Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Hansard source

We all know where this is travelling, as Senator Patterson notes. Labor’s taxes will slug consumers with higher prices at the checkout. Labor’s tax-and-spend budget will hurt more hardworking Australians than it will help.

Another very tenuous position that the government have taken in the budget is to double the threshold before the Medicare surcharge comes in. An unwelcome consequence of this action, as people are now beginning to talk about very vociferously, is that health insurance premiums will increase. Furthermore, this will cause people to leave the private system and move to the public system. More pressure in the public system will lead to increased outlays as well as higher health insurance premiums for those who remain in private health funds. That equals more inflation overall, not less. Again, Labor’s tax policies will punish the people of Australia, because they will only act to fuel inflation. The people of Australia will be slugged with the increased public hospital outlays as well as higher prices.

We have often been lectured by Labor since they got into government that these tax cuts will increase workforce participation. Increasing workforce participation is of course something to aim for. It is a worthy objective that I think all governments should aspire to. That is why we devised the tax cuts in the first place—the tax cuts which Labor have now copied.

Tax cuts can help reduce inflation by encouraging workers to increase their skills and discouraging excessive wage claims. Treasury modelling indicates the coalition’s tax cuts since 2000 have increased the labour force by around 250,000, yet Labor have flagged that this will be the last round of tax cuts for some time. This leads one to ask: if the major tax cuts from the 2007 election campaign reduce inflation by promoting participation, encouraging skill development and keeping wage pressures under control, doesn’t that argument also apply for future tax cuts? I think we can glean from just these measures alone that Labor appears to be totally confused, with a budget that will deliver higher taxes, higher spending and an increase in unemployment to the tune of up to 124,000 fewer people in jobs. As one might say: go figure.

Australian families deserve these tax cuts—and I want to be very clear about that—because they have worked hard and they have earned them. The coalition proudly supports hardworking Australians keeping more of their own money. We strongly believe that, after all necessary expenditure to adequately fund government programs, ensure good government and maintain a surplus, any excess money should be returned to the people who earned it, rather than kept in government coffers. This is underpinned by our core belief that Australians know better than government how to spend their own money. The former coalition government had a very strong record on taxes and the economy, which I am quite sure will be borne out when history is written about this time in our country.

Whilst those in government have chosen to try to recast and rewrite the past, the simple fact is that the previous coalition government was very successful in implementing tax reform and reducing the personal income tax burden on working Australians. The coalition’s careful and skilful management of Australia’s $1.1 trillion economy enabled the government to pay off Labor’s $96 billion debt and convert Labor’s $10 billion deficit into a $14 billion surplus at the same time as giving tax relief to all Australians at all income levels.

A look at last year’s budget papers reveals the truth about personal tax cuts. Under the coalition, a tax burden shared by working Australian families dropped in real terms. In 1996-97 personal income tax receipts were 12.4 per cent of GDP. This was the legacy that the coalition government inherited from Labor. This financial year, the personal income tax burden is projected to decline to 10.9 per cent of GDP. Measures from the tax policy that the coalition formulated and announced at the last election—details that have of course been now plagiarised and copied by the government—are implemented by the passage of this bill. The estimated tax burden for individuals is expected to decline to 10.1 per cent next financial year. Even from opposition, I contend, the coalition is still leading the way in the area of taxation reform. The shadow Treasurer, Mr Turnbull, has announced a review of the entire taxation system so that we can come up with the best and most efficient taxation system for our modern economy. We believe that you cannot have meaningful taxation reform without a reduction in the tax burden. Labor, however, appear to be up to their old tricks and have subsequently copied the coalition by announcing their own review. The problem for them, I think, is that they have asked Treasury to run the review. I have a lot of respect for Treasury—I have worked very closely with them—but what this effectively means is that Treasury is tasked with reviewing itself, which is never a healthy way to conduct a review of this scale and scope.

Labor’s addiction to spin has no bounds. Their copycat review is supposed to be a root and branch review of the tax system, but somehow or other it will not be reviewing very important areas, such as the GST. You cannot have a root and branch review when it does not even consider reform of the GST. I really believe that, unlike the coalition, Labor are still trying to follow the leader in this area because they have no strategic taxation agenda and no strategic framework for this review. I think it has been the case for many years now and I think that the country will be the poorer for it.

I very much support the tax cuts in this bill and I think that I have said enough about how these have effectively been cuts that the coalition devised. I am very pleased to see that these benefits will be passed through to the people of Australia but I also think that it is appropriate, when we look at the budget that was handed down, that we put it in context. The 2008 federal budget has, I believe, let Australians down. It is a very typical Labor budget—let us be clear about it: it increases taxes, massively increases spending, plays the politics of envy and, I think, shows that they do not know what they are doing in running the economy going forward. It is a budget of confusion and contradictions. It is a budget that confirms that Labor has no really clear idea about how to deal with the economic challenges facing Australia, particularly inflation, which is what they said they were trying to address.

I think that it shows that the Treasurer is still struggling to find how he is going to take this economy forward. He claimed that the budget would ease the pressure on inflation and honour Labor’s election commitments to families, but he has failed his first test, in delivering what is unequivocally an expansionary budget.

The budget will do nothing to meet Labor’s promises to keep grocery prices, petrol prices and home interest rates down. For that alone, Labor are to be condemned. They ran around promising that that was what they would do and, search though you may, in the budget there is precious little indication of any ability to do any such thing. I think Australians can take very cold comfort from Labor’s decision to raise taxes on cars, alcohol—for the sake of it but trying to dress it up as some measure to address a problem, which we all think is a significant problem, only this is hardly a way to deal with it—energy, computer software, fringe benefits, passenger movements, passports and visa applications and to increase the cost of private health insurance. I think Mr Swan’s first budget will be remembered very much as a taxing budget. It confirms Labor stands for higher taxes, and this of course will put upward pressure on inflation.

I think it is fair to continue to say from the opposition’s point of view that Labor was indeed left with a strong economy which had a key strategy to keep the economy growing and to keep inflation under control over the longer term. In contrast, it is also fair to characterise Labor’s budget as a political grab bag, not an economic strategy going forward, and I do think Australians deserve better than that. However, what concerns me very much is that unemployment will increase as a result of this budget, with Treasury forecasts showing 134,000 fewer people in jobs. That is a very shameful outcome for the first Labor budget. Despite all the rhetoric about education revolutions and lifting productivity, the participation rate in the workforce is actually forecast by Treasury to fall.

When it comes to the various investment funds on infrastructure, education and health—also, of course, copied from the coalition—there is an appalling lack of detail, with absolutely no explanation of what criteria will be used for the administration and expenditure of billions of dollars of taxpayers’ money withheld from them and retained for some purpose without any detail as to what it will be. And, of course, there is absolutely nothing to tell Australians how this will actually address the infrastructure bottlenecks. Are these funds going to be accessed in the short term? If they are, that is going to put a lot of pressure on inflation. If in fact they are not going to be accessed in the short term, then of course they are not dealing with the problems that have been identified in infrastructure. Labor has made absolutely no attempt to reconcile these contradictions in its approach to these investment funds.

The bottom line is that Labor have not kept their election promises. The Labor government promised not to touch private health insurance, but they are gutting it. The Labor government promised to leave the baby bonus alone, but they are in effect slashing it. Labor promised not to increase taxes, but taxes have gone up. It is very disappointing, and I think it confirms what Mr Garrett said in an unguarded moment before the election: ‘Once we get in, we’ll just change it all.’ The proof of that is well and truly seen in the budget. After promising so much before the election, Labor have let Australians down.