Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Hansard source

I'd like to seek to move some amendments immediately and then make a few comments. Obviously, in the second reading debate we have outlined in detail Labor's approach to this tax package. We've outlined Labor's better, bigger and fairer tax relief for working Australians. We have also indicated that we do not support steps 2 and 3 of the government's plan and the reasons why, so I don't propose to traverse those again.

I would again remind the Senate that, apart from the Australian Greens, as I have discerned, every contribution from senators in this place has supported step 1 of the tax plan. What we are part of at the moment is a debate on a bill where the government is seeking to hold those tax cuts for working Australians—which would start next month—hostage to a tax plan it wants to implement in six years time. There is no logical reason for that, and the Senate ought not to agree to it.

In addition, I want to come to step 3 of the government's tax plan. As I outlined yesterday, we do regard this as both fiscally irresponsible and inherently unfair. It is fiscally irresponsible because, as I outlined in my speech on the second reading, this is a series of changes which grows in terms of its cost to the budget when it comes to fruition, or when it matures, at 12 per cent a year. I made the point in my speech on the second reading yesterday that that is substantially higher than the growth in expenditure we see across other areas of the budget. It is, for example, from memory, some three times faster annual growth than the defence budget and, I think, close to six times faster annual growth than expenditure on family tax benefits and so forth.

What the Senate is being asked to do is to lock in a change to the structure of taxation in this country which will grow over the longer term at 12 per cent per year, thereby either rendering other decisions by government unsustainable or imposing decisions on key expenditure programs by government such as health, education and arguably even defence. If there were an expenditure program that was growing at 12 per cent a year you would hear those on the other side demanding that it be reduced.

I intend to move a range of amendments consistent with Labor's position that I've outlined in the speech on the second reading. What I would like to get to, because I think it is the area where there is most concern in the chamber about the tax plan, is our amendments on sheet 8450 which seek to remove the step 3 tax rate changes and those in later income years. I would seek leave to move items (4), (6) and (8) together, which remove the step 3 tax rates.

These are the tax rates that the government is seeking to change from 2024-25. What I would say to members of the crossbench and senators in this place is that we have two objections to this. One is a fundamental policy objection. It is a fiscal risk. It locks in a very fast-growing program which costs not only billions of dollars a year but grows at 12 per cent, which has consequences both for the budget and for economic and fiscal risk. It is also a fundamental restructure of our tax system. As I referred, one of the academics who made submissions to the Senate committee talked about this as being contrary to essentially 100 years of progressive taxation in this country. It is the wrong thing to do. I make the third point that it was well made by Senator Storer in his very careful and considered speech on the second reading that there is no reason to allow the government to hold these tax cuts, which would occur in six years time—you would have to elect Malcolm Turnbull twice—and make them a pre-condition of tax cuts which can be delivered next month. That is nothing other than a political strategy. As Senator Storer said:

There is no reason to legislate tax cuts four and six years away except to hold future parliaments to ransom and hold out to voters what may well prove to be false hopes.

I seek leave to move amendments (4), (6) and (8) together.

Leave granted.

The Labor Party oppose schedule 2 in the following terms:

(4)     Schedule  2 , item  2 , page 14 (starting at line 3) , table dealing with tax rates for resident taxpayers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]

(6)     Schedule  2 , item  5 , page 15 (starting at line 6), table dealing with tax rates for non-resident taxpayers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]

(8)     Schedule  2 , item  9 , page 17 , table dealing with tax rates for working holiday makers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]