five years ago. In fact, there are 415,000 people who got up this morning who were looking for employment one year ago. Now those people—those 415,000, not to mention the million in total—are adding to revenues of this government. They are providing tax revenues to the government in circumstances where they were previously receiving Newstart and other benefits. In sport we call that a two-goal turnaround. In this place we probably call it prudent economic management, which has let to this.

So what are we attempting to do? Well, in the short term, we want to give, if you like, personal income tax relief to low- and middle-income earners, and that's where you should always start, because, despite the fact that high-income earners in this country contribute most to the tax receipts of government, they are the people best positioned to do that because of, by their very nature, the high incomes they earn. So we're focusing first where the cost-of-living pressures hit hardest, and they hit hardest low- and middle-income earners. Just like in your electorate and my electorate, Mr Deputy Speaker Buchholz, those are people earning middle incomes, and we're providing to them a tax relief of up to $530 as a low-income tax offset. That's step 1 of the plan. Those opposite are supporting that proposal but don't want to lock into other elements of the plan.

The second element of the plan is to increase the threshold of the 32.5 per cent tax bracket from $87,000 to $90,000, and that will also provide relief to those on those incomes. Long term, though, we want an income tax regime that rewards effort. I'm sure many in this place can think of individuals or couples, who look at their individual or combined incomes and think to themselves: 'You know, I could do that extra bit of overtime. I could do that extra shift. I could take on more work'—in the case of independent contractors—'but where's the incentive, quite frankly? I seem to be working for government in that circumstance.' My own sister, who works in the disability sector, is someone who recently bemoaned to me the fact that she seems to be working a lot and, when she sits down with the accountant, it doesn't seem to make economic sense to put in all the hours she does and do all the overtime she does. So what we're seeking to implement is a program that over time will see that top threshold for the 32.5 per cent tax bracket go from $120,000 to $200,000, effectively abolishing the 37c-in-the-dollar step in the income tax system. It's an incentive for people to continue to work hard and earn additional income.

Those opposite are running bit of a myth about this around the community. They say, 'Why should someone on $200,000 pay the same tax as someone earning a small fraction of that amount?' That's a really cute argument, but let me debunk it. The rate might be the same, but the amount of taxation is nowhere near the same. If I'm paying tax at 32.5c in the dollar on $200,000, I'm paying something in the order—forgetting about the lower tax brackets—of $60,000-odd in taxation. If I'm paying 32½c in the dollar on $100,000 then I'm paying $32½ thousand. The rate is the same; the amount of taxation is not the same.

This feeds into the argument about relief that can be offered. What we need to understand is that the overwhelming majority of income tax receipts that come in come from those on high incomes. Those on high incomes pay significantly more in taxation, so some small reduction in the income tax rate is going to deliver a stronger benefit to someone on a higher income than someone on a lower income. For those opposite, this is really a kind of respectful request. Don't seek to hoodwink the Australian people by saying someone on $200,000 under our plan is scheduled to pay the same amount of tax as someone on $60,000. They might pay the same rate, but they certainly aren't paying the same amount of taxation.

The member for Chifley effectively threw down the gauntlet and said, 'I'm looking forward to there being a substantial difference between us and them'—presumably he means those on this side of the chamber—'in the lead-up to the next federal election.' So am I. I share the energy that my good friend and colleague the member for Boothby has for this impending dichotomy. The reality is that those opposite want to run a big spending, big taxing government. None of my colleagues likes that approach. None of my colleagues came into this place and wanted to run big government or big taxing operations—quite the opposite. Certainly, I didn't. My colleagues and I share the view that taxes should be as high as necessary but as low as possible—and that's the situation.

So when the member for Chifley says he's looking forward to that debate and the forthcoming federal election, well, so am I. I don't share his optimism about issues like the dividend imputations being prohibited, and I don't think it's finding favour as he says. Equally, I don't think the idea of disallowing negative gearing is something the wider community supports. The member for Chifley comes in here and says, 'Our unbelievable plan is to offer middle-income earners additional tax relief.' What he should say is 'Oh, by the way, if you happen to be negatively gearing an investment property, we're going to be taken away that opportunity'—which, let's face it, is one of the only mechanisms to get ahead if you're earning a wage.

I encourage the member for Chifley to speak to people working hard investing in his electorate and tell them, 'You won't have the ability to do that.' If you are so confident that this is a measure that is going to find favour, then don't grandfather it. Your proposal is to grandfather those investment properties currently subject to negative gearing. That is to say you're not going to take away an existing entitlement from someone who actually has it but you're going to prevent people from taking up that opportunity prospectively. If you're so confident that this is a measure that will find favour, then don't grandfather it. Go around the country and speak to every person, every couple, every nurse, every police officer, every council worker, every baker and others and say to them 'We're going to take away your ability to negatively gear that investment property.' You won't do that because the reality is you know this won't meet with favour.

Can I say to the member for Chifley and those opposite that if you think older Australians are happy with the idea that you're going to undermine their ability to seek a refund for dividend imputations paid on their behalf on shares in their name then you haven't spoken to the people I have spoken to, some of whom are on very small incomes. I met a gentleman whose total receipts were in the order of $26,000 or $28,000 who was scheduled to lose something in the order of $6,000 depending on the performance of shares in his name. That is a significant whack. Talk about a regressive approach! Frankly, that has him petrified. He asked me what to do about that and I told him he ought to speak to everyone he knows. He told me I was the first conservative politician he'd ever spoken to in his life; he'd certainly never voted for one, but he couldn't see himself voting for his beloved Labor Party at the next election. This is the kind of thing that shows the member for Chifley is wrong to think these measures have been met with favour; they haven't; they're being met with vitriol, to be honest. And we're turning these otherwise fairly passive members of our community into political activists. I'm meeting more and more low- and middle-income earners who say to me, 'You know what? I've never been that politically active but I will be in the lead-up to the next federal election because I can't believe this is happening.'

Our plan will see 94 per cent of all taxpayers facing a marginal tax rate of 32½ cents or less by 2024-25. What those opposite need to consider is that 94 per cent of Australian taxpayers will, by 2024-25, not pay a cent more than 32½ cents in every additional dollar they earn under this plan. Those opposite don't want to have a discussion about this. They don't want to lock into an academic argument about a flat tax rate and how it incentivises individuals to work harder, to work longer. They don't want to lock into that. They just want to run around the country on a 'Mediscare' type of campaign and say, 'Oh, those members of the government, they want you to pay the same tax as someone earning $200,000.' No, we don't. We want them to pay the same rate because guess what? I want someone earning $50,000 to earn $200,000. I want them to take that extra shift, to take up another opportunity, and I don't want bracket creep to disincentivise people, to punish people for getting a wage increase.

This is part of our overall plan that I spoke about. It's part of a plan which has been facilitated by the fact that, when we came to government in 2013, we said we would create a million jobs, and guess what? That plan has come together. It's delivered additional resources to government. It's allowing us to reinvest in lower, fairer, simpler taxes, and those opposite hate it. They hate it! Those opposite absolutely hate it because it speaks to the Australian people. Australian people don't elect their members of parliament to turn up here in Canberra and be chauffeured around in white cars and put taxes up. By the way, I should say to those opposite that if any of their constituents want to donate additional tax to the Treasury, they can do that—there are provisions to do that. I encourage those opposite who find those people to encourage them do that. They don't want to. The reality is they don't want us to talk about lower, fairer taxes because they want higher taxes and a bigger spending government and we don't.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

The government's proposal is a con job. Their taxation Treasury laws income tax plan is nothing more than a con job. We know what the government are really interested in. The centrepiece of their tax plan is the corporate tax cut. This is the tax cut for big businesses, including the big banks that have been involved in the scandals and rip-offs of millions of Australians in the financial and banking sector in this country. That is their priority. They want to give big business a corporate tax cut, of which most of the benefit will flow to overseas investors because of the operation of dividend imputation. But the government worked out that their enterprise tax plan was so unpopular and, by the fact that they were actually increasing taxes on Australians with an increase in the Medicare levy, they needed to do something about it. This is what they came up with: a tax plan that gives a rebate to taxpayers, a very small rebate, in the immediate years.

But the bigger impact will be in 2022 and 2024, down the track, and, of course, it's a con. It's a con in asking the Australian public to again vote for Malcolm Turnbull as Prime Minister for another two occasions before there will be any benefit. Labor, of course, sees through this con and has offered a much fairer and more reasonable package of tax reform and tax cuts that would provide more immediate relief, particularly for low- to middle-income workers and families in this country, and would be a larger tax cut for those people. Ours would be about $928 for people in the $50,000 to $90,000 income bracket compared to the government's $530. Ours comes into effect every year.

This income tax plan of the government is really a con job and they're trying to lay off some of the criticism that they're getting from the general public about their corporate tax plan and cutting corporate taxes at a time when most Australians are doing it tough—when pensioners are struggling with the fact that taper rates have been changed by this government and the fact that they're trying to remove the energy supplement, and when workers are facing record low wages growth in this country and are struggling to meet the cost of electricity bills, private health insurance, child care and education costs, which are going up for their families. Yet this government wants to give a corporate tax cut to the wealthiest corporations in this country.

With respect to the bill that we're debating here tonight, the shadow Treasurer has moved an amendment, which I'm of course supporting. It would give effect to the government's Personal Income Tax Plan. Labor's already indicated that we will support the first stage of that tax plan—the tax cuts that take effect on 1 July 2018. A Shorten Labor government, if elected, would deliver bigger tax cuts on 1 July 2019 and ours would be permanent. That's a fairer tax cut for 10 million working Australians. It's clear that, if the government split this bill, as proposed by the shadow Treasurer, we would be able to vote for the 1 July 2018 changes only. It would have our full support and we could pass that right now. We're ready to go. We could provide that income tax relief for many Australians. So, for full tax certainty, the government should consider splitting this bill and the tax cuts scheduled to start on 1 July 2018 so that they can pass without delay.

A plan that costs over $13 billion over the forward estimates and, according to the government, $140 billion over the medium term, does deserve some scrutiny. The shocking track record of this government on key budget measures means that they don't get a leave pass on this issue. Labor will do the job of proper opposition and will scrutinise and ask questions about the actual cost of their proposed plan over the medium term. The Prime Minister and the Treasurer have been hiding specific details of this plan, including the year-by-year costs beyond the forward estimates. They're hiding and Labor is seeking. Our senators have been asking Treasury for more detailed financial information in estimates—the year-by-year breakdown of the tranches and the individual components of the tranches—so that we, the parliament and the Australian people as a whole, can have better information about what the government is proposing and how much it's actually going to cost the Australian economy. That's not an unreasonable ask. In fact, it's incumbent upon good oppositions to ask those questions. That's the purpose of question time: to hold the government to account for the expenditure of public moneys that they are undertaking on behalf of the Australian people. That's what we've been doing in question time and in budget estimates, but we've not been getting answers from the government. We've asked for a breakdown by gender as well and by electorate based information to ensure that we have the best possible information to make a decision on this. The fact is that 2022 is a long way away and 2024 is even further away. For this government to say that they are certain that they can deliver tax cuts in 2024 is a pipe dream, and it's somewhat irresponsible. And 2025 is even further away.

Australians are giving up on this Liberal-National government when it comes to providing transparency and accountability in some of their policies and how much they'll cost. The government, led by the Liberals, have no vision for the future of their party, let alone the future of our nation. We're taking time to consider our position on these proposed tax cuts because we need that information to make an informed decision. At Senate estimates, as well as at a separate Senate inquiry on this bill, we will ask the necessary questions to hopefully be given the information that the government, quite frankly, are unable to give us.

Labor's already announced our personal income tax policy for the next term, and that's what governments and oppositions should be doing instead of playing silly games about what we might do in the foreseeable circumstances in 2024. Most people aren't sure what the international economy's going to look like in 2024, and the Treasurer doesn't know either. Maybe the Liberals' self-appointed asset trader, the member for Warringah, who wants to buy and sell power stations on the government's book, has a better idea of what global markets are going to look like in 2024, but I must say it's not likely.

The fact is the government's income tax plan is fiscally reckless. Now is the time to be strengthening our fiscal buffers and building Australia's resilience to a shock. This is something that's been recognised by international agencies that work in the economic space, most notably the International Monetary Fund, which just last month said:

Decisive action is needed now to strengthen fiscal buffers, taking full advantage of the cyclical upswing in economic activity.

Yet here we have a government committing billions of dollars on the back of temporary global economic upswing conditions, and we've seen how this plays out before. The government is locking in policy commitments that don't come into effect for seven years, and it won't provide the information about how much it will cost over that period. That is irresponsible. That is a reckless fiscal approach to budgeting in this country, despite the government's own budget papers stating very clearly:

While … risks appear more balanced in the short term … In the longer term, the global economy faces … challenges.

For the first time in his own budget papers, the Treasurer has acknowledged there are snags with the medium-term forecasts. The Treasurer is now saying that there are 'drawbacks' with his medium-term forecasts, but he wants us to sign up to tax cuts in seven years—not likely. We know that wages growth is stubbornly low, stuck at around that two per cent figure on the wage price index, and that real incomes for many Australians are going backwards, and the assumptions that have been built into the budget and the forward estimates about wages growth are now looking shockingly unreliable. They are looking overly ambitious and will not deliver the revenue that the government says they will, and this is something that's beginning to be recognised by many economic commentators.

The responsible thing to do is to provide the information about how you're going to fund this tax plan in the immediate term but also in the five- and seven-year period that you claim. A Shorten Labor government, if we are elected at the next election, will make sure that we provide that information but also that more working Australians get a tax refund. Under our plan, every person earning less than $125,000 a year will receive a bigger tax cut under Labor than under the Liberals. That's more than four million people who will be better off by $398 a year compared to the Liberals. With Labor's tax refund, a teacher on $65,000 a year would receive a tax cut of $928 a year. A couple earning $90,000 and $50,000 respectively would receive a tax cut of $1,855 a year. Again, that choice is clear. Yet we've still heard from government members, dutifully reading from their talking points, about how their tax plan makes things fair. When you compare it to what Labor is proposing, it's not fair at all. As I mentioned at the beginning, it's no more than a con job to hide and try to smooth over the fact that their real intent is to provide a large tax cut for big corporations.

In conclusion, this proposal that we're debating here today is a ruse. It provides a tax cut as a shadow for what is really their main intent, and that is the corporate tax cuts to provide a big handout to some of the biggest businesses in the country, including the big banks. They won't provide the necessary information for this parliament and the Labor Party to make an informed choice about the costs of their tax cuts going into the future, particularly at the five- and seven-year period. Without that information it's incumbent upon us to ensure that we do all we can through budget estimates and questions in the parliament to deliver that information for the Australian people, so that they can make an informed choice.

In the meantime, people have a clear choice, under Labor, of paying down more of the debt and deficit, ensuring that we're investing in services like Medicare and TAFE, putting $17 billion back into the school system, reversing the cuts to hospitals, investing in infrastructure and at the same time delivering fairer and larger tax cuts for middle-income earners. I urge all members of parliament to support the very sensible amendment that's been moved by the shadow Treasurer.

Chris Crewther (Dunkley, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. I note the strong budget that we released a couple of weeks ago, through Treasurer Scott Morrison, and our strong five-point plan under that budget, instead of Labor's one-, two-, three-, three-, four-, not quite five-point plan. By growing our economy and delivering back to people through tax cuts we're incentivising people into jobs, helping people to aid their kids into what they aspire to achieve and helping everyday businesses—people who are working in their own businesses and as employees—and more. Not only that, we will be delivering a surplus in 2019-20.

Under Labor we've seen a situation where our grandchildren and your great-grandchildren will still be paying down the debt. Instead we are finally getting back to surplus after the Rudd-Gillard-Rudd years. We were in surplus in 2007, in the last year of former Prime Minister John Howard. In fact, I was five years old when Labor last delivered a surplus, so Labor doesn't have a very strong record in this regard. This offset will assist over 10 million Australians, with a maximum benefit of $530 being provided to around 4.4 million taxpayers. Taxpayers earning between $48,000 and $90,000 will benefit, and will receive the maximum benefit of $530. For the average working couple or working family that means a potential $1,060 extra in the pocket each year for food, for school uniforms, for petrol, for sporting activities, to go towards their mortgage or rent, for car repayments and more. These changes also mean that around 94 per cent of taxpayers are projected to face a marginal tax rate of a maximum of 32.5 per cent or less in 2024-25.

Let's look at some local examples in my electorate. If you're a high-school teacher on $75,000 in Dunkley you'll have an extra $740 in your pocket from the budget year onwards, with an extra $3,740 in your pocket over the first seven years of in tax plan. If you're a hairdresser, like Wayne at Colour Collections in Frankston—let's say you're on $50,000 a year—you'll have an extra $530 in your pocket from the budget year onwards and, as I said earlier, an extra $3,740 in your pocket over the first seven years of the tax plan as the tax relief increases. This is in addition to other changes, such as the higher rebate and higher threshold for childcare costs for those on low-to-middle incomes, in particular, which benefits 5,618 families in Dunkley, not to mention our relief for small businesses, where we're reducing the tax rate down to 25 per cent over time. That is not backed by Labor, who want to make the 16,000 small businesses in Dunkley pay more.

These changes strike the right balance between improving the system for all Australians and ensuring that the top earners pay their fair share. We are helping people to manage their household budget pressures. We are providing certainty for most working Australians that they will face the same tax rate over their working lives. In comparison, the Australian Labor Party have already announced more than $200 billion of taxes in opposition. We've had the housing tax, the savings tax, the family business tax and now the retirees tax. Labor are, indeed, for higher taxes. They are part of the high-tax club.

John Billing, a local resident in my electorate, originally established and used to head up the 3199 Beach Patrol, which has done and continues to do a lot of great work cleaning up our local beach. I asked him, via Twitter, what the budget would mean for him. He told me that his situation is that he is on $800 a week take-home pay, with child support needed for one, and rent, utilities and living expenses to pay. His gross income is between $50,000 and $60,000 a year. For John, this measure would mean $530 extra in his pocket from reduced personal taxes. With one child, if that is his combined total family income, that would mean up to 85 per cent in rebates for child care, meaning additional savings of at least $1,000 per year on childcare costs. Plus, the implementation of our National Energy Guarantee would mean an extra $400 in savings. So, for John, that makes over $2,000 a year that he will save. That applies to others in my electorate in a similar situation, of whom there are many thousands. Let's say you're on $50,000 a year. By 2024-25, you'll get an extra $3,740 back. If you're on $80,000 a year, you'll get $3,740 back in personal income taxes alone—not to mention, as I said, other savings in child care, small-business benefits and much more. But, of course, everyone on the tax spectrum benefits by us reducing bracket creep and reducing the overall tax burden on all taxpayers over time.

I must raise a number of other things that are worth noting regarding the benefits of this budget and personal income taxes in my electorate. Our strong economic management means we can deliver more, such as these personal income tax cuts, while paying down our debt. By paying down our debt, it means our grandchildren and great-grandchildren won't have continuous debt over time and we won't be continuing to pay interest on our credit card. By having less debt, it means we can spend more on important services. For example, in the recent budget, we increased spending towards health. For example, Spinraza has been recently listed on the Pharmaceutical Benefits Scheme to treat people with spinal muscular atrophy—people like Ally in my electorate. I've mentioned this a number of times before in parliament. She's a person I've advocated for who lives locally, in Seaford. As with many other people with spinal muscular atrophy in my electorate and across Australia, access to Spinraza would mean that her family won't have to pay over $300,000 per year for this treatment. They can get it at a very low cost and it is a life-saving treatment. It means that Ally can go from a position of her health deteriorating over a quick period to, potentially, living for many, many decades and living a strong and fulfilling life.

Our economic management of also means increases in education funding across the whole electorate, not to mention the quality education review that we recently announced and was recently finalised. We hope to introduce further changes that will provide for not only an increase in funding but also higher quality education. We are also providing for those in aged care and for retirees by not, by example, introducing measures that will see franked dividends taken from retirees. There will also be more than 14,000 additional home-care places, and more.

It also means an investment in my electorate of $225 million towards the Frankston to Baxter train line duplication and electrification, which will provide much crucial connectivity to people in my electorate. This goes towards what will be the largest infrastructure investment in my electorate's history. It will connect Frankston via metro rail to Frankston Hospital, Monash University, Karingal, Langwarrin and Baxter. It will mean park-and-ride options, potentially, at both Baxter and Langwarrin, meaning that people living on the peninsula won't have to travel as far. They won't have to go to Kananook or Seaford or Frankston to get to the train; they will be able to go somewhere much closer to their home and won't have to drive around looking for parking. It will also mean that people won't have to queue up to park at the local hospital. They will have greater accessibility by a train service to the hospital, reducing parking pressures there and meaning that families can visit their relatives in hospital. That is a project that we're also calling on the state government to co-contribute to in an amount matching our $225 million. It is an important connectively project that will mean at least 4,000 jobs created in the Dunkley electorate—connectivity, jobs, education, community connectivity and more.

These are some of examples of what we've been able to achieve through strong economic management. At the same time, we are introducing these personal income tax changes, paying down our debt over time and, therefore, spending more on crucial services like infrastructure, health and education. Thank you. I certainly do commend this bill to the House.

Pat Conroy (Shortland, Australian Labor Party, Shadow Assistant Minister for Infrastructure) Share this | Link to this | Hansard source

I rise to talk about the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. I do so with eagerness because this bill allows us to talk about the centrepiece of the government's hopeless and already discredited budget and the philosophical underpinnings of that budget. The philosophical underpinnings of this budget are twofold. First, it's a reaffirmation of the discredited 1980s economic theory of trickle-down economics. Secondly, it is a bizarre commitment to an arbitrary limit on the size of government at 23.9 per cent. That is not grounded in any analysis other than the Treasurer plucking a figure out of the air.

I will go to the first one, which is trickle-down economics. That's the premise of these tax cuts: you give tax cuts to the rich, and somehow they will spend the money in the economy and low- and middle-income earners will receive some benefits down the road to stimulate the economy. This was tried by Reagan and Thatcher in the 1980s and it failed . It absolutely failed then and it will fail now. As the saying goes, something trickles down, but it's not money, that's for sure! I will go to the income distribution of this a bit later. If you want to stimulate the economy, you're much better off targeting tax cuts at low- and middle-income earners rather than the wealthy.

The second part of the philosophical underpinnings for this bill and this budget is a commitment to keep the size of the government at 23.9 per cent of the economy. Why they've plucked 23.9 per cent out of the air I don't know. I don't know why they didn't plump for 23 per cent or 24½ per cent. It just seems incredibly arbitrary and seems to be premised on a view, a very mistaken view, that we're a high-taxing nation.

I want to inject some facts into the debate that were absent from the member for Dunkley's contribution. I'm going to start with regard to whether we are a high-taxing nation. Look at OECD nations, our comparator countries. It's fair to measure us against OECD nations. There are currently 39 members of the OECD. Where would we rank in terms of gross government revenue as a percentage of the economy? If you believe the Treasurer, we'd up the far end, next to socialist nirvanas like Denmark or France. We rank 11th lowest out of 39 countries, barely above countries such as Colombia, Mexico, Indonesia, Costa Rica, Lithuania and the United States. And, if the Treasurer gets his way, we'll move further down to the left and be amongst the countries like Mexico and Indonesia on the size of the government compared to the size of the economy. There is no reason for this. Taxes are good or bad depending on how they work and what you use the money for. I would submit that it doesn't matter particularly whether the size of government is 23½ per cent of the economy or 27½ per cent of the economy; it's how you raise the money and then how you spend it.

Labor's alternative approach is to give more targeted tax cuts and greater tax cuts to low- and middle-income earners where they're needed, to reinvest in services and to pay down the debt and deficit more rapidly. Look at the government's budget. How are they paying for these tax cuts we're talking about right now? They're paying for them through $17 billion of cuts to schools, which is having a direct impact in my electorate. My electorate will lose $33 million in schools funding over the next two years, and that's a great tragedy. I've some of the most resource needy schools in the country. One school—St Pius X Primary School in Windale—draws its student population from the lowest-SES grouping in the entire state. One way of saying it is that St Pius X is the poorest school in the entire state, and it's in greatest need of needs based funding. They've done phenomenal work with the early years in needs based funding, as the latest NAPLAN results show. They came first in the country in their cohort in key tests around mathematics, writing and reading. And they did this because they used their early-years funding to invest in more teachers.

The budget and these income tax cuts are based also on: $700 million in cuts to hospitals, including $37 million in cuts to hospitals in my area; $2.2 billion in cuts to university funding, announced in December last year; a $270 million cut to TAFE; an $84 million cut to the ABC; and cutting infrastructure funding against the long-term average by a third. The 10-year historical average of Commonwealth infrastructure funding across the Howard and then the Labor governments was 1.5 per cent of GDP. Over the four-year average of this government, that's fallen to one per cent—that is, cutting Commonwealth infrastructure funding by a third.

This budget also confirms the government will cut and abolish the energy supplement for new pensioners, costing a new pensioner couple $550 a year, and they will increase the pension age to 70, the highest in the western world. All this is to pay for these personal income tax cuts, some of which are justified, particularly stage 1, but I would submit stage 3 is completely unjustified and certainly not justified when you look at the impact of it.

The median worker in Shortland earns $47,300, according to ABS statistics. That worker will receive a tax cut of $9.80 a week or $509 per annum. I will repeat that. The median worker in Shortland—if you lined up every single worker in the electorate, 50 per cent earn less and 50 per cent earn more—earns $47,300. They will get a $9.80 a week tax cut under this miserly government. In contrast, a lawyer living in my electorate earning $200,000 a year will get $7,225 in tax cuts in stage 3. Let me repeat that. The typical worker gets $500, the $200,000 lawyer gets $7,225. How is that fair? The answer is it's not. When you look at the impact of that, my typical worker will see an increase in their disposable income of 1.3 per cent whereas someone on $200,000 will increase their income, courtesy of this tax cut, by 5.4 per cent. Sixty-two per cent of the income tax cut goes to the top two million taxpayers.

Another way of looking at this is through changes in the share of income tax paid by each income decile. By 2024, if all these tax cuts are legislated, for the people in the third-lowest income decile—the decile in our economy between 20 and 30 per cent—their share of income tax paid in this country will increase by 75 per cent, a full three-quarters increase in the share of income tax paid by the 20 per cent to 30 per cent decile. In fact, every decile between decile 3 and decile 8 would increase their share of income tax paid in this country.

The middle of the Australian tax paying population is being hit by this tax cut. And why are they being hit? They are being hit to cut the share of income taxes paid by the top decile. The highest 10 per cent of income earners in this country will end up paying five per cent less in their share of income tax paid by the entire tax paying population. And who bears the brunt of this? Services and low- and middle-income taxpayers. It's clearly inequitable.

NATSEM, who are, according to the former Prime Minister, the member for Warringah, the premier economic modelling outfit in this country, found the median household in my electorate earns $65,000 a year in income—again, line up every household in my electorate; 50 per cent earn less, 50 per cent earn more. Their increase in disposable income because of these tax cuts will be 1.3 per cent. For a household on $300,000, their increase in disposable income will be five per cent so a four-fold increase in disposable income against my particular median household. It underlines the fallacy behind this entire budget, which is: if we're going to stimulate the economy, we need to give the tax cuts in this particular way. It rejects conventional economic theory where, when you talk about the marginal propensity to consume—a term pioneered by John Maynard Keynes—you give tax cuts, you increase the income of low- and middle-income families. Why do you do that? Because they struggle to save a single dollar. If you give them additional income, they will have to spend that money to keep clothes on their kids' backs, to keep the lights on and to stock the fridge. That immediately injects money into the economy. It circles around and employs more people. It injects more money into the economy. If you give the same amount of money to a high-income family or household, they're as likely to save their money because they don't have to spend every cent they earn to survive. Therefore, money will actually be withdrawn from the economy, and the economic impact will be much lesser. If you opposite are serious about stimulating the economy, even leaving aside the equity aspect I talked about previously, you would give the tax cuts to low- and middle-income earners.

What's the cost of all this? We don't quite know. This is the fallacy, the ridiculousness of this debate. The government is asking the Parliament of Australia to vote to approve their seven-year tax plan across all three stages, without giving us annual breakdowns of the figures over all seven years and without giving us a breakdown between stages 1, 2, and 3. That is lunacy. That is an abrogation of the government's responsibility. In fact, they're asking the parliament to abrogate our responsibility to steward the Commonwealth's resources as finely as we can. How can we vote for something when we don't know what the finite costs are? It's a complete disgrace that the government is approaching this way. They're happy to talk about the cumulative impact of all the tax cuts. We hear government members trying to bulk up the moderate tax cut for typical workers to try to counteract the $7,000 figure for those on $200,000. So they talk about the cumulative impact, but they won't give us the proper cumulative impact of each stage of these tax cuts.

Luckily, other independent think tanks have had a go at it. Grattan Institute is a middle-of-the-road economic think tank. They're often critical of Labor's policies; they're not in alliance with the Labor Party. They estimate that when these tax cuts mature in stage 3, the annual cost of these tax cuts will be $25 billion per annum. Of that, $20 billion will be for tax cuts for those earning over $90,000—double the median income in my electorate—and $15 billion will go to the top 20 per cent of income tax payers in this country. That is an incredible amount. That is an absolutely extraordinary amount.

Labor has got an alternative. I can proudly go to the next election and say there is a clear choice. No-one can claim the two major parties are the same. There is a clear choice being proposed for the Australian people. On one hand is the government, the triumph of trickle-down economics, the triumph of small government, the triumph of giving tax cuts to those who need them the least. On the other hand is Labor's approach, which is about almost doubling the tax cut for low- and middle-income earners who need that cost of living relief and who are suffering from stagnant wage growth in this government. The median worker in my electorate on $47,000 won't receive a $509 tax cut; they'll receive a $928 tax cut—an increase of $398 compared to the plan of those opposite.

Secondly, we'll reinject money in vital government services, with an extra $17 billion for schools, $2.8 billion for hospitals, $2.2 billion for universities, $80 million for MRI, maintaining the energy supplement, rejecting lifting in the pension age, and paying down debt and deficit faster. How can we do all that? Because we have made brave and visionary decisions to cut down on loopholes in the taxation system. No longer will we cop tax minimisation using family trusts, where lawyers or surgeons will employ adult children or spouses and funnel money through them to minimise tax. No longer will we allow negative gearing and capital gains tax to be used to prop up a property bubble. Instead, we'll restrict negative gearing to new property, where it'll add to housing supply, while grandfathering proper arrangements. No longer will we cop corporations paying zero tax on their profits, which is what you have when you have cash refunds for dividend imputation. No longer will we cop other loopholes in the corporate system, such as multinational tax evasion. All of those are brave moves—it's brave for an opposition to put forward such a concrete plan—mean that we can afford greater tax cuts for those who need it most, retire debt and deficit faster and invest in vital services.

So this is a really good opportunity, in this debate and in the year ahead, to have a debate about what Australians want. Do they want an economy ruled by the top, where trickle-down economics is par for the course, or do they want to invest in services? Do they want to invest in the Australian people through increasing human capital? Do they want to get debt under control—because we had a debt emergency in 2014, but it's disappeared, very conveniently, now that the government's been in power for five years—and give real tax cuts to low- and middle-income earners? That's the debate that we're having right now. It behoves the government to split this bill, to get stage 1 quickly through parliament because they have strong support for that, and to park the other stages until we have a proper debate. I'm proud to stand for an alternative, fairer approach to the budget that rewards low- and middle-income earners as well as restoring vital services.

Luke Howarth (Petrie, Liberal Party) Share this | Link to this | Hansard source

It's great to be able to rise and speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, and I support the bill. I support the bill the way it is, the way the Treasurer delivered it in the budget just a week or so ago, because it delivers a fairer Australia and a better Australia for 94 per cent of taxpayers. Ninety-four per cent of taxpayers will benefit, and I've got to say that the government has a strong plan here: a plan to help the people we represent, to help all Australians, to build infrastructure, to create more jobs and to let Australians keep more of their own money. It's their tax, not the Australian government's tax. Those opposite think that what the Australian people earn they have a right to take, and they want to keep increasing taxes.

The other thing I learnt as a seven-year-old when I started judo in Bracken Ridge is that you never lie even if it means punishment for telling the truth. That was one of the golden rules in judo: you never lie even if it means punishment for telling the truth. I did judo for about 20 years, but I'm amazed that I hear opposition members from the Labor Party come into this place every day and fabricate the truth. We hear members opposite talking about cuts to health, cuts to schools and cuts to whatever. The fact—for you, Mr Deputy Speaker, and for the people in my electorate and the people listening—is that health funding is rising every year. Every single year, health funding goes up, and we're doing some great things in health. We're not doing what the Labor Party said 700 days ago that we'd do, selling off Medicare. In fact, Medicare is strengthened. Bulk-billing is up. State governments right around the country, including in Queensland, are receiving more. We have more funds for the Pharmaceutical Benefits Scheme and for schools in my electorate. We hear those opposite talk about a $17 billion cut. What I learnt in judo is never to lie even if it means punishment for telling the truth. The actual fact is that schools funding is being increased by $24 billion, and every single one of the 50 schools in my electorate gets an increase, not last year or the year before but every year. It goes up in 2017. It goes up in 2018. It goes up again in 2019. It goes up again in 2020. For those listening, I just really want to get that point across—that we should be telling the truth.

The fact is that those things go up, and we're only able to do that because the Turnbull coalition government and the budget delivered by the Treasurer, the Hon. Scott Morrison, the member for Cook, have delivered on increased jobs. We know that there have been a million jobs created in the last five years. We've seen increases in income tax come in. We've seen company tax revenue come in, despite the fact that the opposition voted against multinational tax avoidance measures before the 2016 election in the 44th Parliament. So we've had this plan around jobs, the economy and bringing the budget back to surplus, which is important for future generations. All that's being delivered in the budget.

That's in stark contrast to what the opposition are delivering and what their plan is. The people of Australia have a clear choice: lower taxes, better management of the economy, a plan to create jobs, making sure that we have reward for effort for those wanting to get ahead and eliminating bracket creep, or the Labor opposition with a plan for $200 billion in new taxes. They want to continue to keep people down. They want to keep them dependent on the government. I don't believe that. I believe everyone has the potential to do well, and I'll come back to that soon. The $200 billion that the Labor Party want to increase is right across the board. It's on housing, it's on family businesses, it's on large businesses, it's on retirees and it's on income taxes on individuals. That's just some of what they want to do. They're not happy with what we're paying today or the revenue we have today; they want to increase it by another $200 billion.

What does it mean when the Labor Party puts new taxes on housing? Does it mean it will push rents higher for the people in my electorate who are renting—in Deception Bay or in Clontarf where I live? What does it mean for the family that's on $60,000 a year and currently paying $400 a week—or $20,000 a year— in rent, which is a third of their income? Does that mean their rent will go up when Labor scraps all these changes, as it wants to do? Will it lower house prices? What does it mean for a young couple that's newly married that's bought a house for $350,000 and put down a $30,000 deposit and owes $320,000? Let's say the husband or the wife gets a transfer and they need to sell. Is their house still going to be worth $320,000 when these changes come in under Labor or will it go back to $300,000 when they've got to sell, so they make a 20 grand loss? These are the things—policy on the run like the NBN on the back of a coaster that Kevin Rudd did and so forth—that the Labor Party doesn't think through.

How will the Labor Party's attack on family businesses and trusts work out? We heard the previous speaker, the member for Shortland, say, 'Adult kids are rorting the system with trusts.' This is the way the Labor Party thinks: that everyone is out there rorting the system. Running a family business—and I've run businesses—can be tough, and both partners chip in. Children can chip in too; they letterbox drop and so forth for the family. The parents help out with bookkeeping, finances or babysitting. But the Labor Party go, 'No, we're just going to whack up taxes on trusts.' What does that mean for the mum-and-dad family businesses out there that are listening to this broadcast? I'll tell you what it means. It means that they've got a clear choice at the next election not to vote for Labor but to vote for the coalition, which is managing the economy well, and a Prime Minister and government with a plan that we're committed to.

What does it mean for large businesses under the Leader of the Opposition's $200 billion in new taxes? What does that mean for jobs? We know that the statistics don't lie. The statistics show that since we've reduced company tax for businesses under $50 million we've seen 415,000 jobs created in the last 12 months. Do you think we just want to give away tax for the fun of it? We really believe that by reducing company tax and making it more in line with what's happening in other countries, like our nearest neighbour Indonesia on 25 per cent—remember, we're on 30 per cent and all we want to do is lower it to 25 per cent—or the US on 21 per cent or the UK on 17 per cent, it'll help people in my electorate. It'll help with more jobs. It'll help with more investment, more equipment and more building on the premises to help the plumbers and the tradies and so forth. It helps keep those large businesses onshore too. We want to see more businesses remain onshore. They're already battling higher electricity prices and fairly high wages in Australia, which is good. We don't want to see more businesses go offshore to lower company tax rates overseas. We want to keep them here. The government's aware of that, and that's why it's reducing company tax. So when the member opposite and others get up and say, '$80 billion worth of tax cuts,' they're darn right. We are the party of lower taxes, not just in company tax but in income tax. Ninety-four per cent of Australians will benefit from the coalition government's income tax plan that I'm speaking on here, and that's really important.

I haven't finished on Labor's $200 billion yet. They also want to hit the self-funded retirees—the people who have been saving. They want to hit the retirees as well. I had a lady come up to me in North Lakes the other day. She's one of those people who have done the right thing: she's saved, she's got money in the bank, she owns her own house and she gets about $14,000 a year from shares that she was left from her parents when they passed. That $14,000 a year, she'll lose the lot under Mr Shorten. She's going to lose all of it. Not some of it; the lot, because she earns under $18,200, and that's what the tax-free threshold is. She said to me, 'Luke, what am I going to do?' I said: 'Don't vote Labor, for starters. Vote for me. I'm sticking up for you.' This will be the impact of what the Labor Party wants to do with their high-taxing, high-spending agenda. I'm not for it. I don't support it. I'm saying to the people in my electorate: 'We have a much better plan. We believe in you and that everyone can get ahead.'

They also want to hit high-income earners. They think, 'Oh, well, people on high incomes can afford it.' If you're a family earning $190,000, it doesn't matter that you're already paying $58,732 in tax plus the Medicare levy; the Labor Party want to charge you another two per cent, because $58,000 is not enough. They love to use the example of millionaires—'All the millionaires out there in Australia, they're all getting away with it.' If you're earning $1 million, you're currently paying $428,000 in tax plus Medicare. But $428,000 in tax isn't enough; the Labor Party want to hit you again. Whether it's housing, family businesses, large businesses, retirees or individual income tax, the Labor Party's going to hit you. That's all you need to know, okay? They want to tax and they want to spend. That's what they want to do, whereas we believe in lower taxes and making sure that 94 per cent of Australians will be rewarded for their effort.

What the Treasurer brought down the other night was lower, fairer and simpler. It's in three stages, as we know. There's immediate tax relief in the 2018-19 tax year, the next 12 months, that will deliver up to $530 a week extra to low-income earners. That all adds up. Another $10 a week—if your rent goes up $5 a week, you've still got $5 extra left over. That's what we're delivering right now, and that will affect 66,000 people in my electorate alone. Consider the rest of the country. We're also making sure that bracket creep is annihilated. We know that after $80,000 it used to go up to 37 cents on every dollar you earned. The Turnbull government has already increased it so that you're still on the 32½ cent rate up to $87,000. We're now going to increase it to $90,000. Then, in 2024, six years from now, we want to make sure that 94 per cent of Australians pay no more than one-third of their income in tax. I know a guy who lives in my electorate that just eight years ago was earning about $40,000 a year, and today he earns $80,000 a year. He's doubled what he earns. There's no reason why people currently earning $70,000 won't be earning $130,000 six years from now. I believe in people and the potential to work hard to get ahead, and we know that the Labor Party don't. If you earn over $110,000 or $120,000, you get nothing. Nothing for you; they're just going to tax you more.

Under our plan, it's about lower taxes and reward for effort—after all, it's your money, not ours. I often hear stories of students or a husband or wife that are working, trying to provide for their family. They have a day job and they might do a bit of extra work—they might do a night job, a weekend job or overtime—and they go: 'Sometimes it's not worth it, because I get hit with higher taxes. They're taking a whole lot more out of my pay packet.' Well, our plan kills that. We're saying that you can earn up to $200,000 and pay no more than a third in tax. That's fair, because even if you're earning $50,000, and it was a third—it's not a third, because you get the first $18,200 tax free and so forth—you will pay a lot more even if it's a 32 per cent rate if you're earning $180,000. Those over $200,000 will still be on the 45 per cent tax rate.

It's a vision that we're laying out. It's been well thought out by the Treasurer. We've seen the benefits of our plan in relation to jobs and cracking down on multinationals. We've increased revenue, balancing the budget next year so we're not leaving future generations—my children, your children and younger Australians—with future debt and deficit. That's still on the agenda, but it's making sure that we deliver now immediate relief for those most in need—the 66,000 in my electorate.

It's about the government saying to the people listening: 'We believe in you. We don't want you to be dependent on the government. We want you to get ahead. We're not going to keep hitting you with higher taxes and more effort.' Finally, in summing up, I remember when I was seven being taught at judo the golden rule: never lie even if it means punishment for telling the truth. The next opposition speaker who gets up and says that we're cutting education and health should remember that golden rule.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

From listening to a number of speakers from the government side in this debate on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 you'd think that the centrepiece of this budget was delivering tax cuts to working families. Time after time they've been saying that this is the priority of this government, but, quite frankly, everyone knows that that is a myth. Everyone knows that the centrepiece or the signature policy of this government is the $80 billion tax cut to big business. They don't like talking about health, education or pensioners, because they are all cuts. What is happening to families out there are all cuts.

This is an exercise in smoke and mirrors. They're trying to say that they are going to give these tax cuts from 1 July this year. They are projecting our economy for another seven years. They are saying that they are going to make this plan and that wage growth will average 3½ per cent. No economist has come out to endorse the government on any of that. Not even the conservative media have come out with that—not even Sky News. Nobody has come out to say that this is based on any real or proper foundation. This is a pie in the sky.

They are trying to sell as the centrepiece of the government's budget plan these tax cuts for Australians. If that's really what it is about, we have a far better plan for them. The Leader of the Opposition in his budget in reply speech actually spoke of it. We will double what the government is proposing to put out on 1 July this year. We would deliver double that by 1 July 2019. What the government is talk about is a modest increase of about $10 a week for workers in this country. We're not going to stand in the way of any increase, but that is a pretty modest increase. You only have to spend a little bit of time at McDonald's to realise it's going to get swallowed up pretty quickly, particularly if you have got a family.

In addition to that, they're going to project what the economy is going to be like effectively for the next seven years. No reputable economist that I've read has come anywhere near that and given it any credit. They say that you don't know what will occur that far out. I will go to what the IMF, for instance, had to say about it. In terms of the budgetary position, they said:

Decisive action is needed now to strengthen fiscal buffers, taking full advantage of the cyclical upswing in economic activity.

That's the IMF's position: think about where you are now and make some plans for the future by having that buffer. I would have thought that it was almost conservative logic to do something like that. I think John Howard had a bit of a view about that at one stage, although he didn't want to spend much on infrastructure when he was there.

Also, talking about conservative commentators, Peter Martin, the economics editor in The Age,said:

We've been given a budget for the good times that rewards us as if those good times will last, even though they may not.

The world did not see the coming of the global financial crisis in 2008. We all saw when Lehman Brothers went under, and then it started cascading. It caught out just about every international economy, except Australia. I think we handled that pretty well. The member for Lilley was regarded very highly over the way he took decisive action and actually insulated Australia's economy from that. You never hear people over there talk about the global financial crisis. What they do like to talk about is debt and deficit.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Not anymore.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

They like to talk about budget emergencies and all that sort of stuff, although you're right, they're not talking about that now; they've decided to give that away. They almost tripled the debt at that stage. We are now moving past half a trillion dollars in gross debt in this country. So they are moving forward on this all right, and yet they want to give $80 billion to big business. They say that, if we do that, it's going to trickle down to workers. When you think about it, big business in this country has been making reasonable profits over the last five years. Those profits haven't trickled down to their workers. The banks, under the Treasurer's plan, are about to get a tax cut of $17 billion, but the banks over the last 12 months made about $34 billion in profits collectively. That hasn't trickled down to workers in the financial system. It hasn't trickled down to the workers in the big banks. I can't speak for the executives up there, as to what they're getting paid. Bear in mind that this is the government that fought tooth and nail for a royal commission into financial management institutions generally. They didn't want it. As the Treasurer pointed out to us on many occasions, 'It's not going to tell us anything that we don't know about the financial institutions.' Now they don't want to know a thing about it.

We are seeing a litany of things coming out about how the banks have exploited customers and about companies such as AMP, which is almost without a board now because of mismanagement and the way they deal with customers. For children, there is the Dollarmites Club. I always thought the 'Dollarmites' was where I would like to go skiing one day! The bank made sure they artificially stimulated the Dollarmites Club so that the executives could still get their bonuses from operating accounts. These are the people that this government is wedded to looking after. The centrepiece of the government's budget was to give $80 billion to big business and multinational companies. Simply giving $10 a week to workers—as much as anything is going to be helpful for people, particularly those with families—doesn't really measure up to this.

I have just one piece of advice for those opposite. I've been married a long while—in fact, 42 years today—and we've had to manage our household budget. When we couldn't afford things, we didn't buy them. If the government really cannot afford to give an $80 billion increase to big business, don't do it. It's as simple as that. Don't do it on the backs of pensioners, on the backs of families, on the backs of hardworking Australians. There is the hyperbole they go on about over there: 'We want to recognise hard work.' They seem to be outright penalising people who are working hard for this country.

Pensioners in my community—and, as a matter of fact, all of the government's pensioners over there as well—including age pensioners, are going to lose their energy supplement of $14 a fortnight. The government reckon that they don't need it now, even though we're seeing record electricity prices at the moment under their watch. Even though that's all occurring, they're going to take that from pensioners. These pensioners aren't about to work some overtime. They're not about to work another shift or anything like that to pay the difference, because, in most cases, they are age pensioners or disability support pensioners and they don't get any extra income.

We see a government that's committed to wanting to take money out of education. It wants to take $17 billion out of our schools. I would have thought everybody in this place would understand the value of a good education. Most people in this place have had a good education. An investment in education is an investment not only in people who are going to either school or tertiary education; it's an investment in the future of this country. It's a matter of actually believing in where we want to be in the years to come. That is why you put money into education and into our universities and our TAFE colleges. In my own community here in Western Sydney, we are building the Badgerys Creek airport, and the government keeps talking about that, which is great. We need infrastructure to support it, but I'll tell you what we really need. We need young people who are trade qualified to work there, yet we see another $260 million is being taken out of TAFE. That means fewer apprenticeships.

We need to start being smart about this. We need to look at building a country that is going to be able to work towards the future. We need trades. We need to be skilled. We need to be smart. We've got to be that smarter nation. We can't be the ones who are just, as former and now current Prime Minister Mahathir said, the white trash of Asia. We've got to be there, outcompeting all those in our region and all those on the globe. We need a smart country, and that's going to be underpinned by smart people. We've got to ensure that our young people have the skills to compete for the future.

I want to get back to the tax plan. Whilst we will support, clearly, an increase for workers—and, at $10, it is a modest increase—I would have thought the smarter thing for this government to do would be to break up this bill into three components. We would allow the first tranche of this to go through. But, in terms of what's due to come in part 2 and part 3 of it in another four years and another seven years, let's see what the financial information that's current for that time is going to be. The government benches are called the Treasury benches. If they're the Treasury benches, you should know what you're going to be budgeting for if you're going to start making outlays that will apply in seven years time.

It seems to me that there's just too much happening at the moment around finances and budgets and things like that for people to comprehend. Only today, believe it or not, we learnt about this secret deal with Pauline Hanson. I was here when John Howard was Prime Minister. As a matter of fact, I got along quite well with John Howard. He made it very clear when he was here that he would put One Nation last. The Liberals would not preference them. We don't even know what's in this deal. Mr Deputy Speaker, you heard today, time and time again, the Prime Minister being asked: what is this deal which Senator Cormann has already validated as existing, what's in it, what has Pauline Hanson been able to get from the government, and is it in the budget? Clearly, they can answer that, but they won't. I don't know whether they've gone to your party room and told you guys what's happening. I know most of my colleagues over there on the government side. I wouldn't accuse any of them of being racist, but you're really getting into bed with a racist party. If you're going to start doing secret deals and you're not prepared to admit to them in this House and not prepared to admit to them to the Australian people, is this going to be the basis upon which we're going to have budgets in the future?

As I said, I would have thought the smarter thing for this government to do would be to agree to amend the legislation to allow the first tranche of it to proceed on its own merit and for the further aspects of it, the second and third tranche, to be subject to financial information, including the year-on-year costings.

Debate interrupted.