David Fawcett (SA, Liberal Party) Share this | Hansard source

After a speech like that, it's fantastic to come and talk about smaller government and lower, fairer and simpler taxes. The things we just heard from Senator Stoker are about the importance of individual responsibility and the importance of creating equal opportunity as opposed to equal outcomes, and one of the key things is reward for effort. If people take the risk of starting a small business, or if people take the opportunity before them to get educated and to move into employment, they deserve the reward that comes from that.

The criticisms from those opposite about this tax package go to the fact that they say it's not progressive, but can I repeat the figures that Senator Cormann, the finance minister, mentioned during his answers—and we are here, at the end of the day, to take note of answers. Under this package, for somebody earning $30,000, a tax cut is worth 8.3 per cent, whereas for someone on $200,000 it's 0.2 per cent. The top 20 per cent of taxpayers currently are paying 60 per cent of the income tax that is received by government. When this package is implemented in full, the top 20 per cent of Australian taxpayers will still be paying 60 per cent of the income tax that's received by the government. So, what we're doing, by implementing these three phases and by trying to address things like bracket creep, is to still keep Australia as a place that has a tax system that is fair but to make it simpler and to lower the level of tax.

One of the fallacies in this argument is that people love to talk about the tax rate that people are paying. But, by the time you look at what they pay for each level, what's excluded and then the various levels coming up, for the two examples that Senator Cormann used before, if you take the tax that is paid as a function of the income earned—as opposed to having all the steps but just as a function of income earned—for the $30,000 income, tax of $2,200 is around 7.3 per cent. For the person on $200,000, who's paying $67,000 of tax, that's 33.5 per cent of income. So, if you look at it in the overall picture and put the right context around it, you quickly understand why the top 20 per cent of taxpayers are paying 60-odd per cent of the income tax that Australia then relies on for things like schools, hospitals, education and funding our Defence Force. The fallacy that is put forward by those opposite is to take a percentage figure without applying the full context. When you look at those figures—the fact that somebody who is earning $200,000 is paying $67,000 of tax and that equates to 33.5 per cent in overall terms of the income that they have earned—what that shows is that they are paying substantially more in both percentage and dollar figure terms than someone on a lower income.

If you then also take into account that the majority of low-income earners in Australia pay no net tax because of the churn and the things that are handed back, what you see is that this system that the government is looking to put in place is, in fact, a tax package for lower, fairer and simpler taxes. Why is that important? It's important because that's at the heart of a strong economy. That's at the heart of an economy that means that government will have the money that it needs to pay for the services that we are here to provide for our community.

As Senator Stoker said, in an ideal world the government would do only what people are unable to do for themselves. But where we do need to provide services we need to be able to afford it, and under the policies of this government we have finally got back to the point where we are no longer borrowing to pay for those daily costs of government. Because of the debt run up by the Labor government under Prime Ministers Rudd and Gillard, for years now Australia has been borrowing money to pay its daily living costs. It's only the good financial management of the coalition government, under Prime Minister Turnbull and Treasurer Morrison, that has returned us to the point where we are no longer borrowing money. This package is for lower, fairer and simpler taxes to benefit Australia's future.