Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

I would like to say a few words about this Orwellian titled bill. The Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 is part of a growing tradition within this parliament to see legislation presented in the most partisan and most cynical of ways so that you get a highly politically charged description of a bill rather than its title going to the content of the bill.

What we see is the government calling upon this chamber to adjust its deteriorating budget position—a position that the Labor Party acknowledges, but you would not get any sense of that from the discussion of the government. I recall just before the last election the proposition that the current government could fix the deficit; they could reduce the debt. They gave no recognition whatsoever throughout the term of the previous Labor government of the deteriorating revenue position of the Commonwealth. Those positions have now come back to haunt the government itself.

Let me again put the facts on the record. This government has actually doubled the budget deficit in just 12 months, after promising to fix it. This was their biggest election promise, but like all their election promises it is a promise that has just evaporated. The Treasurer, Mr Hockey, has doubled the budget deficit in one year from $17.1 billion to $35 billion in 2015-16. Over the four-year period from 2013-14 to 2016-17, Mr Hockey has presided over a cumulative deterioration of some $96 billion in the deficit compared to the figures he inherited from Labor. We can see these figures quite clearly set out in the Pre-election Economic and Fiscal Outlook—a position that was made independently of the previous government and a position made very clear by the Public Service in the run-up to the last election. This change, the subject of this bill, was already factored into the forward estimates, and so if the bill does not pass by 30 June the consequence will be a further blow-out in the budget deficit, which is, as I say, already at $35 billion.

We have a government which, having abandoned all of those election promises, went through and produced a budget in its first year, which, of course, went down like a lead balloon. The government's political position has deteriorated so badly that it has now even abandoned that proposition in its public rhetoric. It has abandoned the rhetoric around fiscal rectitude in a desperate pursuit to rebuild its electoral fortunes and it is now in the process of preparing itself for an early election. But the reality is simple: the budget is built on a house of cards. The projected budget surplus is built on a change in the accounting rules that allows for the earnings of the Future Fund to be recorded and calculated in the deficit—not through any responsible measures. As we know, Mr Hockey's number are underpinned by unfair measures, which will never pass the Senate. We have seen this chamber on several occasions now reject measures which are fundamentally unfair and offer nothing in the way of rebuilding the prosperity of this nation.

When we talk of a house of cards, we need look no further than the proposals that the government is seeking to pursue in higher education. Not content with its unfair and unnecessary plans for the $100,000 degrees, which have been voted down twice by this chamber, the government continues to maintain its quixotic crusade. Embedded—in fact, hidden—in this year's budget, is the 20 per cent cut in university funding. There are cuts to the training of our research students. There are cuts to the funding to address student equity. There are $5.4 billion worth of cuts to universities, to students and to research.

These are cuts that the government cannot deliver but underlie the assumptions within this budget. So we have these phantom arrangements that the government seeks to pursue. The cuts that have been included in this budget are of course aimed at bodging up the figures to make them look better than they are. It is truly a fantasy budget—a fantastical dream in the imagination of Senator Cormann and his partners in crime, the Treasurer, the Prime Minister and of course the hapless fixer, the minister for education. But the Australian people understand that, if these measures ever were implemented, the enormous costs that they would have to this nation's future.

The stated purpose of this bill—and this is the really interesting point; we do not find this in the title. This is not an amendment bill; in effect, what it is is a proposition that in reality is nothing more than an attempt to change the Clean Energy (Income Tax Rates Amendments) Act 2011 and the Clean Energy (Tax Laws Amendments) Act 2011 so that both acts have their future operative provisions repealed. You would have thought that would be the appropriate way to actually to present these bills as amendments to those measures.

Both acts have provisions already in operation, and these would not be repealed. As such, the bill would repeal an increase in the nominal tax threshold from $18,200 in 2014 to $19,400 in 2015-16. They maintain the second personal marginal tax rate at 32.5 per cent rather than increase it to 33 per cent from 2015-16. They maintain the maximum value of the low-income tax offset at $445 rather than change the maximum value of the offset to $300 million in 2015-16 and they seek to maintain the threshold below which a person may receive the offset at a taxable income of $66,667 and the withdrawal rate at 1.5 per cent rather than the income threshold increasing to $67,000 and the withdrawal rate falling to one per cent from 2015-16.

Of course in these circumstances these were perfectly fair measures introduced at the time in which, as a package of measures, we proceeded in government to ensure that there was fairness about the climate change polices that we were pursuing. So we are now faced with this difficult position and, as a result, if the legislation does not pass by June, these measures of course will further undermine the fiscal position of the Commonwealth.

The shadow Treasurer said in the other place that the opposition has reflected on these matters and the circumstances of the mismanagement of the budget placed upon this Commonwealth. Ultimately, we have resolved to support the bill.

The opposition notes that the tax-free threshold trebled from $6,000 to $18,200 during our time in office. The change that this bill will repeal, while it would have been welcome, would have been a smaller percentage of the increase increasing the amount to $19,400. But, despite the spin that the government has sought to put on this, this action is not something we would have done in office. These are not measures that the Labor Party would have pursued in office. The difficulty of the decision is that we have to pick our battles, and we are trying to the best that we can to ensure that people enjoy the support of this parliament who need it most. Our focus will always be on protecting the most vulnerable from this government just as we are the only party that is responsible enough to call out this government on the issue of the unsustainability of our superannuation system, which of course rewards for those who are most advantaged in this country, or making it clear about the need to change the taxation arrangements for multinational companies so that multinational corporations actually pay their fair share of tax.

That is why we are opposing as well the government's latest rounds of cuts to the pension. I noticed overnight that the Greens have had their Meg Lees moment where they are seeking to adopt the position of the conservatives on the issues of the defence of the pensioners of this country. I look forward to seeing how that goes, because we know how this story ended for another great party, the Democrats. We understood the consequence when the Democrats went down this road of accommodating the reactionary forces in this country. And of course we saw the circumstances whereby, in time, the Democrats were obliterated. So, we are going to see the great party of protest, the great party that wants to express its views about the need to fundamentally transform this country, lining up with the reactionaries to defend this government's attack on the most vulnerable in our country, the pensioners. I look forward to seeing how the latter-day Meg Leeses get on in this circumstance!

This government, unfortunately, has sought to attempt to rewrite history. This is a government that made a number of commitments prior to the last election, all of which have been broken. This is a government that played big on the rhetoric of deficit and debt, all of which have been demonstrated to be hollow. This is a government that we now see wants to present to this parliament measures that of course would continue the great inequalities of this country—in fact, make it much worse—by the pursuit of a tax upon the most vulnerable. This is a government that wants to undermine our universal health system, wants to undermine our highly effective pension system. This is a government that wants to smash equity in higher education. And this is a government that of course is now desperate to present itself as something other than it really is.

We have suggested that there needs to be an alternative approach, and that is what the Labor Party will argue strongly for and defend vigorously in the run-up to the next election—which I say, on all the science, is not that far away. The opposition has outlined alternative measures that can be taken to secure the fiscal position of this country while maintaining fairness and social justice. The Labor Party has a very, very different view about ensuring that we have a country in which prosperity is genuinely shared throughout the community and in which we can ensure that our industries are innovative and modern and able to provide the employment opportunities so that everybody in this country has the right to expect the living standards that a country like ours can afford.

We have to make sure that this is about building priorities into the budget process that defend the fundamental democratic values, and I am afraid you will not find that on the opposition benches. Unfortunately, I now see that the Greens are falling for the old line about how responsible they are, how thoroughly respectable they are, how desperate they are to actually appease those on the other side. I look forward with interest to how that unfolds.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

I rise to oppose the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. Under the law of the land, the tax office will start taking slightly less of your income in a fortnight's time. This is good news, but the coalition and Labor cannot stand it. So today the coalition and Labor will combine to pass a bill that cancels the slight reduction in income tax scheduled for July—a reduction I was responsible for retaining in my first week in the Senate last July. This bill proves that the coalition and Labor are a unity ticket. If you want big taxes to fund a government that can spend your income better than you can, vote for either of them. They will give you want you want.

The tax cut we are talking about is not huge. If you earn $66,000, the tax office currently takes away around $14,300. Next year, with no change, they would take away around $14,220. So, around $80 less would be taken from you. The coalition and Labor believe they can spend that $80 better than you can. In fact, as this bill gets waved through the Senate, they will say that they cannot afford to give you the $80—as if the $80 is theirs.

The mindset of the coalition and Labor is that of someone who believes that all your income is owned by the government, and you get to keep some of it only because of government generosity or absentmindedness. This mindset leads to tax increases being called budget savings. We would not put up with this abuse of language anywhere else. If a business claims that it is making savings, that means it is spending less; it does not mean that it is jacking up prices. This mindset also leads some in the coalition and Labor to treat tax deductions, offsets and exemptions as a government handout, to be withdrawn when the going gets tough. In reality, tax deductions, offsets and exemptions just represent instances where the tax office is taking less money than some imagined tax take. The approach of some in the coalition and Labor is akin to a pickpocket skimming your wallet of notes and then expecting gratitude because this time they left the coins behind.

Yes, governments need to spend money and raise taxes, but our governments are spending more money and raising more taxes than ever in Australia's history. Fifty years ago, taxes were around $5,000 per person after adjusting for inflation. This grew each decade, until now the tax burden is around $19,000 per person. Those bleating about crashing revenues are on another planet. Their complaint, in essence, is that taxes ought to grow even faster. There is no justification for the ever-expanding tax burden. Living standards for all groups of people have risen over the last 50 years, which means the need for government welfare services has declined, and we have not uncovered new forms of effective government intervention either. To the contrary, the prosperity-promoting effects of free markets and the many failings of government involvement have been demonstrated time and time again.

Yes, governments need to spend money and raise taxes, but our taxes are high even by the standards of the stagnant economies that make up the OECD. The average tax burden in the OECD is 30 per cent of GDP. This average accounts for the different populations of OECD countries, as well as the social security contributions in many OECD countries that serve a similar purpose to Australia's compulsory superannuation guarantee payments. In contrast, Australia's tax burden, after including Australia's compulsory superannuation guarantee payments, is 31 per cent of GDP. Having a higher tax burden than the OECD average is extremely concerning, particularly as the OECD average is high compared to prosperous and dynamic non-OECD countries like Singapore.

Yes, governments need to spend money and raise taxes, but every tax expert knows that income tax is the most damaging tax on the Commonwealth government's books. It discourages working, saving, starting a business and taking risks. At times, this coalition government has raised concerns about bracket creep imposing ever higher income tax burdens on middle Australia, but we have experienced considerable bracket creep since the last time there were income tax cuts, and, when a scheduled income tax cut comes along that would return just a fraction of this bracket creep, the coalition government nips it in the bud. For the coalition, this is akin to the cry of St Augustine: 'Lord, give me chastity and continence, but not yet.'

The Liberal Democrats have a comprehensive plan to significantly reduce government spending and an unshakable conviction that your income is yours, not the government's. That is why I am defending the $80 tax cut that is due to each Australian taxpayer in a fortnight's time. But, sadly, the conspiracy of the big government forces of the coalition and Labor will cancel this tax cut through the bill before us today. When the date of the election comes, the taxpayers of Australia will remember.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We have been told in the last 18 months by this government that we have a budget crisis in Australia. If there is a budget crisis in this country, it is not an expenditure crisis, it is not an entitlement crisis; it is a revenue crisis. My party, very proudly, played a significant role in the clean energy package and a price on carbon. That price on carbon over the forward estimates under a costing by the Parliamentary Budget Office would deliver $18 billion in revenue to this country.

With the ruthless and cynical campaign by this government going into the last election about axing the mining tax and the carbon tax, what they did not tell you was that they were axing billions of dollars in revenue that could be used in our economy. It could be reallocated towards transformative behaviour to move the Australian economy and to diversify the Australian economy in areas of renewable energy, science, technology and innovation, diversifying the risks of being reliant on a mining economy and creating new, clean, green and clever jobs across this country. That revenue could be used for a whole range of important things in this country like giving a tax break to low-income earners. That is exactly what we did. With the mining tax we reallocated money towards the small business sector—$5.4 billion to be precise—which, incidentally, was ripped up by the Liberal government at the last budget. It was replaced in this new budget—rather cynically as a new measure—but most of the measures were similar.

A budget, to be balanced, needs revenue and, of course, we have expenditures on the other side. A focus on cost saving that attacks the most vulnerable in our society was never going to get through the Senate because we understand that we need to make brave decisions around tax reform to raise revenue in this country. Governments play a number of critical roles in our society, and we do have some differences of philosophy in this place as to what the role of government should be. My party believes that one of the key roles is levying a fair and equitable tax system, a tax system that is progressive and that, as much as it possibly can, puts equity and equality right up there with efficiencies. Some of the money from that carbon price that was going to be collected from some of the dirtiest polluters on the planet—those who are creating the emissions and the gases that lead to global warming and the devastating effects that that is forecast to have in terms of its impact on a whole range of not just the economy but ecosystems around the planet—was going to be used to support a tax break for the poorest and most vulnerable in this country.

It is very disappointing to see the Labor Party, in 24 hours, turn their back not once but twice on low-income earners in this country. These are supposedly the bread-and-butter supporters of and voters for the Labor Party. Senator Carr talks about our support of the government's measures to bring in a more progressive system on pension payments to help low-income people get more money on the full pension. That is a progressive tax policy. When the Howard government changed it in 2007, the Greens took a very strong stance opposing that because it was not a progressive tax policy. We wanted to help low-income earners in this country, and it is exactly the same situation today. If we abolish this break for low-income earners, it is just going to put more pressure on the poor and vulnerable in our society who actually need the assistance the most. Giving them a leg up and helping them where we can not only takes pressure off other roles of government—the provision of emergency services and other services such as health care and education—but also helps our economy and also helps the circular flow of income. It helps the circular flow of income. So there are all sorts of secondary effects that are really important.

My party is proud to stand in here today and say that we oppose taking away tax breaks for the poorest Australians. Senator Carr said that these decisions are difficult when you are in opposition—if they were in government, they would not do it. I have heard the same thing said about supporting dangerous ISDS clauses—giving corporations the right to sue governments in free trade deals. That is a total cop-out. If you do not stand for something, Senator Carr, you will fall for anything. You need to make a strong statement in this chamber, to those people listening, that you support low-income earners in this country. My party does. We support a progressive tax system that levies money right across the economy from different categories of income, and that is what our society should be based on—the fair and equitable distribution of taxes and incentives.

How many times was this explained by our Prime Minister in the lead-up to the last election and how many times has it been explained by Senator Cormann? In the three short years I have been in the Senate I have heard him talk about axing the tax, getting rid of the job-destroying carbon tax and the mining tax. How many times has this government ever been honest and said that they were revenue raising measures and that revenue was necessary—necessary to balance budgets, necessary to provide a fair and equitable society. It is easy to come in here and cut spending, especially for the most vulnerable in our society. It is a lot more difficult to make brave decisions to support a progressive taxation system, to support a progressive pension system, to tax the bads, the pollutions. When I was at university I remember the rules being pretty simple in any economics textbook—a government should tax the bads, like pollution and health risks like sugar and tobacco; they should levy taxes so our common pool resources, like our mineral wealth, are equally shared amongst those who own them—the Australian voters, Australian taxpayers; and, just as importantly, where possible they should reduce taxes on work and effort.

My party has supported taking a tax off small business to allow them to get a leg up, but we want to see a progressive taxation system in this country. We want to see the bads taxed. We want to see a really simple, sensible, rational, logical price on carbon, and we want to see that money reallocated in the economy to where it is needed the most. If the government come in here and remove this tax break for low-income earners, I want them to explain why they were too gutless to do this when they removed the carbon price last year. I did not hear any of you in here telling low-income Australians that they were going to lose their tax break when you removed the carbon price. In fact, I remember you saying exactly the opposite—that they would get to keep their tax breaks. Now you are taking them away. These are the people who need a leg up, and I am deeply disappointed that the Labor Party are taking the weak decision of saying they would not do this if they were in government but they are going to have to do it in opposition. Low-income Australians want to see someone standing up for them in parliament. I think most Australians support a progressive taxation system, and the Greens will not be supporting this measure in the Senate.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I thought for a moment the Greens under their new leadership might be starting to show some economic sense and rationality. Indeed, today's headlines in the newspaper seem to suggest that they are not just going to take the 'we are against anything the Liberal Party wants to do' approach, which has been the approach of the Greens political party, particularly under their former leadership. And I thought, 'Gee, there's a glimmer of hope!' I am not sure that that was real good for the Liberal Party, Mr Acting Deputy President Back, because if the Greens start looking like they are a sensible, mature political party then perhaps they will take a couple of votes off us! I think they know they will take a lot more off the Labor Party, as they have been doing. But that glimmer of hope and rationality that I thought might be around has just been dissipated by the previous speaker.

I do not know which university he went to, but they must have been teaching him some funny economics there. I might say, Senator Whish-Wilson, that I did not go to a university; I could not afford that. I started work as an articled clerk and did my university qualifications externally, at night-time after working all day. So I did not get the privilege of popping into an economics class run by what sounds to have been a very left-wing group of tutors and lecturers. I am just not sure where it comes from. But I always thought it was the Greens political party's approach that we did not tax people enough in Australia—that there had been too many cuts. Again, it is a bit difficult to find out where the Greens are, economically.

As for the Labor Party, I am delighted that they are, at last, going to support a measure which they did actually introduce, Senator Whish-Wilson. I am not here to defend the Labor Party, I can tell you that! But you wrongly accused them. The Labor Party did do something about this when they were in government. They actually made a commitment to the Australian people before the election that they would do exactly what this bill does now. So, far from berating the Labor Party, you should at least be giving them credit for actually carrying out the promise they made before the last election. We know that Labor Party promises before elections are not particularly reliable. We all remember, prior to the 2010 election, the commitment: 'There will be no carbon tax under the government I lead.' We all remember that commitment on the eve of the election. But then, having watched the last couple of episodes of TheKilling Season, one can never quite understand the personalities, the bitternesses and the hatreds in the Labor Party which seem to be their modus operandi. That is what seems to direct policy decisions in the Labor Party.

Honourable Senators:

Honourable senators interjecting—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Order! Order, colleagues. Senator Macdonald, resume—through the chair, if you would, please.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator Carr, shout all you like, but I have actually taped the first two episodes and I can send them to you, if you want just a bit of a reminder about the part you and most of your friends on the front bench played in the atrocious disloyalty and dishonesty that has been so clearly exposed in those two episodes of The Killing Season about the Labor Party and how it operates.

And, Mr Acting Deputy President Back, why would you expect better from the Labor Party? I just have to divert a fraction and mention that I read an article in the Hobart Mercury the other day from a dear old friend of mine, former Senator Margaret Reynolds. She was a Labor senator based in Townsville when I first entered the Senate. And I liked Margaret; I was disappointed when she left the north and went down to Tasmania. But she wrote this article for the Hobart Mercury berating the major political parties for the way they select Senate candidates. I was obliged to reply to the Hobart MercuryI suspect they did not print it, but I did reply—and I said, 'My old friend Margaret Reynolds was clearly talking about the Labor Party, not the Liberal or National parties,' because, as I pointed out, there is a difference. We have just been through a preselection for a senator in Queensland, and we were very fortunate in having Senator Jo Lindgren elected. But I have to tell you: Senator Lindgren was not selected on a 'captain's pick' or by a couple of union cabals getting together and determining who they would put into the position; Senator Lindgren actually faced over 300 ordinary Australians who make up the selection process of the LNP in Queensland, and she contested against eight other candidates all of whom were people of quality. And Senator Lindgren, through her own abilities, and through the presentation she made, was selected. So I said to Margaret Reynolds, 'You might be talking about the Labor Party, where the Northern Territory branch of the Labor Party preselects a sitting senator and Julia Gillard comes in over the top and says: "Forget about the Labor Party; forget about the ordinary people who select this in the Northern Territory; I want that person."' So the difference could not be more stark. That is why I say you would not know where the Labor Party is coming from.

I might mention, as to my own last preselection, that I had been a sitting senator for some time, but there were actually 15 people opposing me. We had a preselection panel of over 450 people. I am delighted to say that I won on the first ballot, and I thank the LNP for that; I am always grateful to them for that. But that shows the stark difference between how the Liberal and National parties make economic decisions—make any decisions—and how the Labor Party does.

I will get back to the bill—just in case there is anyone listening to this and they might be interested in what this bill, the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, is all about. The Labor Party introduced a carbon tax. They knew it would put up the cost of living of ordinary Australians. So, in an attempt to in some way ameliorate that bad policy decision of the carbon tax, they did say: 'We will give carbon tax related personal income tax cuts, just to compensate for the increased cost of living'—which they knew would happen with the carbon tax. They based that on a floating price for the carbon tax of $29 per tonne. Originally, when the carbon tax came in, the price was at $25.4 per tonne. It was going to float up to $29. And so the Labor Party said, 'We'll introduce these tax cuts to compensate.' But, lo and behold, the Labor Party suddenly realised how corrupt the market was for carbon tax permits, and they realised that their floating price estimate of $29 a tonne was not going to really achieve more than about $12 a tonne—less than half of what was originally expected. So the Labor Party, in a flash of economic responsibility, said: 'Well, the price is not going to go up quite as much as we thought; therefore, those personal income tax cuts that we were going to give won't now be necessary. So, as a budget repair measure, we're going to cancel them.' So, Senator Whish-Wilson, the Labor Party actually acknowledged that and said it was a tax that did not have the same substantive underlying reason as it originally did. So the Labor Party announced that they were going to get rid of these cuts.

Having promised that before the last election, they did a typical Labor-Greens thing: promise something before the election, and after the election come in and do the exact opposite. Twice the coalition has attempted to introduce Labor's removal of their promised income tax cuts. We have tried twice already in this parliament to allow the Labor Party to honour their commitment. Twice we have failed. But I am pleased to say—and all credit where credit is due—that the Labor Party are now, fortuitously, and sensibly, I might say, going to support this government measure, which is purely and simply the proposal that the Labor Party put before the last election.

The coalition made a commitment before the last election, and that commitment was broad; it was clear; it was sensible; it was direct. Nobody—no Australian voter—could have misunderstood what the coalition's principal election promise was before the last election. It was: to fix the budget. We all know that when the Labor Party came into power they had a credit, $60 billion, in the 'piggy bank'. The $60 billion was there for the incoming Labor government because of the good work of Peter Costello and John Howard in the Howard government over many years. The Howard government had paid off previous Labor governments' debts and, more than that, they had put some money away for a rainy day. There were $60 billion sitting there waiting for the new Labor government.

It took the Rudd-Gillard-Rudd government only a few months to blow that $60 billion and run up a debt which, if it had not been addressed, would have got up to around $700 billion. Senator Whish-Wilson is happy about that, I guess. He must be, because the Greens political party supported the Gillard and Rudd governments every time they took measures that would blow that out to $700 billion. Senator Cormann might help me here. That means we are currently paying—how much a day in interest, Senator Cormann?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Way too much: $1.2 billion to $1.3 billion a month.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Australian taxpayers are paying $1.3 billion a month to overseas lenders. They are paying $1.3 billion a month on Labor's debt runner—from $60 billion in credit to approaching $700 billion in deficit and already costing the Australian taxpayers over $1 billion a month in interest on those payments.

The promise the coalition made before the last election was to prepare the budget, and everybody knew that. Everybody was concerned about the unsustainable nature of Labor's borrowings and reckless spending. That is why they voted for the Abbott government and—in spite of continuous opposition by the Labor Party—the Abbott government has already started to turn around that approach to $700 billion in debt that the Labor Party left us.

Our government has not been perfect. I had some concerns about the 2014 budget, which I thought did not quite meet our targets or the aspirations and understanding of the Australian voter. I am pleased to say this is a government that is not too proud to say, 'Perhaps we didn't get it right, then,' and it has done something about fixing it. That never happens with the Labor Party—until today. Today the Labor Party have decided that (a) they will, at least, keep this promise, (b) they will do what they said they would do and understand should be done, and (c) in this small measure, the Labor Party will appreciate that the current government has a huge job to do in repairing the budget balance run up by Labor.

Senator Whish-Wilson: do not be surprised. The Labor Party are not catching you out. They are doing exactly what they said they would do. They have since voted against it, twice, but credit where credit is due. Now they are agreeing with that. In this small way, the coalition will be able to continue on its path of repairing the budget measures that Labor created for this country.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise today to speak on this Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. What an interesting situation. We have so much talk about tax reform—when what we are actually talking about is a tax grab. Tax reform suggests you might seriously consider how you are raising taxes in this country and for what purposes you are raising them and whether that needs to change in the 21st century. But no—tax reform is simply a word for 'How can we get a bigger tax grab from the Australian people?'

The first question you need to be asking if you are serious about tax reform is: where do you raise the money to spend on a public purpose and, in raising that money, how are you trying to shift the economy and the society to respond to the overwhelming challenges of the time? The overwhelming challenge of this century is global warming, the resource extraction of a planet going to nine billion people, where resource extraction is completely unsustainable. At the same time we have overwhelming wealth and income inequality.

If you are looking at the two megatrends, one is global warming, unsustainable and non-renewable resource use around the planet and destruction of ecosystems and, at the same time a widening gap between the rich and poor, then genuine tax reform would look at tax and the bads—that is, the extraction and unsustainable use of resources that are destroying ecosystems, destroying the atmosphere, turning the oceans acid and, at the same time, reducing the gap as much as you can, with structural change to make sure that you reduce income and wealth inequality. That is what genuine tax reform would do. That is why I was extremely proud of the fact that the regime we brought in to address global warming in this country was genuine tax reform. It was the first major tax reform in decades because it said, 'We need to bring down greenhouse gas emissions in this country so we are going to put a price on pollution because the earth cannot sustain the level of waste being put into atmosphere and oceans from the burning of fossil fuels. So we will tax that pollution. We will charge for that pollution. In taxing the bad, we will use that to relieve the tax burden on the poorest and the least able in our democracy.' Is that not genuine tax reform addressing those two megatrends in this century? Of course it is.

What we did was to say, 'Let us make sure that from those who are making the mega profits, we socialise the costs of their work, to pay for that cost.' We said that those people who are burning fossil fuels will pay for it through a carbon price. We introduced the carbon price and at the same time we said that low-income earners should get a break. So we trebled the tax-free fresh threshold. Before, once you earned $6,000 in Australia, you started to pay tax. After the carbon price it went up to $18,200. So it meant an incredible amount to a large number of people. To give an example, it gave tax relief of $300 a year to anyone earning up to $65,000 a year or $600 for people earning $20,000 a year. When you talk about people working part-time—students, low-income earners—it gave them a substantial tax break and, at the same time, it said to BHP and to the Rios of this world, 'You can stop paying for the cost of the extreme weather events that you are imposing on the rest of the community.'

Not only did they run a mega campaign against the mining tax and the carbon price but at the very same time as they were out there running their ad campaign on the Australian community saying, 'What jolly good fellows are we, the mining industry!' they had set up marketing hubs in Singapore to avoid their tax. The biggest tax avoiders in the country were the people saying, 'We shouldn't have to pay a carbon price, we shouldn't have to pay a mining tax.' They were setting up their hub in Singapore, sending billions offshore and paying multimillions to their chief executives who were laughing all the way to the bank as they laughed at the Liberal government that was prepared to give them even more tax relief than they deserved. Now who is going to pay the price of global warming? Who is going to pay for the damage to the infrastructure around Australia from extreme weather events? It is the community, who have to pay through the tax take. Now what we have is a government that is moving to shift the tax burden once again away from the Gina Rineharts of this world and away from the Rios and the BHPs, and onto the lowest income earners in the country.

As my colleague Senator Whish-Wilson said a moment ago, these are really dishonest activities of a government. If the government was honest when they came into power and moved to abolish the carbon price, they should have, at the same time, said to the Australian people: 'Look, we were taking billions of dollars from the big polluters, and we were recycling it through to you, the people. Now that we have decided not to charge those companies those billions of dollars, we are going to take the tax breaks that you had away from you. We are going to reduce the tax-free threshold back down to $6,000, and you will all start paying the tax again.' But they did not. What they said was, 'We will forgo the revenue from the carbon price, and we will maintain those compensation measures'. Anyone with half a brain could see that that left a mega hole in the budget—$18 billion over the forward estimates. It is an $18 billion hole that Prime Minister Abbott decided he wanted. He wanted a big tax hole, and he wanted to add to that tax hole by abolishing the mining tax, which the Treasurer, Mr Hockey, at the time identified as worth around another $6 billion.

It was an amazing effort by a Prime Minister to say: 'Rather than see the tax on the richest corporations and the biggest polluters in the country, we want to impose it on ordinary people. We want to do that.' That is exactly what the government did. In order to disguise that, they went out last year saying: 'We'll keep the compensation from the carbon price but, hey, you have to pay a Medicare co-payment, we are going to deregulate universities and charge students more, we are going to reduce pensions, and we are going to attack the poorest in this country in order to recoup the hole that we made when we decided to let the big polluters and the big miners off the hook.' That is the disaster that we are now inheriting here in Australia.

What is very interesting is the title of this bill. It shows that—to the extent to which we have a government talk about failure of grown-up government—we now have what can only be described as student politics. We have a government that is introducing a bill called Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. The reason that they have done that is, again, the cynicism of politics. In the agreement on the carbon price that the Greens signed with the Gillard government, this tax-free threshold increase was locked in to go up from $18,200 to $19,400. Once the ink was dry, what the Gillard government then did—sneakily, in my view—was defer that increase to $19,400. That is why the government have decided to call it Labor's budget savings measures.

Interestingly, last year, when this very same proposition was put to the Senate at this time, Labor stood up in here and said that they would not stand for the tax-free threshold being wound back, or for the projected increase not going ahead. They would not stand for it last year, and this year they are standing for it. Why? Because 12 months has gone past, because they know that politics moves so fast that the community will not have put two and two together, and they will not have realised that what Labor are now doing is exactly the opposite of what they did last year. There is just no consistent philosophical view from either side of government—except, you can guarantee with the Liberals and the Abbott government that every time the word 'tax' is mentioned it means mega tax relief for the wealthiest and the richest in the country. You can guarantee that, when it comes to Labor Party on the issue, there is no consistent philosophical view. It is wherever is pragmatic at the day that they will do. That is why last year they voted against this proposition, and it is why this year they are going to support the government in voting for this proposition.

I can tell you that, where the Greens are concerned, there is a consistent philosophical view which says very clearly that we should be raising money by taxing the 'bads', and we should be reducing the impact on low-income earners and on those people who are suffering the most in our community wherever we can. That is precisely what we need to be doing. This is not only in terms of the carbon price compensation; with the mining tax we see the government taking away the low-income superannuation investment of $500 a year to people earning less than $37,000. Of course, that is ultimately to go in the deal that the government made with Clive Palmer, Senator Lambie, Senator Lazarus and Senator Wang last year. They all voted to take away the low-income superannuation contribution in the mining tax.

The mining tax abolition cost the Australian community $6.5 billion over the forward estimates. The miners are laughing all the way to bank, and low-income people are suffering from it. With their superannuation, the increase in super from nine per cent to 12 per cent was delayed out to 2025. We are already seeing that—every which way you look at it—the people in Australia who are the ones who have suffered the most are the ones who continue to suffer the most. The richest tax avoiders get away with it, and they get away with it time and time again. What should we be doing? What we should be doing is recognising that—as the International Energy Agency has done this week, and as every other country is now doing as it faces up to the challenge of global warming—we have to absolutely and rapidly change this economy to a low carbon/zero carbon economy. This is why the Greens have said clearly that we need net carbon zero by 2040, that we need to be out to an 80 per cent reduction in emissions by 2030 and that we need to bring that down to 50 per cent at least by 2025

Now, if we are going to do that—as the International Energy Agency says—we have to increase energy efficiency in industry, buildings, and transport; we have to reduce the use of the least efficient coal-fired power plants, and ban their construction; we have to increase investments in renewable energy technology; we have to phase out fossil fuel subsidies; and we have to reduce methane emissions in oil and gas production—and yet, every which way the Australian tax system is considered, we have a situation where this government has moved to destroy those initiatives which would bring down greenhouse gas emissions. That is the task that we should be addressing.

We should also be addressing the other overwhelming trend—that is, wealth accumulation by the very smallest group of people of Australia, and the increasing stress on the remainder of the population. Mr Acting Deputy President, I can tell you that there are an awful lot of people out there who are now sitting back but who did not realise at the time that the reason they had the tax-free threshold was because of the carbon price, and because of the fact that the big polluters were paying so that ordinary people could have a tax break. That was surely a very good idea. At the same time, we had the government out there at the time telling people that the cost of living would fall because the carbon price was going—that everybody would be $500 better off. Well, I am yet to find anyone who is $500 better off because the carbon price has gone. And that is because the main driver of electricity prices was not the carbon price, nor is it the Renewable Energy Target; the main driver of electricity price hikes is the network system. And is anyone interested in fixing that? Not in the government, that is for sure, and not in Labor either. There are very clear measures you could take in the National Electricity Market to address this, but neither Liberal nor Labor are interested in doing so—because the network system is a back-pocket tax. Talk about axing the tax! If you were serious about axing the tax, you would take on the electricity networks and the National Electricity Market in Australia.

The cost of living has not come down. Emissions are now going up. People are more anxious than ever about extreme weather events. The insurance industry is absolutely worried now about how they are going to cover the costs of insurance. And who is going to pay, Mr Acting Deputy President? If this government has its way, it will not be the big miners, it will not be the BHPs and the Rios, and it will not be the Gina Rineharts of this world who will pay, in order to deal with not only mitigation but also adaptation—it is not they who are going to contribute to reducing income and wealth inequality in this country; in fact, they want to drive wages and conditions even lower than they already are. It will be ordinary people who will pay.

So I stand again to say: if we want genuine tax reform in this country, this tax white paper had better address what it is that tax is meant to do. Where is it going to come from, and what is the rationale for why it would come from that sector of the community? And how is it going to be distributed in order to reduce the greenhouse gas emissions and the costs of global warming, and to reduce the gap between the rich and the poor? That is what we need to be doing with our tax system. I really am appalled: we had a situation where people in here were standing up and dancing when the carbon price was repealed, and now we have a situation where those very same people are going out and taking away the capacity for low-income earners to get an additional tax break—in order to facilitate the wealthiest people in this country becoming wealthier; that is, the big miners in particular. Those same people—and it was every one of the people in the Liberal Party, every one of the Nationals; everyone who was in the Palmer United Party at the time; all of the Independents—were all sitting there abolishing the carbon price. And now, in the face of a huge gap in the budget—deliberately created by the Treasurer and the Prime Minister— they are saying to low-income earners across Australia: 'we are not going to honour the increase in the tax-free threshold; we would much rather see the pockets of corporate Australia get fatter at the expense of ordinary people'.

That is why the Greens are going to stand here and oppose this legislation. We are going to stick with our commitment to Australians—that is, we are going to say that the big polluters should pay their way. We did not support an $18 billion hole in the budget over the forward estimates. We are going to remind Australians that they have not got the windfall gain that they thought they were going to get—because the Prime Minister misled them every step of the way on the impact of the cost of pollution. And now the Australian people are inheriting the cost of pollution. The extreme weather events are going to cost Australians with their lives as well as their livelihoods—while those people who have benefited from the abolition of the mining tax and the carbon price laugh; while they insulate themselves from the cost of pollution as they watch an overwhelming majority of people suffer.

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I rise to briefly contribute to and oppose this proposed legislation before the Senate, the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014. The technical description of the bill's purpose is:

The purpose of the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 (the Bill) is to amend the Clean Energy (Income Tax Rates Amendments) Act 2011 and the Clean Energy (Tax Laws Amendments) Act 2011 so that both Acts have their future operative provisions repealed. Both Acts have provisions already in operation and these would not be repealed.

However, the simple explanation is this: if this bill passes, we will be taking money away from low-income earners—the Australian battlers—and I can assure you, Mr Acting Deputy President, they are already battling. I am not going to be a part of that—no way. I am very disappointed with Labor; I cannot believe Labor is being a part of this. With everything that they stand for—the battler, the blue-collar worker—I just cannot believe that they are supporting this legislation. There are better ways to raise revenue and to address this issue of budget repair.

I have put forward a proposal for tax reform calling for the establishment of an FTT—a financial transactions tax. We could pass an FTT instead of agreeing to this legislation. We could actually do that. I launched a plan on how the Australian government could raise an extra $1.4 billion per annum—and that is a minimum—of revenue, and link it to aged Australians' and veterans' pensions by introducing a financial transactions tax. I am disappointed that neither the government nor the opposition have taken the time to properly consider and debate my plan—or speak to me—to protect and boost our pensions through a targeted financial transactions tax, which would only affect about half-a-dozen high-frequency share-trading companies in Australia. High-frequency share traders account for 30 per cent of financial trades in Australia and, in America, similar high-frequency share traders account for 70 per cent of the financial markets. Before 2007 they did not exist.

I am happy to talk with either side of politics about pensions but, first, they have to tell me why they will not introduce a financial transactions tax that would work. It would work and would raise a decent amount of revenue. It would look after our pensioners and our veterans.

The financial experts from the Australia Institute say that France and Italy have introduced FTTs to fund their budget measures. Once again, we are not leading by example. We do not want to get on the front foot and show how a country can lead when it comes to FTTs! The rest of the European Union will follow the same course of action early next year. But we are still sitting here. Neither side will talk to me about an FTT. Does that not tell you something? Why can't we do the same?

I am very concerned that ASIC itself has failed to identify the number and the names of the high-frequency share-trading companies operating in Australia. How embarrassing that ASIC cannot even name these companies. It may be lying to me, which is even more disturbing. It makes up 30 per cent of our trade market. ASIC officials could not properly answer my questions and yet I am informed that high-frequency traders often take advantage of everyday investors, including self-funded retirees, and mum and dad investors. But neither side of politics gives a stuff about that. I can see you are hanging your heads and I would, too. You are skimming $3 billion of profits from those mum and dad investors every year. It is a pretty poor performance.

ASIC's Greg Medcraft and Cathie Armour said that they have a team of rocket scientists whose job it is to be on top of market intelligence, yet they cannot tell me who the high-frequency traders are. Fair go! How are ASIC supposed to ensure high-frequency traders are not front-running or scamming the market, as Greg Medcraft said was ASIC's priority, if they do not even know who they are dealing with? There are mum and dad investors out there who are investing their hard-earned cash and who are at risk of being taken advantage of—and they are being taken advantage of; there is no doubt about that and no argument there—because ASIC have clearly not been able to properly manage this money-making scheme for people who speculate on our share market with high-speed supercomputers and advanced computer programs. That is why we need a financial transactions tax. Not only will it put high-frequency traders on the same playing field as mum and dad investors and regulate them so they cannot affect market prices; it will also raise a minimum of $1.4 billion. I say that again: that is just a minimum. High-frequency traders are a handful of big companies which use technology to get an inside advantage. A financial transactions tax will create another pool of revenue without burdening Australians, struggling to make ends meet.

After what has been going on this morning, it is clear that both major parties have not recognised that there are many battlers out there. So I do wish you luck in the next election, because you are going to need it. I can now see the ads; I am looking forward to running them myself.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank all senators who have contributed to the debate on the Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014, which repeals the second round of carbon tax related personal income tax cuts that were due to start on 1 July 2015.

We have to remember that this bill will legislate the budget improvements that the former government announced and banked in their last budget but never legislated. The beneficial impact from this bill on the budget bottom line will be around $2.8 billion over the current forward estimates period. This measure has already been put to the Senate twice and, so far, of course the Senate has voted it down on both occasions. However, the government welcomes the change of heart by the Labor opposition. The government welcomes the fact that on reflection Labor has decided to back its own budget improvements measure after voting against it twice.

The 1 July 2015 round of personal income tax cuts were originally introduced to provide additional assistance to households, following an expected increase in the carbon tax, from a fixed price of $25.40 in this financial year to $29 next financial year. However, in its final budget, the 2013-14 budget, the former Labor government revised their carbon price estimates for next financial year, down to around $12, and on that basis they said that there was no longer a need for this second round of income tax cuts until such time as the carbon tax got back up to $25.40 a tonne. Of course, we know that, as a result of the policies of the government, supported by the parliament, the carbon tax is now at zero—not $12, not $25.40, not $29 a tonne—no longer pushing up the cost of electricity, no longer pushing up the cost of doing business and no longer pushing up the cost of living for families. And that is why, given that we are in a much stronger position now than we were under the previous government when they made a decision that this particular tax cut was no longer appropriate, it is appropriate that we press ahead with this measure, particularly given the state of the budgets that we inherited from the previous Labor government. Not only did the previous Labor government spend about $200 billion more in their first five budgets than they raised in revenue but they left behind $123 billion in forward projected deficits in their last budget. And of course we know that Labor left behind a budget trajectory and a debt growth trajectory, taking Australia to government gross debt of $667 billion by 2023-24 and rising beyond that period. Under the trajectory that we were on as a result of the policy decisions of the previous government, there were deficits as far as the eye could see and there was debt growth as far as the eye could see. We have been able to reduce that spending-growth trajectory quite significantly as a result of the decisions that were made in our first and second budgets. It is good to see that, one by one and step by step, all of the various measures initiated by the government to improve the budget bottom line are being dealt with by the parliament and by the Senate.

It is good to see that we are now able to deal with one of the outstanding measures to improve the budget bottom line from the 2013-14 budget. On occasion I am asked how we are going with implementing budget measures from the 2014-15 and 2015-16 budgets, and I always point out to people that we are still working to do Labor's job for them. We are still working to implement budget measures way back from 2013 that Labor initiated and banked in their last budget. They banked the beneficial effect on the budget bottom line in their last budget, but never legislated. We are still working to do their work for them, with Labor, until today, opposing their own budget improvement measure.

I conclude by thanking all senators who have contributed to this debate. This is one of the measures from Labor's last budget that we said, while in opposition, we would support in government. We are sticking to that commitment we made in the lead-up to the last election. We are pleased that the opposition has come on board in supporting their own budget measure as well. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.