Milton Dick (Speaker) Share this | Link to this | Hansard source

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

The Australian tax system is not fit for purpose and needs broad reform.

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

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

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

Our tax system is unfit for purpose and no-one wants to talk about the underlying issues. In simple terms, we need to raise enough money from taxes to pay for the things we need. We need to do this in a way that's fair, economically efficient and not too complex, and our current system doesn't deliver any of these things. We need to have a rational, adult conversation about our tax system and our future, one that doesn't descend into outrage and political pointscoring. This needs to include communities, based on a common vision for the country as a whole and what we value.

Most economists recognise that we have a structural deficit in our budget of one to two per cent. Our net debt has increased fourfold since 2013. Borrowing to spend is addictive. It can win short-term votes, and any particular government won't be around for the consequences, but I want the tax that my kids pay in 20 years time to be used for services that are needed at the time, not to pay interest.

The most palatable way to achieve debt reduction is to increase productivity. This is really complex but needs to be a focus that includes education, workforce participation and workplace relations reform. But what else needs to change? I think the following things need to be back on the table.

Firstly, income tax: compared to other countries, Australia relies too heavily on taxing effort. Personal income tax was 39 per cent of total tax collected in 2021, nearly twice as much as the OECD average of 23.5 per cent. With an ageing population, it also doesn't pass the fairness test. When I was born, there were more than seven Australians of working age for each person over 65. This has now declined to less than four. So a bigger burden is placed on a smaller productive proportion of the population. It's creating a deeply unfair intergenerational burden.

Secondly, consumption tax: GST was introduced in an attempt to shift the tax mix. Compared to other countries, we charge GST on fewer things and at a lower level. Last year, the OECD average was 19.2 per cent compared to our 10 per cent. The challenge with GST is that it's regressive. Everyone pays the same percentage, so this works out to be a smaller proportion of total income for those on higher incomes and a larger proportion for those on lower incomes. We probably need to broaden the GST base and look for more elegant ways to address the redistribution problem.

Thirdly, resource rents: Australians collectively own our natural resources. When we allow countries to dig them up and export them, we should be paid appropriately. The petroleum resource rent tax earns an embarrassingly low amount of revenue due to its structure, writedowns and profit shifting. There was no tax paid on two-thirds of the gas exported from WA last year. In 2025-26, PRRT revenue is forecast to be worth 0.08 per cent of GDP. We missed an opportunity this year with pitifully small changes made to the PRRT, which, unsurprisingly, had the support of the fossil fuel industry. We are not being adequately compensated for the use of our natural resources, which is made worse by the fact that these fossil fuels are actually doing damage.

Fourthly, complexities: our tax systems also contain numerous complexities that provide the wrong incentives. Negative gearing was introduced in order to boost supply of rental properties; rental availability is now below one per cent. This hasn't worked, and we are not even allowed to talk about it. You watch: I'll be crucified for even uttering the words. The concession on capital gains tax for investment properties has made it easier to buy your second house than your first house. We need to be able to talk about whether this is what we actually want. Stamp duty creates a transaction cost, making it harder to change houses. Replacing this with land tax would mean people would be more likely to live in the house that's fit for purpose right now.

I could go on. There are plenty of ideas on tax reform, but there is no courage. The world is changing. We're getting older. Fewer workers are shouldering our tax burden. Decarbonisation puts our exports at risk and means we need to incentivise investment. We need to drive productivity so we can continue to enjoy prosperity in coming decades. Because of the decisions we've made, people in their 20s can't imagine owning a house. We have a structural deficit; we can't afford the things we deserve. All of these have implications for our tax system. This needs to be an issue at the next election. Without some courage, we will keep sleepwalking away from a thriving future.

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

I thank the member for Curtin for raising this important issue of tax reform. It allows me to report to the parliament the details of some of the substantial tax reform that's already undertaken and implemented by the Albanese government.

I think it's fair to say that this government has undertaken the most substantial tax reform of any first-term government since the Hawke government of the early 1980s. The principles that we've used to underpin the tax reform that we've undertaken have been encouraging hard work and aspiration amongst Australians, ensuring that the taxation system is efficient in the way that it collects taxes from Australian households, individuals and corporations and ensuring that the system is fair—that everyone pays their fair share of tax. We have done this by consulting and listening to the Australian people.

Recently we heard their message about Australian households and how tough they're doing it with cost-of-living pressures. That's why we listened and acted with Labor's income tax plan that is currently going through the parliament. Because we acted, 13½ million Australians will be better off, with substantial income tax cuts and more money in their pockets from 1 July this year. This will help greatly with household budgets and provide much-needed belief to Australians who are doing it tough.

As part of Labor's tax plan, three million more Australians will receive a tax cut compared to the previous government's plan—100 per cent of taxpayers compared to 84 per cent under the previous government's stage 3—which is a substantial increase in the number of Australians receiving relief from 1 July. Ninety per cent or 5.8 million women will receive a bigger tax cut under Labor's proposed tax package compared to the opposition's. This will assist with reducing gender inequality in incomes in our country, and those in occupations that are dominated by women, such as nurses, teachers, early childhood educators, will be some of the biggest beneficiaries of Labor's new tax plan. And we're increasing the threshold for the 37 per cent and 45 per cent tax rates to ensure that we're returning some of the bracket creep that's been occurring because of increasing inflation and the effect that that's been having on people's after-tax incomes.

For most governments that tax package would be enough for one term. Most governments would say, 'That's a substantial reform to income taxation in Australia, and that is enough for one government to undertake in a term of government.' That was certainly the case for the previous government. They weren't proposing any major tax reform beyond that proposed by stage 3 in this term of government. But our government has not shied away from further reform to ensure that our taxation system is efficient, is fair and is encouraging aspiration amongst Australians. We're also undertaking reform of corporate taxes, of superannuation and of the resources tax.

When it comes to the petroleum resource rent tax, we know that mining resources have been a fundamental part of the strength of the Australian economy and have contributed much to national income over the last century. These are resources that are owned by the Australian people collectively, and this government wants to make sure that the Australian people get a fair return for the exploitation of those resources by those corporations, particularly when the incomes that are derived from that mining go to funding the infrastructure that is fundamental to moving those resources around our country and across the globe. The reforms to the petroleum resource rent tax that we are undertaking will ensure that that system is much more efficient and fairer by introducing a cap on PRRT deductions that corporations can claim and strengthening the anti-tax-avoidance measures in taxing the offshore resources sector. This will ensure that the Australian people get a fair share of the resources that they own and the profits that corporations make from exploiting those resources.

When it comes to superannuation, we know superannuation was established to ensure that Australian workers had dignity in their retirement and a decent quality of life when they left the workforce. It wasn't established as a vehicle for intergenerational wealth creation. But, unfortunately, over time, because of the concessions that existed under the previous government, that is what it has become. This government is reforming the taxation of superannuation to ensure that it meets its intended aim of providing that dignity for Australian workers in retirement. We're doing that by reducing the tax concession for superannuation balances that have very, very large balances for individuals. From 1 July 2025, a 30 per cent concessional tax rate will be applied to future earnings on balances above $3 million. We're introducing fairness back into the superannuation system. Importantly, we are willing to take this reform to the next election to get the approval of the Australian people for it.

We're also introducing a multinational tax integrity package.

There's nothing more frustrating for Australian workers than seeing a substantial portion of their pay packets sent over to the Australian Taxation Office every week or fortnight, when large multinational corporations are able to shift profits to other jurisdictions where they're operating and minimise their tax and in some cases avoid paying any tax in the Australian jurisdiction. There is nothing more frustrating that gets up the noses of Australian workers.

This government has listened to Australians about that frustration and we are acting to make sure that the corporate taxation system is fairer through changes to the thin capitalisation rules and denying deductions for payments made to related parties in relation to intangible assets. We are making the taxation system for corporations and multinationals much fairer.

Importantly, we are also introducing new reporting requirements so that Australians, who have the right to know just how much tax multinational corporations are paying in Australia, can get access to that information, improving the transparency and accountability of our taxation system for hard-working Australians and, in doing so, introducing greater integrity into the way our taxation system works. So our government is undertaking substantial tax reform to ensure that our taxation system is fairer and more efficient and encourages aspiration in the Australian economy.

Good governance is about getting good outcomes for the benefit of the Australian people. When it comes to tax reform, it has been tough to achieve those outcomes for the Australian people. There have been plenty of policies put up by governments and oppositions that have hit the fence, that have never been implemented and never delivered tax reform for the Australian people. That has been a characteristic of debates about tax reform in this place for the last couple of years. Inevitably, you get that predictable and inevitable opposition from oppositions when it comes to tax reform that makes it almost impossible to undertake in this country and makes it almost impossible to modernise the taxation system.

The Albanese government has listened to the Australian people and consulted with the Australian people, but most importantly it has delivered outcomes for Australian people. We are in the process of delivering the most substantial outcome for workers in this country by delivering more of their hard earned into their pockets from 1 July and acting on bracket creep, which has not been done for the last decade. We've listened to the Australian people and we've been successful in getting outcomes on their behalf. That is exactly what tax reform should be about. We know how difficult it is to achieve substantial tax reform in this country. It has to be about achieving outcomes. The government understands and knows that the best way to do that is make sure you are consulting with the Australian people and you are undertaking gradual reform to ensure they understand the process and, most importantly, that the Australian people support what the government of Australia is doing.

That is exactly what the Albanese Labor government is delivering for the Australian people: substantial reform of our corporate taxes; making the superannuation taxation system fairer and ensuring it meets its intended aims of providing dignity for Australian workers in retirement; returning bracket creep to the Australian people; acting on the cost of living pressures that households are facing; and delivering a fairer, more efficient, more effective taxation system for the Australian people.

Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source

I would like to thank the member for Curtin for raising this issue and I acknowledge the work of the member for Wentworth and others in this place. They have drawn attention to the need for broad taxation reform. We all pay taxes, sometimes grudgingly, but we recognise that tax is necessary and important to fund quality public services and support a robust economy. But a good taxation system must be fair, efficient and simple. However, our taxation system fails on all three of these basic measures. Unfortunately, our two-party system makes it difficult if not impossible for extensive taxation policy reform to occur, as both sides use this as a political weapon. We are witnessing this at the moment with respect to the stage 3 tax cuts and that legislation.

Australia has a relatively low tax revenue as a percentage of GDP. In 2021, it ranked 30th out of 38 OECD countries at 29.5 per cent compared to the OECD average of 34.2 per cent. However, of the tax that we do collect, more than 60 per cent is collected from personal and corporate tax. This is approximately twice the OECD average and one of the most inefficient ways to collect tax.

This week, the stage 3 tax cuts legislation will be debated, and, while I support the changes, I don't think they go far enough. The median weekly income in Australia is $1,300 and attracts a tax rate of 30 per cent. For the equivalent earnings in the United States, it's a mere 12 per cent. Our top tax bracket under stage 3 is imposed on incomes exceeding $190,000, with a tax rate of 45 per cent, plus the Medicare levy. In contrast, the top tax bracket in the United States is only 37 per cent, which applies to incomes exceeding $890,000 when converted into Australian dollars. The top tax rate in the UK is 45 per cent. That kicks in at incomes of over $240,000. In New Zealand, their top tax rate is 39 per cent, and that's for incomes over NZ$180,000, which is comparable to Australian dollars. Canada has a top tax rate of 33 per cent for incomes over $235,000—again, our dollars are near parity.

Most advanced economies maintain a high reliance on consumption tax, which is acknowledged as one of the most efficient and sustainable taxes to governments, hence any tax reform should be predicated on reducing our reliance on inefficient taxes and increasing the revenue raised by efficient taxes. Such a reform would improve productivity and increase employment.

The question of fairness appropriately arises when proposing reforms, none more so than for taxation, particularly around consumption taxes such as the GST, which, to some, are considered regressive. However, consumption taxes capture a greater share from those with a capacity to purchase, and the perceived regressive components can be managed through more aggressive reductions in income tax thresholds for low- to middle-income earners and/or other assistant measures, particularly for age pensioners.

The third component of a good taxation system is simplicity, and this is not a word that describes our taxation system, with its more than 10,000 pages of tax law. An overly complex taxation system increases compliance costs for small businesses and microbusinesses and requires more individual taxpayers to resort to the use of tax agents for end-of-year returns. As a country, we benchmark ourselves against the OECD, and it is demonstrably clear that, on taxation matters, Australia performs poorly against other OECD nations.

Every Australian and enterprise benefits from improved productivity and increased employment opportunities. To succeed in this, we need a fairer, more efficient and simpler tax system. Taxation reform is required with urgency, and it must be devoid of political pointscoring so that necessary reforms can be made in the interests of the country and not just one side of politics.

Josh Burns (Macnamara, Australian Labor Party) Share this | Link to this | Hansard source

I, for one, am very proud of the changes that the Labor government is making to the stage 3 tax cuts, because we in the Labor Party have always stood for a progressive tax system—a principle that says, the more you earn in this country, the more tax you pay. It means that people who are fortunate to earn higher incomes put more money back into the services and the society that we all fundamentally believe in and that we all are in this place to be custodians of and to improve.

What we saw under the former government was a set of tax cuts that were going to significantly assist people on higher incomes but were going to do nothing for those people on lower and middle incomes. In the Labor Party, we are always—and always have been and always will be—here to represent and to give voice to Australian workers who are on modest and medium incomes. They are the people who build this country. They are the people who work in our hospitals, in our supermarkets and in our schools. They are the young professionals right across Macnamara who deserve some financial support right now.

So I am very proud that, when Australians—especially those people in my electorate—are going through some genuinely difficult cost-of-living pressures, this government is going to do what's right, what's fairer and what will meaningfully make a difference to people's lives. In Caulfield, we have many families who are struggling with the cost of living. Southbank and St Kilda are filled with young professionals. I think of all of the creative workers in my electorate who are doing it really tough right now and whose rent has gone up. I have had hundreds of conversations with people in my electorate. They talk to me about the rising cost-of-living pressures and what it means every time they go to the supermarket to buy food for their household. It puts real pressure on their daily budgets and on their weekly budgets.

So, when you look at the stage 3 tax cuts that we are going to bring in, that the Treasurer has already introduced and that, hopefully, will pass through this parliament, what they will mean, for people on modest and medium incomes, is that they, too, will get tax relief on 1 July.

But, under the plan left by Scott Morrison and the coalition, thousands of people in my electorate were going to miss out. Now 95,000 people in Macnamara are going to get a tax cut on 1 July. Each and every one of those 95,000 people in Macnamara deserves a little bit more money in their pocket, because each and every one of the people that I am privileged to represent is hard working and dedicated, whether they're working in the arts, as young professionals, in our hospitals—in an incredible hospital like the Alfred—in our schools or in our incredible, world-class hospitality restaurants and venues in Macnamara. Wherever people are working, their work is important, their work is valued and they should be able to keep more of what they earn. They should be able to use these tax cuts to get a bit of a buffer on some of the cost-of-living pressures that they are facing.

To the lower income earners in Macnamara, you're going to get a tax cut. To the medium-income earners in Macnamara, you're going to get a tax cut. To even the higher income earners, you too are going to get a tax cut. In fact, the higher income earners are going to get, proportionately, a larger tax cut than some of the other workers but not as much as what would have occurred under the previous government. This means that every single Australian taxpayer can get a tax cut. That, I think, is something that's really important: that we, on this side of the House, stand with those low- and middle-income earners.

The other point I wanted to make about tax is that I'm also proud of the broad range of taxes that we have addressed and have reformed thus far, in the first year of the Albanese government. When you look at the tax reform that the Treasurer and the finance minister have led—along with, of course, the Prime Minister—we're looking at tax changes to the PRRT and tax changes to superannuation funds. Electric vehicle tax reforms are making it cheaper to import and purchase electric vehicles.

Obviously, these tax cuts that we've been talking about will go to every single Australian taxpayer, to support them in their cost-of-living pressures. But there is also tax reform around making it harder for multinationals to avoid tax in our country. That is an important suite of reforms that I am proud of—they are Labor tax reforms, reforms that are all about ensuring that the Australian government can put more into the services that the Australian people rely on. They are taxes that are fairer, that are progressive and that go to that old principle that, if you earn more, you put back into our great country. I'm proud of the tax reform we've already done, I'm proud of the stage 3 tax reforms and I'm proud that more Australian workers in my electorate will get more of their take-home pay. (Time expired)

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

There's been a bit of discussion about Labor's stage 3.1 tax cuts. Labor claims that they'll tackle the cost of living by giving a $4,500-a-year tax cut to every politician in this place and to billionaires, while only an extra $15 a week to middle-income earners. This whole debate is completely divorced from reality.

We're living in a country where a block of Bega tasty cheese is $20 a kilo at Coles and petrol is $2.20 a litre and where, waiting for you in your inbox, there is an email from the landlord telling you the rent has gone up $200 a month or more. We're seeing people living in tents, kids skipping meals and people unable to afford to see a doctor, let alone a dentist or a psychologist, yet, in this place, Labor and the Liberals have been arguing about whether politicians should get a $4,500-a-year tax cut or a $9,000-a-year tax cut. And you wonder why people are fed up with politics.

The Greens' view is straightforward: Labor should not be giving billionaires and politicians a tax cut while people are struggling to put food on the table or keep a roof over their heads. But this point seems to be missing from the debate. So listen up. We are in a full-blown cost-of-living crisis. People are really struggling to keep their heads above water, and the water is rising. Young people's lives are being delayed and constrained. The fastest growing group in our society who are becoming homeless are children. Some young people are stuck living with their parents well into their 20s and 30s, as they struggle to afford to move out of home. Others are forced to sleep on couches, to skip meals and medication, to travel further to and from work and study, and to do less with what they earn. This used to be a country which looked after people. Now, Labor looks after property moguls and gives billions to big corporations and the billionaires, while everyday people suffer.

This week, Nadine got in touch with my office for advice about her mum. She was living in a home under the NRAS, which provides affordable accommodation for people who need it. But Labor have cruelly, in the middle of a housing crisis, decided to defund this scheme, and in January her rent went from $300 to over $500 a week. We're talking about a 65-year-old woman who has to take out of her superannuation and sell her car to afford the basics. Now she's homeless, bouncing from motel to motel, and neither she nor her daughter know what to do.

I want everyone in this place to imagine that she's your mum—unhoused and living out of a suitcase, with no security and, sometimes, no safety. Too many people in this place have lost the plot and are in denial about what it's like for everyday people out there trying to get by. Our tax system is stacked against Nadine's mum; just like it's stacked against every renter and every first home buyer. Our tax system makes it easier to buy your seventh property than your first. Everyone deserves a home. Everyone should be able to afford to eat. These are really the basics of a dignified life. Nadine says they feel powerless and lost, and that her mum is a beautiful and empathetic person who loves helping others but is now being left behind.

Labor could get Nadine's mum a house, but they're choosing not to. Labor could stop out-of-control rent increases, but they're choosing not to. Labor could build the public housing that we need, instead of defunding the ones that people like Nadine rely on. Labor could change the tax system so that first home buyers aren't losing out to cashed-up property moguls at auctions around the country every weekend. Labor could raise the income support rate and end poverty and homelessness in this country. But they're not doing that. They're choosing not to do that. Until Labor stops tinkering around the edges and fronts up to the challenges of our time, more and more people like Nadine's mum will be left behind.

People have had enough. They've had enough of letting big corporations drive-up costs and make massive profits while getting huge handouts from Labor. The big corporations and the big, wealthy property moguls need to pay their fair share of tax. Enough of the rivers of gold of public money going to property moguls. We need to freeze and cap rents to stop people being kicked out of their homes. Enough of letting people on income support become homeless and hungry. This year, things need to change.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I represent a community in the western suburbs of Melbourne, the outer west of Melbourne, which is one of our fastest growing areas in the country. The median personal weekly income is $801, and the median yearly income is $41,000. So I agree with this MPI that we need to see tax reform, which is why I'm so proud to stand in this place and support the cost-of-living relief tax cuts that do both relief and reform.

I'm going to be blunt. The community I represent, that I've just described, has the highest number of infants in the country and the highest number of people in their early 30s in the country. I'm going to tell you: it also has some of the highest aspiration in the country, and I see that every day in the schools when I get an opportunity to visit them. I'm a proud member for that community in this place. Our tax reform that's in this parliament now will support my community much more than the Morrison stage 3 tax cuts that were put into this parliament prior to the last election and would have rolled out on 1 July this year.

I can tell my colleagues, as I've told several this week, that I was losing sleep on how I was going to look my community in the eye on 1 July, when I know the mortgage stress they're under and when I know the cost-of-living pressures they're under. We've been working so hard to roll back the costs in health, with the minister at the table—working so hard to support people. How was I going to look them in the eye if this had become law on 1 July and I'd got a $9½ thousand tax cut while most of my community got nothing?

So I am really, really proud to be a part of this government that actually understands that, when tough decisions have to be made, you've got to make them, but that also has an eye always on middle Australia. In this place, there are 151 representatives from around the country, and I tell my community all the time that my job here is to tell our story, to influence the decisions that this place makes. Well, our story is that these tax cuts will bring real relief and that any tax reform that isn't about bringing real relief to communities like mine is not a tax reform that I can support. So I support this one wholeheartedly.

I support making super concessions fairer and more affordable, I support ensuring multinationals pay their fair share of tax here in Australia and I support reforms to the petroleum resource rent tax and improving tax compliance, because they all make our tax system fairer. I support our tax reform because it does address bracket creep for the people in my community who are confronted with that move into higher pay that means they pay more tax. Those changes in the thresholds for my community in middle Australia are going to push that further down the road and put more money in their pockets.

I support tax reform that sustains our progressive tax system. I support tax reform that sees every Australian taxpayer as someone worthy of the consideration of this place. I support a government that has created more jobs in its first term than any government on record, because those jobs are coming to my patch and my young people are accessing those jobs. I support this government and its tax reform, because it's not just tax; it's everything else—it's free TAFE; it's cheaper childcare. There are many ways we can support the community. Tax reform is one. I'm really proud to be a member of this Labor government.

Zoe Daniel (Goldstein, Independent) Share this | Link to this | Hansard source

Trust is in short supply in politics these days, in part because the space to have reasoned conversations is so narrow. Pointscoring in politics, magnified by the media, means policymaking is dictated by the headlines, that are ultimately geared towards short-term political outcomes—that is, three-yearly elections—rather than the long-term future of the nation.

The conversation about the stage 3 tax cuts is a good example. The Prime Minister is accused of breaking a promise, and, for some members of my community and elsewhere, that fact has overtaken the substance of the policy change which, in the circumstances, I think is the right call. I don't dismiss the concerns about the integrity of political discourse. However, I would argue that rebuilding trust through reasoned conversations is critical to enabling policy shifts like this when circumstances change.

The changes to stage 3 presented to the parliament this week do not represent tax reform, and the discussion around this cements my view that we're overreliant on income tax and that we must take braver steps on tax reform. To sustain a fair, equitable and prosperous society that supports our young and our old, we have no choice but to create a broader tax base. I would argue that many voters realise that.

Everyone wants to pay less tax, and bracket creep, for example, is a real problem. Right now, we're expected to be grateful to governments when they announce pre-election tax cuts which return some of the bracket creep that has robbed taxpayers in the intervening years. That's why I'm arguing for tax indexation, so that taxpayers are compensated for the impact of inflation every year, not just when a government deigns to do so for political purposes. Not only would it be more equitable, not only would be fairer, but it would also take politics out of it.

Meanwhile, as I have been saying since before the 2022 election, the government needs to be brave and tackle once-in-a-generation, everything-on-the-table tax reform. That means everything: income tax, consumption tax, company tax, property tax, property tax—and yes, that includes negative gearing—and multinational tax, particularly the resource rent tax. After I talked about this before the election, the Liberal Party distributed flyers into letterboxes saying that I was trying to take away the family home. Of course, that was false, but it is emblematic of the lack of capacity to have a conversation—a reasoned conversation—about these issues. Once these changes passed through parliament, we'll still be in the predicament where the budget will not be able to provide the services—especially for our children—that citizens of a prosperous community have a right to expect. Taxing higher-income earners ever more and more will not solve the problem. If we don't act now, we'll be condemning future generations to a less-prosperous future with fewer opportunities, poorer jobs, worse health, lower standards of education and less-affordable housing. They will be unable to reap the benefits of cleaner, greener, cheaper and more reliable energy and technology.

I've encouraged the government to be braver, arguing for a war profits tax on our multinational gas producers, a more significant return from the PRRT and an end to fossil fuel subsidies. The revenue would boost the bottom line and provide the immediate wherewithal for the government to ease the pressure on households and businesses further.

Apart from inflation, productivity is our No. 1 economic problem, but for too long we've ignored one of the significant steps to its solution—that is, keeping more women in the workforce. Overseas examples are instructive. In Australia and in Scandinavia, female workforce participation at the age of 25 is comparable but by age 30, female participation in Australia is 10 per cent lower and remains that way. Analysis by the Australia Institute indicates that if we had Scandinavian female participant rates, our economy would be $60 billion or 3.2 per cent bigger. And guess what? Lower tax and more take-home pay means more women work or women work more. Well, blow me down with a feather! Giving women more opportunities, taxing resources more effectively to facilitate the shift to a cleaner, greener economy, taking the politics out of tax—they are three of the very good reasons for real tax reform. The government says it has changed its mind because circumstances have changed. Well, circumstances are always changing, and we've had no substantial change to the tax system for a quarter of a century. It is time.

Zaneta Mascarenhas (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Curtin for this motion. I see this as a place where we get to contest ideas, and I think the 47th parliament is a better place because of the discussions that we have here. I agree that the Australian tax system is not fit for purpose, but we are in the midst of making amazing reforms. If I reflect on the system we inherited when we took government, we had a trillion dollars worth of debt, we didn't have any plans and there was no productive work being done. Essentially, what we had was a wasted decade.

Since we have taken office, we have tried not to waste a single day. We have been working on different tax initiatives. One of the things I heard when I would speak to people in my electorate during the election campaign was about making sure that multinationals pay their fair share, and that's something that we haven't seen happening. The truth is, when we have these large corporations that come here and make lots of money off us but then have clever—I would describe it as 'unjust'—tax systems where they get this advice and basically restructure their business so they aren't paying their fair share, I see that as incredibly unfair. It's important that if people come to do business in Australia then they need to recognise that they need to contribute to the cohesiveness on this country and pay their fair share of tax.

We have also seen changes to our electric vehicle policy. One of the things that we do recognise is that we are participating in a decarbonised economy and we need to do act quickly. One of the things that we can do to help achieve this is to have a look at the way we encourage alternative technologies such as electric vehicles. The petroleum resource rent tax—the thing I would say about our resources is our resources are owned by all Australians and I think that is something we sometimes forget as Australians. These are things that are owned by all of us. Sometimes when we have these companies take over, it is almost like the perception is that they own the resources but they do not; we all own them. The thing we need to ensure is that it is taxed fairly. We are in the process of changing the petroleum resource rent tax and we will see revenue increase from that.

But the biggest and most significant reform is around our stage 3 tax cuts. This is a significant reform and was, really, what needed to happen at this moment in time. In our communities, we know that cost of living has been at the forefront of people's minds. I know people have been doing it really, really tough. What we needed to do was not only look at what we can do at this moment in time to ensure we are giving cost-of-living relief to as many people as possible but also look at a way in which we don't increase inflation in the economy. I think it is wonderful that this government has restored faith in the Public Service, that we see the Public Service as frank and fearless and that we actually listen to advice.

From discussions we have had in this place, the 47th Parliament, I would like to think, has stepped up and actually listened to what Australians want. I am really excited that 84 per cent of all Australians will get a bigger tax cut because of the changes Labor proposed. Ninety per cent of women will be better off; 98 per cent of 18 to 24-year-olds will be better off. In my electorate of Swan, 77,000 taxpayers will get an increased tax cut. This is phenomenal.

But this is not just about the 77,000. The truth is, in my electorate, everyone, approximately 94,000 people will get a tax cut, so I think this is an amazing thing we are seeing. The truth is Morrison's and the Liberals' previous stage 3 tax cuts were simply unfair. If I think of the country that Australia is, it is that we want to make sure we see fairness in our tax system. We need to continue to think about things like intergenerational equity. I am really excited about what is about to come through and I look forward to working across the House to do amazing things for our country.

Allegra Spender (Wentworth, Independent) Share this | Link to this | Hansard source

Today we are talking about tax, and I personally am delighted because I care about this country, I care about the future for our kids and, if you care about those things, you need to care about tax because there are major issues with our tax system. For me, there are three that really stand out. Firstly, it is harder as a young person today to get ahead than it has been at the past, and I do not like that. Secondly, our companies are not growing their productivity as much as they could, which means we cannot pay and grow our services to this country as much as we can, and I do not like that. Finally, we need to deal with climate change in the cheapest way possible but our tax system stops us from doing that well, and, again, I do not like that.

Starting with intergenerational equity, a young person came to me and said, 'I have worked hard at school, at university. I have a great job, I have a $50,000 HECS debt and I don't think I am ever going to be able to get a home.' The truth is that young people today are having a harder time than previous generations and it is just not fair. If you look at the last 15 years, for a family headed by somebody over 65, their wealth increased over a decade by about 50 per cent. But for a family headed by a young person under the age of 35, their wealth pretty much did not move. I don't think that was the intention of the Australian people when they elected and supported the governments of the past, and supported their tax policies. But that is the system that we have, and it just isn't fair to young people. We're now seeing only 17 per cent of older generations—those over 65—paying any tax, while previously it was 27 per cent. Take two households living next door to each other: if you're retired, you're paying about half the amount of tax that you would be as the same household on the same amount of income, at around $100,000. I just don't think that's fair, and the tax system is important in addressing that.

Secondly, the tax system is important in addressing growth and productivity. Frankly, if we can keep our productivity growth up, if we can raise it from where it has been, we will have billions extra in our coffers and that will make a huge difference to the services we can provide. But we have falling direct foreign investment; we have low and not-growing R&D investment; we are a net capital exporter, where we're sending more money overseas than we're investing in Australian companies; and our corporate tax rate for medium and large companies is, frankly, not competitive with the rest of the OECD. That matters; we need to address that.

And, finally, there's climate. Climate change is an issue that, thankfully, this parliament has taken seriously and is taking real action on. However, our tax system is not underpinning that in the way that it should be. Certainly, things like the fuel tax credit and our failure to deal with the cost of carbon and how to price carbon effectively, mean that we're not doing everything we can to make that transition as cost effective, as efficient and as strong as we possibly can.

Those are the sorts of changes that I think we should contemplate in the tax system. Members of the government have argued that they're doing tax reform. To be honest, my beef is not to say, 'What you're doing here and there aren't important changes.' Some of them, I agree with, some of them, I don't. Some of them are issues on the margins for me. It's not to criticise that, because I know tax reform is hard. But the point I'm trying to make is that what they're doing is not enough. Frankly, that's a symptom of the last election, where the political wedging and the political culture in this place meant that it seemed the only thing anyone wanted to say about tax was absolutely nothing, if they could possibly get away with it. That's what we did in the last election; we cannot do that in the next election.

The coalition has said they're going to put tax on the agenda for the next election, and I think that's a very good thing. My point to the coalition is: make it worth it—address those massive issues that we're facing. Let's not have another sugar hit, which is just tax cuts, without actually having the reform that can help underpin change on the major issues that our country is facing. And to the Labor Party: build on what you've done. I know you're very proud of what you've done in this last change, but build on it so that we do address those major issues our country is facing. That's because you have not gone far enough if you care about those three big issues: intergenerational equity, productivity and effective climate action.

Finally, on the rule-in and rule-out: this is unhelpful. I sat through question time yesterday and heard about that rule-in, rule-out. If we're going to make a tax reform, we must do it together—as a coalition across the parliament.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Curtin for bringing this important matter of public importance to parliament today, providing us all with the opportunity to talk about the significant tax reform that our government has undertaken in our two short years in office.

Unlike the former government, we recognise the importance of reform—but also reform to make our tax system better. As members would be aware, we have clear, stated priorities on tax reform. We've said we want to make super concessions fairer and more accessible. We want to ensure that multinational corporations contribute their rightful share to our tax system. We have reformed the petroleum resource rent tax, projected to increase tax receipts by $2.4 billion. We have enhanced tax compliance measures, which Treasury estimates will bring $9.1 billion back into the tax system. We've also ensured that build-to-rent housing has become an infrastructure asset class, reducing the tax rate from 30 per cent to 15 per cent to encourage the construction of rental homes to help ease the housing crisis. We've also nearly doubled the capital works tax deduction depreciation rate for build-to-rent projects from 2.5 per cent to four per cent—again, to boost housing supply. And we've also used the tax system to incentivise small businesses to invest in renewable energy, with a 20 per cent bonus tax deduction for investments of up to $100,000 for investments on battery storage, solar power and energy-efficient appliances. As noted by members before me on the government side, we've introduced tax reform to reduce the cost of zero emissions vehicles.

To the member for Curtin and others who have spoken today on this matter, I'd say that, in less than two short years, that's pretty significant tax reform. Of course, there's one more, and it's a pretty big reform. Few people have been talking about it. Introduced in the parliament this week, we have legislation to reform the tax system to implement Labor's cost-of-living tax cuts from 1 July. These fairer, better cost-of-living tax cuts, aimed squarely at middle Australia, represent yet another piece of tax reform that this government has put before the parliament.

I take umbrage at those who say that these cost-of-living tax cuts are just tinkering around the edges, because they're not. The reality is that, if this legislation doesn't pass, from 1 July we are set to see the end of the progressive income tax system. From 1 July, if this legislation isn't passed, someone who earns $45,000 will pay tax at the same rate as someone on $200,000. That is the reality, unless this legislation goes through. To imply that Labor's tax changes aren't reform is an incorrect characterisation of what is currently law in this country. Our tax reforms will address bracket creep by adjusting income brackets up the scale—the first change to some brackets since the last time Labor was in power, in 2008. Importantly, they will deliver a tax cut to every single taxpayer in a fairer and more progressive way, and we're doing this because Australians have asked us for help. Australians have asked us to do better, and we are.

Since I came to this place, in May 2022, I've had countless conversations with constituents across my electorate of Bennelong about Scott Morrison's stage 3 tax cuts. Broadly, they have consistently wanted the government to re-examine the tax cuts to ensure they meet the needs of the Australian people. Roslyn from Macquarie Park told me that, even though she and her husband were set to benefit from Scott Morrison's tax cuts, she would rather see that money go towards people who need it more. Alan from—

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Are you calling a point of order?

Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

Yes.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

On what grounds?

Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

Point of order: referring to—

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

On what grounds? What is the point of order?

Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source

That's what I'm about to tell you. The point of order is about using members' names and correct titles. Twice the member opposite has referred to the member for Cook incorrectly.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Sit down please. I do remind all members of the House to use correct titles when referring to any members.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to this | Hansard source

At the end of the day, people in Bennelong expect a fair and progressive tax system. The tax system was in desperate need of reform, and the legislation before the parliament is significant reform. It will give every Australian a tax cut. Ninety per cent of women will be better off, and 98 per cent of young people will be better off. That is significant reform for this nation.

Kylea Tink (North Sydney, Independent) Share this | Link to this | Hansard source

I had a whole speech prepared for this matter of public importance, but I'm going to ad-lib a little bit, so please stick with me. I think what we've just observed is that there is vociferous agreement that the need for broad tax reform is as clear as it is urgent, and I thank the member for Curtin for bringing this matter of public importance into the House. Having sat here and listened for over an hour now, what strikes me in this debate is that we need to agree what 'reform' actually means. Is it simply playing within the same ground rules that we've had all along and only moving the degrees of impact by adjusting the barriers, or is it actually turning up, as the member for Goldstein said, and focusing on rebuilding trust within our community by ensuring that we're able to have reasoned discussions that drive us forward in a possible way?

On behalf of my community of North Sydney, I'd like to add our voice to calls for responsible, sensible and reasoned reform of the core principles. It seems to me—again, having listened really carefully—there are three core principles that we all agree on.

The first is fairness, which must be at the heart of any tax reform process. We need to be driven by desire to tackle the growing inequality in our economic system and intergenerational wealth disparity. Despite being one of the wealthiest nations in the world, one in eight people in Australia live below the poverty line. A robust discussion around tax reform must be grounded in a commitment to fundamental, free and equal human rights. At the heart of it is that not what we are discussing here, that we all deserve to be treated with respect and to live with respect.

At the same time, we need to be prepared to robustly debate our tax space. Our current system relies too heavily on personal income tax, which hampers productivity, as the member for Wentworth said, and is increasingly unsustainable as our population ages, as the member for Curtin said. To become less reliant on this, we must consider alternatives. This is when the next characteristic, I think, needs to step in, and that is courage. From the moment I entered this parliament, I have been calling on our current government to lead with courage, be prepared to have the conversations that are uncomfortable, be prepared to show our nation that a government can truly lead, and be prepared to push for reform that takes us outside the comfort of a single election cycle.

To become less reliant on income tax we have to be prepared to take on some of the forces that, arguably, may make us feel uncomfortable. Winding back things like the fossil fuel subsidy, for example, or ensuring big businesses and the fossil fuel industry pay their fair share, is a good place to start, but it is not going to be easy. And what I would like to say to today's government is, 'I see you. I see you have put your toes into the water around this space, but sitting on the edge and dangling your feet in is not driving reform. You need to jump and invite the Australian people to come with you.'

Taxing windfall gas profits would enable billions to be invested in modernising Australia's energy grid and helping households and businesses directly rather than going into the pockets of gas companies. It should not be beyond the capacity of this government to take that leap. Let us come with you. The Australian Institute estimated that related windfall gain to liquefied natural gas companies in the last financial year was between $26 billion and $40 billion. No wonder Dr Ken Henry, the former Australian Treasury secretary, has argued that a windfall tax should be levied on 100 per cent of those profits. If it was imposed, the revenue generated alone would cover the Australian government's entire $20 billion Rewiring the Nation initiative to modernise the electricity grid. If we hear nothing more from this debate today, I hope we take out the following principles: as Australians, we all agree we want a tax system that is fair; as Australians we all agree we want a government who will lead with courage; and as Australians, we all agree that we need to focus on rebuilding trust between each other and encouraging reasoned discussion in this place for the betterment of our nation. It's time.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The discussion has now concluded.