David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I rise to oppose the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. Under the law of the land, the tax office will start taking slightly less of your income in a fortnight's time. This is good news, but the coalition and Labor cannot stand it. So today the coalition and Labor will combine to pass a bill that cancels the slight reduction in income tax scheduled for July—a reduction I was responsible for retaining in my first week in the Senate last July. This bill proves that the coalition and Labor are a unity ticket. If you want big taxes to fund a government that can spend your income better than you can, vote for either of them. They will give you want you want.

The tax cut we are talking about is not huge. If you earn $66,000, the tax office currently takes away around $14,300. Next year, with no change, they would take away around $14,220. So, around $80 less would be taken from you. The coalition and Labor believe they can spend that $80 better than you can. In fact, as this bill gets waved through the Senate, they will say that they cannot afford to give you the $80—as if the $80 is theirs.

The mindset of the coalition and Labor is that of someone who believes that all your income is owned by the government, and you get to keep some of it only because of government generosity or absentmindedness. This mindset leads to tax increases being called budget savings. We would not put up with this abuse of language anywhere else. If a business claims that it is making savings, that means it is spending less; it does not mean that it is jacking up prices. This mindset also leads some in the coalition and Labor to treat tax deductions, offsets and exemptions as a government handout, to be withdrawn when the going gets tough. In reality, tax deductions, offsets and exemptions just represent instances where the tax office is taking less money than some imagined tax take. The approach of some in the coalition and Labor is akin to a pickpocket skimming your wallet of notes and then expecting gratitude because this time they left the coins behind.

Yes, governments need to spend money and raise taxes, but our governments are spending more money and raising more taxes than ever in Australia's history. Fifty years ago, taxes were around $5,000 per person after adjusting for inflation. This grew each decade, until now the tax burden is around $19,000 per person. Those bleating about crashing revenues are on another planet. Their complaint, in essence, is that taxes ought to grow even faster. There is no justification for the ever-expanding tax burden. Living standards for all groups of people have risen over the last 50 years, which means the need for government welfare services has declined, and we have not uncovered new forms of effective government intervention either. To the contrary, the prosperity-promoting effects of free markets and the many failings of government involvement have been demonstrated time and time again.

Yes, governments need to spend money and raise taxes, but our taxes are high even by the standards of the stagnant economies that make up the OECD. The average tax burden in the OECD is 30 per cent of GDP. This average accounts for the different populations of OECD countries, as well as the social security contributions in many OECD countries that serve a similar purpose to Australia's compulsory superannuation guarantee payments. In contrast, Australia's tax burden, after including Australia's compulsory superannuation guarantee payments, is 31 per cent of GDP. Having a higher tax burden than the OECD average is extremely concerning, particularly as the OECD average is high compared to prosperous and dynamic non-OECD countries like Singapore.

Yes, governments need to spend money and raise taxes, but every tax expert knows that income tax is the most damaging tax on the Commonwealth government's books. It discourages working, saving, starting a business and taking risks. At times, this coalition government has raised concerns about bracket creep imposing ever higher income tax burdens on middle Australia, but we have experienced considerable bracket creep since the last time there were income tax cuts, and, when a scheduled income tax cut comes along that would return just a fraction of this bracket creep, the coalition government nips it in the bud. For the coalition, this is akin to the cry of St Augustine: 'Lord, give me chastity and continence, but not yet.'

The Liberal Democrats have a comprehensive plan to significantly reduce government spending and an unshakable conviction that your income is yours, not the government's. That is why I am defending the $80 tax cut that is due to each Australian taxpayer in a fortnight's time. But, sadly, the conspiracy of the big government forces of the coalition and Labor will cancel this tax cut through the bill before us today. When the date of the election comes, the taxpayers of Australia will remember.