Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I do not know whether to dignify that sort of feeble remark with a response. Let me say for the record that of course we care about lower income Australians. The whole record of our government is testament to the care that we have for lower income Australians. That is why we have profoundly always believed that the best thing we can do for lower income Australians is to ensure that they have access to a job. The best form of social welfare in any country anywhere on earth is to ensure that those who want a job can get a job. When we came into office unemployment was 10 or 11 per cent and now it is five per cent. The record of job creation under this government has been remarkable. We now have a situation where the opposition are complaining about skill shortages; that there are not enough people to fill the vacancies that are available. That is the consequence of a government that is absolutely dedicated to ensuring that we have economic growth of a sort that does ensure that Australians can get jobs and can fill jobs. That is the best way to ensure the welfare of lower income Australians.

As to this assertion that income inequality has increased, I would draw your attention to ABS data from the household expenditure survey that show that income inequality actually decreased in the decade between 1994-95 and 2003-04. There is nothing to suggest that since that time there has been any change. Indeed, we have had a situation where real wage growth has been very strong under this government: some 15 per cent growth in wages compared with only two per cent real wage growth under 13 years of Labor. During the 13 years that they were in office, real wages grew by two per cent. Under our government, real wages have grown by 15 per cent and our tax changes have been skewed to those on lower incomes.

By definition higher income earners pay more tax. I made the point in my answer to the first question: that someone on an income of $150,000 will, after these changes, still be paying nearly $1,000 a week in tax. Someone on $150,000 pays 10 times as much tax as someone on $30,000, even though their income is only five times greater. The progressivity of the tax system remains. That means that those on higher incomes not only pay more in dollar terms but pay a higher proportion of their incomes in tax than those on lower incomes.

We have a very generous but targeted social welfare system with indexation of pensions to MTAWE. The greatest single expenditure in the budget is on social welfare. Some 42 per cent of the $220 billion budget that we have goes to social welfare. Because pensions are indexed to MTAWE and not CPI, that is growing in real terms. We are very proud of our record of looking after poorer Australians. The best thing we can do, as I say, is to maintain strong growth, keep inflation low, keep interest rates low and keep unemployment low.