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

I rise to contribute in relation to the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. There are a number of things about this bill that are a mystery to me. We know that this bill has failed the fairness test, particularly in respect to tranches 2 and 3. We know that this bill fails the test of being fair dinkum, because if you were genuinely interested in providing relief for low-income households you wouldn't tie that to tax cuts for the big end of town. Thirdly, it fails the test of being fiscally responsible. So I'm mystified as to why this government wants to take the approach that it does. I want to add my plea to the government to split the schedules of this bill and have a proper debate over stages 2 and 3 of the never-never tax plan.

Labor support tax relief for low- and middle-income earners, and we are very happy to vote right now on stage 1. We've been very clear about that. But, as I said, this plan fails the fairness test. It is based on ideology and on some twisted political strategy that I do not think the people of Australia will appreciate. It's based on an ideology; it's not about achieving outcomes, such as workforce participation and economic growth. And, as I said, it's fiscally irresponsible. Labor have a bigger, better, fairer tax plan. We will almost double the relief for taxpayers earning up to $125,000. If the government refuses to split this bill now, for 10 million Australians, then an incoming Shorten Labor government will do it.

I will come back to Labor's commitment, time permitting, but let's look at the government's proposal. The cost of these personal income tax cuts over the medium term is $143.95 billion. This deserves proper scrutiny and analysis, as speakers tonight have indicated. What I get concerned about when we talk about that sort of money, that sort of loss of tax receipts for the Commonwealth, is: are we gambling on the fact that we've now had five minutes of economic sunshine, with tax receipts coming in at the moment fuelled by, amongst other things, commodity prices, when we know that down the track, with all the global headwinds that we have ahead of us, we see the potential for a trade war out there in the global economy? With all these clouds on the horizon, we are now saying, 'Let's gamble on all of that and give tax cuts six years down the track after two general elections.'

That's why Labor pushed for a Senate inquiry into this bill. I've already spoken today on some of the evidence that we obtained in the course of that inquiry. It's also why Labor senators asked the Parliamentary Budget Office to provide figures on the package after repeated requests of the government to release its figures. This is a ridiculous situation—the government ordering Treasury not to release costings beyond the forward estimates, despite basing this never-never plan on those same costings. This government's lack of transparency is woeful, and politicising the Treasury is not on. So, on behalf of Labor senators, I wish to thank the PBO for doing this work and providing us with the figures to examine in relatively tight time frames.

The figures tell us that step 1 carries a relatively modest cost of $15.9 billion over the medium term and is targeted at low- to middle-income earners. Step 2, which contains a number of different tax changes, contains the majority of the costs of this package over the medium term, given that step 3, which ultimately is very expensive, only commences in 2024-25. When we come to step three, it's very expensive at the end of the medium term at $10.35 billion per year compared to the full package final annual cost of $24.6 billion per year, and the cost of step three grows at about 12 per cent per year—twice the rate of projected nominal GDP growth. If you are looking at fiscal recklessness and trying to put something into the budget which is, essentially, a time bomb for future generations, then this is, in my view, fiscal irresponsibility.

I reiterate our support for step 1 of the package. It's unfortunate the government decided to try and push through the rest of this stealthy plan under the cover of relief to low- and middle-income Australians. We know the standards of how the Liberal-National Party operate in this place are pretty low. We know that they dress up their ideological attacks on unions and workers in superannuation bills. We know that they skip out on estimates when the questions get tough. Most recently, we saw them sneak in a super amnesty bill under the cover of the budget to protect businesses that have been ripping off workers since 1992.

Unfortunately, those opposite have no qualms about holding the first round of personal income tax cuts hostage to avoid debate on their long-term ideological agenda. That is why it is crucial that the Senate holds this government to account. That's why having an inquiry into this legislation was so important. I want to take a moment to thank all of those witnesses and participants in the inquiry. We heard from the Grattan Institute, the National Centre for Social and Economic Modelling, or NATSEM, the Australian National University, the National Foundation for Australian Women, the Council of Small Business Organisations Australia, the ACTU, Industry Super Australia and, of course, we heard from Treasury officials. Our report was tabled in the Senate on Monday night and is now available on the aph.gov.au website for anyone interested who is listening at home.

I want to quickly run through some of the key things that emerged and some of the evidence we heard. First, it is unfortunate the government is tying this short-term relief to distant promises in the never-never. Second, the long-term benefits of this package will flow more to higher-income earners. That point has been made very strongly by previous Labor speakers. Third, flattening the tax rate—in this case, making people earning $41,000 a year pay the same marginal tax rate as those on $200,000 a year—is a regressive measure. In fact, we heard from one of the witnesses that this schedule, were the tax plan to be finally implemented, would make it the least progressive tax schedule that we've had in the history of our country. And it does nothing to address structural inequality—things like regional inequality and gender balance.

There are national and global factors about which we don't have certainty—I've touched on these—which could impact on the government's and Treasury's forecasts. Earlier today, I talked about some of the heroic assumptions that underpin the surplus predictions. I won't go back over those, but it does give cause for worry if wages growth does not meet the predictions of the budget. We know that Treasury has highlighted some of the geopolitical risks we are facing in the future. But, in order to justify the package that we are debating today, the government continues to rely on its budget projections—projections that predict the wafer-thin return to surplus at the end of the forward estimates period. It is wafer-thin. Whilst we are in the middle of an economic upswing at the moment, NATSEM points out in its analysis of the federal budget that Treasury did not predict this growth even five months ago in MYEFO. So, if that was not predicted, there is absolutely no guarantee that the government has got it right now. How do we know that this unexpected windfall in terms of tax receipts is going to continue for much longer?

What we didn't hear during our inquiry and what I was hoping we might hear in this debate tonight was any compelling evidence that top marginal income tax rates need to be lowered to attract or keep high-income earners in Australia. We did hear that high effective marginal tax rates are often faced by taxpayers not in the top income brackets and can act as a deterrents to workforce participation, particularly in the case of women juggling a return to work with caring for children. Based on evidence, both given to our inquiry and available globally, Labor senators have expressed a number of concerns, and I commend our dissenting report to anyone listening. It was interesting that, during the course of our inquiry, we noted that there was evidence that in fact, just recently, 10,000 millionaires had taken the step of coming to Australia, and virtually none had decided to leave. It was the AfrAsia Bank that had come forward with this interesting information. So obviously our current marginal tax rates are no disincentive for bringing high-wealth individuals into this country.

As I've alluded to, we are deeply concerned that the cumulative impact and loss of revenue flowing from the coalition's corporate tax cuts and from stage 2 in this package will put the budget in a very precarious position. We believe that the budget needs to be in a responsible, sustainable position over the long term to ensure access to fiscal stimulus where needed to protect jobs. This is another one of the areas that the Grattan Institute touched on: we need to have the 'fiscal firepower'—in their terminology—that's necessary if there is going to be a downturn in the future, so the government can take steps. The actions of the last Labor government during the global financial crisis prevented widespread unemployment, and it's important that future governments be afforded such capacity.

We're concerned that, if these personal income tax cuts are passed by parliament, such reductions in revenue could be used by a future coalition government during an economic slowdown to justify cuts to essential services such as health, education and infrastructure. These are the cuts that we know coalition governments want to make.

And we've got serious reservations about the ability of the coalition to balance the books. We should never forget the fact that in 2014 we were confronted with the rhetoric about the 'debt and deficit disaster' that we had. We had to justify all sorts of horrendous cuts in the budget as a result of this so-called debt and deficit disaster. That has now disappeared. Obviously the government isn't interested in talking about those sorts of things, despite the fact that gross debt has crashed through the $500 billion barrier and is on an upward trajectory, and net debt in this coming year is double what it was when the coalition came into office. We know that gross debt will remain well above half a trillion dollars every year for the next decade, yet the government pushes on with its plan to give banks and big business, amongst others, $80 billion in tax cuts. Clearly the coalition have abandoned all hope of repairing their abysmal record on debt and deficit.

I could talk more about Longman. I am concerned about the voters of Longman and the choices that they make, but I do want to reiterate the point that 75 per cent of the good people of Longman would be better off under Labor's tax plan, and that equates to 69,000 voters in the seat of Longman.

In closing, I want to make the point that those opposite want to talk about gaming the tax system, but they do nothing about employers gaming the industrial relations system. They're happy to talk about low- and middle-income earners needing tax relief because of cost-of-living pressures, but they do nothing—as I said earlier today—about the rising gig economy, underemployment, stagnating wages, cuts to penalty rates, the theft of superannuation or the gender gap. They laud the tax package as an incentive for people to work longer hours but ignore the fact that over a million Australians want more work and can't get it. Infighting has crippled them on energy policy, and they're ripping billions out of our education and health systems. Yet the company tax proposal is still a priority, giving billions of dollars to multinationals and banks.

We're not afraid to look at these issues and to take the tough decisions. We're not afraid of the analysis, unlike those opposite. That's why we've been up-front and transparent in releasing our policies earlier. Now more than ever we need a Labor government to tackle inequality and restore trust in government. Labor is ready to govern. We have a better, fairer plan for our tax system, and I urge the government to let go of its fiscally irresponsible and unfair tax plans. I urge those opposite to finally see sense and work with Labor to deliver bigger, better, fairer personal income tax cuts to Australians.