Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

by leave—I move Democrat amendments (1) to (14) on sheet 5438:

(1)    Schedule 1, item 3, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(2)    Schedule 1, item 3, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(3)    Schedule 1, item 3, page 3 (table item 3), omit “$180,000”, substitute “$150,000”.

(4)    Schedule 1, item 3, page 3 (table item 4), omit “$180,000”, substitute “$150,000”.

(5)    Schedule 1, item 4, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(6)    Schedule 1, item 4, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(7)    Schedule 1, item 4, page 3 (table item 3), omit “$180,000”, substitute “150,000”.

(8)    Schedule 1, item 4, page 4 (table item 4), omit “$180,000”, substitute “$150,000”.

(9)    Schedule 1, item 13, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(10)  Schedule 1, item 13, page 5 (table item 3), omit “38%”, substitute “40%”.

(11)  Schedule 1, item 13, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(12)  Schedule 1, item 14, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(13)  Schedule 1, item 14, page 5 (table item 3), omit “38%”, substitute “40%”.

(14)  Schedule 1, item 14, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

I do not intend to delay the Senate much on these matters. I outlined my case in detail in my speech during the second reading debate. But, to recap very briefly, it is my view and the view of the Democrats that these tax cuts are probably desirable and warranted with respect to middle-income families. They are certainly desirable and warranted with respect to low-income families. They will indeed have the effect at the lower end—namely the lower-income and middle-income end—of improving workforce participation. They should contribute to easing pressure on wage claims. They will without doubt provide relief by lifting the disposable income of lower-income and middle-income families and they will, on balance, certainly advance the cause of trying to address many Australians’ living standards.

The tax cuts are very considerable, and certainly will not be understood by the Australian population until they see them in their actual pay packets, because they are comprehensive and quite wide-ranging. The question is whether the increase in aggregate demand that will be the result of these tax cuts—and increasing the maximum amount of the low-income tax offset—will have an inflationary effect. The government and the Treasury, in their advice to the committee that examined this matter, have indicated that their belief is that it will not.

There is that question, however, of how, if there is a judgement call to be made on these matters, the tax cuts intended for higher income Australians could or should be justified. The only reason I have really heard from the Labor government is that they are fulfilling a promise they made before the election. I have not heard them come out and say that they think these tax cuts to higher income Australians and wealthy Australians are a jolly good thing. Now, the conservative opposition may think that they are a very good thing and they would be happy to argue that case, but I have not heard that from the government. Therefore, if the only reason you are advancing those particular tax cuts at the higher end is because you made a promise, and if the economic circumstances in Australia have changed so that fulfilling that promise might not be wise, then our view is that you should reconsider. Consequently, we have put up two sets of amendments: the first one and the alternative, which I will move later because no doubt I do not have the numbers on this one. One is to delete some tax cuts and the other is to defer them.

The set of amendments on sheet 5438 defer some coalition tax cuts already passed in 2007: the 30 per cent band so that the upper threshold does not lift from $75,000 to $80,000 in 2008-09 but does that in 2009-10; the 40 per cent band so that the upper threshold does not lift from $150,000 to $180,000 in 2008-09 but does in 2010-11; and the 45 per cent band so that the upper threshold does not lift to $180,000-plus in 2008-09 but does in 2010-11. The effect of what we are doing is, of course, to reduce the amount of money which will be available in the marketplace—in other words, in increasing aggregate demand.

There is a question as to what you would do if this were successful. You could do one of a couple of things. You could put it into the surplus. In other words, you could use the equilibrium mechanism which the surplus provides by limiting the amount of money available for spending by effectively saving it in government hands, and that is an anti-inflationary measure. Those of the chamber who are economically literate will understand what I am alluding to. The alternative, if you thought you needed to spend it, is that you could take that money and increase the pension rate. That would be a possibility. You could increase the pensions with this amount of money that I am saving by about $15.75 per fortnight for a single pension, or $12.10 per fortnight for a couple, with the cost of $1.2 to $1.3 billion worth of expenditure.

I have not put that proposition to the chamber. I am not going to; these are rough calculations. The purpose of me mentioning that is to indicate that there are alternative ways in which the proposed tax cuts to better-off, wealthier Australians could be used for low-income Australians such as pensioners. I think the government would have been better going down that route than making some tax cuts which are gratuitous, unwarranted, not needed, may well be inflationary and are certainly not justified in this current economic climate. I do again, though, emphasise our opinion that the tax cuts and the low-income tax offset changes for low-income Australians and middle-income Australians are certainly warranted and justified.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Australian Greens will support these amendments because, for the reasons that Senator Murray has put forward so cogently, they deserve support. I have foreshadowed an amendment not simply to defer but to cancel these tax cuts. We very strongly believe that the billions of dollars going to the rich in the form of tax cuts—which, as Senator Murray has said, could well be inflationary and actually lead to an increase in interest rates, so that the money gets taken off people a little way down the line—ought to be going to providing services for the nation or, alternatively, to increasing pensions for those million-plus people in Australia who are living on or below the poverty line because of the inadequate pension system in this country. It is remarkable to us that we have a Labor government that is pouring billions into tax cuts for the rich in this economic climate but cannot find money for the poorest people in our society. Even if the government were not to allocate these billions to raising the pension by from $30 to $100 a week, it ought to allocate the money into the other areas where the government has a lot to do: tackling climate change and improving the health system and the education outcomes in Australia.

This is a knee-jerk policy reaction. Prime Minister Howard announced $31 billion or so in tax cuts over a number of years at the start of the last election campaign. On the Monday or Tuesday of that week, the press gallery went into orbit about that—there were some exceptions but not too many—and insisted that Kevin Rudd had to respond, as Leader of the Opposition, by the end of the week or he would be a dead duck. He did respond on the Friday. He said, ‘Me too; I’ll tick off.’ We are essentially dealing here with a Howard government proposal, which of course is going to service the big end of town, but, in so doing, it will take billions of dollars away from the much more important job of ensuring that pensioners, carers and people who are in real need in this country are assisted. As Senator Murray says, there is a much stronger basis for argument for tax cuts for people on low income and middle income, though the Greens believe that the billions being spent there could be much better targeted to providing services in this egalitarian nation of ours. However, we support the amendments.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

The opposition are supporting the government.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I wish to make a few remarks about the comments from Senator Murray and Senator Bob Brown in support of Senator Murray’s amendments. I note that the Liberal opposition are not supporting the amendments. I want to make a couple of responses on behalf of the government. Senator Murray raised one argument in support of the amendments in relation to inflation and what he claimed would be a stimulatory expansionary consequence of the tax cuts. I point out to the Senate that, in this legislation and legislation that is before the Senate over the next fortnight, we are not just dealing with tax cuts in isolation; we are also dealing with the very important and central focus on and fight against higher inflation. We have presented a budget in which one of the primary principles is to tackle the issue of inflation and to put downward pressure on inflation because we know that increasing inflation puts upward pressure on interest rates. It is in that context that the budget as a whole puts downward pressure on inflation by delivering a stronger surplus, cutting wasteful expenditure and increasing the economy’s supply capacity for the future.

The surplus in the budget for 2008-09 is 1.8 per cent of gross domestic product, and all the tax receipt windfalls since the election are banked rather than being spent. Spending and taxation have been reprioritised to meet the needs of a modern Australia, with new spending in 2008-09 more than offset by cash savings of $7.3 billion in that year, and savings totalling $33.3 billion over four years. So I want to point out to Senator Murray that we are not just dealing with tax cuts in isolation; the total budget itself deals with the issue of the fight against inflation, which we recognise is very, very important.

Senator Murray very briefly brushed over the fundamental reason why we are putting forward these tax cuts when he said words to the effect that the Labor government in opposition gave a promise. We actually do believe—and the Prime Minister has made it very, very clear—in delivering on our election promises, and that is what this bill does. This bill delivers on the election promise in respect of income tax cuts that the Prime Minister, Kevin Rudd, and the Treasurer, Wayne Swan, gave on behalf of the Labor Party at the commencement of the election campaign last year. Certainly the Labor Party and the Labor government believe it is very important to deliver on election promises. The commitment was made and we are delivering. Therefore, I do not accept the argument of Senator Murray that by supporting tax cuts you are undermining the fight against inflation. That has to be seen in a whole-of-budget context, which I have already touched on. This is an election commitment, an election promise, and we are delivering.

Senator Brown said as part of his contribution on the legislation—he is supporting Senator Murray’s amendments—that it is pouring billions into tax cuts for the rich and that this is just an example of a ‘me too’ promise by the Prime Minister, Mr Rudd, made at the commencement of the last election campaign. Well, it is not correct to describe the legislation before the chamber as pouring billions into tax cuts for the rich. If you look at the measures—and this was well debated in the second reading debate—the tax cuts are focused on low- and middle-income earners. For example, from July this year the government will increase the 30 per cent marginal tax threshold so that the 15 per cent marginal tax rate will apply up to $34,000 of income, an increase in the threshold of $4,000. In addition, the low-income tax offset will be increased from $750 to $1,200 and will continue to phase out at 4c for every dollar of income above $30,000. And there are other examples that have been well canvassed in the second reading debate. So it is just not correct to describe this as pouring billions into tax cuts for the rich, full stop.

When the Labor Party announced these tax cuts at the commencement of the election campaign, of course, it was not ‘me too’. The Labor Party in fact announced a significant difference in its tax cut package compared to that put forward by the previous government. We indicated that the Labor government has deferred further tax cuts for those taxpayers on the top marginal rate of tax, in line with our election commitment. So we deferred those tax cuts. I do not refer to that group of people as the rich. Senator Brown does, but I do not. We deferred those tax cuts, Senator Brown. We believe that that was appropriate. The Labor government, then in opposition, believed it was appropriate to focus on low- and middle-income families, and the budget papers show that the decision to defer the reduction in the top marginal tax rate—the so-called ‘rich’ that Senator Brown refers to—releases some $5.3 billion for the government’s other priorities. So, firstly, the package does not represent a tax cut package for the rich and, secondly, it does not represent an example of so-called ‘me too’ politics. Our tax package is quite different from that put forward by the Liberal Party.

To finish, what it does represent is part of a fiscally responsible approach to ensuring we keep downward pressure on inflation and therefore keep downward pressure on interest rates, and, very importantly, in a responsible way it honours the election promise given to the Australian people. There are many things this government are determined to do as a government, and one of them is to honour our election promises. You could not have a more categorical, precise and detailed example of an election promise that we are determined to deliver to the Australian people. For that reason the government oppose the amendments moved by Senator Murray.

Question negatived.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

by leave—I move Democrat amendments (1) to (20) on sheet 5442 together:

(1)    Schedule 1, item 3, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(2)    Schedule 1, item 3, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(3)    Schedule 1, item 3, page 3 (table item 3), omit “$180,000”, substitute “$150,000”.

(4)    Schedule 1, item 3, page 3 (table item 4), omit “$180,000”, substitute “$150,000”.

(5)    Schedule 1, item 4, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(6)    Schedule 1, item 4, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(7)    Schedule 1, item 4, page 3 (table item 3), omit “$180,000”, substitute “150,000”.

(8)    Schedule 1, item 4, page 4 (table item 4), omit “$180,000”, substitute “$150,000”.

(9)    Schedule 1, item 13, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(10)  Schedule 1, item 13, page 5 (table item 3), omit “38%”, substitute “40%”.

(11)  Schedule 1, item 13, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(12)  Schedule 1, item 14, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(13)  Schedule 1, item 14, page 5 (table item 3), omit “38%”, substitute “40%”.

(14)  Schedule 1, item 14, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(15)  Schedule 1, item 23, page 7 (table item 3), omit “$180,000”, substitute “$150,000”.

(16)  Schedule 1, item 23, page 7 (table item 3), omit “37%”, substitute “40%”.

(17)  Schedule 1, item 23, page 7 (table item 4), omit “$180,000”, substitute “$150,000”.

(18)  Schedule 1, item 24, page 7 (table item 3), omit “$180,000”, substitute “$150,000”.

(19)  Schedule 1, item 24, page 7 (table item 3), omit “37%”, substitute “40%”.

(20)  Schedule 1, item 24, page 7 (table item 4), omit “$180,000”, substitute “$150,000”.

I want to recap briefly the position with respect to these amendments. The coalition’s election promise tax cuts, adopted by Labor, were proposed when the Reserve Bank, Treasury and others were forecasting lower inflationary prospects and more stable economic times than now. In the evidence to the Senate Standing Committee on Economics inquiry that examined this bill, the top Treasury officials confirmed two points with respect to fiscal policy and inflation: having no tax cuts would represent significant fiscal tightening, and any negative effects of tax cuts by stimulating aggregate demand would need to be balanced out by reductions elsewhere in government spending, meaning that the promised tax cuts that will contribute to inflation will likely lead to cuts to government spending on services. If such services are essential, that would hardly seem in the national interest.

The minister has made two good points. One is that the government did indeed have a different view to the coalition at the top end and had a different tax package at that end. The second is that their budget overall has attempted to balance out the effect of this fiscal stimulus. The question, of course, is whether they will succeed in that prospect. Through the chair: as the minister well knows and the members of the chamber debating this well know, these things are matters of judgement, and you will only find out later on if your judgement has been right.

I want to say particularly on this matter that, although the figure of $31 billion worth of tax cuts is the one that is commonly run out, we should remember that the tax cuts that will increase aggregate demand and will increase Australians’ disposable income for the years 2008-09 to 2010-11 actually total $57 billion. That is what is going into the marketplace—$26.2 billion is already locked in from the 2007 coalition budget, and there is a whole whack of tax cuts coming in on 1 July 2008 which are in fact a consequence of the coalition’s 2007 budget. That should not be forgotten. Labor intend to add $30.8 billion more in tax cuts.

We have heard, both from me and from the minister, that large tax cuts will go to low- and middle-income earners, and both of us have indicated that we think they do need tax cut relief and do merit an increase in their disposable income. But this should not be overstated. Of the $30.8 billion worth of Labor’s new tax cuts, approximately $11.3 billion, or 37 per cent of the cost, is accounted for by low-income offset changes, so that goes to low-income people. Of the $57 billion total cost—that is, the coalition tax cuts legislated in 2007 and the Labor tax cuts which we are now debating—those earning less than $34,000, which I think is a reasonable measure of low income, will only get approximately 26 per cent of the tax cuts, so about a quarter. In contrast, at the top end, wealthy Australians will do very well. The reputable journalist—probably you would describe her as eminent—Michelle Grattan recently wrote, on 6 May, in the Age:

An analysis by Treasury shows that families with an earner in the top 3% of taxpayers have enjoyed an 85% increase in their disposable incomes since 1996 —about 1.7 times the rise for families with an average income earner.

The point of that, of course, is that better off Australians have been doing very well.

So we think there is merit in accepting the low-income tax offset changes and lower income tax cuts. They will provide income relief. They will assist workforce participation. There does remain the danger of increasing aggregate demand with tax cuts to such an extent that it increases inflationary pressure and results in higher interest rates. The government are aware of that. They believe their budget package adjusts for that. We think that maybe that is a little hopeful, and we think the tax cuts quantum needs to be cut or the tax cuts timing needs to be changed to be sure—or, as the Irish would say, to be sure, to be sure.

The set of amendments on sheet 5442 that I propose now as an alternative to the set of amendments I proposed on sheet 5438 would do the following things. With respect to the 30 per cent band, it would defer the changes so that the upper threshold does not lift from $75,000 to $80,000 in 2008-09 but from $75,000 to $80,000 in 2009-10. For the 40 per cent band, it would cancel the upper threshold lifting from $150,000 to $180,000 in 2008-09, so it is a tougher amendment than the one previously put, and, for the 45 per cent band, it would cancel the threshold lifting to $180,000 plus in 2008-09. In other words, wealthy, wealthier and better-off Australians—and, of course, the rich and very rich—would not get the benefit of those changes, but the vast majority of Australians would get the benefit of the proposals before us. Accordingly, we also move in these amendments to cancel the 40 per cent rate dropping to 38 per cent in 2009-10, and we cancel the 38 per cent rate, which would come in later on, dropping to 37 per cent in 2010-11. So it is a much more modest and a more conservative approach than has been taken in the bill.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I just want to draw the attention of Senator Murray to two matters. I do not want to be unkind, but he did go back to 1996 in his reference to better-off Australians having been doing very well—saying that the wealthier and the richer are better-off. I know these are his last two weeks, and I am actually going to say some very complimentary things about him in the valedictory speeches later in the week. However, I take this opportunity briefly to say, Senator Murray: if your figures are correct and if better-off Australians have been doing very well—and I think you quoted a figure of 86 per cent—I would have to say that I think the GST was a bit of a help to wealthier and better-off Australians. We know the part you played in that. I am not going to be unkind, and I am not going to take the time of the chamber, but if those figures are correct—and I do not know the 86 per cent figure—the debate around the GST and its implementation and the general favouring of the higher income earner by the introduction of the GST is a debate we have canvassed up hill and down dale in this place for many years. I think that would be a factor if your figures are true.

The only other issue I want to touch on is, again, that the tax cuts should not be seen in isolation. I referred to the government’s fiscal approach in the budget and our determination to be fiscally conservative, to have a significant surplus, to put downward pressure on inflation, to fight inflation and to put downward pressure on interest rates. Another component of the budget that was announced was significant investment in education, health and infrastructure, which in turn helps to address one of the issues that Senator Murray raised, about inflation and lack of investment in public infrastructure, broadly defined. As part of the budget, again looking at the totality of economic measures that the government have put forward, we are investing $11 billion in a new Education Investment Fund, we are allocating a further $10 billion in establishing a Health and Hospitals Fund and we are allocating $20 billion, I think, for the infrastructure fund—I will get an accurate figure. It is a significant investment in infrastructure. So we are dealing with some of the critical areas of neglect in investment in infrastructure, broadly speaking, and I include within that education and health. I put that on the record in terms of the fight against inflation.

Finally, Mr Glenn Stevens, the Governor of the Reserve Bank, when questioned about the issue of inflation and inflationary impact, said:

It strikes me that in the popular discussion about fiscal policy, many participants talk past each other because they are looking at different time dimensions. It is not unreasonable to say that if the budget is perpetually in surplus, there is no debt to speak of and no other looming large unfunded liability, taxes should probably, over some long-run horizon, be lower.  This, it seems to me, is the economic case for structural reductions in taxes, which some observers articulate. Others argue that such reductions should be delayed, for cyclical reasons, given that demand needs to slow to contain inflation. So there is a structural case for taxes to fall, and a cyclical case for them not to. It is no doubt difficult for any government to reconcile these two, equally valid, points of view, the more so if the same tension persists for a number of consecutive years.

We believe the government’s approach as a whole, the budget as a whole, the surplus we are delivering, the fiscal conservatism, the fight against inflation, the downward pressure on interest rates, the tax cuts and the investment in the various areas of infrastructure that I have outlined, are a balanced and appropriate package. I will reserve any further remarks, if needed, until the Green amendments that we will get to shortly. We will oppose these amendments.

Question negatived.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I ask that the Greens support for Senator Murray’s amendments be recorded. I seek leave to move Greens amendments (1) to (28) on sheet 5480 together.

Leave granted.

I move:

(1)    Schedule 1, item 3, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(2)    Schedule 1, item 3, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(3)    Schedule 1, item 3, page 3 (table item 3), omit “$180,000”, substitute “$150,000”.

(4)    Schedule 1, item 3, page 3 (table item 4), omit “$180,000”, substitute “$150,000”.

(5)    Schedule 1, item 4, page 3 (table item 2), omit “$80,000”, substitute “$75,000”.

(6)    Schedule 1, item 4, page 3 (table item 3), omit “$80,000”, substitute “$75,000”.

(7)    Schedule 1, item 4, page 3 (table item 3), omit “$180,000”, substitute “150,000”.

(8)    Schedule 1, item 4, page 4 (table item 4), omit “$180,000”, substitute “$150,000”.

(9)    Schedule 1, item 13, page 5 (table item 2), omit “$80,000”, substitute “$75,000”.

(10)  Schedule 1, item 13, page 5 (table item 3), omit “$80,000”, substitute “$75,000”.

(11)  Schedule 1, item 13, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(12)  Schedule 1, item 13, page 5 (table item 3), omit “38%”, substitute “40%”.

(13)  Schedule 1, item 13, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(14)  Schedule 1, item 14 page 5 (table item 2), omit “$80,000”, substitute “$75,000”.

(15)  Schedule 1, item 14, page 5 (table item 3), omit “$80,000”, substitute “$75,000”.

(16)  Schedule 1, item 14, page 5 (table item 3), omit “$180,000”, substitute “$150,000”.

(17)  Schedule 1, item 14, page 5 (table item 3), omit “38%”, substitute “40%”.

(18)  Schedule 1, item 14, page 5 (table item 4), omit “$180,000”, substitute “$150,000”.

(19)  Schedule 1, item 23, page 7 (table item 2), omit “$80,000”, substitute “$75,000”.

(20)  Schedule 1, item 23, page 7 (table item 3), omit “$80,000”, substitute “$75,000”.

(21)  Schedule 1, item 23, page 7 (table item 3), omit “$180,000”, substitute “$150,000”.

(22)  Schedule 1, item 23, page 7 (table item 3), omit “37%”, substitute “40%”.

(23)  Schedule 1, item 23, page 7 (table item 4), omit “$180,000”, substitute “$150,000”.

(24)  Schedule 1, item 24, page 7 (table item 2), omit “$80,000”, substitute “$75,000”.

(25)  Schedule 1, item 24, page 7 (table item 3), omit “$80,000”, substitute “$75,000”.

(26)  Schedule 1, item 24, page 7 (table item 3), omit “$180,000”, substitute “$150,000”.

(27)  Schedule 1, item 24, page 7 (table item 3), omit “37%”, substitute “40%”.

(28)  Schedule 1, item 24, page 7 (table item 4), omit “$180,000”, substitute “$150,000”.

This is a hugely important matter, as far as the Greens are concerned. The government and the opposition are supporting a package of $30.8 billion in tax cuts over the coming years, in a country which desperately needs investment in areas which are not going to be funded at the same time. I have already raised here, in the second reading debate, the plight of pensioners in Australia. I find it close to unbelievable that this first Labor budget has overlooked the 1.2 million pensioners in Australia who are living below the poverty line. Their income is around $270 a week. Let those of us who are on well over $1,000 a week reflect on that. Their income is about $270 a week and they were totally overlooked in the budget except for a repeat of the Howard government’s $500 payment and some support for paying service bills. As far as their income is concerned, it was, once again, essentially ignored. I cannot allow that to pass and nor will the Greens allow that to pass. It is simply wrong.

One would have expected that a socially oriented Labor government would have not only been ensuring that pensioners got an increase but also had that as part of the election presentation last year. This must be the thinking of both big parties, because the Howard government neglected pensioners too. They have essentially had no great increase in their pensions compared to the cost of living since 1993—for the whole of the 11 years that those budgets were brought in. There was some adjustment for the GST, and that was about it. Pensioners stayed stuck at about the level of increasing costs, while parliamentarians’ salaries, for example, increased by something like 85 per cent from the levels of the mid-1990s. It is incredible that we are here with the first major initiative by the government in the area of social structure being legislation which is going to accelerate the growing gap between the haves and the have-nots in Australia.

The minister seems concerned about the word ‘rich’, so let’s talk about the ‘wealthy’ if that is easier. But the fact is we have seen a growth in the gap between the haves and have-nots in this country through the Howard years and we are now seeing a continuation of the economic rationalist policies which say that those people at the top deserve even greater rewards. Listening to the debate this morning, the tenor from the government at least is in line with that quote that the minister read out of the Governor of the Reserve Bank saying—looking at the long horizon, nothing to do with this legislation before us—that there may be room for tax cuts. That is a very generalised statement, because there are a lot of clouds on that long horizon. We are elected here to make sure our society works justly. This is unjust legislation. There is no argument that this can be seen as just. Certainly it extends tax cuts across the board but, as Senator Murray pointed out, they are absolutely loaded to give much greater advantage to people who are on high incomes than to people on low incomes—and pensioners get left out altogether. We cannot and will not accept that. I can tell the government that over the coming years we will be pointing back to this moment, this great lost opportunity to redress something of the imbalance that grew over the Howard years.

What about the need for carers in this country? They live on a pittance. They provide enormous services to those of us who want to see people who are ill, disabled or disadvantaged looked after. They provide the nation with billions of dollars of voluntary service, those people who care for fellow Australians, and yet the budget bypassed them, essentially. The government did not move to recognise that they too are citizens who deserve time off, who deserve to be able to enjoy the freedom of life that so many people, who are going to have massive amounts of money go into their pockets because of these tax cuts, take for granted. There is a failure of understanding here. There is a failure of understanding the difference between the plight of people in our society who are struggling on a pension or caring for others and the unprecedented advantage that the wealthy—and that includes all us members of parliament—have in Australia in 2008. There has never been anything like it before in history. But this government is doing much like the Howard government would have done were it still occupying the government benches. The policies are look-alikes, and it is the Greens who are going to continue to argue—the Democrats have a wonderful track record on this—for social justice in this country with a capital S and a capital J, because it is not in this legislation. This is unjust legislation.

We are not talking about peanuts. As Senator Murray said, put it together with the last Howard tax cuts and we are talking about $57 billion of what should be collected revenue, if not for the pensioners and carers of this country, for hospitals, for remote and rural health services, for public education, for fast and efficient public transport, and for dealing with climate change. Look at the proposal from Senator Milne on behalf of the Greens to retrofit all houses in Australia, starting with the poorest people first, and adding insulation and renewable energy. Cut their power bills. There is more for poor Australians in that proposal than there is in this legislation. But this legislation means the funding is not there to take on that option coming from the Greens which not only advantages us now but will advantage our grandchildren. Argue that about this legislation, if you will.

Then we see, at the other end of the spectrum from the poorer people I have been talking about, these merchants taking home millions of dollars—some of them tens of millions of dollars—each year for their contribution to the country. It is excruciating. Even Republican candidate John McCain has said in the last few days we should stop this. There has to be government intervention on these massive takings of moneys from society by people at the top end of the corporate sector. It does not come out of thin air; it comes out of other people’s pockets. Pay people well for their service. Pay people well for their innovation. Pay people well for their contribution to the nation and to the world. But this has become a massive rort. We, as parliamentarians, have to look at it. That is our responsibility.

If the Republican candidate for the US election says, ‘I’m going to look at that,’ why aren’t the Labor Party looking at this in this country? Because they have lost their way as a party of social justice. So here we are, the Greens, following the Democrats’ worthy amendments, saying: for people on over $75,000 a week, the taxation system is very advantageous as it is. We’re not going to support these further megamillion dollar tax breaks. We will not support them; we will oppose them. We will take the government on in any forum to argue this, and I hope we do not hear down the line, in the coming three years, that the government cannot afford this amount for some struggling Australian group or institution who need proper government support. I will be reminding them about this day in this chamber. This proposal is unfair, unwarranted and unjust. This is simply an echo of the Howard government years. I have put forward these amendments seriously. They are what the Labor Party should be doing, and I ask, even at this late moment, that Labor reconsider.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Senator Bob Brown’s amendments put on behalf of the Australian Greens retain the threshold lift in the 15 per cent rate from $30,000, which is what applies now, to $34,000, then $35,000 and then $37,000 by the year 2010. They also retain the low-income tax offset, which is an increase from $750 now—these are Labor proposals, by the way—through to $1,500 in July 2010. Senator Brown’s amendments retain—again the Labor proposal—the lift in the senior Australians tax offset, single, from $28,867 now to $30,685 in July 2010 and the lift in that tax offset for a couple from $24,680 to $26,680 from the period 2008 to 2010. So, like us, Senator Brown has retained the benefit of the low-income tax cuts. We should also recognise that raising the threshold of the 15 per cent rate to $37,000 by 1 July 2010 does flow through to all income levels; we do recognise that.

Where he has been tougher than the Democrats is with respect to the $75,000 to $80,000 threshold movements—and these days that is pretty well middle income. But I am not going to quarrel, as I think the thrust of Senator Brown’s remarks as to the amendments are right, primarily because the climate has changed. It has changed absolutely remarkably since the election campaign. There was no statement from Treasury, from the Reserve Bank of Australia, from the Treasurer at the time, from the Leader of the Opposition or from anyone that forecast in November 2007 the sorts of economic circumstances we are now facing. Frankly, it is tough for the new Labor government, given all their hopes, dreams, campaigning and plans, because the climate has changed significantly. So, on the basis of the arguments that I have made previously and the remarks that I have made now—even though I personally and my party are very wary of your $75,000 to $80,000 area, Senator Brown—I think on balance the Democrats support the Greens’ amendments.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

The opposition will be supporting the government in relation to this bill, and I made that very clear in my speech in the second reading debate. I thought it not really appropriate to cavil with every proposition put forward by Senators Murray and Bob Brown. However, I do think it is both extravagant and outrageous to claim that the former Howard government neglected pensioners and carers. That is simply not true, and I think it is appropriate that I put on the record a couple of facts as to that.

Quite apart from the issues that took up a lot of this year, in particular the issue of the carers’ bonus, which was largely agitated by the opposition and supported by various pensioners and carers’ groups, the Howard government’s record as to both pensioners and carers is, I think, a sound one. That is quite apart from the fact that the Howard government decreased unemployment, through 2.2 million new jobs, increased real wages by 21 per cent and doubled on average the real net wealth per head of every person in this country. Of course Senator Brown would say that things got pretty bad, and let me tell you that things got so bad under the Howard government that we actually paid carers and senior Australians bonuses that had never been paid before—and we did that for four years. We increased pensions to 25 per cent of average weekly earnings and in fact we legislated that percentage increase, which had never been put into legislation before.

What carers and pensioners can trust is of course the record of the coalition. We did not just talk; we delivered. Between 1996 and 2005 the real disposable income of the poorest 20 per cent of our society, who are very important to us—the carers, the pensioners and seniors—increased by 25 per cent. There was a 25 per cent real increase in the effective income of carers and pensioners. That statistic does not come from me; that comes from the independent and authoritative National Centre for Economic Modelling at the University of Canberra.

We can obviously disagree about points of emphasis. That is not to say that pensioners and carers do not deserve better; they clearly do. However, rearranging or attempting to rearrange the government’s priorities on the tax cuts by an amendment of this kind is hardly a way to put pensioners and carers on a more sustained footing that I think would satisfy Senator Brown. We are in opposition; we are not the government. We are the opposition with a proud record—we think—of caring for pensioners and understanding the specific needs of carers. Under the current circumstances, we think Australian families who are the subject of this bill that we are considering deserve these tax cuts. They have worked hard; they have earned them. I am not making any qualitative comments about pensioners and carers other than to say that in a different setting and context we might be able—as an opposition and on the crossbenches—to urge the government to take better care of them and to look further at what needs to be done for them. But doing so in the course of this bill is not the place.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will be brief because much of the contribution from Senator Brown traversed the issues that were raised in the second reading debate and have been raised in the earlier committee debate. Like Senator Coonan, I want to make a comment about carers and seniors, the group which Senator Brown has focused on in the discussion this afternoon.

We have before us the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008. I agree with Senator Coonan. There may be changes that benefit carers and age pensioners. Indeed the Labor government has established a process, through the total review of the tax system, to include a review of the age pension and retirement incomes more broadly. I accept the point made by Senator Brown that if you are on approximately $14,000 a year—I think he gave the figure of $270 a week as an age pensioner—it is tough. I accept that point, Senator Brown. We have established a process to consider the issues around the age pension. That is not the issue before us directly today; that is to do with the income tax reduction bill.

I have a minor point of correction. I have followed retirement incomes issues and pension and superannuation matters for a long time, and no doubt there have been significant improvements in a whole range of areas for retirees who have personal private income, whether it be superannuation income or non-superannuation income. As a general observation, it is correct to say that—and this is where I depart from Senator Coonan—if you look back over the last 12 years of the previous government there was not a great deal of attention paid to age pensioners. I am talking about full age pensioners who do not have private income. That is one of the reasons, Senator Brown, for including a thorough examination of the age pension within that tax review.

Much was made of this by the previous government. They claim that they indexed the age pension up to 25 per cent of MTAWE—I think Senator Coonan referred to average weekly earnings; it is male total average weekly earnings. I made that mistake once a couple of years ago, Senator Coonan, and I certainly read about it. It is MTAWE—male total average weekly earnings. But it was the Hawke Labor government that introduced that provision. As a matter of policy, it introduced 25 per cent of MTAWE, male total average weekly earnings. I accept that the Liberal government legislated, but it was actually the Hawke government that introduced that indexation method, and that was maintained by the Hawke-Keating governments and the previous government.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Senator Murray interjecting—

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

Senator Murray, there is no point of order or point of clarification.

Honourable Senators:

Honourable senators interjecting—

The Temporary Chairman:

Order! Senators, we are almost at the end of this debate and I think we can get there without too many interjections or disorderly conduct.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I think this is what we call the last hurrah on the GST, Senator Murray.

The Temporary Chairman:

Senator Sherry. I know Senator Murray is listening intently to your laudatory remarks, but you will direct them through the chair, please.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, I am sorry, Chair. We are dealing with income tax reductions. They are focused on low- to middle-income earners. That was the election promise we have given; that is the election promise we are committed to delivering and are debating here today. I acknowledge the important role of carers and age pensioners. Frankly, I am not surprised, Senator Brown, that we are having the debate generally around age pensions. Having looked back at the history over the last 20 years around the age pension, I am not surprised at the community debate that is occurring.

I acknowledge the very significant cost pressures that age pensioners are under, as well as that of low- to middle-income earners more generally in society. I acknowledge that cost pressure, Senator Brown. It is real struggle street for a person. I think it is very tough if you are on a single age pension of $14,000 a year. We have established a process that will comprehensively consider all those factors. It is a separate process, Senator Brown. I hope that solutions will come out of that that we will deal with some time in the near future, Senator Brown.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I thank all contributors to this little debate. We have an agreement. Senator Coonan, on behalf of the opposition, has said that carers and pensioners really do deserve better. The minister has said that pensioners are on struggle street and they are finding it very tough. We all know that, and we have an obligation to fix it. My point here is that the priorities are wrong. We are giving people on lower incomes and middle incomes a well-deserved break in this legislation. But the biggest break of the lot goes to people who are already wealthy. We ought to have given the priority to those who are on struggle street and who really deserve better. The Greens strongly support these amendments, with that in view.

Question put:

That the amendments (Senator Bob Brown’s) be agreed to.