Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I thank all senators who have contributed to the debate on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, which repeals the second round of carbon tax related personal income tax cuts that were due to start on 1 July 2015.

We have to remember that this bill will legislate the budget improvements that the former government announced and banked in their last budget but never legislated. The beneficial impact from this bill on the budget bottom line will be around $2.8 billion over the current forward estimates period. This measure has already been put to the Senate twice and, so far, of course the Senate has voted it down on both occasions. However, the government welcomes the change of heart by the Labor opposition. The government welcomes the fact that on reflection Labor has decided to back its own budget improvements measure after voting against it twice.

The 1 July 2015 round of personal income tax cuts were originally introduced to provide additional assistance to households, following an expected increase in the carbon tax, from a fixed price of $25.40 in this financial year to $29 next financial year. However, in its final budget, the 2013-14 budget, the former Labor government revised their carbon price estimates for next financial year, down to around $12, and on that basis they said that there was no longer a need for this second round of income tax cuts until such time as the carbon tax got back up to $25.40 a tonne. Of course, we know that, as a result of the policies of the government, supported by the parliament, the carbon tax is now at zero—not $12, not $25.40, not $29 a tonne—no longer pushing up the cost of electricity, no longer pushing up the cost of doing business and no longer pushing up the cost of living for families. And that is why, given that we are in a much stronger position now than we were under the previous government when they made a decision that this particular tax cut was no longer appropriate, it is appropriate that we press ahead with this measure, particularly given the state of the budgets that we inherited from the previous Labor government. Not only did the previous Labor government spend about $200 billion more in their first five budgets than they raised in revenue but they left behind $123 billion in forward projected deficits in their last budget. And of course we know that Labor left behind a budget trajectory and a debt growth trajectory, taking Australia to government gross debt of $667 billion by 2023-24 and rising beyond that period. Under the trajectory that we were on as a result of the policy decisions of the previous government, there were deficits as far as the eye could see and there was debt growth as far as the eye could see. We have been able to reduce that spending-growth trajectory quite significantly as a result of the decisions that were made in our first and second budgets. It is good to see that, one by one and step by step, all of the various measures initiated by the government to improve the budget bottom line are being dealt with by the parliament and by the Senate.

It is good to see that we are now able to deal with one of the outstanding measures to improve the budget bottom line from the 2013-14 budget. On occasion I am asked how we are going with implementing budget measures from the 2014-15 and 2015-16 budgets, and I always point out to people that we are still working to do Labor's job for them. We are still working to implement budget measures way back from 2013 that Labor initiated and banked in their last budget. They banked the beneficial effect on the budget bottom line in their last budget, but never legislated. We are still working to do their work for them, with Labor, until today, opposing their own budget improvement measure.

I conclude by thanking all senators who have contributed to this debate. This is one of the measures from Labor's last budget that we said, while in opposition, we would support in government. We are sticking to that commitment we made in the lead-up to the last election. We are pleased that the opposition has come on board in supporting their own budget measure as well. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.