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

You know what, we are all supposed to be grateful that they are doling out five minute here and ten minutes there! We are supposed to say, 'Thank you, Mathias, for allowing senators elected to this place, who sit at this table, to actually debate.' Tell me, did Senator Patrick have a crisis of confidence? Well, I'm happy to speak for ten minutes.

Government senators interjecting—

The CHAIR: Order! Senator Wong, resume your seat, please. Senator Wong has the right to be heard in silence.

I'm very happy to talk about stage 3 in a little more detail. I hope that Senator Storer—who yesterday made a very substantive contribution, although it was cut off—has the opportunity to as well. First, let's remind ourselves that the hyperbole from the other side that Labor is standing in the way of low- and middle-income tax cuts is a Liberal lie. It is simply untrue. We have made clear from budget night that we support all of the tax cuts commencing next month. Let's stop pretending that hyperbole is truthful, let's stop pretending that that has any element of truth to it and let's recall that that is entirely a Liberal lie in order to give the coalition political cover for the fact that they want to hold those tax cuts hostage to the 2024 tax cuts. That is the first point.

The second point is this: there are two primary reasons we oppose stage 3. First, it is fiscally reckless. As I outlined in my second reading speech yesterday, it is clear from evidence to the Senate inquiry that this element of the tax package down the track—I think it is by 2026-27—will be growing at 12 per cent per year. What this Senate is doing by locking in that tax cut is proposing a reduction in revenue over time that grows at 12 per cent a year. That is an enormously expensive proposition for the federal budget. Unlike those opposite, we don't think all tax is theft. We actually think it's a good thing for the federal budget to be able to fund things like the age pension, aged care, health, education and social security, as well as defence and infrastructure. Why would you have a tax measure that grows so unsustainably be locked in and unfunded six years out, which will ensure it will be more difficult for any government down the track to support proper funding of health, education and essential social services?

I made the point in the second reading speech that it is that growth in the cost of the tax package that is in dispute. It's the only part of the tax package that is in dispute in this chamber. We oppose stage 2; but, in terms of the numbers in this chamber, stage 3 is the only part that is actually in dispute. I made the point that if there were an expenditure program growing at 12 per cent, you would hear the baying from the other side for it to be cut. This is three or four times more than the annual growth rate of spending on defence. This is, from recollection, six times more than the annual growth rate in family benefits. This is four times more, or thereabouts, than the growth in education funding. I laid these parameters out in my second reading speech.

This Senate is now rolling over—or proposing to, if Senator Patrick completes his backflip—to put in place, six years ahead, a tax plan that will grow in cost at 12 per cent a year. It was John Daley from the Grattan Institute who pointed out the fiscal recklessness of the plan. He pointed out that the likelihood of there being some external economic shock to which the government has to respond, as we had to respond during the GFC, is substantial. At six years out, why would you lock in a structural change to your tax system which would so deprive the Commonwealth government of revenue which is essential?

From a government that claims it is fiscally responsible, it is fiscally reckless.

The second point I'd make is the one I've made previously, which is that this is not a progressive taxation measure. Remember what stage 3 cuts do: they fundamentally flatten the tax scale between $40,000 and $200,000. And remember what that means: it means that we are essentially saying that people on $40-something thousand and people on $200,000 ought to be treated equally in the tax system. Progressive taxation for the Labor Party is something we actually believe in. We believe in it because it's fair; but we also believe in it because we do believe that government should have the capacity to provide decent health, decent education, decent social services and decent aged care for our community, as well as funding our national security imperatives—which remain imperative. Why would you have a tax cut that grows so much faster than defence spending? Why would you do that? Why would you do that six years out?

Miranda Stewart of the ANU said that this particular measure is both inefficient and a retrograde step that undermines 100 years of progressive income tax rate structure in this country. But that is what those opposite are voting for. What they want to do is to make sure that that tax cut holds hostage the tax cuts which start next month. That is only a political strategy; there is no logic to that. There's actually no logic, in fact, for Senator Cormann getting so stressed and having to guillotine and gag today and yesterday. The government, in fact, has two weeks—there's a second week. The only reason there's been a guillotine and a gag this week is because they want to get it done before the weekend. That is the only reason.

Let's also go to the unfairness of the package. Senator Hanson and Senators Patrick and Griff ought to be aware of the distributional impact of these tax cuts. The reality is that when all three stages of this tax package are implemented the benefits go overwhelmingly to high-income earners. I think 62 per cent of the benefits go to 20 per cent of taxpayers. Do people understand that? They keep talking about low-and middle-income Australians—62 per cent of the benefits go to 20 per cent of taxpayers. If you look at stage 3 alone, it is even more. As a whole, for the whole government tax package, two-thirds of the benefits go to the highest income earners in Australia. So every time Senator Cormann, Senator Birmingham and others get up and say we are for low- and middle-income Australia, remember that figure: two-thirds of the benefits go to the highest income earners in Australia.

Finally, I want to come back to the point about Longman. Senator Hanson comes in here and styles herself—she's on the front-page of one of Australia's papers today—as supporting the battlers. Well, she's certainly given herself a tax cut by supporting the government on this. I'll come back to those earning over $200,000, who are the primary beneficiaries of the aspect of this package in dispute. The national average per electorate of the number of people earning over that amount is 2,054. The number in Longman is 703. The number in Wentworth is 10,367. So, when the press gallery and others talk to Senator Hanson and she tells you that she's the champion of the battlers, I hope that they ask her why she voted for a tax cut which so overwhelmingly benefits high-income earners and so overwhelmingly benefits those people living in Mr Turnbull's electorate. And why is it that she voted for a tax package that so does not benefit those who live in Longman, in a relative sense.

This is a fiscally reckless package. It's a package which requires this Senate to sign off on tax cuts in six years time, two elections away, but Malcolm Turnbull wants it now. And the government is seeking to use those tax cuts to hold hostage the tax cuts for low- and middle-income Australia. That is the wrong thing to do and, if Senator Patrick does not hold to the position he held yesterday, he ought to explain why in 24 hours he's done this, why in 24 hours he's sold people out. He hasn't even put pressure on the government to blink. Senator Cormann said, 'Mate, we're not going to blink,' and he said: 'Okay, I'll just back down easy. I'll give you all these tax cuts that won't help the people in Mayo and that will ensure it will be much harder for future governments to fund aged care— (Time expired)