Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Hansard source

I rise tonight to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. I hope people listening aren't fooled by the government's budget and its so-called tax plan. Although Australia has enjoyed 27 years of recession-free economic growth, the government's tax package is predicated on Australia enjoying 37 years of recession-free economic growth. The Treasurer is promising tax cuts out in the never-never, beyond the forward estimates and way beyond this term and even the next term of government. For this government to say that they know and are certain they can deliver tax cuts in 2024 is just a joke. To make this tax plan remotely workable, the government is relying on an overly optimistic view on how the economy might proceed over the next decade. Mr Morrison is looking more like the Wizard of Oz—all smoke and mirrors—than the Treasurer of Aus, and we all know that the Wizard of Oz was just a rather ordinary man.

There is one thing this government has achieved that is quite remarkable—a rare trifecta. The tax plan is fiscally reckless. It will lock in a less-progressive tax system and it will leave Australia less able to support Australian jobs in the event of a downturn. As it stands, Labor will be the only major party presenting a responsible and fair budget plan at the next election. Despite the government's claim that this tax cut will benefit low-income earners, its plan overwhelmingly favours higher-income earners as well as attacking the foundations of Australia's progressive tax system.

Labor supports fair and responsible tax cuts and Labor understands that workers are doing it tough. We know many workers in Australia are struggling with energy costs and health costs that are higher than ever and we also know that under this government workers in Australia have suffered the worst wages growth since records began. The most recent national accounts highlight, once again, that average compensation for workers is not keeping up with the general cost of living. Let's not forget that many casual workers have had their penalty rates slashed as well. This is exactly why Labor has outlined its plan for bigger, better and fairer tax cuts for 10 million working Australians. Labor's policy will see pay-as-you-go taxpayers who earn up to $125,000 a year better off when compared to the Liberal Party's plan. These are targeted and paid for, will deliver a bigger boost to consumption and won't jeopardise the medium-term budget position and important investments in our hospitals and schools.

Labor's tax refund for working Australians increases the tax cuts currently being offered under the government's tax offset proposal. Labor will support the government's measure that begins on 1 July this year and a Shorten Labor government will deliver bigger tax cuts from 1 July 2019—and they will be permanent. With Labor's tax refund, a teacher on $65,000 will receive a tax cut of $928 a year. A couple earning $90,000 and $50,000 respectively will receive a tax cut of $1,855 a year. More than four million people will be better off by $398 a year compared to the Liberals' plan. Around 77 per cent of Tasmanians—my home state—will benefit from Labor's plan, and 39,000 taxpayers in the electorate of Braddon in north-west Tasmania will be better off with Justine Keay and a Shorten Labor government.

Costed by the independent Parliamentary Budget Office, Labor's policy has a budget impact of $5.8 billion over the forward estimates. Labor has got the big calls right and has made the difficult budget decisions that will allow us to put in place a better plan to tackle debt and deficit. Labor's budget plan provides the fiscal space to deal with international shocks while delivering bigger and better tax cuts for low- and middle-income Australians and protecting essential investments in health and in education.

When it comes to the budget Labor has the responsible and superior plan. Unlike the government, we are not giving $17 billion in tax cuts to the same banks whose shameless behaviour is now being exposed at the banking royal commission. Unlike the government, we are not giving $80 billion to big businesses, including multinationals who will just take the extra funds offshore.

Let's talk about some of the unfairness in the bill before us tonight. Labor in good faith cannot support stage 2 and stage 3 of this tax plan. It's unjust and it's unsustainable. The Australian National University's Ben Phillips has estimated that after the government's full plan is in place someone in the highest quintile will see a 2.2 per cent rise in their incomes compared to a 1.1 per cent rise for those in the middle quintile and a 0.2 per cent rise in the lowest quintile. By 2027 around 60 per cent of the tax cuts will go to the top 20 per cent of households. NATSEM modelling suggests this new tax system from 2024 to 2025 is less progressive than the current system, and that means higher income inequality—those on higher incomes get more of the tax cuts than those on lower incomes.

As part of the new proposal, low- and middle-income earners get a tax offset in 2018-19 with high-income earners getting very little. This part of the plan is progressive as more money goes to lower income earners, and Labor's happy to support this part of the plan. Labor will support the government's proposed changes that are to take effect 1 July 2018. Labor supports the change to the top threshold of the 32.5 per cent personal income tax bracket from $87,000 to $90,000. We support this in the same way as Labor supported the change to the threshold from $80,000 to $87,000 that was announced in the 2016 budget and passed through after the election of that year. Labor also supports the low- and middle-income tax offset providing tax relief for taxpayers earning up to $125,333.

This parliament can guarantee that the tax changes due to take effect in two weeks can pass immediately. That's why Labor will move amendments in the Senate to the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 to ensure the passage of the tax cuts starting on 1 July. However, we don't agree with the rest of the package. By 2024-25, the Liberals' tax plan means high-income earners gain $7,225 per year while those earning $50,000 to $90,000 gain $540 per year and those earning $30,000 gain $200 per year. The total cost of the government's tax plan is $13.4 billion over the four years of the forward estimates and $143.9 billion over the medium term. This has a major structural impact on the budget over the medium term, particularly when combined with the government's big-business tax cuts, which are due to mature over this period.

The Grattan Institute has calculated that once the three-stage plan is completed $15 billion of the annual $25 billion cost of the plan—that's billion dollars—will result from collecting less tax from the top 20 per cent of income earners. In comparison, $25 billion is what the Commonwealth spends on Medicare each year.

We also now know why the government tried to conceal the cost of its income tax plan. Stage 3 of the tax cuts, due to be delivered in six years time, not only reduces the progressivity of the tax program but is the fastest growing component of the package, coming with a $10 billion annual price tag by the end of the decade. When quizzed about whether it was responsible to commit to $143 billion in new tax cuts, much of it delivered years down the track, the respected Chief Executive of the Grattan Institute, John Daley, astutely told the Economics Legislation Committee:

… we do not think it is prudent to be providing tax cuts of this magnitude that far in the future—certainly not to be legislating them—when there are so many economic uncertainties between now and then.

One of the key progressive features of the Australian taxation system is that the income tax rate increases as your income increases. The government's plan to have one taxation rate for those earning between $40,000 and $200,000 is ludicrous, and it's an attack on the progressive nature of our taxation system. I know that many on the Liberal side of the chamber don't believe that $200,000 a year is a lot of money, but ordinary Australians know that those on $40,000 and those on $200,000 are living completely different lives. The government claims that the need for a single tax bracket between these two incomes is to streamline the tax system. It's just the first step in introducing a flat-rate income tax system across the board.

The government's changes overwhelmingly favour taxpayers on higher incomes more. The Australia Institute made this point to the Senate Economics Legislation Committee:

The problem is that the benefits from the latter stages of the tax will overwhelmingly flow to high-income earners. These latter stages are also worth considerably more in dollar value than stage 1. Increasing the top threshold to $200,000 and removing the 37 per cent tax bracket will mainly benefit the top 20 per cent of tax payers. By 2024, 80 per cent of the benefit of that top end tax cut will go to the top 20 per cent and the remaining 20 per cent will go to the next 20 per cent of taxpayers. This means that the bottom 60 per cent of taxpayers will get no benefit at all.

So it's clear that the government's plan is unaffordable, it's irresponsible and it's unjust. I believe Australians want a fairer Australia, they want a fairer tax system and they're sick of the Liberal Party, whose ideology is for people to only look out for themselves and that their neighbours can go to hell. Australians aren't a selfish people. Australia isn't a selfish nation—at least not the Australia that I grew up in. But the policies of this government inherently are. They appeal only to greed and cause only division. They are focused on creating a less fair and less just society, and the politics of this Liberal-National government are at odds with the notion of a fair go that most Australians hold dear. While we support the first stage of the government's bill, we cannot support the second and third stages. Labor has a fairer and a better tax plan, a plan that wants to build a better Australia, not diminish it.