Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Hansard source

Let me make the point that I do listen to Senator Murray’s contributions. I am always delighted when the Democrats purport to want to cut taxes. My general experience in this chamber has been that the Democrats are a high-spending party, and from that it follows that they are generally a high-taxing party. I commend Senator Murray for talking about cutting taxes. That is the government’s agenda. We like people to talk around the government’s agenda, so we commend Senator Murray on that point.

I have not had the opportunity to visit Senator Murray’s website in recent days, so I thank Senator Murray for reminding us that he has an extensive website. Of course all of us know Senator Murray’s longstanding interest in tax. Senator Murray drew our attention to a paper on his website on benchmarking and international comparisons. They are things that the government has done in recent months. Senator Murray, like many senators, would be very much aware of the landmark benchmarking paper done by Mr Warburton and Mr Hendy, which guided the government in its budget considerations. I think people would be very pleased with the way the government looked carefully at international benchmarking to ensure, quite appropriately, that the Australian tax system is very competitive. This government likes to compete to see what it can do to reduce the burden of taxes on taxpayers. That is one of the features of our party, as distinct from other parties in this chamber.

Senator Murray, we listened carefully to you. It will not come as a shock to you that we are not persuaded. I regret to say that we are not persuaded by the arguments that you put. We think that you have devised a somewhat blunt instrument in an attempt to deliver some further tax cuts at the expense of raising the top marginal tax rate, as you concede. The government do not believe that is appropriate. The Warburton and Hendy study drew our attention to international benchmarking and the fact that the government should look at the top tax rate, which was a bit high and cut in a little bit early. The government’s thinking was formed by looking at that important benchmarking study.

I have some figures that would be of interest to Senator Murray. The government’s tax cuts, on top of those delivered through the 2003, 2004 and 2005 budgets, have more than returned bracket creep since 1995-96. On the indexation issue, Senator Murray was worried that the benefits of the tax-free threshold could be seen to be eroded. To give Senator Murray some comfort, as I have indicated, we have more than returned the bracket creep since 1995-96. The tax cuts would have lowered tax by a greater amount than would have been achieved by indexing the 1995-96 tax thresholds to the consumer price index. I think that gives a broader perspective than some of the comparisons that have been raised in this debate. It is estimated that in 2006-07 someone on average weekly earnings will be $1,209 a year better off under the new tax scales than if the personal income tax thresholds had been indexed to CPI since 1995-96, which existed at the time this government came into office.

So what is the point I am making? It is that this government believes in tax reform; this government seeks to lower the burden of tax. In terms of marginal tax rates, I think it is a good thing, if we are talking about incentives for people to get back into the workforce or about incentives to keep people employed. We have to look at those tax rates, and I think the government has done well in its restructuring of the income tax system. Senator Murray, I listened carefully to your observations and my advisers listened carefully to your observations. We carefully weighed them up and decided that we are not able to support your amendments.

Question negatived.