Andrew Murray (WA, Australian Democrats) Share this | Hansard source

by leave—I move Democrat amendments (1) to (14) on sheet 5438:

(1)    Schedule 1, item 3, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(2)    Schedule 1, item 3, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(3)    Schedule 1, item 3, page 3 (table item 3), omit “$180,000”, substitute “$150,000”.

(4)    Schedule 1, item 3, page 3 (table item 4), omit “$180,000”, substitute “$150,000”.

(5)    Schedule 1, item 4, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(6)    Schedule 1, item 4, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(7)    Schedule 1, item 4, page 3 (table item 3), omit “$180,000”, substitute “150,000”.

(8)    Schedule 1, item 4, page 4 (table item 4), omit “$180,000”, substitute “$150,000”.

(9)    Schedule 1, item 13, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(10)  Schedule 1, item 13, page 5 (table item 3), omit “38%”, substitute “40%”.

(11)  Schedule 1, item 13, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(12)  Schedule 1, item 14, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(13)  Schedule 1, item 14, page 5 (table item 3), omit “38%”, substitute “40%”.

(14)  Schedule 1, item 14, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

I do not intend to delay the Senate much on these matters. I outlined my case in detail in my speech during the second reading debate. But, to recap very briefly, it is my view and the view of the Democrats that these tax cuts are probably desirable and warranted with respect to middle-income families. They are certainly desirable and warranted with respect to low-income families. They will indeed have the effect at the lower end—namely the lower-income and middle-income end—of improving workforce participation. They should contribute to easing pressure on wage claims. They will without doubt provide relief by lifting the disposable income of lower-income and middle-income families and they will, on balance, certainly advance the cause of trying to address many Australians’ living standards.

The tax cuts are very considerable, and certainly will not be understood by the Australian population until they see them in their actual pay packets, because they are comprehensive and quite wide-ranging. The question is whether the increase in aggregate demand that will be the result of these tax cuts—and increasing the maximum amount of the low-income tax offset—will have an inflationary effect. The government and the Treasury, in their advice to the committee that examined this matter, have indicated that their belief is that it will not.

There is that question, however, of how, if there is a judgement call to be made on these matters, the tax cuts intended for higher income Australians could or should be justified. The only reason I have really heard from the Labor government is that they are fulfilling a promise they made before the election. I have not heard them come out and say that they think these tax cuts to higher income Australians and wealthy Australians are a jolly good thing. Now, the conservative opposition may think that they are a very good thing and they would be happy to argue that case, but I have not heard that from the government. Therefore, if the only reason you are advancing those particular tax cuts at the higher end is because you made a promise, and if the economic circumstances in Australia have changed so that fulfilling that promise might not be wise, then our view is that you should reconsider. Consequently, we have put up two sets of amendments: the first one and the alternative, which I will move later because no doubt I do not have the numbers on this one. One is to delete some tax cuts and the other is to defer them.

The set of amendments on sheet 5438 defer some coalition tax cuts already passed in 2007: the 30 per cent band so that the upper threshold does not lift from $75,000 to $80,000 in 2008-09 but does that in 2009-10; the 40 per cent band so that the upper threshold does not lift from $150,000 to $180,000 in 2008-09 but does in 2010-11; and the 45 per cent band so that the upper threshold does not lift to $180,000-plus in 2008-09 but does in 2010-11. The effect of what we are doing is, of course, to reduce the amount of money which will be available in the marketplace—in other words, in increasing aggregate demand.

There is a question as to what you would do if this were successful. You could do one of a couple of things. You could put it into the surplus. In other words, you could use the equilibrium mechanism which the surplus provides by limiting the amount of money available for spending by effectively saving it in government hands, and that is an anti-inflationary measure. Those of the chamber who are economically literate will understand what I am alluding to. The alternative, if you thought you needed to spend it, is that you could take that money and increase the pension rate. That would be a possibility. You could increase the pensions with this amount of money that I am saving by about $15.75 per fortnight for a single pension, or $12.10 per fortnight for a couple, with the cost of $1.2 to $1.3 billion worth of expenditure.

I have not put that proposition to the chamber. I am not going to; these are rough calculations. The purpose of me mentioning that is to indicate that there are alternative ways in which the proposed tax cuts to better-off, wealthier Australians could be used for low-income Australians such as pensioners. I think the government would have been better going down that route than making some tax cuts which are gratuitous, unwarranted, not needed, may well be inflationary and are certainly not justified in this current economic climate. I do again, though, emphasise our opinion that the tax cuts and the low-income tax offset changes for low-income Australians and middle-income Australians are certainly warranted and justified.