Michelle Ananda-Rajah (Higgins, Australian Labor Party) Share this | Link to this | Hansard source

Labor's tax plan joins other Labor legacies, including child care and paid parental leave, as amongst the biggest economic leavers supporting women who want to work more. With 53 per cent women, the Albanese government understands that gender equality and women's economic advancement go hand in hand. We get it. But there are other beneficiaries. Ninety-eight per cent of 18- to 26-year-olds will get a tax cut, when many of these people would have got absolutely nothing under Morrison's old tax plan. These are children. These are sons and daughters. They're nieces, nephews and grandkids. This is the intergenerational dividend that we are bringing forth with this new plan.

A uni student working part time and earning $27 per hour could receive a tax cut of up to $500. A nurse on $76,000 would get a tax cut of nearly $1,600. A couple saving up for their first home with a combined income of $150,000 could get a combined tax cut of just over $3,000. A person who is a town planner, for example, on $90,000 could get a tax cut of nearly $2,000. An events manager on $85,000 could get a tax cut of just under $2,000. And a person earning $200,000 will still get a tax cut of $4,500 or thereabouts. Advice from the Treasury and the RBA is that Labor's tax cuts will deliver more relief for more workers without adding to inflationary pressures or burdening the budget. I encourage all of my constituents to read the Treasury advice, which we did release.

A massive leaver that sweeps over the nation bringing more to all Australians when they need it most and rewarding their efforts is the essence of aspiration. Aspiration is not the monopoly of the few. It belongs to every single Australian. My own story and that of my parents is testament to that. The Grattan Institute recently torpedoed the coalition's claims around bracket creep. The Grattan Institute's own independent analysis found that these tax cuts would ensure that 83 per cent of taxpayers will actually be better off in a decade from now.

But then there are constituents in my community who have been disappointed with this change. These people are in the higher income bracket and they constitute around one in four taxpayers in Higgins. Those who earn $150,000 and above will still get a tax cut. In fact, they will receive the biggest tax cut of all. We are, for the first time in 16 years, raising the highest tax threshold from $180,000 to 190,000. Higher income earners do a lot of the heavy lifting, as far as tax revenue is concerned, and these people have budgeted for this additional money. Many of them have, like everyone else, outgoings, except their outgoings tend to be a quantum higher—school fees, childcare fees, private health insurance, rent, mortgages. They bought homes at a time when the RBA advised them that interest rates would be flat and now, of course, they are getting stung with high interest rates, like many other Australians. They are no different. These people, rightly, where waiting for tax relief. Well, we are giving them tax relief by raising the tax threshold to $190,000 and they are also getting a tax cut. But I do want to acknowledge their disappointment.

However, for all they complain, the Liberals in their decade of government did not provide higher income earners with any tax relief, even during good economic weather, and I think real questions need to be asked. Instead, they legislated the stage 3 tax cuts to kick in five years later, effectively kicking the can down the road. As the Prime Minister said at the National Press Club on 25 January this year, pretending you knew exactly what the economy would look like in five years was a triumph of hope over experience and economic reality. Now the party of robodebt and car park rorts question our integrity. Integrity in leadership means making the right decisions, rather than the easy ones. An inflexible government unwilling to adapt to changing economic realities is, frankly, irresponsible and even dangerous. When there is clearly a better option for cost-of-living pressures, workforce participation, women and the economy, not making the change is irresponsible. I liken this to when I practised as a doctor. I would see a patient scheduled for surgery and they had a healthcare plan. If that patient then came back three weeks later having had a heart attack and stroke, do you think that their medical plan is going to be the same? Of course not. The medical plan would completely change.

Now, we can spend hours debating the intricacies of tax reform but until we reform our political norms we will be unable to have mature conversations about our future. When everything gets weaponised, we are all poorer for it. Australians are under pressure right now, and it is crystal clear that every taxpayer up and down the income scale needs and deserves tax relief. We are being responsive to challenging economic times by applying the same agility that is demanded, in fact expected, in every other field, whether it be business, medicine or finance, by delivering better tax cuts that come with an economic dividend. We owe it to all Australian taxpayers and, most importantly, to each other to do more.

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

I rise to talk on this treasury laws amendment bill—cost-of-living tax cuts, as Labor call it. What a shame, how disappointing is it that I have to rise to speak on this, given that the Labor Party promised at the last election that they would keep stage 3 tax cuts. The previous speakers, all three of them over there, right in front of me, including the members for Robertson and Higgins, were elected based on a lie, an absolute lie. The Prime Minister stated clearly that stage 3 tax cuts would be there. They would be there—100 per cent.

Keep talking, member for Robertson. We will be in your electorate, champ, and yours, member for Higgins—I was down there the other week. The reality is that this Prime Minister can't lie straight in bed. He and the Treasurer, Jim Chalmers, said in a media release on 26 July 2021, 'An Albanese Labor government will deliver the same legislated tax relief to more than nine million Australians as the Morrison government.' That's what they said. The Treasurer, Mr Chalmers, put that out with the Prime Minister:

An Albanese Labor Government will deliver the same legislated tax relief to more than 9 million Australians as the Morrison Government.

The member for Robertson, the member for Higgins and others were elected based on that commitment on 26 July 2021. Then they come in here and try to justify this lie to their electorates. I mean, give me a break!

Seven News also reported on the election day, 21 May 2022, that 'Stage 3 tax cuts are legislated under the previous government and they're locked in, according to the Leader of the Opposition, Anthony Albanese.' That's what Seven News reported. Post-election, the Prime Minister, Anthony Albanese, in June 2022, said:

… they are legislated, and one of the things that people have a right to believe, is that when a politician makes a commitment before an election, they keep it, and I intend to do just that.

That's what the Prime Minister said. That's what the Australian people need to know. The people of Petrie, the people sitting up there in the gallery: this is your Prime Minister. This is what he said before the election. This is what he said plenty of times after the election. Now he comes in here and breaks that promise.

Mark my words, this bill is a seven per cent increase for some people on their tax—$70 on every thousand—and 15 per cent for some people, increases based on legislation, and they're giving a measly three per cent for people under 45 grand. Anyway, we'll come back to that.

Let's keep going. On 11 November 2022 on Seven News, the Prime Minister, Anthony Albanese, said, 'My word is my bond,' and, 'We said during the election campaign that we would maintain the position that had already been legislated. I've always been a man of my word, and I believe that, when you go to an election and you make commitments, you should stick to them.' That's what the people of Robertson and the people of Petrie heard from the Prime Minister—that he would stick to these election commitments.

Again, a journalist said to him, after he was elected—not that long ago—'Stage 3 is absolutely locked in.' Prime Minister Anthony Albanese: 'Yes.' Journalist: 'There are no circumstances under which you would seek to roll back stage 3?' Prime Minister Anthony Albanese: 'No, no circumstances.' He didn't say, 'Maybe some circumstances.'

The Prime Minister should not have to break an election commitment to deal with a cost-of-living crisis that he and his government have created. That fact is that what they're delivering here is diddly squat. That's what it is. It's $804, when most people in my electorate have seen their expenses go up by $8,000. We'll come back to that.

My speech today for the people of Petrie is a little bit about 1) integrity—I've outlined that the Prime Minister has none, which is very clear from his quotes and his commitment before the election; 2) Stage 3—the reality of who gets what; 3) Cost of living under this Labor government is woeful; and 4) what lies will this government tell next? What will they come after next, and what will that mean to you?

The reality is that in my electorate of Petrie 12,272 people will get nothing; they have no income. They might be retired; they might be students; if they're over 18—12,272 people will get nothing. There are 46,000 people that earn between $18,200 and $45,000. There are 55,000 people that earn between $45,000 and $135,000. They will get a further $804 tax cut from what the coalition had already legislated.

When I say 'legislated', right now, on this day, in Australia, the law of the land is that from 1 July, for those who earn between $45,000 and $200,000, the income tax rate will be 30 per cent. Most people think that's alright, because they think, 'If I'm earning a dollar, I'm happy to pay 30c and keep 70c.' That was the purpose of getting rid of the 37 per cent tax rate. But these people are bringing that back, another seven per cent for many people in my electorate—thousands of people. In fact, 2.1 million people in Australia will see tax hikes from the Albanese Labor government.

They're increasing their tax. If they earn $135,000 to $190,000, they're increasing their tax by seven per cent. The rate on income tax will go from 30 per cent, which is law today, to 37 per cent. Seven per cent is $70 on every thousand in the middle of a cost-of-living crisis, in the middle of a homelessness issue. Homelessness, since this government has been elected, has probably doubled—we won't find out until the 2026 census.

The 45 per cent rate will now increase to cover those on $190,000 to $200,000. They went to the election promising a 30 per cent rate. Instead, on that $10,000, they're going to take $1,500 back off them. That's the reality. When I talk to people in my electorate that earn under $45,000, I explain to them that their tax rate is 19 cents on the dollar. Their first $18,200 is tax free. Then it's 19 cents on the dollar from $18,200 to $45,000. Most people say: 'That's fair. I'm happy to pay my 19 cents and keep 81 cents.' But what this government is doing, to be tricky, to be smart, to try to give everyone a big $804 tax cut, is saying 'We're going to reduce your tax to 16 cents.' Alright, you're going to reduce it to 16 cents, but that wasn't the tax rate that was the big issue. Most people are happy to pay 19 cents. What the government won't tell those in Petrie and those in the gallery and others is that they'd already taken $1,500 off most people that earn under $120,000, after they came to government. In May 2022, when the election was on, the low-income and middle-income tax offset delivered $1,500 to most people earning under $120,000 in their tax return. So, you rock on up to your accountant and get $1,500 back. Guess what happened last year with this mob? That's gone now. That's all gone. So, people were having to pay, in some cases, additional dollars, having to pay the ATO more money, and in other cases they had a measly little tax return when they were expecting $1,500 more.

The Albanese Labor government want to tell you: 'We're reducing the 19 cents to 16 cents. You'll get $804, but we've already taken $1,500 off you. So you are $700 worse off there. Then the cost of living has gone through the roof, which everybody knows about. Groceries are up by nine per cent. Housing costs are up by 12 per cent and people are homeless under this mob. Electricity bills are up by 20 per cent, when another Albanese Labor government promise was that they would reduce your electricity bills by $275—instead they've gone up 20 per cent with all their renewable energy rollout. Those that own a home or have to insure a car know that insurance is up by 22 per cent. How much longer do you want to put up with this bloke? You need to toss out the Albanese Labor government come the next election. You want to cook a barbecue or heat your shower with gas? It's 27 per cent up. That's not a little bit—it's a lot more than $804, because that's all you're getting.

Every single person in Australia needs to know that any that tax cut they receive on 1 July this year is because of the former coalition government. Do you think this mob would give you any tax cuts if it wasn't for the coalition government and what we had legislated? All they're doing is using con, spin and trickery. You can't believe a word that the Treasurer says, what the Prime Minister says or what the Minister for Finance. I forgot about the Minister for Finance in the Senate, Senator Katy Gallagher. On 6 January—less than a month ago—the journalist says, 'Minister, can you guarantee that all workers, even those on the highest income will get their full stage 3 tax cut from 1 July?' Minister Gallagher, leader in the Senate along with Minister Wong, said, 'Well, our position on the tax cuts hasn't changed.' They were doing this work back in November. This woman is in cabinet. She's either lying or she doesn't know what is going on. 'They're legislated,' says Minister Gallagher. 'They're due to come into effect from 1 July this year. The parliament passed them in the last term.' Stephen Jones, the Assistant Treasurer opposite, on 29 November said, 'We are always looking at ways to find savings in the budget and we're looking at that, but there has been no consideration on stage 3 tax cuts.' You could go through every single one of them, and you can't believe a word they're saying. You cannot believe them.

To the backbenchers opposite, in their first term and all excited to be here: Guess what? You got elected on the back of a lie. Don't bother telling your electorates everyone's bet better off, because, if you were honest, you'd say: 'We're giving you 804 bucks. Your cost of living has gone up by $8,000. We've removed LMITO. And for any other tax cut you've got, you can thank Scott Morrison'—or the member for Cook, I should say—because that's the reality. These tax cuts were delivered by the coalition. They were meant to kill bracket creep.

All the public servants here that are on $200,000 a year—guess what? All their housing costs have gone up, too. We're not going to forget them. You were meant to get a tax cut, and this mob has taken it back off you. They're increasing your tax by seven per cent if you earn over $135,000 and by 15 per cent if you earn over $190,000. And you want this guy in! Get rid of him! Honestly, they're no good and they want to keep people down. That's the reality of this government. They want to keep people down. They do not want to have people aspire to do more with their lives. That is the absolute reality.

Bracket creep was very important to get rid of. The former coalition government was completely removing the 37 per cent rate. A member opposite—I think it was the member for Bennelong—got up yesterday and said: 'People earning $200,000 and people earning $45,000 are all paying the same rates of tax. That's not fair. We're bringing back the 37 per cent rate.' That guy got elected on a lie as well. What he didn't tell you is that someone earning $199,000 on the current law of the land that kicks in on 1 July pays $30,000 more tax than someone earning $99,000. He forgot that inconvenient point!

It is sad that we have to be here to debate this, because this is a blatant lie from the Albanese Labor government. In my 10 years in parliament, I've told the truth. I've been straight with people. When people look me in the eye when I'm out and about in the Petrie electorate, around Redcliffe or North Lakes or Griffin or Deception Bay or down in Brisbane City Council, I tell them the truth. They ask me; they get a straight answer. This mob looked down the barrel and just completely lied. To every single one of these backbenchers who gets up and does a speech: you can keep telling yourself that, but the reality is that you've been elected under a lie. We won't forget it. We will continue to make sure that we hold this mob to account.

Andrew Giles (Scullin, Australian Labor Party, Minister for Immigration, Citizenship and Multicultural Affairs) Share this | Link to this | Hansard source

How are you going to vote?

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

I understand the member opposite asked me how we're going to vote. We'll vote for these changes for this reason—I'll explain to you why. I told you that part. Hang on. It's because the $804 that will be given will benefit a lot of people, obviously. Because of the $8,000 that they've been hit with since you got into government, they're really struggling—really struggling every day. I put up posts on my social media. They are hurting right now. Your government needs to do better—a lot better.

Are we happy about these changes? Of course we're not. But it's not the coalition that is bringing this bill forward. We've done what we thought was right. It's the Albanese Labor government that has broken their commitment, and every single one of them will have this on their record forever, and there's no escaping that.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

We are debating the most important economic and social issue of this moment: the cost-of-living challenge that is facing so many people in our community. All of us across this chamber represent communities where cost-of-living challenges are the first-order issue discussed at the kitchen table every morning at breakfast. What this debate is really about—and I'm going to talk about some of the macro-economics and the numbers, but what this debate is really about—at its core, is two different approaches. We've just seen one approach from the member opposite who just spoke, and that is to approach this issue from the position of political posturing—to spend all of his time on faux outrage; to spend all of his time bloviating and expressing rhetoric upon rhetoric. But then, in the last 30 seconds—an incoherent 30 seconds—he spoke on why it is that they're going to support the whole thing anyway! How could we take seriously the 14½ minutes of rhetoric before that, when those opposite are going to vote for all of this? He said that part of the reason they're going to vote for it is that the people who will be getting the $800-plus need it, in the midst of this cost-of-living crisis, which is exactly at the core of why we're doing it.

Let's be very clear: those opposite are using this as an opportunity for political posturing, first and foremost. We are hearing almost no reason for opposing this bill from those opposite—I'd say none, from the last few contributions that I've heard. They're using this as an opportunity for pure politics. I say: don't listen to the words that come out of their red, contorted, angry faces during this debate; look at the way they vote. That will tell you everything. In contrast, we are bringing a constructive, well-calibrated policy response to a very complicated situation, one that is very necessary and one that this House needs to pass urgently.

I want to take a step back for a minute. What is the challenge that we are dealing with? The challenge is a cost-of-living crisis that had its beginnings in the global economic shocks arising from the war in Ukraine and the post-COVID supply chain problems, which led to a global surge in inflation. Over the past 18 months that has rippled through our economy, as it has in every other major OECD economy. That has manifested in supermarket prices and the cost of services. It has also manifested in rising interest rates, which is one of the strategies to deal with this crisis, but that in turn has hit households through higher mortgage costs and in other ways, indirectly, such as rents. We can all agree that, in all these different ways, households have felt cost-of-living pressure, arising from the global inflation challenge. This government has already responded in a range of ways. In its first two budgets it had a whole raft of measures—$20 billion plus—that benefited those in our community who are most in need. There was rent support, cheaper medicines, bill relief, and on and on it went.

What I want to talk about now is the fact that this evolution of this cost-of-living crisis has taken paths that have nuances that require additional support, on top of what the government has already provided. One aspect of the evolution of the cost-of-living crisis over the last 12-plus months is that, as we've found from data that the Treasury has provided to us, working households have been affected by cost-of-living pressures more than other cohorts in the community, through mortgages, transport costs and a range of other costs. That's something important to bear in mind. Inflation is not passing through the economy uniformly; working households are being disproportionately affected.

Secondly, when one breaks the community into quintiles, it is the lowest quintile that is being affected the most. In some senses that oughtn't surprise us, but when one actually looks at the data—and, again, this comes through in the Treasury briefing—what we find is that the lowest quintile is dissaving at a very significant rate. The rate of saving steps up with each of the higher quintiles, from the second through to the fifth. This means that the cohort of low- and medium-income working households need particular assistance, particularly in light of the fact that the previous stage 3 tax cuts—the Morrison stage 3 tax cuts—offered absolutely nothing to those earning between $18,000 and $45,000. The cost-of-living crisis was falling disproportionately on low- and medium-income working households, which the modelling shows were dissaving the most due to being hit the hardest, and they were going to get absolutely nothing from the tax cuts that were passed five years ago. Clearly a policy change, a policy recalibration, was needed.

The challenge is: what we do about that? How do we change the targeting of benefits in such a way that it reflects our better understanding of the evolution of the cost-of-living challenges? How do we do so in a way that helps those most in need? How do we do so in a way that is non-inflationary and that also builds in structural reform? I'm now going to step through the fact that what we are offering—and what those opposite are going to vote for—ticks all of those boxes. It is important policy. It is first-order policy for households that are struggling. It is good policy and it is also urgent, and that's why this House should pass it soon.

Firstly, what we've found, as I've outlined before, is that those on low incomes are being disproportionately affected by the cost-of-living increases. Inflation is not falling evenly across our community. What we'll find with our recalibrated tax changes is that those on incomes of 130K or less are going to get over $800 more than they would have before. Some of those opposite almost act as though $800 is nothing. It doesn't correct for everything that's gone on but, proportionately, it's a lot. It's $800 more than what would have got under those opposite, so it's hardly something to snipe at.

Secondly, what we're doing addresses the issue of structural reform in a substantive way. We've all heard about this issue of bracket creep, and I just want to step through it momentarily. What we are doing increases two of the key bracket thresholds that are the subject of so much of this discussion. The bracket threshold for the 37 per cent rate will increase from $120,000 to $135,000. The bracket threshold for the top marginal rate will increase from $180,000 to $190,000. In that way, this tax package that is being offered to this parliament does change the thresholds in a way that is responsible and affordable. Reducing the rate for earnings between $18,000 and $45,000 from 19 per cent to 16 per cent is critically important in terms of bracket creep, because that affects the average rate paid for a very significant cohort of taxpayers. Indeed, the Treasury modelling found that the reduction of that 19 per cent tax rate to 16 per cent will see a smaller increase in average tax rates for the first seven quintiles over the next 10 years. So that is absolutely critical in that we'll see a very significant proportion of taxpayers benefit in the extent to which their average tax rate is affected as their incomes increase.

This goes to this rhetorical point of aspiration. Those opposite seem to think that the only changes in the tax system that address aspiration are those that affect the top tax rate. In fact, changes to tax rates right up and down the schedule affect people's aspirations—people who are trying to do better, people who are trying to reduce the burdens on their families and people who are trying to increase their after-tax pay. It's a ridiculous framing of aspiration to suggest that anything other than changing the top tax rate has nothing to do with aspiration. Something that reduces the average tax paid for seven cohorts, as Treasury modelling indicates, is a very significant way of enhancing and promoting aspiration in our economy and our society.

Thirdly, the tax changes that we are putting forward will have a significant benefit for young people who are taxpayers and for women. This is something which is critically important for groups that are particularly disadvantaged by the cost-of-living changes. And it's also particularly important for my next point, which is labour supply, which interacts with the aspiration point. What is critically important in the design of this tax change is that it's going to be far more effective in encouraging and incentivising labour force supply in the economy. We know that marginal tax rates have an effect on people's willingness to supply their labour; that is something which is very intuitive. But a number of studies have shown that this isn't even across all taxpayers. In fact, some of the most responsive people to changes in marginal tax rates are those on low or medium incomes; many of the studies have shown that it's often women—low skilled and low income, or medium skilled and medium income women—who are the most responsive. That's partly because they're often part-time and have more flexibility, and it's partly due to other behavioural characteristics and preferences. What is clear is that changing the tax rates in our package—in particular, changing the 19 per cent tax rate to 16 per cent—is going to have a very significant impact on labour supply. The Treasury modelling suggests that the package that is being offered today versus the original Morrison package will see an extra 930,000 hours offered per week in the labour market compared to the previous offering, which is a very significant change. It will be, in many cases, women working in the care economy and retail who need more hours, who are now going to be incentivised to work more and who will bring home more money for their families and boost the living standards and after-tax income of those families. So this is a very significant change.

Fifthly, and related to that point, is the fact that this tax change will be non-inflationary because it's revenue neutral and it is going to increase the labour supply. In increasing the labour supply, it's going to have important benefits for the labour market at a time when parts of our labour market are under constraints. So this important piece of policy is extremely urgent, given the cost-of-living pressures that so many people in our community are facing, and it ticks all the boxes that I talked about before. It's going to give extra assistance to those that need it most, and it's going to do so in a way that is non-inflationary and provides structural reform.

But, of course, this is not just about all of the macroeconomic aggregates, as important as they are. This is also about the people that we see in the street every day, like the people in Fraser that I've talked to since this policy was announced and who have uniformly supported it as something they desperately need. In my electorate, 78,000 people will receive a tax cut, but 68,000 people will receive a bigger tax cut under the revised tax cuts than the ones that the Morrison government had brought in. In Fraser, 87 per cent of taxpayers are getting a bigger tax cut, and many of them, in proportional terms, are getting a substantially bigger tax cut.

In Fraser, health care and social assistance is the largest employing industry, and, in that industry, 97 to 98 per cent of workers will be better off under our plan. These are the people who were thanked by so many in this place after the pandemic and these are the people who continue to do so much important hard and difficult work in our community that is often not that well remunerated. These are the people for whom we fought for wage increases through strengthening IR laws, increasing the minimum wage and increasing payments for wages and conditions for people in the aged-care industry. We've been doing all we can in terms of their wages, but these people will also rightly benefit from a materially bigger tax cut of at least $800 more. That will make a real difference to those families and those people who work in the healthcare industry, the social assistance industry and so many other industries, including people in retail, people who drive trucks, people who work in the transport industry—the list goes on. These are people who have been doing it so tough for 18 months.

What is clear is that if we had gone ahead with the package the Morrison government legislated all those years ago, which was now not fit for purpose, so many of the people that I just talked about would have received no benefits at all in the upcoming budget, or far too little. This revised tax package will fix that. It does so in a way that is financially responsible, through good and well-designed policy that fits the needs of the day, and that is structural reform that will build in long-term benefits. It's for those reasons why those opposite will vote for this, and it's for those reasons why all of us on this side will also vote for this package.

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

I rise to speak in support of the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024, but I'd also like to take this opportunity to talk about what this bill isn't. This bill is not substantive tax reform and is not a response to an unsustainable tax system. It's not addressing intergenerational wealth problems or the open question of how we're going to pay for our essential services in the coming decades. This bill is cost-of-living relief. It makes changes to how the stage 3 tax cuts are implemented in response to a changing economic environment, but, in the long term, we need actual tax reform.

What's happened since this bill has been announced? Much of the commentary has been focused on the politics—the broken promise, the honesty and the lies. Much of the media has focused on the votes, the wedge and the furore. I understand that people don't like it when a promise is made and broken, but I believe governments need to be allowed to respond to changing circumstances and to lead when the going gets tough. Opponents and journalists love to play the 'rule in, rule out' game, where leaders are cornered into promising to never change something. But part of good leadership is not making promises that are so rigid you can't move when things change. I believe that in this particular case, the circumstances have changed. Thirteen interest rate increases is a change, and the global instability we see is also a change. We're not the only economy dealing with inflation.

But that's the politics. As an independent, I'm here to focus on the policy and what's right for the country now, so that's what I'll do. The recent increases in the cost of living are affecting people in every income bracket. The government does need to act in these circumstances, but in a way that doesn't exacerbate inflation. Reshaping these tax cuts seems like not a bad way to provide some relief at this stage. The injection of $20 billion into the economy had already been factored in, so the changes don't substantially add inflationary pressure. Under these changes, seven in every 10 taxpayers in Curtin will be better off. I recognise that this is frustrating and challenging for the three out of 10 in Curtin who were expecting a higher tax cut than the one they'll be getting. I've heard from constituents who were counting on the change, include a single working mother who carries the burden of her household and her child. Despite earning a decent salary, the cost-of-living pressures have had a huge impact on her. She made financial decisions based on the promise that stage 3 tax cuts would be delivered. I heard from another couple in their early 30s who have rented for the past nine years and saved, and have now been able to buy their first home. The result of the changes will be that they have less income than expected, and it will be harder for them to make other significant decisions in their lives, such as starting a family. These stories are real and should not be discounted.

Many constituents who have contacted me have acknowledged that they are lucky to be in a position where their hard work is rewarded by a higher salary and where they are still able to put food on the table. One couple told me that they would have benefited from the stage 3 tax cuts in their original form, but believe it's the right decision to make amendments to respond to the cost-of-living needs of lower- and middle-income earners. I've also heard stories from several constituents in the 70 per cent who will benefit more, who are so relieved to be receiving an extra cut that will ease the spike they're experiencing in household expenditure or that will otherwise take care of a specific bill that's weighing on their minds. For these people, this change is very welcome news. The benefit of the reshaped cuts is, in fact, shared pretty fairly, with everyone on an income between $60,000 and $210,000 getting a cut to their effective tax rate of between two and three percentage points. Under the previously legislated stage 3 tax cuts, this was less than one percentage point for people earning less than $70,000 and more than four percentage points for people earning more than $190,000.

This package also seems to be a fairly well-targeted package to drive greater workforce participation. It's heartening to see that 90 per cent of women are likely to benefit from these changes. The way the cuts are now shaped, it's likely to have the biggest workforce participation effect for women who are deciding whether to return to work for that extra day or two. I've been in that position myself, weighing up the additional cost of child care and the extra pay for an extra day of work balanced against the extra logistics and the risk of kids getting sick and not being able to go to child care—trying to work out if it's actually worth working more. I believe that the modelling of the effect of these redesigned tax cuts on workforce participation shows an expected impact of the equivalent of an extra 24,000 full-time workers, which is very welcome in the current environment. Many of these jobs will be in the care sector, where we desperately need a boost to the workforce.

Of course not everyone earns an income and pays tax, so not everyone benefits from a tax cut. Those on a disability support pension, JobSeeker or an age pension are still seeing the seven per cent increase in the cost of groceries and a 10 per cent increase in rents. The government will need to find different ways to provide them with some cost-of-living relief, through addressing health costs or other essentials. The Medicare levy adjustment announced this week does provide some additional relief to more than a million lower-earning Australians.

But, as I said at the outset, this bill is not really about substantive long-term tax reform. It provides cost-of-living relief. The previously legislated stage 3 tax cuts were pitched as addressing bracket creep. Now, I completely agree that we need to address bracket creep, but there is actually only one way to address bracket creep properly, and that's to index our tax brackets. With indexed tax brackets, successive governments wouldn't be able to treat the hidden additional revenue as accountability-free pocket money or demonstrate periodic largesse. Any decision to spend more would need to be made explicitly, with clear trade-offs and with the permission of the electorate.

Unfortunately, there is pretty much no chance that we'll see this amendment, because it serves neither major party. Both parties value the fact that they will be given access to additional tax revenue when they're in government. A stalemate over genuine tax reform has evolved between the major parties over the last 30 years, with ideology overriding facts and evidence. Every Australian loses because of this. Our tax system's robustness is in continual decline, which increasingly undermines our ability to provide essential services and a reasonable social safety net at both the federal level and the state and territory level. Political leaders are hamstrung by their legacies of promises not to touch anything, so we end up tinkering around the edges.

Tax policy cannot be taboo. We must design the tax system we need for the next few decades. So what needs to change? In short, I think the following things need to be back on the table.

We need to reduce our reliance on personal income tax. With an aging population, we're placing an increasing burden on a decreasing proportion of the population. When I was born, there were more than seven Australians of working age for each person over 65. This has now declined from seven to about four. This is not sustainable.

We also need to increase GST on a broader base. Compared to other countries, we charge GST on fewer things and at a lower level. But if we change this, we will need an appropriate redistribution so that it's not regressive.

We need to earn appropriate value from our natural resources. We collectively own our natural resources, and we should be paid appropriately for them if we let companies export them. 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 only 0.08 per cent of GDP.

We need to simplify the tax system. Our tax system contains numerous complexities that provide the wrong incentives or are a drag on productivity. We need to get back to first principles and decide what behaviours we want to incentivise more or less of, and structure our tax system accordingly.

In summary, I support the cost-of-living support delivered by this reshaping of the stage 3 tax cuts, because it is fair, is likely to stimulate greater workforce participation, particularly for women, and is much needed at the moment. But I challenge the government to be brave, to look more broadly at our tax system and to take on the challenge of working out how we will pay for the things we think we deserve as we get older, as decarbonisation puts our exports at risk, as our productivity continues to decline and as people in their 20s see owning a house as increasingly out of reach. These challenges won't go away, and I think Australia wants to see leaders willing to face them head on rather than hiding their heads in the sand.

Gordon Reid (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

From the outset, I want to thank the member for Fraser and the member for Curtin for the civilised debate that was conducted in the last half an hour. I think that that's the way this chamber should be conducted. But there was a member previous to that, raising their voice and using political posturing and rhetoric against our dynamic economic policy, and I was really saddened and disappointed by some of the statements made by the member for Petrie just earlier. The member was disappointed in Labor's dynamic economic policy in this Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024. The member was disappointed that this legislation will give every Australian taxpayer a tax cut. This is alongside the major cost-of-living policies and initiatives that the Albanese Labor government has put in place since we were elected in 2022. I am talking about things like cheaper child care. The member for Dobell is here in this chamber at the moment. Across the Central Coast, we talking about nearly 14,000 families who are going to be benefiting from our cheaper childcare policy. We look at the tripling of the bulk-billing incentive. We have had major increases in our bulk-billing rates on the Central Coast, including an additional 10,000 visits to the GP. Bulk billing was in decline prior to that and now it is on the road to recovery. To the opening of the bulk-billed urgent care centres, they are completely bulk-billed for every human being who walks through the door and that is how it should be in Australia with our health care.

The member for Higgins also brought up something which I can definitely relate to—that is, when the circumstances of a patient who may present at a hospital change then you need to adopt your clinical priorities and also your clinical treatment plan, as I know other members in the chamber he would know. For example, if a patient comes into the emergency department hypotensive—low blood pressure—you don't stand there with your hands in your pocket; you give them IV fluid. Or take for example a patient with an infection. You have started some antibiotics, whether that be through a drip or in a tablet. If you get some testing back and find that that bug is resistant to that antibiotic, you change the antibiotic. Alternatively, if you have a patient with kidney failure, renal failure, stop or adjust the medications that are cleared by the kidneys. These are simple clinical examples. These are examples I use every day when I'm practising in the emergency department, and the same can be said here.

This is a dynamic policy that will help every single Australian, every single Australian. It gives every single Australian a tax cut, it helps with their cost of living and it also let's them have more of what they earn in their own pockets. The federal Labor government is laser focused on helping reduce the cost of living for all Australians, not just some. This week we have introduced Labor's tax cut legislation which will provide tax cuts and cost-of-living relief from 1 July. These tax cuts will deliver relief that is fiscally responsible and that does not add to inflationary pressures. Our tax cuts, as I have said multiple times now, in the tree minutes that I've spoken mean that every Australian taxpayer will receive a tax cut, especially helping low- and middle-income Australians the most. It is a plan for tax relief and it is a plan for tax reform.

These tax cuts are not just good for low- and middle-income Australians. They are good for women, they are good for helping with cost-of-living pressures, they are good for labour supply, they are good for the economy and, most importantly they are good for the people of Robertson on the Central Coast. That's right, all 66,000 taxpayers in my electorate of Robertson on the New South Wales Central Coast will receive a tax cut. Of these 66,000 hardworking taxpayers, 56,000 people will receive a greater tax cut with Labor's plan compared to what was originally legislated by the former Morrison government. On average, taxpayers in Robertson will receive a tax cut that is equal to approximately $1,580, and 85 per cent of taxpayers in Robertson will now be better off under Labor's plan. This is relief that will assist single parents, couples and families managing growing living pressures right across our beautiful region.

Around 83 per cent of taxpayers in New South Wales will receive a bigger tax cut thanks to our economic plan. When the former coalition government legislated its stage 3 tax cuts five years ago, the world was a very, very different place before a once in a 100-year pandemic, persistent inflation, higher interest rates, two conflicts and global uncertainty put Australians under more sustained cost-of-living pressures. When the circumstances change, changing policy is the responsible thing to do and that is exactly what this government, this side of the House, is doing. The change of policy may not have been the easiest decision but it is the right decision to make for the circumstances that we are in. Cost of living is a significant issue for our community on the Central Coast. A competent government listens and adapts to make things better when needed. Addressing cost-of-living pressures is my No. 1 priority, and, when economic circumstances change, the right thing to do is adapt your economic policy.

Labor's tax cuts will mean 13.6 million Australian taxpayers will receive a tax cut from 1 July, and 2.9 million Australian taxpayers will also now receive a tax cut thanks to Labor's plan, compared to what was legislated under the former Morrison government five years ago. If you look at how the Australian people are receiving our tax cuts plan in the media—and I've been out doorknocking and phone banking—you'll see that 62 per cent of Australians support our plan for bigger tax cuts for more Australians, not just some. The Liberals and the Nationals and those in the media will do everything they can to undermine our plan, but the reality is that this is good and responsible economic policy that will help all Australians with the cost of living.

The Australian people are not silly. They understand good economic policy when they see it, and they are supporting our plan. But don't just take it from me. Australian National University professor Ben Phillips said of Labor's tax cuts: 'Very much the support now is across the board rather than just at the very top. So that's good in terms of workforce participation, and it's also good in terms of cost-of-living relief. I think overall it's a fairer package.' Australia Institute Executive Director Richard Denniss said, 'Anthony Albanese's decision to recast Scott Morrison's 2018 tax cuts to suit the economy of 2024 is the biggest and most honest piece of tax reform in Australia for decades.'

Across Australia, the people who will benefit the most from our tax cuts are those in our communities such as nurses, teachers and truck drivers, where 95 per cent will now receive a bigger tax cut from 1 July. Essential workers, who we rely on every day to care, to teach and to supply our communities, were hit hard during the pandemic, and now they can expect a bigger tax cut under Labor's responsible economic policy. I am proud to say that there are many other Australian workers who will be better off under this legislation than they would have been under the legislation five years ago.

Ninety-seven per cent of Australia's 150,000 aged-care workers and disability carers will now receive a greater tax cut. Ninety-seven per cent of Australia's 310,000 registered nurses will now receive a greater tax cut. Ninety-six per cent of Australia's 100,000 commercial cleaners will now receive a greater tax cut. Ninety-seven per cent of Australia's 140,000 early childhood educators will now receive a greater tax cut. Our plan will also see those taxpayers earning $45,000 or less receiving a tax cut. This was not the case under those opposite.

This change will significantly boost the take-home pay of Australians on modest incomes and people working part time. These are Australians who might be studying at university, single parents and older Australians, who will all now be better off under the plan that is being implemented by the Albanese Labor government. For a family on an average household income of around $130,000, with one partner earning $80,000 and the other earning $50,000, their combined tax cut will be over $2,600, which is about $50 a week and $1,600 more than they would have got under the old plan.

Don't just take it from me. Last week I was doorknocking in my electorate right across the area but in particular in the areas of Avoca Beach and Umina Beach as well. The No. 1 issue that was being raised with me was the cost of living and the pressures being faced by families on the Central Coast. That is why the federal Labor government is giving all Australian taxpayers a tax cut and providing a bigger tax cut to low- and middle-income earners.

The opposition and those in the media will say that our plan to give all Australians a tax cut and bigger tax cuts does not address bracket creep. According to Treasury, this is not the case, and those opposite and in the media would benefit from reading the Treasury advice that has been made public. If they are unable to find that advice, please email my office and I will send you a copy. It says that our plan distributes the future impact of bracket creep more evenly. Our tax cuts deliver a better, more progressive tax system which addresses bracket creep. Further, Treasury estimates that our tax cuts will increase labour supply by around 930,000 hours per week, which is more than double the labour supply impact of the former coalition government's plan, and our tax cuts will boost productivity and strengthen the Australian economy. On Labor's tax cuts, Westpac's economic spokesperson, Luci Ellis, said:

While the changes this week alter the distribution of the benefits, the macroeconomic impact of this—relative to the package as originally announced—is marginal. We do not expect that this will affect the RBA's view of the inflation outlook or the future path of the cash rate.

In other words: Labor's tax cuts will not add to inflation, and the RBA expects the inflation rate to continue to fall and to return to the target band, which is in line with Treasury's forecasts.

The federal Labor government is building on the existing cost-of-living relief measures that we have implemented since we were elected in 2022. I touched on some of them earlier in my speech, but let's go through them again, because they are all relevant to this speech and to some previous. They include making it easier to see a doctor, through Labor's Medicare urgent care clinics. These are bulk-billed walk-in clinics with extended operating hours—if you're too sick for the GP and not sick enough for the emergency department—to take pressure off our hospitals. It's a signature policy and a signature initiative that would only have been possible under an Albanese Labor government. We delivered energy bill relief, assisting eligible Australians with their energy costs; cheaper child care, helping one million Australian families afford early childhood education and care; fee-free TAFE, ensuring hundreds of thousands of Australians can afford to upskill and get well-paid jobs; cheaper medicines, by reducing the price of PBS medications; an increase in rental assistance, increasing it to its highest level in 30 years; and an expansion and strengthening of paid parental leave.

The federal Labor government will continue to help reduce the cost of living for all Australians. I am pleased to be part of a mature, competent federal government that is governing for all Australians, not just some. We are making the necessary reforms to position Australia on strong foundations and we're not leaving any Australians behind. I want to thank the Prime Minister, Anthony Albanese, for his leadership and conviction, making the right decision in the challenging circumstances that are affecting our country, affecting my state and affecting our electorates. I also want to thank the Treasurer, Dr Jim Chalmers, for his work ensuring Labor's tax cuts are equitable and deliver the greatest cost-of-living relief for middle Australia.

Julian Leeser (Berowra, Liberal Party) Share this | Link to this | Hansard source

Australians face scams every day—scams that are there to deceive Australians. The scammer makes a promise to give something or to do something or pretends to be something other than what they are. Often they deceive people into believing that the scammer is actually helping them. Despite the red flags, the scammer keeps promising there's nothing to fear and there's nothing wrong. People put their trust in the scammer, and then it's too late: the scammer has taken them for a ride and disappeared.

Today we're not debating an online scam but an electoral scam. Anthony Albanese promised the stage 3 tax cuts over 100 times. Labor had voted for these tax cuts in this parliament. The tax cuts were taken to the Australian people by both sides. In 2019, under Bill Shorten, Labor was very honest about its tax plans, and Australians rejected them. Had Labor under Anthony Albanese in 2022 been as honest, they may have been rejected again. But Australians believed Labor, and they believed Anthony Albanese when he said, 'My word is my bond.' Then his word wasn't his bond and he pocketed $28 billion in extra taxes. To be fair to the Prime Minister, he wasn't the only one. His ministers all lined up to celebrate the broken promise. The teals also broke their promises. I've heard many of their arguments. The word 'fairness' comes up a lot. Do you know what the fairest thing you can do is? Keep your word and keep your promises to Australians.

Australians are right to feel disappointed in a prime minister and in a government that says one thing and does another. Australians have learnt that you can't trust the Labor Party when it comes to taxes. Paul Keating had his l-a-w law tax cuts that were never delivered, and Julia Gillard said there would be no carbon tax under the government she led. Now Anthony Albanese has broken a word which he once said was his bond.

No-one questions that Australians are facing difficult times. Because of this government, Australians are facing the most financial pressure since the Keating recession of the 1990s. True, unemployment continues at historic lows; yet the economic hamster-wheel is getting faster and faster. Under this government, real net disposable income per person has fallen 8.6 per cent. The official figures reflect what Australians are feeling in their wallets. Under this government, food's gone up nine per cent, electricity's up 23 per cent and gas is up 29 per cent. This is despite the fact that we have a Prime Minister who'd promised to reduce power bills by $275.

And it's the home where the pain is. For home owners, it's the pain of a dozen interest rate rises under this government, meaning that a family with a $750,000 mortgage are paying an extra $24,000 a year. Renters—who are often young or the most economically vulnerable—are feeling the pain of the largest increase in almost 15 years.

Bracket creep, interest rate increases, energy costs, inflation and falling real wages have all taken their toll. For an average income earner, this is a decline in take-home pay of the order of $8,000. It's worth recording that, under Labor's policy, a worker on an average wage would receive only $804 a year—a fraction of what they lost.

It must be noted that, under this package, in its entirety, taxpayers lose. Labor's tax package increases the tax take over 10 years by $28 billion.

We know that this tax package is a test case for Labor breaking further promises after the next election. Over the last two years, we have seen very deliberate language around the stage 3 tax cuts: 'There are no plans;' 'It's legislated;' 'Our position hasn't changed'—cute forms of words, always delivered with a touch of indignation when the ministers or the Prime Minister would be questioned. Now we'll hear the same form of words for negative gearing, for superannuation, for family trusts and for death duties over the next 18 months.

The opposition knows how much Australians are hurting. It's why we will not stand in the way of these tax cuts. But Australians are paying a terrible price for the inflationary largesse of state, territory and federal Labor governments and the lack of any long-term economic plan from the Treasurer.

I applaud people studying and learning. The Treasurer might have studied and written a thesis on the reforms of the eighties and nineties—and I applaud that, too; I really do—but he hasn't done any thinking about the 2020s and the 2030s. We must look forward, not look back.

Today, I want to add two reflections to this debate about where we're heading. The first is that we need to recentre the economic debate of this country on the matters that will grow and prosper Australia. All too often we've let the economic policy levers be driven by a desire to alleviate economic symptoms Australians face, rather than to address the causes. This is a government focused on dishing out panadol for pain rather than surgery for a cure. It's about winning a news poll rather than building for a generation.

Let's speak the truth that too few want acknowledged. The Australian economy's not working as it should. The fact that Australian wages aren't buying as much as they used to is not a cause of our economic malaise; it's a symptom. It's a symptom of our loss of competitiveness and productivity. The fact that power bills are going up and up won't be answered by temporary relief, but by a reform of energy markets and a serious debate about our energy mix where nothing, including nuclear power, is off the table. There's the fact that investment in major projects is being stymied because this government has fed and encouraged activist groups. Lawfare is stymieing jobs, investment, productivity and national income. The Attorney-General won't resolve issues around legal standing, which is enabling political activists to disrupt the economic progress of this country.

There's also a truth whispered among parents. Though most of them love their children's school and appreciate the care and dedication of their teachers, there's a deep fear our education system—primary, secondary and tertiary—is not preparing young people for the workforce they will face. Australia's skill needs are not being met. In so many places we've settled for a status quo economy that worked for the 1980s but is not working for the 2020s and will fail in the 2030s.

Our biggest businesses—be they supermarkets, telcos, banks or airlines—are settled up in cosy relationships which hinder growth and innovation. We need the ACCC to continue to put the supermarkets, the telcos, the banks and the airlines under the microscope, studying market structure, barriers to entry and how we can encourage more market players. Competition drives prices down and it drives innovation up. And we need a workplace relations system that doesn't treat those who create jobs like enemies and criminals instead of partners in building a positive, high-wage economy. We need to reset the economic discussion and build for a new economic future.

Policies are always underpinned by values, and those values matter. When it comes to the economy, we must always encourage aspiration, because it's aspiration that encourages every Australian to participate, to contribute, to give it a go and to do their best. Aspiration is a virtue. It's the optimism expressing itself through our labour, which is the gift we all bring to our workplaces. From young people contemplating decisions about skills and study, to older people thinking about taking on extra work, aspiration matters. When an Australian makes a decision—

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

The debate is interrupted in accordance with standing order 43 and may be resumed at a later hour. Member for Berowra, your speech was interrupted; you will be granted leave to continue when the debate is resumed.