Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

The Abbott-Turnbull government is itching to slug lower income Australians by raising the GST to 15 per cent and extending it to food, health and education. It is quite clear that the coalition government is addicted to tax increases. I heard Senator Seselja talking earlier today about the fact that the coalition seems to trade on the mythology that they seek to tax at a lower proportion of GDP than Labor. But the ABC's Fact Check in 2013 put that mythology to rest once and for all: over the Howard years the tax to GDP ratio was at 23.5 per cent as opposed to 21.4 per cent over the Labor period to 2012-13. That is a clear 2.1 percentage points lower. There may have been a number of reasons why that was the case, but the coalition will never let the facts get in the way of a good myth. So instead of actually tackling the real issues facing Australia—reforming the tax system to address the tax cheats and close the loopholes through which wealthy corporations and individuals avoid paying tax—the government has once again focused on hitting the least well-off in our society.

Over the Howard years we saw the introduction of several structural changes to the tax system which over time have disproportionately benefitted those at the top end of the income spectrum. The tax treatment of superannuation is one area which comes to mind. If we are looking for the most glaring examples of where there is a need for reform to our tax system where there is unfairness in place, we need go no further than the superannuation tax concession arrangements. The top 10 per cent of income earners receive about 38 per cent of all super tax concessions. This reinforces inequality in our society, and we know that inequality has been shown to be an impediment to economic growth.

We know also that Australians will pay an additional $68 billion in GST from 2017-18, costing the average family an additional $5,000 a year. Recent modelling by NATSEM reveals that increasing the GST to 15 per cent would hit people in the lowest 20 per cent of income bracket with an extra seven per cent in tax. In contrast, those in the highest 20 per cent income bracket would pay just three per cent more of their income. The government's intention to offset the GST increase with a personal income tax cut does nothing to redress this shift.

In looking at, for example, a five per cent reduction in income tax across all tax brackets being applied to offset the GST, the NATSEM modelling shows that income tax reductions will make the overall system even more regressive. Indeed, two-thirds of households will be worse off. To put it another way, the bottom 60 per cent will be paying more as a proportion of their incomes, while the top 40 per cent will be paying less. We need to look and think about what paying that extra $5,000 will mean to the average family. Between 1975 and 2014, real wages in Australia rose by $7,000 for the bottom 10th of income earners. At the same time, the top 10 per cent of income earners increased their real wages by $47,000. This is more than the total pay received by the bottom tenth. What we have here is rising inequality. In addition to increasing the GST, extending it to food, health and education is a further assault on our fair society.

I ask: where is the innovation that Mr Turnbull promised when he took over as leader? Why doesn't he tackle the myriad shady loopholes and offsets that the rich have used to avoid paying their fair share of tax? Why doesn't he tackle the rorts that multinational companies use to avoid paying their fair share of Australian taxes? Why doesn't he look at the way our superannuation tax concessions reinforce inequality? Why doesn't he get down to the real business of fixing our broken tax system? Rather than taking the opportunity to innovate our tax system and achieve true tax reform, Mr Turnbull has simply limited his sights to the simplest and most regressive tax of all, the GST.