Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer. Minister, last year the ABS reported that income inequality increased by 2.3 per cent between 1994-95 and 2002-03. Also, ANU economist Andrew Leigh found that tax changes over the past three decades helped explain that inequality. Minister, last night the Treasurer gave a tax cut of $7 a week to people earning $20,000 and $119 a week to people earning $150,000. Won’t the tax cuts announced last night lead to even greater inequality? Does your government really care?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I do not know whether to dignify that sort of feeble remark with a response. Let me say for the record that of course we care about lower income Australians. The whole record of our government is testament to the care that we have for lower income Australians. That is why we have profoundly always believed that the best thing we can do for lower income Australians is to ensure that they have access to a job. The best form of social welfare in any country anywhere on earth is to ensure that those who want a job can get a job. When we came into office unemployment was 10 or 11 per cent and now it is five per cent. The record of job creation under this government has been remarkable. We now have a situation where the opposition are complaining about skill shortages; that there are not enough people to fill the vacancies that are available. That is the consequence of a government that is absolutely dedicated to ensuring that we have economic growth of a sort that does ensure that Australians can get jobs and can fill jobs. That is the best way to ensure the welfare of lower income Australians.

As to this assertion that income inequality has increased, I would draw your attention to ABS data from the household expenditure survey that show that income inequality actually decreased in the decade between 1994-95 and 2003-04. There is nothing to suggest that since that time there has been any change. Indeed, we have had a situation where real wage growth has been very strong under this government: some 15 per cent growth in wages compared with only two per cent real wage growth under 13 years of Labor. During the 13 years that they were in office, real wages grew by two per cent. Under our government, real wages have grown by 15 per cent and our tax changes have been skewed to those on lower incomes.

By definition higher income earners pay more tax. I made the point in my answer to the first question: that someone on an income of $150,000 will, after these changes, still be paying nearly $1,000 a week in tax. Someone on $150,000 pays 10 times as much tax as someone on $30,000, even though their income is only five times greater. The progressivity of the tax system remains. That means that those on higher incomes not only pay more in dollar terms but pay a higher proportion of their incomes in tax than those on lower incomes.

We have a very generous but targeted social welfare system with indexation of pensions to MTAWE. The greatest single expenditure in the budget is on social welfare. Some 42 per cent of the $220 billion budget that we have goes to social welfare. Because pensions are indexed to MTAWE and not CPI, that is growing in real terms. We are very proud of our record of looking after poorer Australians. The best thing we can do, as I say, is to maintain strong growth, keep inflation low, keep interest rates low and keep unemployment low.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I thank the minister for his answer. Is he aware that around a quarter of a million men of working age are on the long-term unemployed list? What is he doing about that? What is in the budget for them? Is the minister also aware that, had the 1980 personal tax-free threshold of $4,041 kept pace with earnings, it would now be over $14,000? Given the fact that Australia charges tax on incomes that are less than half the average rate used in the OECD, why did the government lift all of the tax thresholds other than the tax-free threshold, which remains stuck at $6,000? What is the logic of giving welfare top-ups instead of simply increasing that threshold? Indeed, now that retirees will pay no tax at all after they turn 60, regardless of income, is there any logic at all in charging people income tax when they are below the poverty line, now accepted at being around $12,500?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I am not quite sure how I am meant to answer all those questions in one minute. If you want a supplementary, ask a supplementary that can be answered in one minute. But in relation to the tax-free threshold: I know this is something the Democrats advocate, but the cost of raising the tax-free threshold across the board is enormous and, of course, everybody, including millionaires, gets the benefit of it. What we have done is make sure that it is targeted to low-income earners by the device of the low-income tax offset, which, if you read the budget papers, you will see has been increased. This means that low-income earners have a tax-free threshold of $10,000 under this government.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

My question is to Senator Coonan, Minister representing the Minister for Revenue and Assistant Treasurer. It is further to the answer she gave earlier on the abolition of the end benefits tax, more commonly known as the exit tax. Can she provide the revenue collected from this tax in 2005-06? What is the forecast dollar saving to taxpayers of the abolition of this tax from 2007-08 onwards?

Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

I will get Senator Sherry a specific answer to his question, but this gives me a very good opportunity to repeat—because it was announced only last night—the very good news of the government removing the tax on superannuation end benefits rather than removing the tax on superannuation contributions, which is something that, I think, at one stage the Labor Party favoured. It is a policy which affects every single person who has money in superannuation and it is a policy which is targeted to assisting those who want to stay in the workforce longer.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Mr President, I rise on a point of order that goes to relevance. I asked about the value to taxpayers of the scrapping of the end benefits tax. She said she would get me an answer. Why is she talking about something totally different?

Paul Calvert (President) Share this | Link to this | Hansard source

I did hear the minister say that she was going to get the answer to that part of the question—to the question. Minister.

Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

Thank you very much, Mr President. I can understand how Senator Sherry might want the specific details in the budget papers. That is a fair enough question. We will get that. While I have the call, I will continue to answer this question. I can understand that this policy is a very sensitive matter for the Labor Party. I think Senator Sherry has been the spokesperson for superannuation for the Labor Party—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I rise on a point of order, which is the same one raised by Senator Sherry. If a minister is asked a specific question and gets up and says, effectively, ‘I can’t answer that question; I will get you the information,’ how is it possible, how is it logical, for the minister then to go on and say that she is going to answer the question, when she has already admitted that she cannot? I ask you to rule that she has effectively answered that question by saying that she cannot answer it and tell her to sit down.

Paul Calvert (President) Share this | Link to this | Hansard source

The minister has indicated she is going to get further information on the question. I ask the minister if she has any other relevant information she would like to provide.

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I do not think it is in order for you to ask the minister if she has any other relevant information. That is not your—

Paul Calvert (President) Share this | Link to this | Hansard source

I will rule on whether it is relevant or not. If the minister has not got any other information that would complete her answer to Senator Sherry, then I will rule her out of order.

Alan Ferguson (SA, Liberal Party) Share this | Link to this | Hansard source

I rise on a point of order. Is it in order for a senator to get up and say, ‘I wish to make the same point of order as Senator Sherry,’ when you have already ruled on that point of order?

Paul Calvert (President) Share this | Link to this | Hansard source

Anyway, Minister, would you return to the question. I ask you to be relevant to the question asked by Senator Sherry.

Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

Thank you, Mr President. I am very pleased to be relevant to the question. To put my answer in context: it is a matter on which I have said that I am not unable to answer the question; I said I would get very specific and detailed figures that relate to part of Senator Sherry’s question. But he asked it in relation to a general policy question also. That raises superannuation and an announcement in the budget last night, where the government announced how it will plan and streamline a better system for superannuation to help retirees. I know the Labor Party does not like this, particularly Senator Sherry, because he has been Labor spokesperson certainly for over 10 years, probably more like 15. I remember when I started in the portfolio of Assistant Treasurer he said he was going to start with a blank piece of paper. So far as I can tell, he has still got a blank sheet of paper.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Back to the very specific question about the abolition of the exit tax, of which the government is supposedly so proud: why weren’t the tax savings to taxpayers disclosed in the budget? Why can’t the minister provide those figures now, if she is so proud of the abolition of that tax? Secondly, can the minister provide a breakdown of the exit tax, the contributions tax and the fund earnings tax in the last financial year?

Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

I am quite sure that the Australian public would like to know whether the Labor Party will quit procrastinating on superannuation and make some commitment to help the retirement incomes of Australians.