Dave Sharma (NSW, Liberal Party) Share this | Hansard source

This is not my first speech. Australia's in a cost-of-living recession right now. Over the past 18 months, we've seen real net disposable income per person fall by 8.6 per cent. This decline in household living standards has never been so dramatic and has never been so rapid. What we've seen in Australia is an average full-time earner on $95,000 a year see their real disposable income fall by over $8,000.

These workers are being hit by a triple tsunami. They're being hit by higher income tax because of bracket creep. Personal income tax collections have increased by 27 per cent since Labor came to office, which means that workers are taking home less of their pay. They're also being hit by higher mortgage repayments, the result of higher interest rates. There have now been 12 increases in the cash rate under this Labor government. In the past two years, we've seen mortgage repayments, on an economy-wide basis, go from $11 billion per quarter to $29 billion per quarter, an increase of $18 billion per quarter. So more of workers' take-home pay, which has already been reduced by bracket creep and growing taxes, has to go to servicing their mortgage. Finally—the third whammy—they're being hit by high inflation. As the RBA has reminded us, this is now a homegrown problem. The headline rate of inflation is too high; it's well above the RBA's target. We've seen food prices up by nine per cent. We've seen electricity prices up by 23 per cent—not $275 a year less, as we were promised by the Labor government. We've seen gas prices up by 29 per cent.

For workers, that means that the pay they are left with, after higher taxes and higher mortgage repayments, buys less—fewer groceries; less food on the table. It means less ability to meet back-to-school bills; less ability to pay for electricity and gas bills, which are going up each quarter; and less ability to fill up the car.

Recent figures from the OECD reveal this decline in living standards here in Australia quite starkly. In the 12 months to September 2023, Australian household incomes have fallen by 6.1 per cent, adjusted for inflation. This is the sharpest fall measured across any of the OECD economies over the same period. Over the same period, we've seen household incomes in the OECD, on average, go up by 1.7 per cent. In the United States, they've gone up by 2.6 per cent. In the United Kingdom, they've gone up by 3.2 per cent. In France, they're up by 0.3 per cent. But in Australia, household incomes, adjusted for inflation, have fallen by 6.1 per cent. That means that Australian real household incomes are now back to 2017 levels. If households are feeling poorer, families are finding it harder to put food on the table and people are worried about how they're going to pay their bills, that's because they are as wealthy or as poor as they were in 2017. People have gone no further ahead in seven years now.

With these amended stage 3 tax cuts in the cost-of-living tax cuts bill, the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024, you would think, listening to some of those opposite, that Labor has fixed the cost-of-living crisis that they've presided over. But, if you look at the sums here, the person on an annual wage is going to receive only an extra $800 a year, or $15 a week, under these amended tax cuts. An average worker on $95,000 a year has lost $8,000 a year, or $150 a week, because of higher inflation, bracket creep and higher mortgage repayments, and all they are getting back from this government is an extra $800 a year, or $15 a week. They've lost $8,000 a year; they're getting back $800 a year.

I think this is my main gripe with this legislation. Labor is seeking to alleviate the symptoms but not to treat the disease—the disease they have made considerably worse and continue to make worse: the disease of high inflation and rising cost of living. The economist Chris Richardson has described these tax cuts as a bandaid and said that higher productivity would be needed to drive better living standards. He's been quoted as saying: 'In Australia these days, we spend our time grabbing bits of pie from each other rather than growing the pie.' The Deloitte Access Economics partner Stephen Smith has said that, while the tax cuts would provide some relief to households, that will not be enough to offset the decline in living standards. He's said:

Households have been dealing with the cost of living challenges that elevated inflation and rising interest rates impose. At the same time, bracket creep is ratcheting up the average rate of tax paid, while aggregate measures of income and economic growth are being driven by population growth, not productivity.

So there are three major problems with this legislation. Firstly, it's insufficient. If you're an average worker, you've lost $8,000 a year in your real disposable household income, or $150 a week, and all you're getting back is an extra $800 a year, or $15 a week. But it's also doing nothing to address the root causes: high inflation and low productivity growth, which are the biggest burden on living standards and how Australian households are feeling right now.

In fact, the government's most important agenda in this parliament has been to alter our industrial relations landscape to make workplaces less flexible and to reduce the scope for enterprise bargaining and for wage rises linked to more productive and flexible workplaces. All these changes do is hurt productivity and contribute to wage price inflation.

These amended stage 3 tax cuts also entrench bracket creep, and bracket creep is at the heart of why Australians have less take-home income. The stage 3 tax cuts, unamended, would have returned significant portions of the proceeds of bracket creep. They would have simplified the tax system. And they would have restored incentive to our personal income tax rates. Under the plan unamended, 95 per cent of taxpayers would have been paying no more than a marginal rate of 30c in a dollar, whilst the plan would have retained the progressive character of our personal income tax system. But instead, with these amended changes, we see, from Treasury's own estimates, that they are expected to increase revenue by $28 billion over the next decade. It's not much of a tax cut if the Treasury is taking $28 billion over the next decade in additional tax revenue compared to the business-as-usual scenario.

Australia relies too much on income tax receipts in our tax system. We need to address that, and these changes today do nothing to address that. All they do is increase our dependence on income tax. Ultimately, it's workers and salary earners, who are often earning income but are quite asset poor, who are bearing more of the burden of our taxation system and having to fund more of the social services that Australians rightly expect.

We need a better balance in our tax system. That is why the coalition—whilst not standing in the way of these tax cuts, because we recognise households are doing it tough—will take a policy proposal to the next election that will simplify our tax system, restore incentive and rebalance our tax system away from our dependence on income tax.

Lastly, this is a broken promise. And this is a question that goes to the heart of personal integrity and the integrity of any government. We know the Labor government voted for these stage 3 tax cuts. They went to the last election saying they would support the stage 3 tax cuts. They confirmed on over 100 separate occasions that they supported these tax cuts. We heard the Prime Minister say he was a man of his word, and that his word was his bond when it came to these things. Whilst they can cite extraordinary circumstances, I think we've seen from this government already that we cannot take them at their word. If they assure us again and again they do not plan to change parts of our tax system, we cannot take those assurances at face value. If they promise us they will do one thing—whether it's to acquire nuclear-powered submarines, not altering negative gearing or not altering the capital gains tax system—we can no longer take them at their word.

This is a prime minister and a government who spoke a lot about integrity in the last parliament; they spoke a lot about restoring trust in politicians and about restoring the public's faith in elected office, and I share those sentiments. I would like to see public faith restored in elected office in our parliament, but this cuts right across that. This is up there with Julia Gillard's promise not to introduce a carbon tax: 'There will be no carbon tax under the government I lead.' It's up there with Paul Keating's abandonment of the 'l-a-w' tax cuts after the 1993 election. In fact, in many respects, it's even more egregious than that. You could argue, with Australia coming out of a recession in 1993-94, that the case for retaining the l-a-w tax cuts was no longer made. You could argue that after the 2010 election, when Julia Gillard had to form government with the Greens, she had to adjust her policies to make sure they were on board. But there are no such exigent circumstances here. This is a broken promise, pure and simple. Whilst the Australian people might be mildly grateful for an extra $15 a week—when they've lost $150 a week because of bracket creep, because of higher interest rates, because of high inflation—they will not forgive a government for so flagrantly breaching their promise, for breaching the commitment they made to the electorate, and for being so bereft of solutions to the broader challenges our economy faces—low productivity, increasingly inflexible workplaces and a government that is more focused on redistributing the pie rather than growing it for everybody.