Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the honourable member for McMahon's amendments to the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, and I do so because he's done a lot of hard work. Labor's done the hard work—the member for McMahon in particular—and as a result we are going to be able to deliver bigger, better and fairer tax cuts for 10 million working Australians. Ten million working Australians will be better off under Labor's plan for a bigger, better income tax to support lower- and middle-income people, including, of course, all those Australian families, like those in my electorate of Solomon, in Darwin and Palmerston.

I was in the chamber yesterday evening to listen to the debate, and I listened to both sides. The last speaker last night, the member for Fowler, spoke incredibly well about the difference that we have with those opposite when it comes to priorities—and budgets are about priorities. He also spoke about how workers in his electorate are going to be much better off. I concur with everything he said—in particular, the fact that Labor's bigger and better income tax plan is going to be of enormous advantage for low- and middle-income people, and it's going to be really good for those families struggling with bills.

I contrast that with what one of those opposite said in the debate last night. I don't mean to single him out, but the member for Dunkley mentioned Wayne, a hairdresser in the member's electorate. He spoke about how Wayne would be $530 better off because he's paid about 50 grand per annum. But that's under the Liberal plan, which we support the first tranche of. Wayne, a hairdresser in the member's electorate, will be $530 better off per annum, but under Labor Wayne would be $928 better off. That's almost double. We were here in the chamber last night listening to those opposite trying to tell us that an $80 billion tax cut to corporate Australia is better for hairdressers like Wayne. Our bigger, better income tax would mean that Wayne would have hundreds of extra dollars in his pocket, and that money would circulate back through the economy, because that's what happens when you invest in lower and middle-income working Australians.

Seventy-six per cent of taxpayers in my electorate of Solomon are going to be better off under our bigger and better income tax plan—76 per cent. That's extremely helpful for those families struggling with the cost of living, who would be $928 better off. If you're a young person working in my electorate, in Darwin or Palmerston, you might even be able to afford a one-way airfare from Darwin down to Melbourne. We're trying to work on the airlines and get them to perhaps stop gouging us as much as they are, and we've started a Fair Fares campaign to that effect. But you can see how helpful $928 would be to someone who's living in a regional or rural area of Australia.

I don't know how the National Party sleeps at night. I've got no idea. How can you stand by when $17 billion is going to be given to the banks who are ripping off your farmers, the farmers that you say that you represent? Seventeen billion dollars to the banks! Then they take us back through time and say the GFC never happened. Well, the taxpayers of Australia supported the banks and guaranteed the banks during the GFC, and what was the thanks that the Australian taxpayers got for that? Rip-offs and rorts until this Prime Minister was forced, because the banks asked him, to start a royal commission. This Prime Minister was forced to start a royal commission, so now we're starting to see, through that royal commission, what behaviours are happening. Those are the priorities of those opposite. They want to give $17 billion in corporate tax cuts to the banks. Where is that money better spent? We believe in educating Australians and putting it into our schools. That's what we believe. That's what our priorities are on this side.

Seventy-six per cent of taxpayers in Solomon are going to be better off. A glassie on Mitchell Street—Mitchell Street is this great strip in Darwin, with pubs and restaurants—who is going around being friendly to patrons, having a great time and picking up glasses is going to be $770 better off under Labor than they are now. We don't have as many backpackers as we used to have, because unfortunately those opposite brought in a backpacker tax that scared a lot of them away, but because we have such an amazing tourism experience in Darwin I'm happy to say that the backpackers are coming back. The glassies will be better off. A grade 4 bus driver taking his mates from a work site back home safely will be $508 better off under our bigger and better income tax plan. A senior constable working in the soon-to-be-built Palmerston police station will be $928 better off under Labor. Those opposite talk a lot about law and order. We're supporting the people who serve us in the community and enforce the law. We're supporting them by giving them an income tax cut that is almost double the one from those opposite. As for first responders, a fully qualified paramedic will be $665 better off. People who are out there saving lives on the front line are the ones that we support, not the big banks. The big banks are making record profits. They'll be all right. They're shutting branches and making record profits. They don't need a $17 billion tax cut. Those opposite believe they do. The policeman on the beat, the paramedic and the senior firefighter fighting fires and putting his or her life at risk will be $928 better off under our plan. That's where our priorities are.

An intern at the new hospital at Palmerston—a project supported by both sides of politics—will be $928 better off under Labor. A teacher on $65,000 a year will also be $928 better off. A principal will also get income tax assistance through our plan. A principal at one of our fantastic schools in Solomon will still be better off—$140 better off—under Labor. And a junior leader with the Australian Army, based in Darwin, who may have done a couple of tours overseas serving our country, will be better off. Those opposite want to give a $17 billion tax handout—some tax relief—to those corporate banks that are struggling! We want to give it to the junior army leader in my electorate, because they're a young guy or girl who is serving our country, may have kids and may be struggling with the costs of living. That's who we want to support.

Budgets are all about priorities. On average, nurses at Royal Darwin Hospital will be $928 better off under Labor. The reason that I have gone through some examples of working Australians in my electorate and pointed out how they'll be better off under our bigger and better income tax plan is that it proves where our priorities are, and that is on lower and middle income Australians—those people who are serving us, those people who are working in retail. I listened to the government speakers in a completely objective way. I listened to what they said and tried to see if it fitted with the actions in the budget. The conclusion that any reasonable person would come to is that their priorities are aimed at the top end of town, not at lower and middle-income people. They're out of touch. The member for Barker said that our side of politics was talking down trickle-down economics. Yes, we were. Yes, we do. We do talk down trickle-down economics, because it was discredited in the eighties and it's never worked in one country, ever. If there is one, point it out to me. Yes, we are talking down trickle-down economics. The idea that those opposite want you to believe, that they're going to help out corporate Australia when corporate Australia is having record profits—it's a good thing it's having record profits, but does it need an $80 billion handout at the expense of working Australians like the people in my electorate? We say our priorities are with lower and middle income working Australians. We need real reform of the banking system, not a $17 billion handout to the banks.

We have done the hard work to deliver these bigger, better and fairer tax cuts. I commend the shadow Treasurer, the shadow finance minister and all those who are supporting hardworking Australians. They're making the tough decisions because we want our priorities in government to support working Australians, and that means putting money back into our schools and into our hospitals. I hope that those listening can see, with a couple of clear examples, that this budget is a con job. It fails the fairness test at every level.

Pensioners are also losing out. In the time remaining, I want those listening to put their own fairness test over this. Pensioners are losing out. They are losing $14 a fortnight. We should be caring for those who cared for us. We should be supporting those who grew us up, who built this country. And they're taking money off pensioners to give to banks? What does that say about the priorities of those opposite? I don't know whether many of those opposite did manual labour in their life. I'm a former soldier; I worked hard. My body has paid a bit of a price for it, but I tell you what, in my electorate there are people building our city. They're working hard, physically hard work, in the tropics. And they say: 'Why would a Prime Minister make us work until we're 70? Why would he increase the pension age so that I've got to work until I'm 70? I've been paying taxes my whole working life. I've been building this nation, building our community, raising a family. Why would he want me to work until I'm 70?' They don't see it as fair.

Those opposite claim to be the superior financial managers. Net debt's doubled to more than $350 billion under the stewardship of those opposite. They like to pretend there wasn't a global financial crisis when this side of politics supported working Australians and kept us out of a recession. Those opposite like to believe that never happened, but I can tell you it did. The member for Lilley and those that were in this place at the time worked to support working Australians. That's what the member for Maribyrnong is doing right now. That is the reason our Leader of the Opposition has put forward with his team—the member for McMahon and others—these amendments that I support strongly. I support the shadow Treasurer because we have our priorities right on this side of the chamber—that is, a bigger and better income tax plan for working Australians, almost double that of those opposite. Those opposite need to have a hard look at themselves and bring fairness back to this country.

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

It is with pleasure that I rise to support the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, which ushers in tax relief for millions of hardworking Australians. I'll touch upon the opposition's position towards the end of my speech to the House. Suffice to say, if those opposite ever get control of the Treasury benches and the keys to the Treasury, it will be an economic shambles in this country, and I think most Australians know it. They have long memories. They remember the days of Rudd and the Rudd money and the shambolic economic management of the opposition. They have absolutely no economic credibility; it's all smoke and mirrors over there on the opposition benches. They are essentially economic charlatans.

It is with pleasure that I rise to support this government bill, the measures of which have been very well received not only in central western New South Wales but right across Australia. They are all about helping Australians get their hard-earned money by giving it back to them and putting it back in their pockets, rather than penalising them, stifling their effort and stifling their enterprise, which is what those opposite benches specialise in. With personal income tax accounting for over half the Commonwealth government's tax revenue, it's important to get this issue right and make sure that our hardworking Australians are not overtaxed and not prevented from getting ahead through unduly high taxes or by seeing the gains that they are able to make eroded through issues like bracket creep, which is a constant issue facing Australians. As we've heard, the government's plan is a three-step plan, and I'll briefly touch upon those three steps. After that, we'll focus our attention on the opposition.

Step 1 of the tax plan is to provide immediate relief to low- and middle-income earners. The government is providing relief to earners of up to $530 in 2018-19, 2019-20, 2020-21 and 2021-22 through these targeted tax offsets. Those earning up to $37,000 who face a 19 per cent tax rate will have their tax reduced by $200. This will increase incrementally for those earning between $37,000 and $48,000. The maximum offset of $530 will be available to taxpayers earning between $48,000 and $90,000. Then this benefit gradually reduces at a taxable income of just over $125,000. This is going to assist over 10 million Australians, including those on average full-time earnings receiving the $530 benefit. The benefit of the offset will be received as a lump sum on assessment after individuals lodge their tax returns. This offset is in addition to the low income tax offset. This targeted approach will ensure tax relief goes to middle- and low-income earners, where it's needed.

In terms of protecting against bracket creep, from 1 July the 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. This will prevent around 200,000 Australians from paying tax at the 37 per cent marginal tax rate. And then from 1 July 2022 the government will lock in the tax relief from the new offset by increasing the top threshold of the 19 per cent bracket from $37,000 to $41,000, providing tax relief of up to $540 per year, and increase the low income tax offset from $445 to $645. This change to the 19 per cent bracket will prevent around half a million Australians from paying tax at the 32.5 per cent marginal tax rate in 2022-23. In addition, the government will provide tax relief of up to $1,350 year by increasing the top threshold of the 32.5 per cent bracket from $90,000 to $120,000 from 1 July 2022. This measure is projected to prevent around 1.8 million taxpayers from facing the 37 per cent tax rate in 2022-23 due to wages growth and bracket creep.

How do those tax measures affect folks on the ground in electorates across Australia? Those measures will help over 61,000 taxpayers in the central west of New South Wales, in the Calare electorate, benefit from low- and-middle-income tax relief in 2018-19. For example, if you're a worker on $50,000, you'll get an extra $530 in your pocket from the budget year onwards and an extra $3,700-odd in your pocket over the first seven years of the tax plan. If you're on, say, $88,000, you'll immediately get $575 and you'll get an extra $4,000 over the course of seven years. These are substantial savings which will make a real difference to the lives of everyday Australians. A person on $75,000 a year will get a $530 tax offset straightaway and then over $3,700 in their pocket over the first seven years of the plan—and so it goes on. These are real tax relief measures that are going to help put money back into the pockets of everyday Australians.

The third phase of the plan is basically about making personal taxes simpler and flatter. In 2024-25 the government will simplify and flatten the personal tax system by abolishing the 37 per cent tax bracket entirely—this is substantial reform—and Australians earning more than $41,000 will only pay 32.5 cents in the dollar all the way up to the top marginal tax threshold, which will be adjusted to $200,000. As a result of these measures, around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, in 2024-25 compared to 63 per cent of taxpayers in 2024-25 under the current settings. These are very substantial reforms and they will make a real difference on the ground. Australia already has relatively high rates of tax, cutting in at relatively low levels of income compared with other countries. So it is important that we undertake this tax reform. Australia's top marginal tax rate cuts in at around 2.2 times average full-time earnings compared with four times average full-time earnings in Canada and the UK and 8.8 times average full-time earnings in the US. Without change, Australia's ratio is projected to drop to around 1.7, reducing our international competitiveness and our ability to attract and retain talent. Under the government's plan, the ratio will fall more modestly to around 1.9. This is a very substantial tax relief package. It is aimed to help folks on the ground in Australia, including low- and middle-income earners. You've got to compare those tax relief measures to what is being proposed by the opposition. I mean, they come into this House and, honestly, on one level you have to admire the front—folks, it is all smoke and mirrors. They are aiming to grab $200 billion from some of Australia's most vulnerable people.

Let's take a look at Labor's retiree tax. That's $10.7 billion over the four-year budget forward estimates but it's going to be a lot more over the decade. What they're aiming to do is snatch money back from retirees. That's what they're doing. These retirees are people who've worked their whole lives, who've given to Australia, who've made their plans and now, in their most vulnerable time, these older Australians are going to be hit very hard.

It's starting to bite, I think. The opposition, they've got some by-elections coming up, and you can see in question time that their heads are a little bit down because they know that they've got some real problems in this area. The cat was belled recently in a very good article in The Australian on 13 March which reported on the Self Managed Super Fund Association chief, John Maroney's, comments. It makes for salutary reading for folks on the opposition benches. He says:

It is our contention that this proposal will affect more than one million Australians saving for their retirement and other purposes. Our calculations show it will cut about $5000 of income from the median SMSF retiree earning about $50,000 a year in pension income. To be saying these people won’t be paying any more tax is just semantics.

The article goes on to say:

Mr Maroney said the hit on retirement incomes was clearly "not just affecting the very wealthy and can substantially damage the lifestyles of retirees who have prudently saved and are carefully drawing down on their retirement savings."

He also stated:

Viewing all SMSFs as belonging to the mega-rich is an over simplification.

I think he's got it dead right. Those pensioners and retirees will be affected by this tax grab from their income. You know, the chickens are going to come home to roost and they may come home sooner than the opposition expect.

On top of that, you have Labor's housing tax, a $20 billion tax on mum-and-dad investors through Labor's plan to abolish negative gearing for established homes. Again, this is not something that just affects wealthy people. One-in-five police officers negatively gear as do 50,000 teachers. Small businesses negatively gear. As the Treasurer said recently, more than 60 per cent of people on incomes less than the average wage negatively gear so a lot of these measures have not been thought out. You've got Labor's investment tax—that's $13 billion. That's the tax increase in capital gains tax for all assets by 50 per cent by halving the CGT amount. This is on all assets. It hits every investment and will hurt productivity and the living standards of all Australians.

The taxes, they just keep on rolling in. Labor's tax return tax is a $1.5 billion tax, courtesy of Labor's proposal to slap a $3,000 cap on the amount individuals can deduct for managing their tax. Then you have Labor's higher income tax—a $22 billion tax on wages, courtesy of Labor's plan to re-impose the deficit levy The taxes keep coming thick and fast. Don't be fooled by the economic charlatans on the opposition benches. Taxes are coming if the opposition ever regain the Treasury benches in this country and they're going to hurt some of the most vulnerable Australians.

You look at Labor's family business tax—a $22 billion tax on family businesses, with Labor planning to impose a 30 per cent tax rate on distributions from discretionary trusts. This will hurt family businesses, particularly those in regional areas, where the variables of the weather year to year can impact on cash flow and income—and it's not just on farms. These families use trusts legitimately to spread income between beneficiaries to assist in flexibly managing their affairs. Then, of course, you've got Labor's savings tax. This is $25 billion worth of new taxes on your superannuation savings, lowering the annual non-concessional contributions cap to $75,000, lowering the high-income super contribution threshold to $200,000, reversing the introduction of catch-up concessional contributions and reversing changes to tax deductibility for personal contributions.

The taxes just keep on coming. Who can forget the Labor tradie tax? This is Labor's change to tax deductibility for the 800,000 people who are self-employed. Finally, you've got Labor's growth tax, imposing higher taxes on business earnings. This is a $59 billion tax on Australian businesses, courtesy of Labor's plan to reverse the Australian government's enterprise tax plan. They continue to deceive Australians about reversing the tax cuts that have already been legislated for 3.2 million businesses with a turnover of less than $50 million.

The new taxes are coming, and I warn all Australians that those opposite can't be trusted. You look at their economic management—their management, full stop, has a long and sorry record, from the pink batts fiasco to the Building the Education Revolution fiasco, where overpriced school buildings were constructed by out-of-town builders. You look at the Rudd money fiasco, where money was literally shovelled out of the backs of trucks. They are an economic shambles over there, but I commend the fiscal responsibility of the government. (Time expired)

Linda Burney (Barton, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I follow the member for Calare, and I remind him that it was under Prime Minister Rudd that we avoided the global financial crisis because of the very measures that he was running down. When it comes to vulnerable Australians, I'm glad the minister is still in the chamber. I spoke to the member for Bruce yesterday, and, if anyone's attacking vulnerable Australians, it is the government. There is a gentleman in his electorate who is eligible for the age pension, and it's taken 12 months for that pension to be approved. So let's not be fooled by the member for Calare's comments.

I rise to support the amendment moved by the member for McMahon to the second reading motion of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, for the following reasons. What the Treasurer and the Prime Minister expect us to do in relation to this budget—of course, the hallmark of the budget being the company tax reduction and the Personal Income Tax Plan—is to take a leap of faith when it comes to these plans and to this budget. The expectation is unacceptable not only to the opposition but to the Australian public. Despite repeated questions to the Treasurer over the past few days in question time, the true costings are still unclear. The Treasurer refuses to provide those costings for 2018, 2022 and, particularly, 2024. The leap of faith I'm talking about is for the government to fully implement its proposed tax plan. We have to go through three election cycles before it can be fully implemented, and I think that is a mark of arrogance and a mark of, as I said, the leap of faith expected of the Australian people, who will be so affected by this.

Labor have said repeatedly we will support the government's measures to begin on 1 July this year—the component of this bill that is geared towards relieving low- and middle-income earners. We know, as the government knows, if we provide tax cuts to these groups of people, that the money will be spent and it will benefit the economy enormously. That is one of the main reasons that Labor have said that we will support the first tranche of the tax cuts, for 2018. But the stubbornness of the government and, in particular, the Treasurer, in refusing to split the bill so that we can support the first tranche of tax cuts to low- and middle-income earners, is just mind-boggling. I suspect that if The Australian newspaper is correct in what it has on its front page this morning then the tax plan is pretty much in tatters, and I suspect there's a fair bit of scrambling going on at the moment within the government. The intransigence of the government in not splitting the bill is really a slap in the face to those people that would benefit from tax cuts in 2018. The measures that I am speaking about in the bill are to introduce low- and middle-income tax offsets—a non-refundable tax offset of up to $530 per year for taxpayers earning up to $125,000—and to increase the threshold of the 32.5 per cent personal income tax bracket from $87,000 to $90,000. However, as I said, the government is refusing to split the bill. The reality is that the government is holding low- and middle-income earners hostage by sticking these cuts to cuts for high-income earners. We find that completely unacceptable. I suspect that the logic and the thinking of government members would find it unacceptable as well, but that is what has been hung around the government's neck.

According to the government, the total cost of those cuts would be $13 billion over the forward estimates and $140 billion over the medium term. We need more information on the rest of the proposal. As I've said, we've been asking the government to explain the numbers in parliament, and there is a ridiculous refusal to do so, and people are not going to find that acceptable. Last week the Australian Bureau of Statistics released its wages data, which completely threw into doubt the government's overly optimistic wage growth forecast and casts doubts over the government's budget forecast. The government is, as we know, married to its company tax cuts, and we know that that will benefit not the needy but the people and companies—some of them overseas companies and some of them banks—that need it the least.

Honestly, it is clear that in this budget the government is not only getting the proposals wrong but getting the narrative wrong too. Once again, a leap of faith is expected through to 2024. The nonsense of that to everyone is: who knows what the economic conditions will be globally in 2024? We are being asked to take that leap of faith and to assume that the global economic conditions will be favourable from now through to 2024, and there is no guarantee of that, of course. The government is locking in policy commitments that don't come into force for seven years, and that is unacceptable when we talk about the tax plans in the government's budget. The reality is that low- and middle-income earners are not the priority of this government. We understand that. This government is more preoccupied, as I said, with the company tax cuts.

Labor's plan will deliver larger and fairer tax cuts for 10 million working Australians, and we've made that very clear. With Labor, someone earning $80,000 a year will receive a tax cut of almost a thousand dollars a year. That's $398 better than the Liberals' policy. As has been articulated, a teacher on $65,000 will receive a tax cut of almost a thousand dollars a year. A couple earning $90,000 and $50,000 respectively will receive a tax cut close to $2,000 a year.

Labor will support the government's measures that begin on 1 July, as I've said, and a Shorten Labor government will deliver larger tax cuts from 1 July 2019. With Labor there are more substantial tax cuts than with the Liberals, and that means schools, hospitals and pensioners will be better off. Our plan—which is costed, I stress, by the independent Parliamentary Budget Office—will be $5.8 billion over the forward estimates. Labor can deliver larger tax cuts to low- and middle-income earners, and that is where, as we know, it will benefit the economy the most.

It is clear from the government's budget that it's priority is not low- and middle-income earners. The plan's studies have said that up to 20 per cent of income earners will see the largest percentage increase in their income tax cut. The government's plan will create a less progressive and more inequitable tax system, and that is surely not what this country needs. The government says it can afford an $80 billion tax cut for big business and a $17 billion handout to the banks, which is part of the $80 billion. Our argument is that that is not appropriate and that where that funding should go is to funding the things that people rely on—things like health, education and supporting people on pensions.

Of course, the government is also being seen to be cutting the energy supplement to pensioners by $14 a fortnight and forcing people to keep working until they're 70. I think the member for Solomon articulated that very well. That might sound fine for people who have jobs that aren't demanding on their bodies, but to expect a construction worker or a shearer to work to 70 is a nonsense. The government must surely realise that. The government has even placed a freeze on Medicare rebates for specialists. The truth is that this government simply does not get it and is out of touch, whether they argue the toss or not.

Under this government, the cost of living will increase. Workers in retail, food and accommodation industries stand to lose up to $77 a week. Families and pensioners are paying $20 a week more, or $1,000 a year, for private health insurance. We know childcare costs have increased dramatically. Also, the record cost to see a GP, particularly one who doesn't bulk-bill, is increasing. There is unemployment, and that is trending upwards, despite the government's rhetoric in relation to how many jobs have supposedly been created. We know that wage increases are not keeping up with inflation, and we know that very clearly. People out there in the community know that. People know that they are struggling to pay their bills, which are increasing while their wages are not. We also know that public sector wages grew by 0.5 per cent in the quarter and 2.3 per cent over the year. This is lower growth than in the last quarter.

I will finish in the next four or five minutes by summarising what I also wanted to put on the record. Despite the rhetoric from the government, real wages continue to stagnate and ordinary Australians—people out there whom we serve—continue to struggle to keep up with the ever-increasing costs of living. We only have to look at our power bills to understand that. Wages growth is barely above inflation, and we are hearing some horrific revelations from the royal commission into banking and financial services, yet the government persists with the nonsense of an $80 billion tax break to big business, and, as I have said, $17 billion of that will go to the banks.

I will finish up by pointing out that in Human Services, the portfolio that I have responsibility for, we are seeing the burden of balancing the budget placed on schools and hospitals and also on Australians who require income support. While the government has been dragged kicking and screaming to the royal commission, we are seeing the pursuit of innocent Australians for false and inflated Centrelink debts. I have said on numerous occasions that if there is fraudulent behaviour then, of course, any government has the right to pursue and recoup that money. But, in many cases—and we know that in the robo-debt debacle it was 20,000 cases—Australians were accused of owing Centrelink money when they in fact did not owe any money or owed much less than the debt articulated. We've heard horror stories from vulnerable income support recipients who received harassing and threatening correspondence from debt collection agencies sent out by the government. We've heard shocking reports about the government's issuing of inaccurate and unlawful debt notices. We've also heard of Centrelink making errors, like overpaying people over a period of months and even years, despite the fact that those people were trying to point out to Centrelink that there was a problem. We've heard those stories over and over again. Meanwhile, the government has taken an axe to Centrelink jobs, slashing 1,200 in this year's budget and 1,180 in last year's budget. Centrelink is understaffed and under-resourced; we understand that.

I finish up by saying to the government: split the bill. Split the bill, and we will support that first tranche of tax cuts. You will have to split the bill invariably, so stop being so intransigent about it. The issue out there in the community is that tax is complex. Many people find it difficult to understand the facts and the figures, but what the community understands very well indeed—and every member of this House also understands it, because the community is telling us this—is that the company tax cuts the government is proposing are unacceptable. It's unacceptable because of the flat wages growth and it's unacceptable because the government is refusing to split this bill and get tax relief to those that need it most urgently, low- and middle-income earners. I do not understand the government's tactics, and I suspect that the government's tactics are unravelling at a rate that is very, very fast.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I'd like to start off where the previous speaker, the member for Barton, finished. She talked about intransigence, and there is intransigence, but it's by the Australian Labor Party and their opposition to the government's tax reform proposals. It's quite clear why that's the case. While they talk about the tax system being complex, as the previous member being did, it's because they don't actually understand what the point of a tax system is. More importantly, the tax system is complex—that's true—and that's part of its problem, and that is what the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 is seeking to address.

This budget and much of the tax relief proposals before us are built on three pillars. The first pillar is one of responsibility. Responsibility, because it provides for the budget to finally be returned to surplus. The Labor legacy of debts and deficits accruing, which has been almost intractable for our government, is now coming to an end. There is light at the end of the tunnel. Instead of waiting and delaying, as our political opponents have done, we are not just finally bringing a point of surplus together, credibly, but actually bringing it forward so that we can start to pay down the debt of the Commonwealth.

The second pillar is, of course, security to make sure that people who are in a vulnerable stage of life get the support and assistance that they need. That comes through our support for mental health packages and support for people who are vulnerable throughout different stages of life, and our increase in support for people in aged care to make sure that they have dignity and choice as they enter the latter stages of their lives. But you can only deliver that sense of security and support if you actually have (1) a strong economy and (2) the means to deliver it, and by delivering a responsible budget you can also deliver a secure one.

Critically, and most importantly, the third pillar of this budget is one of opportunity—opportunity for all Australians to be able to realise their ambitions and their dreams. Critical at the heart of that is the tax relief proposal put forward by this government in this budget. It builds on the principle that I started with earlier: if you don't have a responsible budget that manages the finances of the nation in a measured and considerate way, if you don't have a responsible budget that recognises that government has to live within their means and if you don't have a responsible budget that recognises that we cannot imperil generations of the future to pay for our lifestyle today, you cannot deliver a budget that also delivers opportunity—opportunity for every Australian to be able to choose how they live their lives and to be able to make choices about how they want to secure their own futures.

That's what the tax relief proposals in this budget are about. They're about removing the complexity that seems to be loved and enjoyed by those opposite, including the member who just spoke, the member for Barton. They love and indulge in the fact that people can find ways to minimise their taxation obligations and love the fact that people see a huge discrepancy between tax arrangements so that the well off and the privileged are able to organise their affairs in their own interests and against their obligations to society. That's what complexity delivers, a worse outcome for every Australian, a worse outcome for government revenue and a worse outcome for taxpayers except for the select and privileged few. The core of the tax relief proposal that is being put forward to this parliament is to remove one of those prongs of complexity, particularly to change the structure of the income tax base so that those people who are in the middle class and low- and middle-income earners pay less contribution towards the tax system, so that they don't have the dead hand of government and the tax system sneak up on them and touch them on the shoulder just as they seek to achieve more in their careers and achieve more in increasing their incomes and helping to secure the position of their families. We're doing that, particularly by changing the tax rate so that for the middle income tax rate of 32½ per cent the threshold goes from $87,000 to $90,000. That will reduce taxes by up to $135 a year for taxpayers earning above $87,000. From 2022-23, the top threshold, the 32.5 per cent bracket will be further increased from $90,000 to $120,000, making sure that more and more middle-income-earning Australians will never contribute more than a third of their income in income tax. The top threshold in the 19 per cent bracket will also be increased, from $37,000 to $41,000. Meaning low-income earners, those who put the effort into making sure that they can secure their income—sometimes part-time workers, many women—will have tax relief as well. The low- and middle-income tax offset will be replaced by increasing the low-income tax offset from $445 to $645. The increase in the low-income tax offset and increasing the top threshold of the 19 per cent bracket will guarantee the benefit of every part of the tax proposal that's been put forward and legislated for already. Critically, and more importantly, the next stage of the tax reform proposal will be to flatten the tax system to take the entirety of the Australian middle class into one tax bracket where they will not pay more than 32.5 per cent, or more than a third of their income in income tax.

If you want to dismiss this proposal and the proposal being put forward by the government, you are turning around to every mum, every dad, every person and every professional who believes in their capacity and their ingenuity to support themselves and their families and saying, 'You are not contributing enough to the burden of the nation and you should be paying more than a third of your income to the tax system.' You are saying to all those mums and dads and professionals and small business people and those who are making a wicket and making a go so they do not have to be dependent on others that they must make a greater contribution to the affairs of the nation and that more than a third of their income, more than 33 cents in the dollar that they earn, should be going to support the people in this place, rather than going out there and making sure that they can earn their income, keep it and make their choices and decisions about how they are going to secure the future of their family and community. That's why, from the 2024-25 income year, the top threshold of the 32.5 per cent tax bracket, will be further increased from $120,000 to $200,000, completely removing the 37 per cent tax bracket and simplifying the personal income tax system. This will mean that people will stay in the same tax bracket over their entire working life. The top marginal rate of 45 per cent will remain but only after incomes reach more than $200,000.

So under this progressive tax plan we will see the middle class paying the same tax rate. Lower income earners will be paying a lesser rate and high-income earners, after they earn more than $200,000, will be paying a higher rate. But, critically, we will be supporting those families and those individuals to get their support and assistance. These changes will mean that around 94 per cent of taxpayers are projected to face a marginal tax rate of 32½ per cent or less in 2024-25. This compares with the projected 63 per cent of taxpayers in 2024-25 under the current policy setting, which shows you that the plan the government has put forward is one focused on people, focused on families and focused on Australians who want to put their own position and their own security at the fore, who want to make sure they enjoy the dividends and rewards of earned work and effort so that they can provide for their families. It's about understanding that the tax system, by its complexity, is undermining the future opportunity of this great nation, because sitting at the heart of this great nation isn't the opportunity of unleashing the power of bureaucracies, as our opponents would like, and it's not sitting at the heart of Canberra and its capacity to be able to overgovern and overregulate our lives; it's where people come together and form families as the foundation of community and nationhood, and through their freedom and choice they are able to support themselves and the community around them. This is a plan to support Australia being governed from the citizen up and the family up rather than Canberra down. The more we move towards this trajectory the more we are going to profoundly empower the average Australians to be able to live their lives and their dreams without burdening them too heavily on the obligations they have towards the rest of the country.

But, critically and more importantly, what this tax plan does is start to address the deep imbalance in our tax system. The government's tax plan reduces the dependence on income tax, which critically hits so many young and working and aspirational Australians. When more than 70 per cent of the revenue that comes into the federal government's coffers comes from income tax and hits critically within a short period of life—mostly between the ages of 35 and 55—what you're indulging, as we are presently, is a tax system that takes from the young and aspirational who have not yet had their go, principally to reward those who have. If you look at who pays tax, holds wealth and consumes the benefits of the tax system, there is no alignment. We must make sure that we provide a legal framework and a tax environment that supports the workers of the future, so that when they're going through the process of getting married—and thankfully we can now say that every family has that opportunity—we have a tax system where working people are not overburdened while they're trying to save to buy their own home. It's about the foundational principles of people being able to live large lives beyond themselves and that they will not be asked to carry the vast majority of the burden of the nation. Instead, we are going to recognise that they too have a right to be able to aspire to and achieve their own dreams and enjoy the benefits of the tax relief that is being put forward by this country.

I'm not going to try to pretend that this is the end of the tax reform that I would like to see. I would like to see a concrete plan into the future to address the intergenerational theft that often exists at the heart of our tax system, where some people pay while other people enjoy the benefit without any recognition of the obligations of everybody who sits in this society. But that plan and that solution does not come from those who sit on the opposition benches, because those who sit on the opposition benches are only interested in fiddling at the margins. They're only interested in working around the system to try and reward their own friends, their own mates and the tax system and target the people who do not vote for them. Their position is not one anchored on a sense of justice in society but, instead, appealing to voting blocks and bases in the hope that they can make their way from the opposition benches into the government ones. It is a plan that is fundamentally unjust and does not respect reward for effort or understand the contribution and the effort that people have made to make themselves independent of the welfare system. We believe strongly in making sure that people who have earned income and saved for their future are able to have a degree of security without having grabs and focuses designed to achieve populist political objectives.

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

You're just repeating yourself.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

It's pretty easy to keep repeating yourself when you guys don't listen. The opposition benches don't actually understand the serious consequences of their policy framework. They don't understand that the consequences of what they are putting forward will do nothing to address housing affordability moving forward. It will have no effect in trying to improve the opportunity for younger Australians when all their objective is to hit some people so they can redistribute wealth to other parts of the community to achieve their broader political objectives. They're not actually focused on the future of this country and what we need—to continue being a liberal democracy, to have an investment in society built on ownership and responsibility, to have a society that recognises that aspirational entrepreneurialism is something to be celebrated and to be recognised. Those who have worked hard and secured reward for their effort should have recognition and respect for that effort. That's what we need to achieve in this country, that's not what is being put forward by our opponents and that is precisely what is being achieved in the government's tax relief proposal before us today—the Treasury Laws Amendment (Personal Income Tax Plan) Bill. It is the beginning of a journey to build a better stronger liberal democracy for our great nation.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Minister for Regional Services, Territories and Local Government) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. There are two tax plans that are before the Australian people today. There's the Turnbull government's plan to provide an $80 billion tax cut to big businesses and then there is Labor's plan to oppose this because we believe that this money could be better used to pay down debt, and to invest in apprentices, hospitals and Medicare. There is the government's plan to give $17 billion to the disgraced and ashamed big banks in this country—a $17 billion tax cut—and then there is Labor's plan which sees the obscenity in giving the same amount of money to the big banks as this government has cut from school funding in its first two budgets. We believe that this money can be better spent on schools and teachers than on paying bonuses to bank managers. We think the money, $17 billion, would be better spent on the education system than it would be on paying more bonuses to bank managers.

The member for Goldstein, in a display of tedium and repetition, asked the question rhetorically to this chamber: 'What will Labor spend the money on?' Well, I can tell him, in my electorate today, there are schools where there are over 115 temporary classrooms, where kids are being crammed into spaces that are not fit for purpose. There are schools that cannot afford to pay for the additional resources to educate those students, particularly in struggling areas. So when the member for Goldstein and other members opposite say, 'What would Labor do with the money?' I would point to those schools. I would point to the TAFEs and the universities, where students are prohibited from joining up because they cannot afford to pay the prohibitive upfront costs.

There are two plans for tax in this country. There is a plan to change our progressive income tax system so a person on $40,000 a year would pay the same rate of tax as a person on $190,000 a year. This would be achieved by this bill by lifting the 37 per cent threshold from $90,000 to $120,000 a year from 1 July 2020, and by removing the 30 per cent bracket and lifting the top threshold from $180,000 to $200,000 a year on 1 July 2024. We don't think it's fair to introduce a tax system which has a person earning $40,000 a year on exactly the same tax rate as somebody who is earning $190,000 a year.

We also oppose it because the plan is unfunded. Its inner workings are so secret that the Treasurer has refused time and time and time again to provide any costings or any modellings to the people who are today being asked to vote upon this legislation. We estimate that the cost of this proposal could be as much as $80 billion over the six years from 2022-23 out to 2027-28. But the vast majority of workers will receive no benefit from these top-end tax cuts. Overall, the government's plan sees 62 per cent of the benefits flowing to the top 20 per cent of income earners over that seven-year period. It's worth repeating: 62 per cent of the benefits flow to the top 20 per cent of income earners over that seven-year period.

I can understand why the member for Goldstein is so enthusiastic about this proposition, but I could not see why the member for New England, who is in the chamber today, or any of those other National Party members would stick their hand up and vote for such a proposition. When you look at the geographic distribution of taxpayers, it is true that there are many of those income earners on salaries of over $200,000 a year, and the majority of them are clustered in electorates such as those represented by the Prime Minister, the member for Goldstein, the foreign minister and the Treasurer, but they aren't represented so well in those regional electorates such that I represent or such that the National Party traditionally represents. So I can understand why some members of the government would be voting in favour of those propositions, because they will advantage some of the electors within their electorates. But in the place I come from and, indeed, the place you come from, Deputy Speaker Mitchell, these taxpayers will not see the benefit.

If you care about inequality, and if you care about the growing inequality in this country, Deputy Speaker, then you'll have grave concerns about the propositions contained within this bill, and you will vote in favour of the member for McMahon's second reading amendment. Very high income earners are taking a larger share of the income earned. In fact, over the last 30 years, the top one per cent of income earners' share of income has more than doubled, from 4½ per cent to nine per cent, and the top 0.1 per cent has seen an almost fourfold increase in their share of total income. Wealth inequality—the gap is growing even further. The wealthiest 10 families in Australia own approximately as much as the poorest four million Australians. The wealthiest 10 families own as much as the poorest four million Australians. The top 20 per cent own 62.5 per cent of all net worth of all households. The top 20 per cent own 97.7 per cent of net financial assets. So if you care about the fact that inequality is growing in this country, one of the most effective levers that a government has to address growing inequality is to ensure that we have some capacity to redistribute and to reinvest in the things that are going to help us address growing inequality: investing in education, investing in health and investing in economic infrastructure.

Labor has a plan to deliver lower taxes for the majority of working Australians. In fact, our plan will ensure that 10 million working Australians will receive a decent tax cut. Those who earn up to $125,000 a year will pay, on average, less tax under the Labor tax plan than under that proposed in this bill by the Turnbull government. More than four million people will get a tax cut of nearly $930 a year. A teacher, for example, earning $65,000 a year would receive a tax cut of nearly $930 a year. A couple earning $90,000 and $50,000 a year respectively would receive a tax cut combined of $1,855 a year. So there are two tax plans put before the Australian people: one which enables us to invest in the services that Australians expect and which enables us to give nearly 10 million ordinary working Australians a fair tax cut; and the other, which delivers the overwhelmingly majority of benefits to the big end of town.

Of course, we're not just talking about income tax. There are two plans. There is the government's plan to continue subsidising property speculation and investment while turning its back on the growing number of people who are homeless and locked out of the rental market, let alone able to dream about owning their own home. Then, in contrast to that, there is Labor's plan, which says that we should not give preference to a person who is buying their second, third, fourth or fifth property over somebody who is struggling to rent a home or to buy their first property. Our plan to remove negative gearing from houses which don't add to the stock of available rental properties will save the budget $2 billion over the forward estimates and $37 billion over 10 years and will put downward pressure on property prices, enabling more Australian families to realise their dream of home ownership.

Then there is a plan around the abuse of discretionary trusts. Discretionary trusts are used by individuals and businesses to reduce their tax liability, because income from a trust can be apportioned to beneficiaries on a discretionary basis. This practice of income splitting through discretionary trusts is used most frequently by wealthy Australians to minimise their tax. In fact, if you look at what has happened with the use of discretionary trusts since the early 1990s, there has been an increase to over 642,000 discretionary trusts in Australia today. Income splitting through the use of these discretionary trusts allows high-income Australians to avoid paying the marginal tax rate that applies to every other one of us. We believe that we can no longer afford this. Access to discretionary trusts and income splitting is generally only available to wealthier Australians that have been able to accumulate a passive investment such as shares and properties. In contrast, low- and middle-income earners who go to work and struggle to pay their weekly bills typically do not have large passive investments outside their superannuation accounts, nor do they have the resources to pay boutique tax advisers to enable them to set up such elaborate structures. Our plan to remove the abuse of discretionary trusts will save the budget over $4.1 billion over the forward estimates. That is more money, which will enable us to invest in schools, universities, apprentices, hospitals and education.

There are also two plans when it comes to dividend imputation. There's the government's plan to continue the absurd practice of providing an income tax return through dividend imputation credits, even though a person pays no income tax. This would cost the budget approximately $8 billion a year over the next 10 years. In contrast to that, there's Labor's plan that says that we are the only country in the world that does this, that this is unaffordable and that money saved could be better used to provide better services for aged care and to improve schooling for the young. So, when you compare Labor's fair plan, which will provide a better tax cut for over 10 million working Australians, to the propositions put forward in this bill around income tax, when you compare Labor's plan to the unaffordable, uncosted, unfunded $80 billion worth of corporate tax cuts, including $17 billion to the disgraced and ashamed big banks, when you compare our plans around dividend imputation, capital gains tax discounts and negative gearing in the property market to those on offer, you have a contrast between a party which wants to govern for the majority and for the public interest and a party which is governing for the big end of town and making short-term decisions to get it from here to the next election but which has no plan to deal with the fiscal problems it has created and no plan to deal with the big challenges around aged care, health care, the future of our education system and how to invest in training the next generation of apprentices so that we don't have to import skilled trades people into this country year on year instead of training our own.

So this bill is not just about tax. This bill is about how we address inequality, how we create the revenue stream which is going to enable us to provide the services and the infrastructure that Australians expect a reasonably performing federal government to deliver on. That is why we must support the amendment which has been moved by the member for McMahon to split the bill and enable us to give fair tax relief from 1 July to low- and middle-income earners while ensuring that we are not forced to vote on a bill or part of a bill which is unfunded and, on its face, provides unfair tax relief to wealthy Australians which we cannot afford. With those comments, I commend the second reading amendment moved by the member for McMahon and I call on all members opposite to do the same.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

I rise in support of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 and I commend this legislation to the House. As I've previously said in my contributions to the debate on the appropriation bills before the House, and also in a matter of public importance debate, I strongly endorse this budget and the work of the Treasurer and the Prime Minister on our plan for a strong economy.

As we've heard in this debate, the Australian economy continues to strengthen and is shaking off the downturn in mining investment. Under our economic plan, jobs are being created, investment is rising and the budget is strengthening. This budget is about building on that plan to ensure the benefits of stronger economic growth can continue to be shared and secured so we can keep guaranteeing the essential services Australians and their families rely on like Medicare, schools and hospitals.

But there's no doubt that, while the economy is continuing to strengthen and the budget position is improving, many people in my electorate on the Central Coast are experiencing cost-of-living pressures. I hear a lot from individuals across my electorate about the costs of living, and that's why I rise today to support this bill. Plain and simple, it will deliver lower, fairer and simpler taxes for nearly 60,000 middle- and low-income earners in my electorate of Robertson. It is the first priority of the government's seven-year plan to make personal income tax in Australia lower, fairer and simpler.

This fully funded tax relief, achieved while bringing the budget back into balance, will target low- and middle-income earners first, help ensure that income earned by Australians is protected from bracket creep and make personal taxes simpler and flatter over the next seven years. Low- and middle-income workers in my electorate of Robertson will under this plan receive tax relief of up to $530 per year. Under this plan, by 2024-25 around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, compared with 63 per cent if we leave the system unchanged.

When I'm out in places like Saratoga, Erina or Umina Beach, I hear responses to our budget measures from local residents. Elizabeth, from Gosford, welcomed the tax changes and said they give more flexibility to individuals and families. Jenny, from Narara, said she thought the budget was very good, especially our plan for financial support for families in the form of tax relief. Robyn and Richard, from Hardys Bay, tell me tax cuts are always welcome for any taxpayer. Bob, from Kincumber, said the move towards a flatter tax is great.

This bill is going to benefit hardworking Australians in my electorate like Elizabeth, Jenny, Robyn, Richard and Bob. Like our plan for a stronger economy this bill is carefully laid out, with tax relief for Australians being delivered in three steps. As the Treasurer said in his second reading speech our plan will mean that individuals will be able to take on additional work, seek advancement and put in the extra hours knowing that their extra income from their hard work will remain with them and that a higher proportion will not go to the government in higher taxes. Our plan will deliver a personal income tax system that is lower, fairer and simpler, consistent with our values as a government.

The plan will be delivered in three steps. Firstly, it will provide tax relief to low- and middle-income earners first; secondly, it will protect what Australians earn from bracket creep; and, thirdly, it will ensure that Australians pay less tax by making personal taxes simpler and flatter. This is the money of hardworking Australians, including people on the Central Coast. It's not the government's money, although members opposite seem to think otherwise. Hardworking Australians like those in my electorate of Robertson have earnt this money, and they deserve more of it back in their pockets. Working Australians don't need the government of the day telling them how to spend their money. They need a government that is on their side, and that is exactly what this plan demonstrates. This government has outlined a clear plan for tax relief for hardworking Australians, and it's a plan that's affordable and simple.

I'd like to speak briefly in some more detail about these measures. Step 1 of this bill will start permanent tax relief by introducing the low- and middle-income tax offset. This is a new, non-refundable tax offset for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. The offset will assist over 10 million Australians, with a maximum benefit of $530 being provided to around 4.4 million taxpayers. Nearly 60,000 people in my electorate of Robertson who are low- and middle-income earners will benefit from this plan. Importantly, this major tax relief will not be clawed back by other tax increases, nor increases to the Medicare levy, which I'm pleased to see will remain unchanged, nor will it be funded by putting a higher tax burden on others. For example, a high school teacher in Ettalong Beach earning $75,000 will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan. A shop assistant in Kincumber on $45,000 will have an extra $440 in their pocket from the budget year onwards, with an extra $3,380 in their pocket over the first seven years of the tax plan, as the tax relief increases. A hairdresser in Erina on $50,000 will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan, as the tax relief increases. These are funds that will help more local families pay their electricity bills, fill the car up with petrol on the long commute to Sydney or Newcastle, or pay for the school textbooks for their kids.

The second step is about providing hardworking Australians with certainty about their future and combating bracket creep. It will provide certainty for the many working Australians that they will face the same tax rate over the span of their working lives. It's making sure that a nurse at Gosford Hospital or a barista at a cafe in Kariong can take extra shifts or earn more knowing that their wages won't get eaten up by higher tax rates. Hardworking Australians who have earnt a pay rise or have taken on extra hours at work should be able to keep more of their money, not pay more tax because of bracket creep. From 1 July 2018, the top threshold for the 32.5 per cent income tax bracket will be increased from $87,000 to $90,000, reducing taxes by up to $135 for taxpayers earning over $87,000. From 2022-23, the top threshold of the 32.5 per cent bracket will be further increased from $90,000 to $120,000 and the top threshold of the 19 per cent bracket will be increased from $37,000 to $41,000.

Step 3 of the plan will make the personal tax system simply and flatter. From the 2024-25 income year, the top threshold of the 32.5 per cent tax bracket will be further increased from $120,000 to $200,000, completely removing the 37 per cent tax bracket, simplifying the personal income tax system and reducing the number of tax brackets from five to four. This will mean that people may stay in the same tax bracket over their working lives. The top marginal rate of 45 per cent will remain, but only after their incomes reach more than $200,000. These changes will mean that 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 compares with a projected 63 per cent of taxpayers in 2024-25 under current settings.

There's been some speculation about the way this government has gone about this plan, but I believe that by legislating this as a package we are delivering the commitment and certainty that families want when they go to work. They don't want the Labor Party or any government in the future putting their hands deep in their pockets and ripping out their hard-earned money. Sadly, it's exactly this approach that Labor appear to be taking with their plan. Labor's retirement or retiree tax has the potential to hurt retirees and low-income earners by abolishing tax refunds for share dividends. Labor's tax grab means 875,000 individuals and self-managed super funds will pay tax twice on what they earn from their savings. This includes more than half a million Australians on taxable incomes of less than $18,200, which is simply not fair.

I'd like to share just one example from Julie in Terrigal, who wrote to me about why our tax plan is stronger than the tax plan of those opposite. These are Julie's words. She said:

My husband and I married in 1971, we both left school at 14 years old (1963 and 1965) and we both had jobs to go to immediately. My husband has worked exceptionally hard all his life, mostly in the construction industry (and mostly six days a week) and is still working 6 days a week now at almost 69 years of age paying all our taxes along the way and never once asking the Government for one single cent our entire lives.

A few years ago we got serious about making a financial plan to set ourselves up for retirement, part of that plan was to buy shares that would pay us a Franked Dividend during our retirement, a retirement that hopefully will commence later this year.

We could in no way be classed as wealthy, our share portfolio amounts to $450,000 and when we combine that with our superannuation of around $400,000, it means that we belong to that unfortunate group of people who will have saved just a little too much to qualify for any sort of pension.

Labor's plan to abolish the Franking Credits Refunds, if they are elected, will mean we'll receive even less income, but still not qualify for any pension.

We'd be punished for making ourselves Self Funded Retirees. That would be a very disappointing outcome for two people who have worked hard all their lives, took the initiative to make a financial plan to support their retirement only then to have the rules changed yet again.

I know when speaking with my friends, (some of whom are also self-funded retirees) don't fully understand the huge impact this is going to have on their retirement incomes.)

To Julie, I say: thank you for sharing your story with me. You are being hurt.

I'd like to end by saying that this budget represents the sixth successive update where the underlying cash balance is projected to reach surplus in 2020-21. Through sustainable budget management, for the first time in a decade, the government is no longer borrowing to pay for everyday expenses, and it's thanks to this responsible economic management that I can confidently back the measures in this bill on behalf of the people of the Central coast. I commend this bill to the House.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I'd like to be able to explain to the House and my constituents in the electorate of Bruce what impact the government's proposals have on my electorate, who will benefit from the changes proposed to taxation in this country in the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, who wins, who loses, how my electorate and community may fare relative to other electorates, and how the various components of this very complex proposal, to be implemented over the next seven years, actually impact on people—and by 'impact' I don't mean inane anecdotes about alleged correspondence from people called Julie, Elizabeth, Bob and Sally; we never hear about any Mohammeds, Vikrams or people from non-English speaking backgrounds in these comparisons I hear from those opposite. I don't mean the inane anecdotes; I mean the grown-up distributional impacts in a longitudinal sense that you might expect if we're debating a bill to spend $140 billion. It seems like a reasonable kind of question, but I can't tell my electorate what this means. Indeed, no member of this parliament can honestly report back to their electorate what it means in terms of impacts for their community vis-a-vis other communities around the country, because it's actually impossible to do so from the information provided to the parliament. The government won't tell us.

The cost to the budget of this bill over the forward estimates is $13 billion, and the cost in the medium term, we're told, is $140 billion, but that's all we know about the impact. They're big numbers—kind of important, I would have thought. Australians, I would think, would expect us to do our jobs as parliamentarians, scrutinising legislation and proposals thoughtfully and looking at the impacts. It's not as if—despite some of the nonsense we heard at the end of the previous member's speech—the mob opposite have done a great job with the budget. The context for this $140 billion is important.

You used to hear about the 'debt and deficit disaster' and the 'debt trucks'. You don't hear much about that anymore. It's funny, because there was a debt and deficit disaster when Labor was in government, according to the now government, but they've made the budget worse, and you don't hear that. We now have the best global economic conditions for over a decade. Yet, despite that, net debt for this coming year is double what it was when the Liberals came to office. Gross debt has now crashed through half a trillion dollars on their watch, for the first time in Australia's history, and will remain well above half a trillion dollars every year for the next decade. Both types of debt, net debt and gross debt, are growing faster under the current government than under the previous Labor government, which had a global financial crisis to contend with.

I have to hand it to those opposite: they do have luck. If you looked back from the time of Federation to now and picked one decade where you'd just go, 'Wow, I'd really want to be in government in that decade,' you would have picked the decade of the Howard government. Our terms of trade were the best they've ever been. Revenue was pouring in faster than you could spend it. They do have luck.

We had a global financial crisis. We sorted that out. We responded to it. Now this government has the best economic conditions in a decade. Yet, despite that, the deficit is 6½ times bigger than it predicted in its first horror budget. We hear a lot about how you've got to live within your means, not much about the means to live, properly funding Medicare or schools, universities or infrastructure, preparing the nation for the future. But it's okay, despite all of this fiscal context, to run in here and try to rush through a bill that spends $140 billion, because the government's in political trouble and the vultures are circling for the Prime Minister.

They've tried everything else. We heard there was going to be adult government. I would have thought that adult government was introducing a tax bill and being able to explain what the cost, year by year, of the different measures would be. That would be grown-up government, to my mind. But not when you're in political trouble. You press the panic button. You rush in and go: 'Tax cuts, everyone! Tax cuts! Trust us. Stick with us for seven years. In seven years, you might get a bigger tax cut.' You'd think that even the worst of the boneheads opposite would agree with that fiscal context and that parliamentarians should be able to consider the detail and the impacts of legislation that shells out $140 billion. But, no, the government are hiding the truth from people, trying to con Australians and blackmail this parliament by rushing through this bill without proper scrutiny.

In my view, oppositions in a Westminster parliamentary system such as ours have two critical primary functions above all else. One is to properly scrutinise on behalf of the people we represent and on behalf of all Australians, doing our job as an opposition. Yes, we'd rather be over there. You change the country for the better through being in government—or at least we would. But your job as an opposition is to properly scrutinise what those people sitting over there, the government, put forward. You can't do that if you don't have the information. The other responsibility of an opposition, of course, is to propose alternatives so that, when we come to an election, there's a clear, costed, credible alternative for people to choose. I'm proud of the job we're doing on both fronts.

But we do need the information to do our job. You have to provide the information to the parliament, if you have any respect for the institution, so both sides can do their jobs. The Prime Minister and the Treasurer are unable, unwilling or deliberately hiding the facts and the figures. They simply will not admit the cost, year by year, of each of the measures. We asked them in question time—no answers. Senators have asked the Treasury this week for this information: a year-by-year breakdown of the tranches' individual components. We've also asked for a breakdown of the impact by gender and by electorate and for other important information so we can do our job.

The government, when you look at it, is a complete farce—there's one silly stunt after another. This is not adult government. What have you got to hide? What possible reasons could there be for not providing this information which is entirely normal and reasonable. It could be that you don't have it. This could be a big call—I'm going to say something nice—but, even I don't believe you're so incompetent that you'd rush in here trying to spend $140 billion—

Government Member:

A government member interjecting—

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

No, no, I mean that, I do. But, actually, as a safety net: I do not believe the Treasury is so incompetent that they wouldn't have briefed you with the detail at least. So you've got it somewhere. We have to believe you have this somewhere. It might be in the dispatch box over there. Maybe it's in a filing cabinet, who knows? The Prime Minister might be hiding it under the mattress at home. The other possibility is you're just unwilling, obstinate and disrespectful and it's another one of your silly tactics and stunts: 'We'll get Labor to vote against the tax cut bill. That'll be good on TV. We won't tell them what's in it—we'll just get them to vote—and then we'll say, "They don't like tax cuts."' That's entirely possible, and it's part of the political tactic. But my belief is you're deliberately hiding the information, because if the detail comes out then the tax plan will be exposed for the con that it appears to be.

This is the government's latest plan, and the word 'latest' is important. We can't forget that until a few weeks ago the government's personal tax plan was to increase taxes on everyone earning between about $21,000 and $180,000. Indeed, in the last budget the only people in the country to get a tax cut were those earning over $180,000. They've had quite a few tax plans. They were going to jack up the GST. That didn't last long. Then there was that brilliant moment of state based income taxes. That was good. They went in 1942; let's bring them back. There are company tax cuts of $80 billion. I know, I said the number '80'. It's a number the Prime Minister just cannot bring himself to say in here. What's the cost of the company tax cuts, legislated and unlegislated, over the 10 years? We think the answer is 80 when you glue it together, but the Prime Minister just can't bring himself to say it—80 seems to be the hardest word. This is the latest tax plan; we'll see how long it lasts. We'll have to count them in dog years for them to have any credibility in a temporal sense, really.

So on 1 July, apparently, this bill will see the introduction of a low- and middle-income tax offset—a non-refundable tax offset—of up to $530 a year for taxpayers earning up to $125,000 and an increase in the top threshold of the 32.5 per cent personal income tax bracket from $87,000 to $90,000. We're good with that—a bipartisan moment, hurrah! Let's do it. We could split this bill and vote on it today. Lock it in, Eddie. Give us certainty. We've been upfront from the start, since budget night, when you announced this. We said, 'Yep, we'll back that. Bring the legislation in and we'll vote on it and move on. It's costed, it's clear, it's fair, it's affordable and it's in the forward estimates. We can understand what we're dealing with.' The government could do that today.

As for the rest of the plan—a plan that costs $13 billion over four years and $140 billion over the medium term and that has a whole lot of complex measures—we want to examine it. As I said, that's our scrutiny role. The alternative, of course, is putting forward alternatives for people to choose from. We've said—Bill Shorten, the Leader of the Opposition, said in the budget reply speech—that Labor will deliver bigger, better and fairer tax cuts. If we're doing three-word slogans, that's our three-word slogan. You had 'lower, fairer, simpler'—we'll touch on 'fairer' in a moment. We will deliver bigger, better, fairer tax cuts for $10 million working Australians. In this instance, size does matter. The difference is clear, and Australians can decide what to do with it.

Labor's tax refund for working Australians increases the tax cuts currently being offered under the government's tax offset proposal. As I said, we'll support the measures that begin on 1 July this year, and a Labor government will deliver bigger tax cuts from 1 July 2019, and they'll be permanent, so that anyone earning less than $125,000 a year will get a bigger tax cut under Labor than under the Liberals. Indeed, more than four million people will be better off by $398 a year compared to the Liberals. Our proposal has been costed by the independent Parliamentary Budget Office and our policy has a budget impact of $5.8 billion over the forward estimates. It's affordable. It's the latest in Labor's series of reforms to tax and proposals which we've outlined. You could never accuse us of being a small-target opposition or of not doing our job of putting forward policy. You might not agree with it—we hear a load of nonsense; indeed, we see deliberate mistruths in the newsletters sent to electors by those opposite—but you couldn't accuse us of not putting forward an alternative plan.

There are a range of problems with the government's tax plans. We know that. We haven't been given the full picture by the government—they simply won't tell us—but it is possible now, from a lot of the advice we've commissioned and the independent external analysis that's been published in the days and weeks since the budget, to start to figure out a lot of stuff from it.

Let's have a look at the word 'fairness'. We say ours is fairer; they say theirs is fairer. The government MPs keep saying: 'It's fair, it's fair. Trust us, we're Liberals. It's fair, it's fair.' What does fairness look like to a Liberal? It's a sit-down, shock-horror moment: early indications are, from the independent commentators and analysis that has been done, that once the government's three-stage package is in place it will deliver larger benefits to those on higher incomes. I know, right? Shocking! From the mob who brought a two per cent tax cut for people earning over $180,000, $80 billion for multinationals and big companies, and company tax cuts, who would have thought? When the government's plan is fully implemented, a worker on $42,000 in this country will be on exactly the same tax rate as an executive earning $200,000. This is in a country that has a proud tradition of egalitarianism, fairness and proper funding of public services—that those who can afford to pay the most contribute a bit more towards our society.

The Grattan Institute has said that once the three-stage plan is complete $15 billion of the annual $25 billion cost to the plan will result from collecting less tax from the top 20 per cent of income earners. To be fair, the proposed tax offset for low- and middle-income earners in 2018-19 is progressive. More money goes to lower-income earners—we'd vote for that. But by 2024-25 the tax cuts mean that higher-income earners gain $7,225 a year, while those earning $50,000 to $90,000 gain $540 a year and those earning $30,000 gain $200 a year. It's not just income; it's also the gender impact. They won't tell us what the gender impact of this is, but the Australia Institute has done some analysis in the last week or so and concluded that two-thirds of the benefit of the government's proposed tax changes go to men, because men dominate the ranks of high-income earners. For every $1 in tax cuts for women, men get $2. Is that fair or unfair? Well, when you've only got about 20 per cent of your parliamentary representation being women, and last weekend you knocked off a woman in Queensland, the member for Ryan, treated shamefully—I think that means that, going into the next election, the LNP in Queensland will have two out of 21 held seats contested by women—I suppose that's a better outcome, isn't it? You would probably think that is fair.

At a time when the government should be locking in strong surpluses, devoting more of this revenue towards structural budget repair to protect the nation from further shocks and repairing the balance sheet post GFC as we enter into uncertain economic times, they've chosen to chuck $140 billion at a tax plan that they won't release the details for. Overwhelmingly, we know from independent analysis that more of the benefit will go to high-income earners, and we're being asked to just wave this through. Well, to my mind, that's not what parliamentarians should be doing. It's not what an opposition's job of scrutiny should be. If the House is not able to deal with this—funnily enough, we don't have the numbers in the House—then I hope that the Senate will be able to pull this to pieces and figure out what the real impact is, because none of us are able to honestly report to our electorates.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

It is a great pleasure to rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, which will deliver fairer, lower and simpler taxes. This bill starts from the premise that this is the money of everyday, ordinary Australians—those who've got up every morning, sometimes every night, and worked hard. It's about returning more of their money to them. We're helping people manage household pressures and expenses, providing certainty for most of those Australians who get out there and work—the certainty that they'll face the same tax rate over their working life.

The government's seven-year personal income tax plan is affordable, is most certainly fiscally responsible and, as the budget outlines, will ensure a great benefit to working people across the country. Compare that to our colleagues on the other side of the benches, who've announced $200 billion of taxes in opposition. There's a housing tax, a savings tax and a family business tax, and, of course, we now have the retirees tax. There is no question that Labor is for higher taxes so they can spend it on all of their pet social projects. Labor is the leader of the high-tax club. We're here for returning more of your money to you.

Firstly, this bill will provide tax relief to low- and middle-income earners to help erase the cost-of-living pressures. It'll start by giving permanent tax relief, with a low- and middle-income tax offset, a non-refundable tax offset for the years 2018-19 through to 2021-22. It'll assist over 10 million Australians, with the maximum benefit of $530 being provided to about 4.4 million taxpayers. Taxpayers earning between $48,000 and $90,000 will receive the maximum of $530. The offset will provide a benefit of up to $200 for taxpayers with taxable incomes of up to $37,000.

Secondly, it will combat bracket keep. From the 2018-19 financial year, the top threshold of the 32½ per cent income tax bracket will increase from $87,000 to $90,000, reducing taxes by up to $135 for taxpayers earning above $87,000. From 2022-23, the threshold of the 32½c tax bracket will further increase from $90,000 to $120,000, and the top threshold of the 19 per cent bracket will increase from $37,000 to $41,000. The low- and middle-income tax offset will be replaced by increasing the low-income tax offset from $445 to $645.

Thirdly, step 3 is to simplify and flatten the whole system. From 2024-25 onwards the threshold of the 32½c bracket will be further increased from $120,000 to $200,000, completely removing the need for that 37c tax bracket. This will mean the vast number of Australians will simply stay on the same tax bracket for their entire lives. The 45 per cent tax bracket will kick in at $200,000. Ninety-four per cent of taxpayers are projected to face a marginal tax rate of only 32½ per cent or less in 2024-25. Compare this to a projected 63 per cent of taxpayers under current settings. These steps are quite landmark in setting a tax regime that is simple and provides certainty for Australians.

So what does that mean for my electorate and for the Gold Coast? I hold the northern part of the Gold Coast. For my area and for my constituents—over 100,000 voting men and women and over 170,000 men, women and children—73 per cent of my constituents are receiving tax relief. Now that's an average, which means there are some areas which are receiving a much higher rate. Eighty per cent of constituents in Alberton, Stapylton, Steiglitz and Woongoolba will receive tax relief. In Gaven, Pacific Pines, Maudsland and Oxenford, 79 per cent of working men and women will receive tax relief. In the suburbs of Gilberton, Jacobs Well, Norwell, Ormeau, Coomera and Pimpama, 78 per cent of people will receive tax relief. In Arundel and Parkwood, 76 per cent will receive tax relief. In Labrador and Southport, 75 per cent will receive tax relief. This is an extraordinary set of numbers in terms of people in my electorate who will receive tax relief because of what this government's doing. Compare that to Labor's $200 billion increase already announced. No-one's arguing about Labor's tax increase. No-one is saying the numbers are wrong. These are taxes on houses, taxes on savings, taxes on businesses and, of course—the mother of them all, with over $10 billion coming in in the first few years alone—a tax on retirees. The northern Gold Coast has one of the highest numbers of senior Australians and retirees in the country. There is no way I will sit idly by while Labor seeks to rip $10 billion from these men and women who have worked hard all their lives, saved, put aside and planned for their retirement. This is Labor's response to that.

The numbers speak for themselves. This is a great bill for Gold Coast working men and women. It is a great bill for 73 per cent of all Gold Coast working men and women because they receive tax relief, and for the others, of course, there is ostensibly no change. This is all upside and no downside. This is all benefit. For everyone looking forward, this provides certainty in terms of where we're going. This is a personal tax plan that will see a staggering 94 per cent of my constituents paying the 32½ per cent tax bracket come 2024-25. I commend this bill wholeheartedly to the House.

Tony Zappia (Makin, Australian Labor Party, Shadow Assistant Minister for Medicare) Share this | Link to this | Hansard source

In speaking on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, I say at the outset that I support the comments made by members on this side of the parliament. I think that at this stage of the debate Labor's position on this bill is clear. It's even more clear, after listening to the statistics that many of my colleagues have been able to present with regard to the unfairness of this legislation, how the government is so much out of touch with reality and with the community. This legislation goes to the heart of the government's proposed tax cuts, and those tax cuts are part of a long-term plan that takes us right out to the year 2024—indeed, perhaps to a time when those who are proposing the tax cuts in this legislation will not even be around to be held accountable for it.

It's proposed that the government's plan has effectively three stages to it. Phase 1 begins on 1 July 2018. The government proposes to then introduce 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 increase the top threshold of the 32.5 per cent personal income tax bracket from $87,000 to $90,000. Phase 2 begins on 1 July 2022—that is four years away; indeed, it's perhaps two elections away. Then, the government wants to increase the low-income tax offset from $445 to $645. The 19 per cent personal income tax bracket will be increased from $37,000 to $41,000 and the government wants to increase the top threshold of the 32.5 per cent personal income tax bracket from $90,000 to $120,000. Then we come to phase 3. That is proposed to commence on 1 July 2024—that is in six years time, which is possibly three elections away. Then, the government proposes to abolish the 37 per cent tax bracket and increase the top threshold of the 32.5 per cent personal income tax bracket from $120,000 to $200,000.

As those dates quite clearly point out, this is a plan that takes us effectively into the never-never, because between now and then it is very likely that not only will governments change but also circumstances here in Australia and overseas will change. While we haven't been given the full picture from the government, the early indications of the government's plan are that, once the government's three-stage package is in place, it will deliver more large benefits to those on higher incomes. The Australian National University's Ben Phillips has estimated that, by 2027, around 60 per cent of the tax cuts will go to the top 20 per cent of households. As part of the new proposal, low- and middle-income earners get a tax offset in 2018-19, with higher income earners getting very little of that money. This part of the plan means that more money goes to lower income earners. However, by 2024-25, the tax cuts mean that higher income earners gain $7,225 per year, while those earning $50,000 to $90,000 gain just $540 per year, and those earning $30,000 gain the very little amount of $200 per year. The Grattan Institute has assessed that, once the three-stage plan is complete, $15 billion of the annual $25 billion cost of the plan will result from collecting less tax. I repeat that: collecting less tax from the top 20 per cent of income earners. The Australia Institute has also analysed the government's tax proposal, and the Australian Institute analysis shows that, overall, the government's plan sees 62 per cent of the benefits flowing to the top 20 per cent of income earners over a seven-year period.

Labor's position with respect to this legislation has been made clear. Labor will support the government's proposed changes that are to take effect from 1 July 2018. Labor has been entirely up front about that. If the government was to split the bills, we could vote for the 1 July 2018 changes only. They would pass immediately. However, the total cost of the government's 3-stage plan, whilst $13 billion over the forward estimates, is expected to reach $140 billion over the medium term, and, as I said earlier, the government has been unwilling, deliberately hiding or simply unable to provide specific details of the plan, including the year-by-year costs beyond the forward estimates.

I turn to the question of fairness and the inequity about this proposal. The government's proposed tax plan is regressive in that it will widen the inequality that already exists throughout Australia and that has been widening over recent decades. According to the Australia Institute, the top one per cent of income earners' share of income has more than doubled from 4.5 per cent to nine per cent. The top 0.1 per cent has seen an almost fourfold increase in their share of total income. The top 20 per cent own 62.5 per cent of the net worth of all households. And the top 20 per cent own 97.7 per cent of net financial assets. That is financial assets less financial liabilities. It's clear that the wealth of this nation is falling more and more into the hands of fewer and fewer people.

Budgets reflect government priorities and government ideology. This is a tax package that begins with some tax relief—around $10 a week for average households—but ends with substantial tax cuts of over $7,000 per year to high-income earners who really don't need that money right now. For most Australians, wages over the past two decades have almost flatlined. For many, hours have been cut and there is no longer any job security. Wage earners have seen very little increase whilst simultaneously company profits and living costs have risen substantially. Most of the high-income earners, who will indeed benefit from the government's proposed tax cuts, are not likely to be wage earners. They are most likely to be self-employed people or highly paid professionals who negotiate their own contracts and who very likely have not been restrained by low wage growth over recent years.

The current median salary in Australia is approximately $55,000 a year and the median full-time wage is approximately $73,000 per year. On current estimates, some three-quarters of income tax payers earn less than $90,000 a year. So, again, the dominant beneficiaries of the government's tax proposals are those people who are already well off—or at least should be—because they are on high incomes They don't need a tax cut. The government knows that, and that is possibly why the Prime Minister and the Treasurer refuse to release their costings. The government also knows that the community would see through the unfairness and judge the government accordingly if those costings were to be released. This is on top of the $80 billion in corporate tax cuts that the government is also still pursuing and of which, again, the government still refuses to acknowledge the full costing.

Of course, there are other very serious flaws with the government's policy, and I want to run through some of those. Firstly, the package is dependent on the Turnbull government winning the next two elections, or possibly the next three elections if governments don't run their full three-year terms. Secondly, the package makes wages growth assumptions that are out of step with reality. If that wage growth does not eventuate—and it is very likely that it will not—then government income tax revenue will also fall and the government's tax cuts will be unsustainable. Thirdly, the package makes assumptions about the economy that are very speculative. We don't know what the global economy or the Australian economy will look like in three years time, let alone in six years time. But neither the Prime Minister nor the Treasurer is very likely to be around in 2024 to be held to account or indeed to have to fix up the mess that they may well create as a result of this policy. It is about promising things into the future that they are not in a position to deliver on right here and now. It is one thing to deliver for the forward estimates; it is another to deliver beyond that.

Of course, these tax cuts for high income earners are proposed when net debt is set to hit $341 billion at the end of this financial year, 2017-18, and rise to $350 billion by the end of 2018-19. So again one can ask the very legitimate question: why, at a time when net debt is around $350 billion, would the government provide tax cuts into the future to those who are not in need, when there is a much greater need to try to get the budget back into order?

Even worse than all of that, these are tax cuts that the Turnbull government is proposing at a time when it wants to cut the $14-per-fortnight energy supplement to pensioners around Australia. That measure is still on the books. The government wants to cut $17 billion from schools. I hear members opposite saying that there are no cuts to schools. There are cuts to schools in comparison to what would have been allocated had the government stuck to its commitment when it was elected in 2013. The government wants to cut a further $270 million from the already decimated TAFE system around Australia, at a time when we know we need more skills training in this country, and it wants to cut hospitals funding. As the member for Ballarat quite properly pointed out yesterday with respect to one of the hospitals in Queensland, hospital funding has been cut. These cuts come at a time when the government wants to continue the Medicare freeze on specialists and at a time when out-of-pocket costs to see doctors and specialists have risen.

This is also at a time when the government is saying to people, 'If you want a pension, you will have to work until the age of 70.' No other country in the world does that, but this government believes it's reasonable to say to the older people in this country, 'You will have to work to the age of 70 before you are entitled to a pension.' It comes at a time when up to 700,000 Australian workers will lose up to $77 a week in penalty rates cuts that this government supports. These are people who are already struggling to make ends meet and who are quite often only part-time workers and have to work two or three jobs just to try to make a living. It comes at a time when families are paying over $1,000 more for private health insurance. Again, the government wants to cut the taxes for the high-income earners at a time when costs of living for people around the country are probably the single most concerning issue for so many families.

It's clear that this government, the Turnbull government, is completely out of touch with Australian sentiment. If the Turnbull government thinks that it is fair to offer over $7,000 a year of tax cuts to very high-income earners while people at the low end of income are absolutely struggling, it needs to get out into the community and talk to some real people. That is why Labor's alternative proposal is much fairer and, quite frankly, much more responsible. It is a proposal that will see a person on $65,000 be given a $924 tax cut per year. Ten million Australians will benefit from Labor's tax cuts because Labor understands that right now the families throughout Australia that are struggling the most are the middle-income and low-income families. It is those families that government policy should be seeking to support at this very time. Supporting those families and providing those tax cuts will, in turn, give the Australian economy the best boost possible.

Trent Zimmerman (North Sydney, Liberal Party) Share this | Link to this | Hansard source

Unlike the member for Makin, I'm delighted to speak in support of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 because it will deliver fairer, simpler and lower taxes for ordinary Australians. This bill is an important part of the Turnbull government's plan for a strong economy which will provide more jobs and opportunities. It's a central part of the 2018 budget. I want to reflect on the fact that our responsible economic management has allowed us to deliver the trifecta of lower taxes, an earlier return to surplus, and an increased funding for essential services and infrastructure that I know are critical to the nation's future. We have been able to do this both because of increasing revenue and because of our discipline in containing the growth of government expenditure.

Our tax reforms are part of our broader plan for a stronger economy which is already delivering for Australians. This is reflected in the fact that Australia is in its 27th year of economic growth, a record virtually unmatched in the international community. Business conditions are at the highest levels since the global financial crisis, and the Australian economy is generating a thousand jobs a day, on average. The Turnbull government have met the promise we made to the Australian people to create over a million jobs, and we have done it earlier than we predicted. Importantly, in the last year, the overwhelming majority of those jobs have been full-time.

Momentum is building in the Australian economy but if there is one thing we know, it is that governments cannot rest on their laurels. We cannot take this strong economy for granted. That's why the government are sticking to the economic plan that we outlined to the Australian people, which has a number of key elements. These include our commitment to record infrastructure spending and the 10-year infrastructure pipeline we announced. For Sydney, this includes our investment in better public transport, which will benefit my own electorate. For example, in North Sydney, the $1.6 billion we are providing to the New South Wales government to assist in the construction of the Sydney metro will be a game changer for my area as it will for the entire rail network across our city. This new metro rail line from Chatswood to Bankstown via the CBD will include new stations in my electorate at Crows Nest and North Sydney, and will alleviate congestion on the North Shore line. We're supporting a rail link to the new Western Sydney Airport. That airport will be the centre of a new powerhouse in economic activity for tour state.

Our plan includes our commitment to diversify the economy. This includes support for the innovation sector, which is thriving in North Sydney and has even greater potential. I see this from participants in the North Sydney innovation network I established following my election, which is bringing together some of the leaders in the sector working on the Lower North Shore. Similarly, our commitment to free trade is opening new opportunities for our service sectors and agriculture alike.

I welcome today's announcement that the EU will commence negotiations on a free trade agreement with Australia, which comes on the back of our success in negotiating the TPP and other high-quality free trade agreements. We are better supporting small business, which plays a vital role across Australia and in our local communities. This year's budget extends the instant write-off provisions, allowing small businesses to invest more in their own capital needs. Well over a thousand local businesses in my electorate have benefited from this measure in recent years. Some 31,000 local businesses with turnovers of up to $350 million will benefit from the company tax reductions we have already legislated.

A key part of our plan is tax reform. This has two components. The Ten Year Enterprise Tax Plan is essential to improving the competitiveness of our economy in a global environment in which many of our direct competitors are or have already reduced their company tax rates. The case for the company tax reductions is as strong today as it was when the Leader of the Opposition and the shadow Treasurer argued the case for lower company tax cuts just a few years ago. Their hypocrisy in now opposing those reduction has not gone unnoticed by the Australian community. In fact, the case is now even stronger in a world where we have moved from having among the lowest company tax rates to amongst the highest in the OECD. In this year's budget, we have outlined a plan to reform personal tax to lower taxes for hardworking Australians. Our plan will build a personal tax system that encourages aspirational Australians to get ahead, while also being fiscally responsible. It is a very direct way of reducing cost-of-living pressures for millions of Australians. The plan will provide immediate tax relief for low-income and middle-income earners, protect Australians against bracket creep and, in the medium term, make personal taxes simpler and flatter.

The first step of our plan will provide up to an additional $530 through the tax offset to low- and middle-income earners in each of the next four years. Ten million Australians stand to benefit and 4.4 million people will receive the full $530 benefit in the next financial year. The second step is to expand tax relief to help protect middle-income earners from bracket creep. From 1 July this year, the government will increase the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. This will provide a tax cut to around three million Australians. In my own electorate, some 67,300 taxpayers stand to benefit in the next financial year from these changes. From 1 July 2022, these bracket creep measures will be expanded by increasing the top threshold of the 19 per cent tax bracket from $37,000 to $41,000 and increasing the low-tax offset from $445 to $645. From 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000. The third step of our plan will deliver the final stage of our personal income tax reforms. From 1 July 2024, the government will remove the 37 per cent tax bracket completely. This will be achieved by increasing the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000. These reforms will fundamentally reshape our personal income tax system because it is vital that workers are rewarded rather than penalised for their efforts.

I want to make a few general remarks about the broader context of the government's economic plan and the reforms outlined in this bill. First, one of the frequent criticisms of past government policies has been that they are not part of a long-term strategy. On occasions, budgets have been seen as being tailored for the three-year political cycle rather than the future interests of our nation. It's one of the reasons why in my first speech I argued that it was time to move to four-year parliamentary terms. This government is demonstrating that it is thinking beyond simply the electoral cycle. We see this in many areas, be it in our 10-year plan for school funding, in our 10-year pipeline for infrastructure, in our enterprise tax plan, which I've spoken about, or in the seven-year plan we have outlined for personal income tax reform in this bill. By planning for the future, we can ensure our economy continues to grow and that both individuals and businesses have greater certainty about the economic environment in which they will be operating. The challenges faced by our nation will not be solved by the short-termism and political fixes we so evidently saw in the Leader of the Opposition's budget reply speech. A political grab is not a plan for the future of our nation.

Second, if you believe the politics of envy those in the Labor Party and their compatriots in the Australian Greens seek to stoke, you would think that our tax system penalises those on lower incomes and disproportionately benefits those in higher income tax brackets in an unfair way. The reality is, of course, something entirely different. I want to thank the Treasurer for so clearly debunking these myths in his address to the Australian business economists in late April. I want to reiterate some of the points the Treasurer made in that speech. For example, he pointed out that 17 per cent of personal income tax revenue in 2015-16 came from the top one per cent of taxpayers. The top 10 per cent of taxpayers pay 45 per cent of personal income tax. The 2.4 million Australians in the top two tax brackets—around one-quarter of taxpayers—actually pay 65 per cent of personal income tax in this country. As the Treasurer commented, the burden is carried by the few and not the many, as is often claimed by the high-tax club.

Finally, I want to remark on a narrative that I've heard time and again from those sitting opposite in the Australian Labor Party. In relation to our tax reforms, be it those for companies or the personal income tax reductions in this bill, we've heard the cry from Labor that these are somehow tax giveaways, as if the incomes of Australians and Australian businesses belong to government. The claims reveal something fundamental about Labor's approach to tax. It's no surprise that their response to the budget and their own proposals rely so heavily on funding their increased spending by increasing taxes on those older Australians who've relied on dividend imputation.

We in the coalition believe in something quite different. We see tax reductions as giving back to Australians what they have earned themselves through their own endeavours and hard work. Labor's approach is not one that I could ever support. It is not an approach that will encourage the aspirations of those who strive for themselves and their own families. It is not an approach that will strengthen our economy by encouraging those who want to achieve and get ahead. The strength of our nation lies in the endeavours of our people. This bill seeks to recognise that fact, and I commend the bill to the House.

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

I think the word that comes to my mind when I look at the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, combined with the government's plans to give a $70 billion-plus tax cut to big business, is 'irresponsible'. I come from a small-business background. I spent quite a bit of my time running my own small business, and then I managed a national trade association for small businesses. One of the fundamental rules in small business is that you don't use a windfall gain to build into your base. If you get a windfall gain, if something happens that suddenly delivers unexpected money that is not actually due to you, you don't build that into your operational base. You use that to improve your capacity to grow your business. You might use it for infrastructure. You might use it to retrain your staff. You use it in a one-off way which builds a capacity for growth. What you don't do, if you get a one-off large contract without an expectation of more, is move into bigger premises and build higher rent into your base.

We saw the Howard-Costello government make that fundamental mistake when they were in government, when, for reasons due to extraordinary global growth, particularly in China, we had unprecedented growth in Australia. Rather than taking that boom, which was not of our own making—in a sense, it was actually the massive growth in China—and investing in productive infrastructure, in education, in positioning Australia in a better place to drive our own growth, they built it into our base through massive tax cuts and increases in welfare and by the introduction of negative gearing, reducing capital gains tax, making superannuation tax free and a whole range of other things. When money flowed in, they did a whole range of things that built that money flow into the base, even though it was coming from another source and it couldn't be guaranteed to continue.

Now we've got a government doing exactly the same thing. We hear the Treasurer talk about growth. They're projecting growth to continue at that level. They're projecting, for wages that have been flatlining, the growth to suddenly double. They're projecting heroic growth in a whole range of areas of the economy, and they're then building that projected growth into the base through these massive, massive tax cuts. And, next time the economy turns, we will find ourselves in exactly the same position we found ourselves in when the economy turned last time: with a base which cannot be sustained through the economic cycle.

We've been protected in Australia from understanding what downturns are by what is now over 25 years of uninterrupted economic growth. Even during the global financial crisis, when the rest of the world used the word 'recession', we didn't go backwards. We continued to move forwards, largely because of the extraordinary stimulus packages that the Labor government introduced. We in Australia have forgotten what that looks like. But it is foolish to assume that the growth projections through 2027 and through 2028, even if they're accurate for that long, would continue through 2030 and 2035, yet they're building it into the base in such a way that it would be almost impossible for any future government to pull that back out when it's needed.

Let's look at what they're actually promising here. It is still just a promise because they've got to get it through this House. The government are promising tax cuts through 2018, 2022 and 2024. The first tranche starts on 1 July. It's around $530 a year for taxpayers earning up to $125,333, so it's a modest tax cut for low- and middle-income earners. We on this side of the House support that, and we're ready to vote for it anytime the government put that up as a separate bill. Then in 2022—some four years away—they're going to increase the low-income tax offset from $445 to $645. Again, it's a modest increase for low-income earners, but they're also increasing the top threshold of the 32.5 per cent from $90,000 to $120,000. So they're giving a more substantial cut to the higher end of the middle-income tax bracket in 2022. Then in 2024 they're abolishing the 37 per cent tax bracket, which gives quite a substantial tax cut to the top threshold of $120,000 to $200,000. They're effectively abolishing the 37 per cent tax rate completely, which, again, is a substantial tax cut for people at the upper end of incomes.

So we've got a modest tax cut now and a promise of tax cuts in 2022 and 2024. They're seeking to pass a bill now which locks future governments into that. Of course, you can't actually lock a future government into that, but by seeking to have it passed now they're increasing the difficulty of governments to be able to respond to global movements. They're effectively building what is a projected windfall gain from global growth into the base for future governments.

We on this side are happy to support the first one tomorrow. Any time the government wants to bring in a bill that provides that first cut, we will be more than happy to vote for it. But we are not happy to vote for a bill that introduces the three right up to 2024, when the government cannot come into this House and tell us what the cost of each of those is because, apparently, the projections are unreliable. If the projections of the costs are unreliable, then the projections of the revenue are unreliable. You can't say, 'Sorry, we can't trust the projections' and then say, 'But we can afford it because the projections are right.' You can't have it both ways. The projections of wage growth suddenly recovering from the slump it's in now are heroic at best. This is the same mistake that the Howard-Costello government made. This is the same mistake of assuming that the world economy will not go through the normal economic cycles, and building into our cost base what they believe we can afford in the best of times. It's foolish. It's irresponsible.

We on this side know better than that. We actually governed in the global financial crisis, which nobody saw coming, and we suddenly found ourselves in circumstances where the decisions on negative gearing, the decisions on capital gains tax and the decisions that the Howard and Costello government made in the last years of their term about imputation credits and the non-tax of super were all unsustainable. We see this government now trying to deal with the some of those impacts but not others. The impacts of building high expectations into the base by the Howard-Costello government are still being felt now by this government, and this government hasn't learned a thing.

We on the Labor side have a different view of what should happen in the tax cut arena. We also are proposing personal tax cuts, just like the government, but for low- and middle-income earners they're about twice the size. A person earning less than $125,000 a year will receive a bigger tax cut under Labor than the Liberals, and nearly four million people will be better off by about $398 a year compared to under the Liberals' plan. That means 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 $1,855 a year. We believe that the difference between the government's approach and Labor's approach demonstrates our attitude to fairness and our understanding of the word 'fairness'.

The government's unfair budget gives big business and the banks an $80 billion tax handout and it makes Australians pay for it with savage cuts. That's the other side of a tax cut—our taxes actually pay for things. I shouldn't even have to say this, but they actually pay for things that we all value. The government says: 'We'll give the money back to you. It's in your pocket. Go and spend it as you see fit.' I dare anybody out there to find a way to spend their additional $10 tax cut on providing better schools for their children, making sure there is a hospital bed when they need one or making sure they can catch a train to the city. I dare anybody to take their individual $10 and make any of the things happen that we as a country need to happen in the next decade.

We as a country need an education system that prepares our children for a future which is profoundly different to the future that I prepared for. We need an education system which is flexible, which has strong capacity and which builds capacity in our population, yet we see cuts to the education system, whether it's TAFE, universities or schools, from this government. We need a country that can build the infrastructure that we need. We see a lot of spin from this government on infrastructure, but when you actually look at the figures it's not there. The cuts that this government are already making across the board in order to afford their tax cuts—in spite of their heroic projections, which they say are going to pay for them—are quite shocking.

This is not about fairness. Those of us on this side know that people on low and middle incomes are struggling and haven't received pay rises. Their work is becoming more casualised. The cost of living is outstripping wages, and they are desperately in need of relief. Anybody in this House that goes out to their communities will hear that. They will hear the people that provide meals for the homeless telling you that more and more people, particularly older women, are coming in for meals because they need the rest of their income to pay their rent and their utilities. Anybody who goes out into their community—apart from those that live in the extremely wealthy suburbs—will tell you that low- and middle-income earners are struggling, and they're the ones that need the support.

We on the Labor side are focusing our tax cuts where they are most needed. That's what we believe our economy can afford over the long term, and that's what we are delivering—fairness and help where it is most needed now. Unlike the government, we're not trying to pay for those cuts out of projected growth. We're not saying: 'Oh, the economy is going to grow. Let's spend it!' We've actually looked through the tax system to see where we can introduce fairness. Most people listening to this will know that we've already announced, over a number of years now, a number of policies that close down some of the unfairness in our tax system.

Our changes to negative gearing will allow people to negative gear new properties but not existing ones. We'll make changes to the capital gains tax, which will take some of the heat out of house prices, which are currently driving houses out of reach for most people and dramatically affecting rents as well. If people are looking at household stress and the impact of high rents on households, they don't have to look much further than Parramatta. The median price to buy a house in Parramatta went past $1 million last year, and our rents are some of the highest in Sydney—and that's Parramatta, 25km from the CBD. We have an incredibly flat bell curve. We have a lot of people in our community that are on low incomes and an equal number that are on high incomes. Housing prices, rent and the cost of living are putting a lot of people under incredible stress. We don't believe that it's fair that taxpayers continue to subsidise people to buy their second, third, fourth and fifth investment properties when there are so many people that can't even afford their rent—that, in order to pay their rent, are turning up to Meals Plus to get a free meal. Shockingly, an increasing number of those people are single women.

I would urge anybody looking at the bill that we're looking at today to consider the fairness of it. Consider why it is that the government won't split the bill into two so that we on this side and in the House today, if they wish, can pass the tax cuts for 1 July. Consider why they are insisting that if the parliament doesn't pass the plan right up to 2024 then nobody will get a tax cut on 1 July. Consider why this government would decide that, when presumably they know, as I do, that there are people out there for whom even a $10 tax cut will make a difference—so difficult are their circumstances when it comes to the rising cost of living in our communities. Consider why a government would prevent people from getting a tax cut on 1 July in order to play the political point. It's hard to see a policy rationale for it, but there is a political point: trying to force us to pass all of it in order to give it on 1 July. We're not going to fall for it. We have our own policy. Come 2019, if Labor wins government, the tax cuts for low- and middle-income earners will be twice the size of what this government is providing. Even under this government, no-one gets it till the end of the financial year anyway, because they get it as a refund, not week by week. So people won't actually be worse off from waiting, quite frankly. When people wake up to that, they will see absolutely through this cheap political attempt to force this side of the House to pass tax cuts on a projected revenue which is so unreliable that they can't even give us the actual costs. This is, I think, one of the most stupid debates I've ever been involved in, and it's irresponsible.

Ann Sudmalis (Gilmore, Liberal Party) Share this | Link to this | Hansard source

I rise to talk about the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. I've yet to meet a fair-dinkum Aussie who isn't trying to make the life and opportunities of their family better than the life experiences that they had. Our plan for personal tax is all about helping that come true for working families and individuals. A lot of young working people may not be so concerned about making provision for a family, but they do want to own their own apartment, they want to travel and they want more money in their pocket. So our personal tax system encourages aspirational Australians to get ahead.

So what does 'aspirational' mean? It means, 'I want to get better; I want to have a good time.' I speak to my young children—well, my youngest; the other two are pretty stable. She just wants to travel, get on and pay down her mortgage. She's not looking for family stuff, but she wants more money in her pocket, the sooner the better, and she'd like it for the next 10, 15 or 20 years, instead of the ATO taking a bigger grab as she increases her commissions.

I will just go back a little bit; I was talking about family. Our personal tax system encourages all of these people to get on, get better and have more money. The first step will provide tax relief to low- and middle-income earners, the second step will help tackle bracket creep and the third step will simplify and flatten the system. There are lots of people in the general community, and they're really not too sure about that term 'bracket creep'. Put simply, as you earn more money, your taxable income jumps into a new level and the taxman takes more from your pay packet. Together, the reforms we're putting forward with the company tax changes, tax integrity measures and personal income tax changes will eventually build a much simpler system. It'll reward those hardworking Aussies who almost jump over into a new level, so they've got more money to spend, they've got more money to save, they've got more money to pay down their credit cards and they've got more money to pay down their mortgage. Ultimately, this drives a stronger economy.

Step 1 gives immediate tax relief for low- and middle-income earners to help with the cost of living pressures. The income tax offset will provide tax relief of up to $530 to low- and middle-income earners for the next four years. I heard a comment from the previous speaker that $10 a week would be better put to them as a tax cut rather than waiting until the end of the year. I would argue with that. People don't tend to save the $10 a week, but getting a tax refund cheque of $530 gives them the ability to go and buy something that they hadn't thought of buying on the way through, or it gives them the chance to throw it onto an electricity bill or put it towards something special. But $10 a week is not so practical. Ultimately, having that offset for the next four years is going to help over 10 million Australians. Around 4.4 million people will receive the full benefit of $530 in the coming financial year, as from July. It's pretty cynical not to think that's a good idea. The benefit is in addition to the existing low-income tax offset, and it will be available on assessment after the taxpayer lodges their tax return. There are two parts to that. You get rewarded for putting your tax return in early, saving the tax office even more money because they don't have to chase you to put your tax return in.

The second part is all about that bracket creep I mentioned. We're planning to expand tax relief to help protect those middle-income earners. From 1 July this year, the government will provide a tax cut of up to 135 bucks a year to around three million people. It mightn't sound like much, but it will make a difference. This means that people earning just under $87,000 can stop being concerned that if they get extra pay it'll suddenly push them to a higher level of tax payable. From July, it will only kick in after you earn over $90,000 per year. These earners will only pay 32.5 per cent tax. That's about the same as the company tax rate as it was in years past.

When the low- and middle-income tax offset concludes in 2021-22, the benefits will be locked in by increasing the threshold of the 19 per cent tax bracket from $37,000 to $41,000. Let me tell you: that's a lot of people living in Gilmore. That's a massive benefit to the people living in Gilmore. We don't have a lot of people earning those top levels, but that will certainly make a difference for the people living in my region. From 22 July, the top threshold will be the 32.5 per cent. That's a cut of over $1,300 bucks a year. I would encourage all of those—and there are some—to be very happy about that. There are some people in my region who will be very happy about that.

The whole idea is about making personal taxes simpler, and I have tell you: we all want that. I can say that even as a past employer. I have here copies of this week's tax scales. We all want tax to be simpler, making it much easier. Luckily you have this on the computer now, but in the old days you had a little plastic book, and for each person whose tax you paid you'd go through their book, align how many dollars they'd earned, find out if they were on the tax-free threshold, write down on their payslip how much tax they paid and record it in your notebook—because it wasn't on the computer back then—and at the end of the year you added it all up and, each year or each fortnight, you slugged it off to the taxman. It was very cumbersome. That's the aim: if we end up with a flatter system, it is going to make it so much easier for everyone.

So, yes, it's going to be good. From July this year the government will provide a tax cut of up to $135 for three million people, and that will be great. Making it much simpler would definitely be better and I know that people will appreciate it. That flattening of the tax system means that, ultimately, 94 per cent of all taxpayers in Australia will only have to pay 32½c in the dollar. Ninety-four per cent of working Australians will only have to pay 32½ per cent. For a lot of Australians, that will make one of hell of a difference. Currently, some of them are up on 48 cent. That means the tax man grabs almost half of what you earn, so half of what you earn is gone. As I was explaining to a radio journalist this morning, if you have a family who are split and one of those partners is paying child support, a third of their income, give or take a bit, goes off to the tax department, but their assessment for child support is on the whole lot, so roughly another third goes off to the child support agency. That leaves that person with a whole lot less money to spend either on a new family or on trying to be stable and have a home. So changing this whole tax regime has a domino effect of benefit not just for the taxable income but for living and surviving, and there are a lot of people who are going to be really appreciative of that. For that 94 per cent of Australians, the working Australians who are only going to be paying 32 per cent or less, it will be a great achievement. Compare that with 63 per cent if we don't make any changes at all. If we don't make any changes at all to this system, only 63 per cent will be in that 32½ per cent bracket.

A lot of people are saying: 'Well, it's such a hard ask to change the tax schedules. It's such a hard ask to get anything like this through the House. Why would any government bother to change the tax system? We've had it for years.' Some would say, 'Ah, well, too bad; too late; too hard.' The answer is that right now that scale of personal income tax simply isn't fair. If people want to get ahead, earn more money and make changes in their life financially then the ATO is likely to take a bigger chunk of your pay packet than you'd really like.

During my village visits around Gilmore, I have met both older and younger residents who have thought about economic issues. Initially I found it curious that people would come and talk to me in a coffee shop and say, 'I've been thinking about tax.' I'm thinking: 'Why? Why are you thinking about tax? There are so many other things to think about. But, anyway, go ahead.' Some of the more mature people come to me and they say, 'It'd be a whole lot easier if there was just a flat rate from go to whoa. I used to be an employer, I used to employee people and it was so difficult. It would be so much easier.' I thought, 'Okay. I love it. I'll write it down and send it off to the minister and see what happens.' Right now, trying to get a single rate across the board through is going to be pretty difficult, but the good thing is that we can at least start.

Addressing that sort of a legislative change is pretty mammoth. Right now, we have the aim to have lower, fairer and simpler taxes—a system that is fair for all Australians, rewards all Australians and makes people think about earning more money instead of saying, 'No, I'm not going to take an extra shift, thanks very much. It will shove me into a different tax bracket. No, I don't want to do that because it's going to cause me more financial grief.' What! We want to encourage people to work more. It should be in our DNA: work more, enjoy more, save more. To build a stronger economy, it's vital that every worker is rewarded rather than penalised by the tax system for their efforts.

I bet that most of my constituents—in fact, most Australians—are not aware that personal income tax contributes over half of the government's tax revenue. So it's really, really important to get these settings right and build a tax system that's fair and financially responsible. The tax burden borne by workers has continued to rise, and that's okay. You could talk to any working person and they would said, 'That's okay. I don't mind paying my fair share of tax'—well, most of them; thankfully we're chasing those who are saying, 'I don't want to pay tax. I'd rather go under the table.' Most of them say, 'I want to help build the local roads and I want to help support the local schools.' They're happy with that, but they want it to be fair. When more than half of our revenue comes from income tax, we've really got to get it right because there will come a point in time when people will say, 'It's too hard to work. I'm in too high a tax scale. I'll just go on income support from the government.' Bracket creep reduces that and now we have to change that. We have to make sure that there's incentive to work hard, take risks and succeed. There were 2.4 million Australians with taxable income above $87,000 in 2015-16, representing about 23 per cent of taxpayers, but they were paying 65 per cent of the personal income tax. The government's seven-year Personal Income Tax Plan will improve the incentive to strive for success by providing low tax to middle- and low-income earners to combat bracket creep and flatten the system, as was suggested by those strange people coming to my village visits. They'll be very, very happy. We need to protect the middle-income Australians for the rest of their working life. We need to encourage them to keep working.

The plan delivers a tax system and encourages aspirational Australians to get ahead. Individuals will be able to take on more work and seek advancement knowing that their income will not be grabbed by the tax man. Nobody wants that secret hand coming over the back of the paymaster's shoulder, saying, 'Got ya! I'm taking more of your money. You might be able to get back some in your refund, but probably not.' The plan is affordable and it's funded. The coalition government is pretty good at this. Financial management is our major strength. We're good at it. We're good money managers—very good money managers. In the budget this year, we've turned a corner. As I've been explaining to a number of people, when you stop borrowing money to pay down debt—because that's like taking out a new credit card to pay down a credit card you've already got—you actually get more and more into debt. We've turned that corner. We've thrown that second credit card away and now we're paying down the first credit card. That's fiscally responsible—a big word. It just means we're taking care of taxpayer dollars, and that's incredibly important.

Together, our reforms for company tax, tax integrity and personal income tax changes will make a much simpler system, will reward our hardworking Australians and will drive a stronger economy. There is no question that this must go hand-in-hand with changes to the whole scheme. I often find that the other side will pick half an argument and argue against it, when this is not a simple issue. Tax is never a simple issue. You have to combat it from both sides. You have to pull money from here and push money there. Part of this whole structure is about changing the whole plan for economic stability and tax fairness and ultimately making Australians really, really happy with the outcome of how we're spending their money from the tax we do collect but also allowing them to have more of their own money to spend on what they want to spend it on.

Brian Mitchell (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Before I get started on my speech, I will just make reference to the speech by the member for Gilmore. She said a few things which I'd like to address. She said that financial management is a major strength of the coalition. Now, I know they think they believe that, but the facts belie it. Since this government came to power, we've had debt and deficit go through the roof. Apparently we had a debt and deficit emergency when they came to power, but since they've been in power for five years I think debt has doubled to more than half a trillion dollars, and the deficit has tripled. I hardly see that as an example of prudent financial management.

The member for Gilmore also mentioned the virtues, supposedly, of a flat tax. I must take issue with that. I think one of the great things about Australia is that we have a progressive taxation system. The more you earn, the more you pay. The problem with a flat tax is that it means a lot less money for government revenue, and that means a lot less money for hospitals, a lot less money for schools, a lot less money for roads, a lot less money for aged care and a lot less money for child care. All the services and infrastructure that make a cohesive, peaceful, stable society require taxation revenue. A flat tax system—I think the flat-taxers, the flat-earthers, usually like to talk about 20 to 25 per cent as their target—would mean such a massive drop in revenue for this country that we would see social services just drop off the edge.

We would see the wealthy in this country get incredibly wealthier, and they'd be okay. They'd have their private schools, their private hospitals and their private cars to take them wherever they'd like to go. But public transport would fall away; public schools would have less money; and public hospitals would crumble, and we don't want to see that society. We've seen that society in countries overseas where the wealthy are incredibly wealthy and everybody else has to make do, and we don't want to see that here.

Now I'll get to the substance of my speech. Two weeks ago, the Treasurer handed down yet another Liberal budget that looks after the top end of town. It's an economic agenda that includes $7,000-a-year tax cuts for high-income earners, such as everybody in this chamber, but it takes $14 a fortnight from pensioners. It's an economic agenda that gives $17 billion to banks but cuts $17 billion from schools. It's an economic agenda that takes $715 million from Australian hospitals but gives $80 billion—$80 billion!—to corporations and multinationals. The Treasurer and the Prime Minister are desperate to divert attention from the ugly truth of their ugly budget. They point excitedly to the $540 a year that workers will get back as tax relief: 'Look! We're helping the poor people. We care. We do!' But that tax relief will only come if this parliament approves the entire rotten package.

Labor has been up-front. We support the government's first tranche of tax cuts for workers on low and middle incomes. If those tax cuts were separated from the other stages, they would sail through this parliament, and workers would enjoy the benefits immediately. But the government is refusing to separate the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. The Prime Minister and the Treasurer are trying to blackmail this parliament: 'Pass the tax cuts for the rich too, or working families will get nothing. Give our friends in boardrooms and mansions a bigger slice of the pie, or we will deny the little people their tiny little sliver of relief. Give politicians and CEOs and lawyers and surgeons $7,000 tax cuts, or the workers won't get their $540.' That is their real agenda. The modest tax cuts for ordinary Australians are the sprat to catch the mackerel. They're just the bait, and it's despicable.

Labor has been seeking answers from the government. What is the total year-on-year cost of its seven-year tax plan? The questions could not be more direct in question time. There is no preamble and no posturing. They are simple, direct questions this Treasurer should be able to answer. And we know that he does know the answers; he just won't give them. He won't tell this parliament and he won't tell the Australian people. The Treasurer and the Prime Minister are refusing to answer. They are refusing to tell this parliament the detail of budget measures that they expect this parliament to approve. They are blind to their own arrogance. It's a government that has broken more promises than it has kept, and it cannot expect to be taken at its word.

A government that promised no cuts to health, no cuts to education, no cuts to pensions and no cuts to the ABC and then broke every single one of those promises cannot be taken at its word. A Prime Minister who came to office as a champion of tackling climate change and of raising the tone of political debate but who now champions the expansion of fossil fuels and who peddles in petty sloganeering cannot be taken at his word. A Treasurer who railed against debt and deficit but who has tripled the deficit and more than doubled the debt to half a trillion dollars cannot be taken at his word. A government built on lies and broken promises cannot be taken at its word. This parliament must see the detail of the cost of those measures that it is expected to vote on. It is common sense.

Labor's budget reply speech outlined a bigger, better and fairer tax system that benefits 10 million everyday Australians. Labor's plan nearly doubles the tax relief for the vast majority of wage earners. Labor can afford this because we are not backing the billions for banks and corporations. We think the top end of town is doing nicely already. They can look after themselves. They don't need our help. But we know that working Australians—the supermarket tellers and medical receptionists; the nurses, teachers and teachers aides; the mechanics, office workers, bus drivers and baristas; the people in this gallery; the parents of the schoolchildren who come to this parliament—are finding it tough to make ends meet. We are not talking about making it easier to afford a summer trip to France; we are talking about making it easier to afford the kids' school camp to Queensland. We are not making it easier to buy your second, third, fifth or 10th investment property; we are going to make it easier to buy a home to live in. Labor is supporting the government's tax measures that come into effect from 1 July this year, but we obviously believe they do not go far enough. A Labor government would permanently expand this element of the government's agenda so that anyone earning under $125,000 a year will receive an even bigger tax cut. Under Labor, more than four million Australians will be another $400 a year better off. It proves the lie of this government that says Labor is the bigger-taxing party in government. The vast majority of Australians will be better off—they will pay less tax—under Labor.

In my electorate of Lyons, the median weekly income is $981 a week, well below the national and even the Tasmanian average. Less than 10 per cent of my constituents earn more than $90,000 a year. The vast majority of people in Lyons will have more money in their pockets under Labor. That is an absolute fact. Labor can deliver these bigger, better and fairer tax cuts to working Australians because we are not backing billions in giveaways for banks and corporations. That means we can also reinvest in vital community services like health and education, which the Liberals have cut. Labor will put back the $17 billion into schools that the Liberals cut. We know that $17 billion invested in our kids is a better investment than giving $17 billion to the banks. Labor will invest more in health and hospitals, including an extra $30 million in Tasmania's hospitals, which are suffering under the Hodgman Liberal state government. Labor will invest more in TAFE after this government, in this budget, ripped $270 million out of TAFE. We will fund 100,000 places to ensure that our kids have the skills to fill the jobs that this century requires. We will invest more in apprenticeships and even require that one in 10 jobs on Commonwealth projects be filled by an apprentice. We know that there are 130,000 fewer apprentices since this government came to power. It's a shameful record, at a time when we are importing so many skills from overseas, that so many young people have been denied a place in trades training.

These are stark differences—and there will be stark differences at the next election. People have a real choice. The Liberals have their failed, trickle-down economics, 'look after the top end of town' and 'make the rich richer' philosophy. It's failed. They've tried it overseas. The US has had it in place since Reagan's time. You cut the taxes for the top end of town and somehow believe that the money will be invested and will make its way down to the workers one day. It hasn't happened. They've been trying it for 40 years—it has failed. There is living proof. The once great American middle class has been rent asunder. It's gone. The American dream that we all once aspired to—mum and dad, the suburban house and the car in the drive—is all gone. In America you are struggling or you're rich. There's no in-between. People are struggling to afford their health care or they're captive in their employment because that's where their private health insurance is. This is the sort of model these people want to bring to this country.

I know there was irony there when Donald Horne called his book The Lucky Country, but we have taken that slogan on—'the lucky country'. It's a great country. It didn't just happen by accident. This country enjoys the stability and the prosperity that it does because of the sacrifice and the decisions made by previous members of this parliament. It was no accident. It didn't just happen by magic. Laws and policies made by this parliament, to protect trade unions and the right to protest and to bring in fair work provisions, the eight-hour day, the weekend and penalty rates, are what made this country great. By making life affordable for people at the bottom end, that is what generates economic activity. I'm no great fan of Henry Ford. He was a nasty fascist, but one thing he did understand was business. He knew that, if he was going to make a whole pile of cars, the best way for him to sell more cars was to make sure that his workers could afford to buy them. Ford made sure that workers in his factories could afford to buy the products he was making. It's basic business. You empower the people at the bottom—you give them enough economic power—and that's where you generate your economic activity from. The more you casualise, the more you contract out and the more you make people insecure at the bottom, the less they're going buy and the less economic activity they're going to generate. They're going to hold onto their money—'I'm not sure I've got a shift next week; I'll hold onto what little cash I've got. I'm not sure I'll be able to afford the rent, so I better squirrel it away.' When you have confidence, secure wages and secure work, that's when you go out and purchase and generate economic activity, and that's when you create jobs.

At the next election, there's a choice between the failed trickle-down philosophy of this government and those opposite, and Labor, with bigger, better and fairer tax cuts for the vast majority of people in this country. The top end are going to miss out—hand on heart. If you're in the gallery and you're super-rich, sorry, you're getting no tax cuts under Labor. But if you're a working person on a wage under $125,000, you're going to be better off. Labor understands that economic activity is generated from the bottom up. We know that. There's been 25 or 26 years of uninterrupted economic growth in this country, thanks to those on this side of the House—and we look forward to making things even better when we get on the other side of the House. Thank you.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to talk about the cornerstone of this government's great budget and the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. This obviously comes on the back of the announcement we made about the million jobs that have been created since 2013, one of the promises that we've kept.

Opposition Members:

Opposition members interjecting—

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I hear a bit of noise from the other side. They were very good at keeping promises, weren't they? There was Grocery Watch and all those sort of things, which they seem to have forgotten about. An old adage comes to mind when we talk about taxes: there is no certainty in life except death and taxes. Taxes are necessary in a civil society to fund essential government services. But we should never lose sight of where this money actually comes from. It's not the government's money; it is money from hardworking Australians. We have an obligation to those hardworking Australians to ensure that we spend within our means, take as little as we possibly can and avoid the wasteful spending that those on the opposite side thrive on.

Our tax system needs reform; anyone who thinks it doesn't has blinkers on. This bill is just one part of our reform of the tax system. This bill will deliver lower, fairer and simpler taxes. We have to remember that this money, as I said before, is the money of every Australian. It is not the government's money. Australians have earned it, they have worked hard for it, they know how to spend it and they should have the right to spend it. No-one knows better how to spend money than those who have earned it. We have heard that from some very famous people and we have heard it from many on this side as well. But those opposite, like every other left-leaning political party around the world, seem to believe they know what is best for you. This is quite a paternalistic view; but, then again, those opposite have never trusted the Australian people with personal responsibility.

There are 71,736 taxpayers in my electorate of Swan and they stand to benefit from the upcoming low- and middle-income tax relief in 2018-19. There are 99,248 constituents on the electoral role in Swan. Of that number, 71,736 people are going to be better off under our personal income tax plan. That sounds pretty good to me.

This bill contains a number of changes that 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 manage household budget pressures. Those opposite, whenever they are on the government benches, completely disregard the budgetary pressures on Australian families. This government, through this bill, is providing certainty for most working Australians that they will face the same tax rate over their working life. The coalition government's seven-year plan is affordable and fiscally responsible, as outlined in the budget. It will provide certainty to workers and, unlike the plans of those opposite, it will ensure that, if you make more money, if you work overtime or happen to come into share dividends or spend more time working on a weekend, you won't be penalised by a higher tax rate.

Labor has already announced more than $200 billion of taxes whilst in opposition. There is the housing tax, the savings tax, the family business tax and now we have the retirees tax. And we could probably see the introduction of a death tax under the opposition—obviously something the Australian people don't like. Those opposite, under the current Labor leader, are for higher taxes. Liberals are for lower taxes.

Opposition members interjecting—

Perhaps they want to follow the advice of Bernie Sanders and mention the paradise of Venezuela under Maduro—because that seems to be where they have lifted their tax plan from. I heard the member for Mackellar speaking here about Venezuela and letting the member for Fenner know what the actual problems are with a high-taxing government and why people cross the borders to spend their money and purchase products because they can't afford to buy them in their own country, where the taxes are so high. Those opposite don't like self-funded retirees—we know that—or anyone who has taken a bit of a risk in their lives. We know those opposite have sold out any credentials to say they care about business.

This bill has three parts and is extended over seven years. Step 1 of this bill is providing tax relief to low- and middle-income earners to help ease the cost of living pressures. This bill will start permanent tax relief by introducing the low- and middle-income tax offset, a new non-refundable tax offset for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. 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 receive the maximum benefit of $530. For some reason, those opposite seem to think that $530 isn't much to anyone. For context, for a uni student that difference will mean whether or not they can cover two years of the compulsory student union fees those opposite rammed through the parliament when they last sat on these benches. This offset will provide a benefit of up to $200 for taxpayers with taxable incomes up to $37,000. From $37,000 it will increase at a rate of three cents per dollar to a maximum benefit of $530 for taxable incomes of $48,000. The offset will phase out at a rate of 1.5 cents per dollar between the taxable incomes of $90,000 and $125,333.

Step 2 of this bill will be to combat bracket creep, something that people of our age and, I'm sure, the member for Moreton have lived under for many years. Many Australians have enormous disdain for it. This is something that the coalition want to get rid of, but those opposite seem to care about that as much as they care about small business. From 2018-19 the top threshold for 32.5 per cent income tax bracket will be increased from $87,000 to $90,000, reducing taxes by up to $135 for taxpayers earning above $87,000. This will help many in my electorate, considering that in the great state of Western Australia the average salary is already around $88,000. But, according to the member for McMahon, if they earn $3,000 or $4,000 more they are rich. From 2022-23 the top threshold of the 32.5 per cent bracket will be further increased from $90,000 to $120,000, and the top threshold of the 19 per cent bracket will be increased from $37,000 to $41,000. The low- and middle-income tax offset will be replaced by increasing the low income tax offset from $445 to $645. The increased LITO and the increase in the top threshold of the 19 per cent bracket guarantee the benefits of step 1.

Here are a few examples to see what it means for people in my electorate. An accountant, say, on $87,000 in Swan will have an extra $530 in his or her pocket from the budget year onwards. That means an extra $3,740 in their pocket over the first seven years of the tax plan. A shop assistant on $45,000 in Swan will have an extra $440 in their pocket from the budget year onwards. That means an extra $3,380 in their pocket over the first seven years of the tax plan as the tax relief increases. A hairdresser on $50,000 in Swan will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan as the tax relief increases.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

It's a tax refund.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

Why don't you like hairdressers in Swan? I hear the member for Moreton having a go at hairdressers in Swan. Why don't you like hairdressers in Swan?

Mr Perrett interjecting—

Have a look at yours! A high school teacher on $75,000 in Swan—

Mr Perrett interjecting—

They always go to the man when they haven't got any substance to their argument. They always go to the man. A high school teacher on $75,000 in Swan will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan.

Step 3 of this bill will simplify and flatten the tax system to ensure aspiration and that Australians who strive for their dreams are not disincentivised from earning more money. From the 2024-25 income year the top threshold of the 32.5 per cent tax bracket will be further increased from $120,000 to $200,000, completely removing the 37 per cent tax bracket and simplifying the personal income tax system. This means that people will stay in the same tax bracket over their working life. The top marginal rate of 45 per cent will remain, but only after their incomes reach more than $200,000. These changes will mean that 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 compares with a projected 63 per cent of taxpayers in 2024-25 under the current settings. Under this bill bracket creep will be practically nonexistent. True to form, the Labor Party has twisted the words and started their usual scare campaign, claiming we're only helping the rich. I thought the Prime Minister explained it well when he said:

Now under our long-term plan, when it’s fully set up, fully completed in seven years, someone earning $205,000 will make obviously five times as much as someone on $41,000 but they will pay 13 times as much tax. So they’ll earn five times as much but they’ll pay 13 times as much tax. So the idea that we are dismantling the progressive tax system is simply absurd.

It's clear the Australian people are smarter than Labor and its petty scare campaigns give them credit for being. People will be better off under our tax system. Those opposite like to denigrate the idea of thinking past an election cycle or two because they've never looked further than an election cycle. Perhaps that might mean those opposite standing by their principles and not changing their policy when the wind blows in a different direction to yesterday. To give some context, the government's tax plan means that 73 per cent of my electorate of 98,000 people will benefit from these changes. This tax plan nurtures the Australian dream, supports aspiration and will ensure those who earn more pay a fair share and do not get bumped up to a higher rate for earning just a few dollars more. I heard the member for Melbourne yesterday calling this plan a flat tax, similar to what former Speaker of the US Congress Newt Gingrich attempted to bring in during the 1990s. While the member for Melbourne has a silk tie on his neck and continues to bash his drum, funnily enough, from 1 March under the new EBA of the members he represented in the ETU A-grade class 4 electricians on service maintenance installation will actually earn more than $90,000 over a year. Are these electricians the rich the member from Melbourne wants to stoke class warfare against? It seems crazy.

This is bill is part of an approach the government is taking to ensure a stronger economy for all Australians. Those opposite seem to forget that this House doesn't create jobs or projects. It is hardworking Australians in small and medium businesses that employ people and keep this country going—and they are also the major employers of Australians. Our commitment to ensuring government gets out of the way and allows people the opportunity to forge their own path through life and to nurture individualism and aspiration will mean nothing but a greater Australia and innovation. Gone are the days of economic rationalisation from those opposite. Gone are the days of caring about the middle class and caring about Australia. We on this side of the chamber, unlike those opposite, have an incredible plan to surplus—not saying one thing to the people of Longman and another thing to the people of Fremantle. Labor say they'll tax more, spend more and come back to a surplus sooner, all while giving bigger tax cuts. It is a policy dilemma if ever I've heard one. The only thing the Australian public needs to remember is: watch what Labor do; don't listen to what they say. Those opposite said the mining tax wouldn't hurt WA, and they lied on that. They also said in 2007, when they got elected, that they'd give WA a $100 million infrastructure fund. It never happened. As I said before, watch what they do; don't listen to what they say. Those opposite, under the stewardship of the former member for Griffith and member for Lilley, would bring us to surplus and work to fix GST in Western Australia as well. They delivered nothing on the GST, not $1. Instead, they gave us the pink batts scandal and no plan for surplus.

Australians cannot trust Labor. They'll say anything to get their hands on the keys to the Lodge. I reflect on the famous 'The Forgotten People' speech by the great Sir Robert Menzies, our longest serving Prime Minister, when he spoke on the impact of taxes:

We have talked of income from savings as if it possessed a somewhat discreditable character. We have taxed it more and more heavily. We have spoken slightingly of the earning of interest at the very moment when we have advocated new pensions and social schemes. I have myself heard a minister of power and influence declare that no deprivation is suffered by a man if he still has the means to fill his stomach, clothe his body and keep a roof over his head. And yet the truth is, as I have endeavoured to show, that frugal people who strive for and obtain the margin above these materially necessary things are the whole foundation of a really active and developing national life.

I encourage those opposite to reconsider their approach to this bill. It will effectively deliver lower, fairer and simpler taxes for hardworking Australians, just as we have delivered a million jobs in the last five years.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Just before this year's budget was delivered, people might remember the Treasurer junking the Liberal and National Party plans to increase taxes on every single Australian with their NDIS and Medicare levy hike. That plan was based on the completely untrue suggestion that Labor did anything other than fully fund the vital NDIS. I repeat: the member for Lilley, as Treasurer under prime ministers Rudd and Gillard, completely funded the NDIS, an initiative that flowed from the policy work of Bill Shorten and Jenny Macklin. So, the Medicare levy increase proposed by those opposite and opposed by Labor was thrown on the scrapheap, joining some distinguished company in the Abbott and Turnbull government's waste-policy bin.

Right after this volte-face, the Treasurer held a press conference filled with his usual style of bluster and hot air. He said, 'You will pay more under Labor.' Well, how untrue that has turned out to be. In fact, I remind those opposite—and I see that the member for Swan is here—that, if you look back over the last 50 years in terms of taxing governments, nine out of the 10 highest-taxing governments in the last 50 years have been Liberal and National Party governments. That's a fact that those opposite don't like to remember. However, we know that under Labor we've got the balance right. Labor is proposing bigger, better and fairer tax cuts for 10 million Australians than the Turnbull government.

The Morrison budget as it stands introduces a tax cut scheme which is in three tranches. On 1 July 2018, which is only 39 days away, the first tranche would introduces a low- and middle-income tax offset, a non-refundable tax offset of up to $530 per year for taxpayers earning up to $125,333. They'd also increase the top threshold of the 32.5 per cent personal income tax bracket from 87 grand up to 90 grand. The second tranche, coming into place on 1 July 2022, which is 1,500 days away today, would increase the low-income tax offset from $445 up to $645, and the 19 per cent personal income tax bracket would be increased from 37 grand to 41 grand. It would increase the top threshold of the 32.5 per cent tax bracket from 90 grand up to $120,000. The third tranche, to come into place on 1 July 2024, which is 2,231 days away, would abolish the 37 per cent tax bracket and increase the top threshold from 120 grand to $200,000, which, as people have described, is all but a flat tax for that 32.5 per cent personal income tax bracket.

Labor have been up-front right from the start on budget night in responses from the member for McMahon and the Opposition Leader, Bill Shorten. Labor have said that we'll support the government's proposed changes that are due to take effect on 1 July 2018—39 days away. If the government split the bill so that we could vote for the 1 July changes only, it would have Labor's full support and they could pass it instantly. I do note that it would provide relief only in tax returns a year later. It is an offset, not a refund—a different treatment to the dividend imputation, I note, but that's a story for another day. I have heard that the Greens political party does not support this tranche, but that's a matter for them.

With Labor's support, the coalition government would have the numbers in both houses, and this could be done right now. To do this, however, Prime Minister Turnbull and the Treasurer would have to get off their high horse and split the bill. And—to mix equine metaphors—it looks like they're flogging a dead horse with their tax plan. But, if they split the bill in this House, it could then be split in the Senate, and that would allow the parliament to take a detailed and considered position on each of the tranches. A plan that costs over $13 billion over the forward estimates and—according to the government—$140 billion over the medium term deserves intense scrutiny. That is an incredible amount of money. As I said, there's no rush. We have 2,231 days, which is about 53,544 hours, to have a look at the legislation.

In question time after question time we've seen that the Prime Minister and the Treasurer have been unable or unwilling to give or deliberately hiding specific details of this tax plan that they want us to sign off, including the year-by-year costs beyond the forward estimates. It's not good enough for the Treasurer to come into this House and demand that we support a plan for which the detailed costings are not available. Because of its design, tranches come into force outside the forward estimates periods but inside the medium-term projection. Surely it is entirely reasonable that the parliament should be provided with the details to enable an informed decision.

There is no way that Labor would ever be a rubber stamp for this mob. We can't trust them. My constituents would be furious if we didn't do our job and scrutinise this budget. 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 that we—the parliament, the opposition and the Australian people as a whole—can have better information about what the government are proposing. We've also asked for a breakdown by gender as well as electorate based information to ensure that the Australian people get the best possible deal.

As I said earlier, Labor is proposing a bigger, better and fairer tax cut in 2019. Should we win the election, everyone earning less than $125,000 will receive a bigger tax cut under Labor's plans. For so many of those people, the tax cuts are almost double those being proposed by the government. To help display the benefit of Labor's plan to working Australians, we've launched an online calculator tool at www.biggerbettertaxcut.com.au, and I encourage everybody to get online and have a look. You can actually do some calculations. The website showed earlier that a teacher on $70,000 a year would receive a tax cut of $982 a year under Labor. A couple earning $90,000 and $50,000 respectively would receive a bigger tax cut than that which the government is proposing—nearly $2,000, in fact, which is $800 better than the coalition government's plan. That website again, so everyone can have a look, is www.biggerbettertaxcut.com.au.

We don't believe the hype and the heavy breathing coming from those opposite. As I pointed out, when they're talking about taxing governments, nine out of 10 of the highest-taxing governments over the last 50 years have been coalition governments.

I've spoken about why Labor will support the initial stage—the one that begins on 1 July this year—and how Labor will go further to deliver bigger, better and fairer tax cuts for 10 million Australians. But what are some of the other problems with this Turnbull government plan? Obviously, we haven't seen the full picture, but early indications are that, once the government's three-stage plan is in place, it will deliver larger benefits to those on higher incomes. Who would have thought of a coalition government doing that, looking after the top end of town? But we know that this is an out-of-touch government. Obviously if you're putting your money in a bank in the Cayman Islands rather than investing in Australia, you've got some other things on your mind.

It makes sense, for a government that have demonstrated time after time their commitment to support the top end of town, that that's where they're going to send the benefits. Teachers, nurses, labourers—no. Casuals, those who rely on penalty rates or are forced into labour hire—no. CEOs, company directors and their mates—of course, they get the biggest tax cuts. For example, ANU's Ben Phillips has estimated that, after the government's full plan is in place, someone in the highest quintile, the highest 20 per cent, will see a 2.2 per cent rise in their income—good luck for them—compared to those in the middle quintile, who will only get a 1.1 per cent rise. And the lowest quintile, those who need it most, will only get a 0.2 per cent rise. Of the tax cuts by 2027, over 60 per cent of the cuts will go to the top quintile, the top 20 per cent, of households.

NATSEM modelling suggests that this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality. The rich get more of the tax cuts than anyone else, effectively baking in a less egalitarian society.

As part of the new proposal, low- and middle-income earners getting a tax offset in 2018-19, with high-income earners getting very little. This part of the plan is progressive: more money goes to lower-income earners. However, looking after the long-term, by 2024-25 the tax cuts mean high-income earners gain $7,225 per year while those earning $50,000 to $90,000 only gain $540 per year. The Grattan Institute has assessed that, while the government's plan doesn't make the tax system much less progressive, it does find that, once the three-stage plan is complete, $15 billion of the annual $25 billion cost of the plan will result from collecting less tax from the top 20 per cent of income earners.

And it doesn't just start at income. Analysis by the Australian Institute shows that roughly two-thirds of the benefit of the government's proposed income tax cuts will flow to men, with men dominating the ranks of the high-income earners. For every dollar in tax cuts for women, men will get two.

I suspect that the government members contributing to this debate may use some statistics to claim there is a greater benefit to low- and middle-income earners. That doesn't surprise me. We've seen this sort of exaggeration before. But 2022 and 2024 are a long way away. The government is locking in policy commitments that don't come into force for seven years. We don't know what the world will look like by then. I'm not sure what the international economy will be doing by then, and also we should be focusing on strengthening the fiscal buffers and building Australia's resilience to any such stocks. As the IMF stated just last month:

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

When it comes to economic forecasts, it's not just Labor saying that the wage forecasts are questionable. Economist after economist has come out backing up this claim, saying:

… uncertainty persists on whether wages growth will pick up significantly enough to support revenues.

That's from Moody's.

'We're doing the tax cut before the revenue is realised', says Stephen Anthony, chief economist with Industry Super. 'One area that is questionable is the forecast for wages growth in the final two years of the forward estimates,' says Saul Eslake.

What I hear from locals in my electorate is that the wages growth is anything but certain. Most of the people I meet find their wages flat, effectively going backwards when you factor in cost-of-living pressures. What we need now is more money in the pockets of working Australian families, and Australians know that Labor is the party to deliver on that promise.

One thing is clear: the 2018 budget is not fair. It gives big business and the banks an $80 billion tax handout and makes Australians pay for it with a savage cut. It fails the fairness test on pensioners. Prime Minister Turnbull is cutting the energy supplement, costing pensioners $14 a fortnight and forcing people to keep working until they are 70. It fails the fairness test on education. Prime Minister Turnbull is still cutting $17 billion from schools and has $270 million in new cuts to TAFE. It fails the fairness test on hospitals and it fails the fairness test on Medicare because the freeze on specialists means that people pay more when they visit their doctor.

So here's the choice. Under the Liberals and Nationals, the cost of living will increase for the workers in the retail, food and accommodation industries, who stand to lose up to $77 a week in penalty rates. Families are paying around $20 a week or $1,000 a year more for private health insurance. Parents are paying $40 a week or $2,000 a year more in fees for child care. There are record costs to see a GP: $9 more out of your pocket every time you visit the doctor.

But let's look on the other side of the ledger. What does Leader of the Opposition Bill Shorten want to deliver for Australia? For a start, Labor will restore penalty rates. Labor won't slash the energy supplement or make pensioners work until they're 70. We'll cap the out-of-control rises to private health insurance. We'll restore the $17 billion cut from schools and all the money cut from hospitals. Labor will abolish the unfair cap on university places, allowing 200,000 more Australians to fulfil their dream of a university education and, of course, all the productivity boost that comes from such investment. Labor will also—and I'm particularly proud of this one—scrap up-front fees for 100,000 TAFE students who choose to learn the skills that Australia needs.

To make it simple for people: we'll provide bigger, better and fairer tax cuts to 10 million working Australians. The choice is simple. You can either invest in the future of Australia or invest in the top end of town. The battle lines are clear in the lead-up to the next election. This budget has set out an agenda of unfairness. When you compare it against the last five budgets rolled out by those opposite, it is arguably not as cruel as some of them. But that is not a glowing reference. I remember when the then shadow Treasurer said at the Press Club that they would deliver a surplus in their first year of government. I remember when he made that statement. What have we seen under the coalition? We have seen no surplus. We've seen the deficit blow out, and debt skyrocket.

Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

. It is a great honour to be able to speak during the consideration of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. Here is an example of a government with a plan for the future that gives tax relief to low- and middle-income earners immediately, ensuring that we address the ongoing issue of bracket creep into the medium term, and making personal income taxes simpler and flatter in step 3 of our plan. This is a plan that will ensure that we work towards a stronger economy. We know and every piece of evidence suggests that if we can assist and encourage aspiration, if we can assist Australians to keep more of their hard-earned money in their own pocket, it strengthens the economy.

In contrast to the Labor Party, we don't think it assists the economy to strangle it with ever higher taxes. We also believe, in contrast to the Labor Party, individuals' hard-earned money is theirs; it's not government's. It's not ours to bestow upon them. The Labor Party would suggest that a government just benevolently allows you to keep a bit more of your own money—no, this is their money. It's been said that this plan will deliver lower, fairer and simpler taxes. We know and we believe that this will strike a balance between improving the outcomes for low- and middle-income earners and ensure that those who are fortunate to be in higher tax brackets pay the appropriate amount of tax. We know that, with the very progressive tax system that Australia has, higher-income earners pay a much greater and disproportionate share of personal income tax. If you look at Australia, as compared to most of our competitors in the OECD, we have a disproportionate and quite a large reliance on personal income tax.

This is a seven-year plan. It is a plan; it is not a cash splash prior to an election, as the Leader of the Opposition outlined in his budget-in-reply speech. This is a plan to ensure that we give people relief immediately, that we address bracket creep so people don't move into ever higher tax brackets and, in the end, that we make our tax system fairer and simpler by removing the 37 per cent marginal tax rate. Importantly, it will mean that 94 per cent of Australians will never pay more than 32½ per cent as a marginal tax rate. In essence, you get to keep two-thirds of your income and the government will take a third. I think most Australians believe that's pretty fair.

This bill will put in place a new non-refundable tax offset for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. The offset, importantly, will assist over 10 million Australians, with the maximum benefit of $530 being provided to at least 4.4 million taxpayers. Taxpayers earning in the range of $48,000 to $90,000—not high-income earners, millionaires or billionaires, as the Labor Party would outline—will receive that maximum benefit. The offset will similarly provide a benefit of up to $200 for taxpayers with taxable incomes of up to $37,000, and from $37,000 it will increase at a rate of 3c per dollar to that maximum benefit of $530 that I just referred to for taxable incomes of $48,000 or more. The offset will phase out at a rate of 1½c per dollar for taxable incomes between $90,000 and $125,000.

This is calibrated tax policy to ensure that the benefits are being provided to people who are working hard, who are contributing to our society and who are paying their taxes. It is allowing them to keep a little bit more. For a double-income family, it will mean over a thousand dollars a year more in a tax offset that they will be able to put towards their electricity bills, the children's school fees, the children's books or the children's school uniforms. So many of these costs that often arrive in one go will be met by an offset that people will now receive at the end of the income year. As I've said, for a double-income family, that'll be over a thousand dollars.

Step 2 of the tax plan—a well-thought-through plan—is to combat bracket creep. We know that, in a tax system such as ours, we on this side of the House are always trying to find ways that we can combat bracket creep, and this year's budget does so in extraordinarily wonderful ways. From 2018-19, the top threshold for the 32½ per cent tax bracket will be increased from $87,000 to $90,000. It's important to note that this builds on the hard work done in last year's budget to increase that threshold from $80,000 to $87,000. So in two income years that 32½ per cent tax bracket will have moved from $80,000 to $90,000. From 2022-23, the top threshold of the 32½ per cent bracket will be further increased from its soon-to-be $90,000 threshold to $120,000, and the top threshold of the 19 per cent tax bracket will be increased from $37,000 to $41,000. The low- and middle-income tax offset in that year will be replaced by increasing the low-income tax offset from its then-to-be rate of $445 to $645. This will be a permanent change to the LITO that ensures that the benefits provided to low- and middle-income earners commencing from 1 July this year will be a permanent feature of the system, and it ensures that the benefits that are locked in in step 1 of the tax plan become a permanent feature of our tax system for those low- and middle-income earners from step 2 of the tax plan.

Step 3 of the tax plan is extraordinarily important, in simplifying and flattening our tax system. We know we have an extraordinarily progressive tax system, and we believe on this side of the House that it's an extraordinary piece of work that must be done to ensure that we have this ambitious proposal to flatten the tax system. So, from the 2024-25 income year, the top threshold of the 32½ per cent tax bracket will be further increased from $120,000, which it will have been increased to in step 2 of the plan, to $200,000, which will completely remove the 37 per cent tax bracket—of course, simplifying our personal income tax system and more importantly, in layman's terms, ensuring that those individuals who are not millionaires or billionaires by any stretch of the imagination are not paying more than 32½c in the dollar until they reach that $200,000 threshold. This will mean that the majority of people will stay in the same tax bracket their whole lives. They won't have to move onto oppressively higher tax rates on incomes that you wouldn't describe as being extraordinarily high. That is going to assist in participation in the economy and assist in people doing and seeking to do additional hours and not being punished for those pleasant but unexpected pay rises or pleasant but unexpected promotions, which, at the moment, under the current tax system, push people onto higher and higher tax rates. These changes will mean that 94 per cent of Australians won't pay more than 32½c in the dollar in their lives. We think that is an extraordinarily important step in this plan—because this is a plan. It's not a feature of one budget or two budgets; it's a plan, and it can be legislated by this parliament now. It can be locked in. We can say to Australians, with confidence as a parliament and a Senate, 'You can expect personal income tax relief each year for the next seven years.'

I know many Australians, particularly during the Howard and Costello years, became pleasantly accustomed to personal income tax relief almost year on year. Until last year's budget, when the middle threshold was moved from $80,000 to $87,000, Australians had not seen that personal income tax relief for many years. As a parliament and as a government, we are very keen to ensure Australians can have the certainty over the next seven years that, as they work harder, as they try to provide for their families and as they work hard, day in, day out, we have said to them, 'We can guarantee a plan and a framework by which you are guaranteed additional personal income tax relief, year on year, for the next seven years.'

We think, in the end, that this bill and the plan contained within it reward effort, foster aspiration and improve the opportunities to strive for success in your own life. That shows, in the end, the competing visions that we have in this parliament. Do we have a plan for aspiration, or is there a bitter, jealous—

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

Envious.

Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

envious approach to politics? I don't think Australians are bitter and jealous and envious. I actually don't think that's in their nature. I think Australians are very confident about their future. I think they're very aspirational. In the end, they want to work hard to provide for themselves and their families. Above all, I think they know, instinctively, that each dollar that they can keep in their own pockets will be far better spent by them than by government. The litany of higher taxes that the Labor Party has quite shamelessly and unashamedly committed to—$220 billion of higher taxes—is really a message that says to Australians, 'We want more of your hard-earned money because we can spend it better than you.' Instinctively, I don't think Australians believe that. I don't think the history of the 'glory years' of the Wayne Swan treasurership has proven that the Labor Party can spend taxpayers' money better than taxpayers can spend their own money. I certainly don't think that's the evidence of those 'glory years', as they're described.

Our view is that Australians are encouraging us, as a parliament, to lock in these seven years of tax cuts so they can have relief. They know that they will get additional and increasing tax relief over the next seven years, because this is going to be so important as a cornerstone of our strengthening and growing economy, our ambitions and—something we can be very proud of—a $2 trillion economy.

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

The debate is interrupted with standing order 43. The debate may be resumed at a later hour.