Maria Kovacic (NSW, Liberal Party) Share this | Hansard source

I rise to speak today on the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024. I note the comments of Senator Pocock and I think they're important—the tax has to come from somewhere, but it doesn't all have to come from everyday Australians. This bill has been subject to a considerable amount of public debate this year, as it represents the most significant of all of the unfortunate broken promises of Albanese Labor government. There has been a lot of discussion, too, about the opposition's position on this bill. We are supporting this bill not because it represents meaningful reform for our tax system, not because it addresses the extraordinary pressure that Australian households and small businesses have endured under this government, not because of the progressive burden of bracket creep and not because it will seek to address the No. 1 problem in our economy of productivity. This bill does none of that. Yes, this bill does provide Australian families with some short-term tax relief, but this is a political response, not an economic response, from a government, a prime minister and a treasurer who are laser-focused on politics rather than on our economy and on running our country.

We are supporting the bill currently because it would be wrong to deny hardworking Australians out there—particularly those in my Western Sydney community—some tax relief in a few months time. This is despite the fact that this government repeatedly misled the Australian people about keeping all of these tax cuts in place, both before and after the federal election. But rather than keep talking about the consistently broken promises of this government, which are effectively their trademark, I'm going to use my time here to discuss these measures and how, if left in place over the medium and long term, they will end up costing hardworking Australians and Australian small businesses even more.

Australians know that this government has not been honest with us. We also know that these measures will increase the government's revenue by $28 billion over the next decade. This is Treasury's own data. We will all pay more. The 90 per cent of women that are often referenced in this discussion will also end up paying more. This money isn't imaginary. It's real. And that money is being taken out of Australians' pay cheques every fortnight or month or however it is that they receive their pay. That means less money to spend on ever-increasing bills that we all face, making it much harder to save for the special things that we would like to have for ourselves, for our families or for our friends, like buying some Taylor Swift tickets. Not everybody gets to go see that for free. Along with the growing plethora of new and increasing taxes across our economy, we've heard in recent days about the potential cost increase in the average family car, or a ute for a tradie. This government has only one strategy to manage our economy and the cost-of-living crisis that they have perpetuated and mismanaged, and that is to tax Australians more. What will be next? Will it be the family home? But I digress. I want to go back to the $28 billion. It is $28 billion more that will be taken from Australians over the next decade as a result of this bill.

This government is not serious about economic reform. I was going to say that they couldn't care less, but the more I think about it, the more I think it's accurate to say that they actually don't know what to do, in the same way that they have no idea of the devastating effects of their new IR legislation on Australian small businesses. Either way, it's a demonstration of their inability to do the job that the Australian public rightly expects them to do. At the end of the day, this bill serves one particular purpose. It is a political fix for this government at the Dunkley by-election. As a result, young Australians will pay the price. Young Australians will suffer the most from bracket creep as their salaries shift over $135,000. Young Australians are already paying extraordinary prices to rent a home. Young Australians fear that no matter how hard they work they will never be able to afford to buy their own home. Young Australians will carry the burden of the NDIS and the aged-care system into the future in the increasing taxes that they will pay. They will pay more yet again. But this should come as no surprise, because this isn't a reformative approach; it is a political approach.

It is also an opportunity lost to create a systemic improvement to our tax system by addressing bracket creep, which the original stage 3 cuts would have done. There is no-one that does not recognise that bracket creep is a problem, so why didn't this government come up with an idea of its own to address it, rather than simply removing it? Bracket creep will reduce the value of these tax cuts over time. There is no question about that. Treasury confirms it. This is because our tax scales are not indexed to inflation or to wage growth. Indexing thresholds, as an example, is a brave move, perhaps a necessary one, but it requires a government and leadership that has economic nous and budgetary discipline. Unfortunately, those are not the hallmarks of this Prime Minister or this Treasurer. This government keeps kicking the can down the road—someone else's fault and someone else's responsibility.

This bill is a response to a problem solely of the government's own making—that is, this Labor government's cost-of-living crisis, where Australians are paying more for just about everything. In Labor's first 18 months, personal income tax has risen by a record 27 per cent. The purchasing power of an Australian earning a gross salary of $85,000 has fallen by more than $7,600 since Labor came to office. Try saving when that's what you have to deal with.

Headline inflation remains more than 1.6 per cent above the midpoint of the RBA's target band, with food, housing, insurance, health and education costs all growing faster than the headline inflation rate. Core inflation measures remain higher than the headline rate, and domestic, non-tradable inflation is at a remarkable 5.4 per cent. The RBA themselves have said they don't expect inflation to return to the midpoint until 2026.

Over the past 18 months, real net disposable income per person has collapsed by 8.6 per cent. For an average income earner, this is a decline in take-home pay of just under $8,000. This is primarily being driven by rising mortgage payments, falling real wages and increasing taxes. Let's drill down on that a little bit. Someone on this annual wage would receive just $804 more under Labor's policy, or $15.46 a week. That is less than one per cent of their annual wage and returns just 10c for every dollar they have lost to cost-of-living pressures during Labor's first 18 months in office. Let me repeat that: it returns 10c for every dollar lost to cost-of-living pressures during this government's first 18 months in office. Every single one of those Australians will be worse off over the next decade. Collectively, we will be $28 billion worse off over the next decade. AMP senior economist Diana Mousina said:

… there is a risk that the tax changes add to inflation in mid-2024 and could challenge our current expectation for rate cuts starting from mid-year …

As I said, this bill is a short-term political sugar hit with one goal in mind: Labor holding Dunkley at the by-election. This is a political agenda rather than an economic strategy. This government has squandered the opportunity to engage in meaningful economic reform. The Treasury had this to say about our tax system:

Australia relies heavily on individuals' and corporate income taxes compared with other developed countries, as well as some regional competitors. Australia's reliance on individuals and corporate income taxes remains much the same as it was in the 1950s, despite the significant change to the economy. This reliance is projected to increase further, largely due to wages growth and individuals paying higher average rates of tax (bracket creep).

They continued:

Bracket creep diminishes progressivity, and exacerbates the other problems in the individuals income tax system, such as reward for effort …

That's from Treasury.

We know that Australians are paying more tax than ever before. Inflation adjusted, the average annual income tax bill per adult in 1990 was $8,220. In September last year it was $15,344. Household disposable income is also plummeting from highs under the coalition back down to the same levels as 2013, when Labor was last in office. The Business Council of Australia said:

Our tax base is eroding and with an unhealthy reliance on taxing incomes as well as a raft of inefficient taxes, especially at state and territory level, we are increasingly ill-equipped to meet our society's needs.

Enter stage left the crisis in the NDIS, in aged care and in housing.

Before the election, this Prime Minister promised a $275 reduction in energy prices, no changes to super taxes, an increase in real wages, no changes to franking credits, cheaper mortgages and no changes to the stage 3 tax cuts. The Prime Minister has broken every single one of these promises. Yet the government have been unable to deliver anything meaningful to address a cost-of-living crisis or to show us that they are capable of delivering some kind of meaningful economic reform—an absolute opportunity lost.