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

I rise to make a contribution to this debate. It's quite clear that the government's tax plans are fiscally reckless. They are less progressive and they do fail Australian jobs. It's good to see in the newspapers today that, for once, there was accurate reporting of the Labor position on this issue. There was some reporting around the issue of the Senate Economic Committee's report on the personal income tax bill. As Deputy Chair of the Senate Economics Legislation Committee, I had the opportunity to participate in that inquiry. The Labor senators handed down a dissenting report in relation to that bill. In our dissenting report, we accuse the coalition of abandoning all hope of budget repair. We also talk about the fact that this government has an abysmal record on debt and deficit by attempting to legislate for the full package of personal income tax cuts, given the well-known downside risks to Australia's fiscal and economic position.

The position that the government has taken on personal income tax is absolutely irresponsible. What we saw in the course of the Senate inquiry into the bill was that this government has adopted an ideological approach to income tax reform. The government should be looking at outcomes. Is its income tax reform directed at improving workforce participation or is it directed at improving consumer spending? No. These are not the issues which the government has been looking at. Its approach is an ideological one. It comes down to a mantra of lower taxes, looking at bracket creep and making the system simpler. The Treasury officials were obliged to explain that that was the rationale for this piece of legislation.

During the course of this inquiry, we were quite disappointed at the lack of disclosure on the part of the government. We are entitled to know the total cost over the 11-year period of the Personal Income Tax Plan, which is roughly $144 billion. We, of course, know what the cost of the plan is over the forward estimates but, in the intervening years, we are not privileged or trusted with the information as to the annual costings in that intervening period, which is an absolutely ridiculous situation. The Treasury people were prevented from disclosing that information. We know that they had done the analysis but it fell to the Parliamentary Budget Office when I wrote to the Parliamentary Budget Officer to call for some detail around the costings of the government's plan. So we were able to see a breakdown of the seven components of the income tax plan.

The Treasury officials were basically instructed to advise us that the figures were too uncertain. Despite the fact that we said, 'Please tell us that information, but you can put caveats around it or put qualifications; give us confidence intervals as to what degree of weight we can place on it,' they were not prepared to divulge that information. That is a ridiculous situation when we are talking about income tax cuts which are going to cost the budget $144 billion over the longer period.

This is fiscal recklessness on a grand scale. We are assured that we are going to see a return to surplus by the end of the forward estimates but, on the present projections, we are looking at something less than one per cent of GDP in terms of the final surplus figure. That is a wafer-thin surplus. During the course of estimates, I had the opportunity to ask the head of Treasury, Mr Fraser, about his views on the risks associated with the global economy going forward, and he was very unequivocal about the fact that we now have heightened risks in the geopolitical area. That is a huge question mark over the amount of weight that we can place on that and on the level of risk associated with this plan.

During the course of our Senate inquiry we heard that in the budget there are a number of assumptions that underpin this surplus that some might describe as heroic assumptions: the fact that we've got productivity growth in the budget of 1.6 per cent, which is double the average that we've seen historically since the GFC—so, a historic assumption—and assumptions were made on migration. When it comes to wages growth, that's probably the greatest area of concern—a rate of wages growth of 3.5 per cent underpins the budget. Modelling done during the course of our inquiry showed that if wages growth was, for example, one per cent lower than what was being projected, that would have a $39 billion per annum impact on the budget in terms of revenue. The other area we're concerned about is the terms of trade. As I indicated previously, we are going through a period of time of global uncertainty and, if we have global shocks, that also has the potential to impact on our terms of trade. All of these assumptions are very nice for the government to put forward on the basis of this surplus, but I think we are really adopting a very risky approach.

We need to have long-term sustainability when it comes to the budget and when we're talking about the sorts of revenue we're looking at here. We need to ensure that as we go forward we have revenue coming through that is going to pay for the essential services Australians rely on—things like health, education and infrastructure. The moment we see any of these shocks impacting on the budget, we know that a future coalition government cannot be trusted in regard to cuts to health, education and infrastructure.

We also saw some of the assumptions that were underpinning the budget, in terms of behavioural impacts. We saw the tax cuts being directed at the higher-income end. We saw that Grattan advised that changes to marginal income tax rates do not provide much of a disincentive to work for people in the higher-income area when it comes to additional hours. The government would have been better advised to take the billion dollars from the tax cuts to the wealthy and instead put it into child care. That would certainly encourage greater workforce participation. The changes that come in with respect to the personal income tax package are really not directed at achieving anything useful.

I also want to mention here that this government is doing nothing about the rising gig economy, underemployment, stagnating wages, cuts to penalty rates, the theft of superannuation and the gender gap. They are crippled when it comes to energy policy and are ripping billions of dollars out of our education and health systems, yet they want to give billions of dollars to multinationals and to banks. In contrast, Labor would give people earning less than $125,000 a year a bigger tax cut. We believe in a better, bigger and fairer tax system. Under our plan more than four million ordinary Australian workers would be $398 better off each and every year. Labor is taking action to help working Australians with other cost of living pressures and will invest in our hospitals and our schools. We are uncapping an extra 200,000 places at university. We will review and invest in a TAFE system that has been neglected for years. Today is, of course, National TAFE Day, so we should be celebrating our TAFE system. These are measures that are proven to create jobs and foster economic growth. Labor can do these things because we won't be giving out massive tax handouts to business and to banks. Labor has a bigger, better, fairer plan for our tax system and we are ready for government.