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

(   I thank Senator Xenophon for that question. I was listening attentively to the question in a very interested fashion. Let me make this point, and I will do my absolute best to precisely answer the question. There are an infinity of ideas and suggestions that are brought to us for increased government expenditure. The propositions that you have just put on the table are a number out of a great plethora of propositions that are put to the government for additional expenditure, and all of them generally come with the proposition that if only the government were to spend more money on this, that and the other it would be good for economic growth. It is completely impractical for the government to model the potential implications of every single good idea that people think they might have for the government to spend more of the money that the government does not have. The government is in deficit; the government's expenditure as a share of the economy is too high. If we want the economy to be as strong as possible, if we want Australian families to have the best possible opportunity to get ahead, we have to bring public expenditure as a share of the economy down so that our revenue has a chance to catch up and we can get the budget back into balance.

This tax cut for hardworking families is not funded by spending cuts. This tax cut for hardworking families is funded by a crackdown on tax avoidance, in particular a crackdown on multinational tax avoidance, and a series of measures that are reflected in the budget. The important macro-economic point here is that we cannot increase the overall tax burden in the economy without limit to catch up ever-increasing levels of expenditure in relation to a whole series of good ideas that people bring to government from time to time, because it would force the tax burden in the economy up to a level that would damage economic growth. The better way to increase revenue for government is on the back of stronger economic growth. In order to achieve stronger economic growth you have to have, among other things, the right incentives for families across Australia to work harder, and lower tax rates focused very specifically, focused in laser sharp fashion, on Australians on average full-time wages is a way to provide that incentive.

Our Ten Year Enterprise Tax Plan is part of providing that incentive—attracting additional investment, helping to boost productivity, helping to increase real wages over time, which in turn will have a flow-on effect on the level of income tax revenue generated. This will occur not on the back of a higher tax rate but on the back of stronger economic activity. That is what we are trying to achieve. Just keeping spending more money on all sorts of meritorious causes costs money that we do not have, because we cannot keep increasing spending as a share of GDP—that is not the right way forward for Australia. And, no, we have not modelled every single spending proposal that has been put to us; what we have modelled is the economic impact of the government's package in the budget and, as has been publicly disclosed on a number of occasions, it is expected to permanently add one per cent to the size of the economy over the long term.