Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

The President has received the following letter from Senator Moore:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The Turnbull Government's failure to articulate a tax policy.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clocks accordingly.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

As we on this side know, this government is a shambles. Malcolm Turnbull rolled Prime Minister Abbott based on the false promise of a new economic leadership and, allegedly, to usher in new politics where slogans would give way to advocacy. This new economic leadership has failed to appear, and 162 days and 13 or 14 ministers later we are seeing an unravelling government that has no tax policy—indeed, no policies at all—to help everyday Australians. The best Malcolm Turnbull can offer is a weak, scare campaign—

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Bilyk, I am going to ask you to refer to the Prime Minister by his title or as Mr Turnbull.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The best Mr Turnbull can offer is a weak scare campaign slogan on opposition policy. Mr Turnbull decided that his government is so devoid of policies, so lacking in ideas, so lacking in vision and a Treasurer so hopelessly and obviously out of his depth they would launch an old style Mr Abbott scare campaign about negative gearing. It is utterly remarkable that just months out from a federal election the government has no plan at all on taxation. So we have had months of the government secretly dipping their toes into the water to test whether a GST change was palatable.

Leaked COAG documents show that the government put a number of options relating to changes to the GST on the table. The first few options include lifting the GST to 15 per cent, lifting the GST to 12½ per cent and expanding the base to include all food and non-alcoholic drinks, and raising the GST to 15 per cent while expanding it to include food and non-alcoholic drinks, water and sewerage. They deviously did not articulate any of these options to the Australian people. Why? Because they know just how unfair they are. An increase in the GST will be an increased tax on everything—fresh food, health, education. As we know, a 15 per cent GST on everything will cost families an extra $7.4 billion in school fees and other educational expenses in the first year alone. Treasury figures show raising the GST to 15 per cent and extending it to fresh food would hit families for another $9.45 billion a year—an extraordinary impost that, as always with the GST, would fall hardest on those with the least to spare. We know that this is utterly heartless and cruel. These are the policies that we have not actually seen yet—but we hope that we eventually will, because there could be an election in a couple of months. We are still waiting on the government to articulate any policies—but we do know that being cruel and thoughtless is a common thread in this government.

The Liberals are still in confusion about their position on the GST. Just recently, we had one minister, Senator Cash, in fact, say just last week that a 50 per cent rise in the GST was still on the table of tax proposals being considered. The employment minister told Sky News:

We haven't taken it off the table completely, not at all.

This contradicted Prime Minister Turnbull, who told reporters in Rockhampton on the very same day:

I can assure you the government will not be taking a proposal to increase the GST to the election.

That leaves me with one or two thoughts: if they get re-elected then either they are going to do it anyway and just not bother being honest about it or they have realised their plan to increase the GST is unpopular because it is so unfair, and they would just like the issue to go away. The government has spent the last six months with the 'Will we? Won't we? Will we? Won't we?' conversation on the GST and, as we know, they are now left with no policies on taxation at all. They have wasted the first 2½ years of their three-year term failing to develop policies, and now they expect that whatever thought-bubbles they come up with in the next couple of months will be good enough. I can assure those opposite that the people of Australia do not think that that is good enough.

Last week, the Treasurer, Mr Morrison, gave one of the worst speeches in living memory of a sitting Treasurer at the National Press Club. Worst speech in living memory of a sitting Treasurer: 46 minutes of waffle! Even people on this side felt embarrassed and sorry for him. This was his moment to shine. He was at the National Press Club. This was his moment to take economic leadership and define how he would make the taxation system fairer—and he failed. He failed big time. It is obvious that what he wanted to talk about was a GST—and that rug had been very nicely pulled out from underneath him. All that was left were platitudes and meaningless glib statements.

I know that the great Australian dream for young people is to buy their own home. Labor has a plan to make the taxation system around housing fairer. The negative gearing and capital gains tax changes announced by Mr Shorten and Mr Bowen will deliver the most important structural budget reform in a decade. These changes will improve fairness and make a real contribution to tackling housing affordability. On negative gearing, Labor will modify the system so that investment losses can only be offset against wage income for new properties, new builds. This will help channel investment into new housing supply to improve affordability.

A strong housing market is central to Australia's successful transition out of the mining boom, and directing investment towards new building starts will obviously also improve jobs, investment and growth. Despite Mr Morrison peddling propaganda, the current tax concessions on negatively geared property overwhelmingly go to those on the highest incomes. The government's own Re:think tax discussion paper tells us that fewer than one in seven Australians earning a middle income claim negative gearing deductions. So, even though those on the other side say, 'All the negative gearing is done by nurses and school teachers,' we know that that is not true. Almost a quarter of the people earning $250,000 claim for negative gearing. So the top 20 per cent of income earners receive about half of all the benefits of negative gearing. Importantly for existing properties and other asset classes, our changes will mean investment losses can still be offset against other investment income and the final capital gain, directly linking the deductions claimed to the specific class of earnings. This will align Australia's rules more closely with those already operating in other advanced economies. We will also halve the existing capital gains tax discount to 25 per cent.

When the current discount was introduced in 1999, Australia was running a $12 billion surplus in the most favourable economic climate in a generation. Today, we are facing a $37 billion deficit as our economy switches gears and we continue the long climb back from the depths of the global financial crisis. While fairness is front and centre of our policy approach, these changes are also good economic policy. As observed by the recent Financial System Inquiry, reducing the capital gains tax discount and negative gearing concessions would lead to a more efficient allocation of funding in the economy. This would lead to more productivity-enhancing investment and more economic growth and jobs. Significantly, these changes would take effect from 1 July 2017, with all existing investments fully grandfathered—that is, anyone who has already made an investment in good faith before this date will be unaffected by the new arrangements.

In deciding to pursue these specific reforms to negative gearing and capital gains tax, we in the Labor Party have been guided by our values. We believe that the tax load should be fairly shared and not get lighter the higher up the income scale you go. Labor know that there are 475 Australians with more than $10 million in their superannuation account and that they are living tax-free on the income from those superannuation accounts. We say that that is not fair and it is not sustainable. Labor have had our plans on the table since April of last year—the best part of a year—and we have had a fully costed plan for fairer super.

In addition, Labor want to tackle the issues of the multinational tax avoidance. In 2012-13, companies shifted over $300 billion from their Australian arms to overseas parent or subsidiary companies. We want to close the loopholes that allow big multinationals to send their profits overseas. Unlike the government, who want to cut funding to schools and hospitals, we think that multinationals should pay their fair share of tax. (Time expired)

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

Senator Moore is a gift that just keeps giving when she comes up with these MPIs on activities of the Turnbull government. Acting Deputy President Bernardi, you, in business, and all of us with families, know very well that unless you are earning more than you are spending on a week-to-week or fortnight-to-fortnight basis, you are going down the gurgler. And that is where the last Labor government sent this country, as you know. The young people in the gallery should be taking notes because one day they will be having to run household and business budgets and having to vote for governments of the day. I say again that the only way to balance a budget is to make sure that you have more coming in than you have going out.

If we have a look at the situation in November 2007, this country had no net debt, it had no deficit and it had cash in the bank. Look where we are today? When this government came into power in September 2013, the deficit—the accumulation year to year—was already $123 billion! We were rushing to $660 billion of debt! The important point to be understood here is not the debt itself. Those of us with credit card accounts and those of us with mortgages know that it is not the actual amount on the credit card or the mortgage: it is what you are paying out each and every month in interest. What is of interest is that this country is borrowing offshore and paying $1.2 billion a month just to pay the interest on the debt.

We heard Senator Bilyk talk for one moment about negative gearing. By the Leader of the Opposition's own statement, this transformational tax reform would raise less than $600 million in four years. Do you know what that equates to in the interest that we are paying offshore at the moment? Two weeks—two weeks of lousy interest on the debt would account for the Leader of the Opposition so-called transformational tax reform on negative gearing on housing. If the Labor Party is genuinely interested in actually having a look at negative gearing—as Senator Whish-Wilson should note from his economic past—they need only go back to the efforts of the Hawke-Keating government, who did try to remove negative gearing. We all know what the impact of that was.

Of all funds associated with negative gearing, 97 per cent is on existing housing. Two-thirds of all Australians who negatively gear have a taxable income of $80,000 a year or less, 70 per cent of them have only one rental property and it makes the masterful average loss of $10,000 a year. It is largely people who can gain no other advantage. So we need to have a look at what this government is doing. Its first principle has been, is now and will be to ensure that we get to a situation in which this country is earning more than it is spending. At the moment we are spending $100 million a day, seven days a week, in excess of what we actually have and what we earn.

The comment was made by Senator Bilyk—and I am in complete agreement—that we have to make sure that all entities pay their tax. I was pleased that only this day Treasurer Morrison made the statement:

The Turnbull Government will apply new requirements on foreign investment applications to ensure multinational companies investing in Australia pay tax here on what they earn … The Government is committed to ensuring companies operating in Australia pay tax on their Australian earnings. Where companies fail to do so I will have powers to take action, including ordering divestment of Australian assets.

That is not a large area, but we all agree in this place that it is essential. It is essential that people pay their due taxation, whether they are Australian organisations, overseas organisations et cetera.

I go again to why we are where we are. The Labor Party proposed savings in government, and we know very well in the 2½ years that we have been in government that the Labor Party has opposed and blocked in this place savings measures it had itself proposed—well in excess of $3 billion. There have been further savings and revenue measures proposed by this government that the Labor opposition is blocking now—$5.5 billion. There is spending that Labor says we must restore from banked savings, this is loaned money—$30.2 billion. There are savings in this current 2015-16 budget that the opposition has said it will not support. The list goes on and on.

But I say this to the chamber: if you have a look at the situation occurring now in Europe, the United States of America, Eastern Europe and South America, the world in my view is headed for some very, very rocky times. Acting Deputy President Bernardi, as you know, I have had many years in the oil and gas industry. Look where oil and gas prices are today. I say to you: each time over history—going back to before the First World War—every time there has been a sustained drop in oil prices, the sequel has been recession and/or depression around the globe. Where are we today? Oil prices are down at the levels they are. When you have a look at what the major oil producing countries are, with the exception of the United States, they are countries that have difficulty with stability: Russia, Angola, Nigeria, Iran, Iraq, South American countries and some of the Middle Eastern countries.

This is not a time for cheap political point-scoring. This is not a time for this country to be spending well beyond its means. This is a time for us to be getting our debt under control. It is not a time for us to be losing $1.2 billion a month in interest alone on our debt. This is a time when this country needs to get back to a circumstance of strong economic stability: the sort of stability that we saw in 2007, which got this country through the global financial crisis when it eventually occurred, during the time of the Rudd government.

Just have a look at how different the circumstances are today to how they were then and whether this country is equipped to be able to sustain another global financial crisis: our terms of trade have declined; China, the great supplier of wealth to this country over the last few years, has slowed down economically; high commodity prices have now come off; and Australia has that debt of $400 to $600 billion and the monthly interest of $1.2 billion. Interest rates are at a historically low level. It is time that this country understood the challenge. (Time expired)

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Sometimes it is good to go third in these debates so that you can hear the views of the opposition and the views of government senators. I thank Senator Moore for bringing this motion forward for consideration today. When Prime Minister Turnbull had rolled Mr Abbott out of the Prime Minister's office, his pitch to his own party room and to the people of Australia was really twofold. It was, 'We're doing very badly in the polls, and I will improve your standing in the news polls. Prime Minister Abbott cannot sell the economic message and that is something I will do.'

It is interesting, only a few short months later, to see how that is working out. The polls are not looking all that great, but—of much greater consequence—the government's economic message is just incoherent. With greatest respect to Senator Back, who I quite like personally, he did not shed a great deal of light on the government's economic message just then. Senator Bilyk, in her own way, has just put a proposition. We do not believe that the opposition's proposals on negative gearing go anywhere near far enough. I will explain why in a moment.

But it is, nonetheless, a recognition of the revenue that is available. Having bailed out and gone a bit weak at the knees at the idea of taxing every Australian on every purchase of every item through the GST—you have gone a bit cold on that idea—there are revenue measures available through things like negative gearing and, particularly, capital gains tax exemptions. For Senator Back, it appeared to have just gone completely over his head that that is what is on the table.

It is very interesting because I can recall through six years of the Rudd-Gillard governments that we could not get a peep out of the Labor Party on negative gearing. We could not find a pulse. We went after the Treasury department: 'No, we've not been asked to model it.' It was this extraordinary tight-lipped exchange at the time, where negative gearing was considered too politically dangerous to handle. Labor will say one thing in opposition and in government another, but credit where it is due: it is out in the open now and the debate is joint. They at least—

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

You'll never be in government with that.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Do not be so sure of that, Senator Cameron, because that smug attitude is what is costing you votes. Now that it is at least out in the open, I do want to acknowledge that the Labor Party has at least bitten the bullet—there is a negative gearing policy out there; there is a capital gains tax policy out there—which is more than we can say for the government. They are screaming about the loss of revenue and yet they are not interested in actually taking it on where it is available.

In the middle of last year, we had the Parliamentary Budget Office model what negative gearing concessions to wealthy property investors actually cost the economy. It is—in combination with capital gains tax exemptions, which is the sixth largest tax expenditure in our economy—$22 billion over the forward estimates. That is an incredible transfer of wealth; that is a subsidy to property investors.

I have been kind of amused to see the Property Council, one of the few voices left in the debate still hanging on to the idea that this intervention in the housing market is in the public interest, saying, 'It's all people on $80,000 a year or less.' It is remarkable. Yes, you can do that. When you have negatively geared a whole heap of your income out of existence so that it is invisible to the Australian Tax Office, you can actually get your taxable income down below $80,000 a year—you can get it to zero.

The Property Council does not mention that in their press release: all these people who negatively gear rental properties who have no income at all. What a remarkable miracle! Are these homeless people who are negatively gearing? No, it is not. It is people who have managed to take their taxable income down below these thresholds, and then the Property Council can go on in their press release about how it is doctors, teachers, plumbers and presumably homeless people who are all negatively gearing their seven investment properties. That is how ridiculous the debate has gotten. It is costing the economy $22 billion over the forward estimates. The debate should have been over when Malcolm Turnbull stood up the other day—

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Ludlam, it is 'Mr Turnbull' or 'the Prime Minister'.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Quite correct, Acting Deputy President. When Mr Turnbull, the Prime Minister of the Commonwealth of Australia, brazenly stood up the other day and said, 'It'll crash property prices if you take away these negative gearing and capital gains tax reforms.' I would have thought that, if you strip away the hysterical language, that should have been the end of the debate. When this so-called liberal said that this $22 billion intervention in the property market is there to help push prices up, he basically acknowledged that negative gearing and capital gains tax exemptions increase property prices. What kind of intervention in the market is that supposed to be, where these incentives are being subsidised by low-income taxpayers? That should have been the end of the debate, but at least it has started. (Time expired)

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Today I rise on the matter of the Turnbull government's spectacular failure on tax policy. It has become painfully clear the Turnbull government has no plan for the economic future of our country and no idea when it comes to taxation reform. Last year, Mr Turnbull told us he was stepping up to contest the prime ministership because of the dire lack of economic leadership in the federal Liberal government. He told us he would lead an intelligent conversation with the Australian people about the economic reforms that his government would undertake. He told us that things would change. He told us that he would be different. Many Australians took Mr Turnbull at his word. They trusted that he would deliver solutions that would create a fairer taxation system to drive a more productive economy, which would create more jobs in Australia, for Australians. They believed that they would be treated as rational, intelligent human beings and that the government would be clear, direct and honest with its plans. There was also genuine goodwill in the electorate that the government was doing the hard yards and a comprehensive taxation agenda would soon be unveiled.

It is now more than five months on and what have we seen—nothing—no policy, no direction, no solutions and no idea. We have seen the Liberal Party members continue to block greater fairness and transparency in our taxation system at every opportunity, while they continue unabated in their calls to cut the wages and conditions of hardworking Australians. We have seen a party divided, a party where the Prime Minister, the Treasurer and the Minister for Finance cannot agree on what problems are facing the country, let alone find any solutions.

The reality is that while the Liberal Party might have a new front man in his shiny leather jacket, they are still singing the tired old Liberal songs that have already been roundly rejected by the Australian people. Songs of young people forced into decades of debt with $100,000 degrees, and of Australian schools being tasked with educating the next generation with $30 billion less. Songs of hospitals that have to absorb more than $50 billion worth of cuts in the face of the increasing care needs of an ageing population. And songs of hardworking Australians who would have their wages and conditions viciously cut and penalty rates slashed if the Liberals got their way. Let me be clear, while Mr Turnbull might sing in more soothing tones than Mr Abbott, the words are exactly the same.

All of the toxic Abbott era policy remains and now we have the additional burden of a government that does not have a clue what to do on taxation reform. In fact, if anything, the Turnbull government actually went backwards when they junked their own tax white paper after billing it as 'the document' that would lay out a road map for the direction of tax policy. Those opposite spent millions of dollars in staffing and advertising the white paper process before junking it completely. What a shameful waste of time and money.

The truth is that Mr Turnbull and Mr Morrison have completely dropped the ball on tax policy. They have been asleep at the wheel when it comes to the fundamental levers that will drive the direction of our national economy. The reality is that our taxation system is in dire need of reform. There are too many loopholes that allow the highest earning companies and individuals to avoid paying their fair share of tax. There are too many subsidies going to the well-off. There is too little to stimulate growth and create jobs, and despite being in power for more than two years the Liberal government has shown it has no idea how to do anything about it or is completely unwilling to do anything about it. This is a very serious matter.

The Liberal government is hopelessly divided, irretrievably ideological and utterly incompetent when it comes to economic reform. On if any given day, we see as many different policy positions as there are Liberals fronting the camera. We saw Treasurer Morrison try to convince us in his Press Club address that bracket creep is one of the greatest issues facing the country, only to be contradicted very soon after by the Minster for Finance, Senator Cormann, who has contended that it is really not so bad after all. We heard Senator Cash reiterate that a GST hike is definitely still on the cards, only days after the Prime Minister told us exactly the opposite. Clearly the Liberals are deeply divided. The only thing they could agree on was a regressive hike to the GST, and, clearly, Mr Morrison had nothing else to offer once Mr Turnbull scotched this plan in a transparent attempt to save his electoral fortunes.

This became abundantly clear last week at the Treasurer's awkward and highly embarrassing appearance at the National Press Club. After more than five months as Treasurer, all the Australian people got was 46 minutes of waffle, slogans and platitudes. It became painfully clear that the Treasurer had no framework, no vision and no policies. Even the most rusted-on Liberals would have been hard-pressed to find a single policy to celebrate from Mr Morrison's much anticipated speech. Two and a half years in power and this government cannot summon up a single idea—not one. Even their multinational taxation legislation has an asterisk where the revenue figures should have been.

The Labor Party understands that Australia's taxation system is in dire need of reform and we understand that we need a system that works for all Australians, not just the wealthy, who are able to benefit from generous taxation loopholes. In too many areas fairness has been mistaken for the interests of the rich and powerful—never more so than under this Abbott/Turnbull government. The harsh and punitive measures put forward by those opposite will not solve the problem of inequality, they will only serve to entrench it. Labor has presented a coherent and measured set of policies that would deliver more fairness to our taxation system and grow our economy without sacrificing vital investment in the health and education of our people. In the complete absence of leadership from the Turnbull government, Labor has proven we are ready and able to lead the tax debate. Labor has been very clear about our priorities and we have released a comprehensive suite of policies so that the Australian people know exactly what we stand for. In fact, we have released more policies than any other opposition in living memory—more than 50 so far. We have led the way on high-income superannuation, multinational tax, tobacco and housing subsidies.

More recently, we have offered a positive plan for negative gearing and capital gains changes which would remove distortions in the housing industry and put homeownership back in reach for prospective first home buyers. Australian taxpayers currently spend more than $10 billion each year on negative gearing and capital gains subsidies for housing investment. Despite what those opposite will tell you, the facts are indisputable. The vast majority of the financial benefit from these concessions goes to those on high incomes. Many argue that negative gearing and capital gains concessions encourage building activity. The reality is that 97 per cent of houses bought under this policy are existing properties, with few investors taking the opportunity to invest in new housing stock. If more houses is truly the goal then it is very difficult to argue that we should continue to spend billions of dollars each year with only a three per cent success rate.

But Labor's reform plan will succeed where the existing policy has failed because negative gearing subsidies will be restricted to new properties. It will invigorate the construction industry. It will increase housing supply and create jobs. It will also provide the financial means for greater investment in health and education. Labor have demonstrated that we are willing to address the difficult questions and do the hard work to find solutions that are fair, reasonable and productive.

In contrast, this Abbott-Turnbull government have been in power for more than two years and yet they clearly do not have a clue on tax policy. The reality is that those opposite either have no intention or no idea how to create a fairer tax system that will support a productive economy. And now they are trying to distract from their abject failure by waging a baseless, hysterical scare campaign against Labor's measured and sensible negative-gearing reform. Mr Turnbull promised an intelligent debate on tax to the Australian people. But now we see that he is trying to cover up the total policy void in his own government by waging a desperate misinformation campaign against Labor. Well, it is not good enough. Australians expect more from the government, and they deserve more. Those opposite need to stop sitting on their hands and start doing the work. Mr Morrison needs to stop blaming everyone for his failure and Mr Turnbull needs to front up to the Australian people. (Time expired)

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

I have realised something that has been a crystal clear awakening for me, and that is that the term 'fairness' when used by those on the other side of the chamber is just another euphemism for socialism. Everything they have talked about to do with fairness in the tax debate has been about taking more money from taxpayers and giving that money to those who do not pay tax. Everything about their debate has been about increasing the revenue for government, not about cutting programs that are wasteful or ending the money shuffle. There has been no proposed radical reform of the tax system. It has simply been about getting more from fewer people. That is the Labor way; it is the socialist way—'We will continue to take and spend your money until there is none left.'

You do not make everyone wealthier and lift a tide that all boats can float on by penalising those who are producing in the economy. We need to provide assistance and incentives for people to get out there and work. We need to provide assistance and incentives for people to get out there and start businesses, to employ and to invest. You do not do that by taxing people more.

The gerrymandering that would go on according to the plan of those on the other side is designed to make it fair for them, who have all benefited from lucrative superannuation investment schemes and no thresholds and who have all benefited from negative gearing and the tax fairness that came in under a coalition government previously. But they are going to penalise future generations even more than they have. Let's remember this: there was no debt in this country seven years ago. The mob on the other side spent hundreds of billions of dollars that they did not have that our children—your children and my children—and successive generations of children are going to be forced to repay. They implemented policies that have wasted tens of billions of dollars that we are still living with the legacy of today.

But, having said that, I want to thank Senator Moore for introducing this motion. It is not because of the wording—I understand there are spurious political games being played there—but because it provides an opportunity for those on this side of the chamber to talk about this and to prove that we are the thinkers. We are the people who are contemplating sincere and serious reform of the tax act.

So for the benefit of those on the other side, rather than apportion any ideas to the government, I am going to outline briefly the Bernardi tax plan. This is an opportunity to provide incentives and true equity and fairness to the Australian people. Let's start with the inequality between single-income families and dual-income families. On a $100,000 income, there is about a $10,000 tax disparity. That means that if you are sole breadwinner in your family earning $100,000 you are going to pay $10,000 or so more tax than if two people are out there working. On top of that, if the two people who are out there working have children, they are going to be benefiting from the childcare rebate and a whole bunch of other rebates and assistance. The inequality continues to grow.

So why don't we do something different? Why don't we say a single-income family with a dependent spouse or dependent children can benefit from multiple tax-free thresholds—maybe one for their spouse and half a one each for their child? This is about ending the money shuffle. It is about shrinking the size of government and making it truly fairer for individuals and families to determine what they want to spend their money on and get government out of it, because everything government touches turns to custard. Demonstrations of that have abounded again and again.

If you want to get more radical—and the aristocratic socialists, the merchant bankers, would like this—you could look at something like having a massively high tax-free threshold.

Senator Whish-Wilson interjecting—

Of course, there would be no subsidies for vineyards or anything like that under that scheme, Senator Whish-Wilson. But, nonetheless, you could have a very high tax-free threshold so that anyone earning under, say, $50,000 a year did not pay any tax. Principally they do not now because of the money shuffle and rebates. On top of that, you could have a flat rate of tax for those earning between $50,000 and, say, $100,000 of 20c or 25c in the dollar and maybe a 30c threshold after that. You could lower the company tax rate to the flat rate of 25c in the dollar, and in compensation for these sorts of cuts you could abolish personal deductions, subsidies and rebates and all the things that increase the size of government and decrease the size of the private sector. As I said before, everything the government tries to subsidise or infiltrate or influence goes bad.

We need to confront the demons that are within the Australian economy at the moment. That is simply that government is too big. Australians do not need more taxes. They need tax cuts. If you want to grow your economy you have to provide the incentive, and the incentives come from rewarding people for their efforts, rewarding people for taking risks. If you had a flat rate of tax after $50,000 or something, as I have demonstrated, you would not need capital gains tax exemptions or concessions, because people would be paying 20c or 25c in the dollar for every dollar, whether it came from a capital gain, speculation or from income.

That sort of stuff, of course, is anathema to the socialists on the other side. It is anathema to them because it stops them having control over what people want to do for themselves. They love being able to pull the levers and strings and say, 'We will give you a bit of that, if you do this over there.' They are channelling their inner Bernie Sanders. Senator Dastyari gives me the thumbs up because I have no doubt that Senator Dastyari, in his heart, is a true socialist. He is cuddling up there to Senator Cameron, which is a creepy, creepy thing to do, but, nonetheless, they are two peas in a pod when it comes to socialism and taxes.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Madam Acting Deputy President, I raise a point of order. I believe Senator Bernardi was trying to insult me. I am not sure that he has succeeded in doing so, but I do feel—

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

What is the point of order?

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am seeking guidance on whether or not a senator is in a position to pass those kinds of aspersions on another senator regarding—

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

There is no point of order.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

What I find interesting about that interjection is the fact that Senator Cameron has the dignity to accept that he is a true socialist and he is a Bernie Sanders, whereas Senator Dastyari on the one hand wants to embrace it, but is not prepared to. He is a bit of a chameleon; we understand that. We recognise the fact that he likes to be a bit of an actor. We have seen him perform on the ABC stage in the theatre there. His props are sometimes wrong and sometimes he does not know whether he is Arthur or Martha, whether he is coming or going, whether he is a socialist or a free marketeer, whether he is Labor right or Labor left. He is everywhere. I have seen him coming up to almost anyone in this chamber. It is spurious. I would say to you, Madam Acting Deputy President, in this place people will respect you if you are your true self and if you do not pretend to be something that you are not. I have lived by that all my life, as you would probably know, and if I could give any unsolicited advice to the socialists, the wannabe socialists or the denialist socialists on the other side, I would say, 'Be yourself.' If Senator Dastyari were asking me this, I would say, 'Just be yourself—people might not like you for it, but you will win their respect.'

Having said that, they have failed, clearly, to adopt the Bernardi taxation plan of simplifying things, because from their point of view it is about controlling and influencing people and trying to coerce their behaviour. As I mentioned earlier, every notional saving—if only Hansard could pick up that I am putting 'savings' in air quotes—savings, for those on the other side, are bigger taxes. They are expenses for other people. That is the duality and the great hypocrisy of modern politics: they talk about savings but they are actually expenses. This is why the budget is never going to balance under those on the other side. What they put forward is a fraud. We need to allow individuals to make determinations about what they want to spend their money on, free of the influence or corralling of government. Let them choose the best type of child care for themselves by cutting the taxes and not having to subsidise it. It means not taking a dollar from someone, clipping the ticket in government and giving them back 90c or 50c or 40c in rebates. That only increases the size of government, and this is what this country cannot afford. This is a very hard word for me to say, as a conservative, but it is time for a radical rethink of how taxes are implemented in this country. If we do not, we will travel the path of other countries—that is, the reward for effort is gone and government gets bigger and bigger until it is no longer sustainable. We have seen it in Greece, we have seen it in Italy, we have seen it right through the European Union. We are seeing that America is struggling with debt problems and the polarisation of the community there. We want to avoid those issues in this country. The only way to do it is to shrink the size of government, to live within our means and to allow people the opportunity to make determinations, good and bad, and to live with the consequences, good and bad, of making their own decisions. That needs a radical rethink from those on that side of the chamber. But it is clear that those on this side of the chamber are starting to think seriously about how we can reset the tax system for the benefit of all Australians.

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

It never ceases to amaze me that the ultraconservatives like Senator Bernardi are fairly happy to talk to us about the role of government. They do not see any role for government in our lives except when it comes to social issues that you rely on the government to step in and regulate, such as same-sex marriage and other issues.

Let us talk about Bernie Sanders. It is a really interesting point. Why has Bernie Sanders been so successful in the US in the primaries today? It is probably the same reason that Donald Trump has been so successful. This is an international hot topic. I heard a really good summary from none other than Mr Kim Beazley on TV the other night, on Lateline. He said that the reason that US politics seems to be going haywire is that white males of middle income brackets have had no change in real income in the US in the last 20 years, whereas Australian incomes have increased 3½-fold. In the US, trickle-down economics has failed. Trickle-down economics, small government and leave it to the market have failed the American people. That is why we are seeing such an interesting race in the US primaries.

Tax reform is partly about revenue raising; it is partly about balancing budgets; but mostly it is about having a fair and equitable society. It is using the levers that we have in tax reform to get outcomes that we want to have a more prosperous and sustainable society. My party, the Greens, have been very proud to have led on the biggest tax reform of our generation with a clean energy package, putting a price on carbon, trying to tax the superprofits of mining companies.

This government ruthlessly and cynically campaigned at the last election to rip up $18 billion worth of good policy that raised significant revenue for our country. But what they failed to tell the Australian people was how they were going to replace that revenue. In their first budget, which we all remember very well, they were going to attack pensioners, students, single parents, the sick and the elderly—and it failed, because they had no plan. Since then we have gone through a green paper process and a white paper process, constantly ruling in and ruling out what we are going to look at in tax reform. In our party, the Greens, we just want to have a sensible debate.

Talking about sensible, sadly we lost the clean energy package and now we are paying polluters billions of dollars. But we have done a good job of getting some outcomes on tax transparency. That still has a way to go, but we are convinced we are on the right track there. We have delivered a small business package, which has helped small business get up. They are the engine room of our national economy. We have delivered pension reform. That gives an increase in pensions to the least well-off this country, those who need it the most. We have constantly stood up against the GST, not just because it is a regressive tax but because it is lazy. It is lazy politics, when there are so many other things we could do. We have been out there suggesting these constructive alternatives for some time now.

I am very proud to say that my partner in crime here, Senator Ludlam, has been campaigning on negative gearing for at least 18 months, if not longer. I sat in the Press Club nine months ago debating negative gearing and capital gains tax with Judith Sloan and the Grattan Institute. This is something we have been talking about for some time. We have constantly had policies on removing negative gearing, removing the capital gains tax concessions and having superannuation tax reform. We have been happy to put those costings out there. We have been happy to lead on this. I am proud to say that we now have the support of the Labor Party in a couple of these things and, in a constructive process, they have joined us to campaign on tax reform around these issues. Adam Bandt was on the front page of The Australian last week saying that he was holding out a fig leaf to the government: 'Come and talk to the Greens about super concessions, come and talk to us about capital gains tax and come and talk to us about negative gearing. Together we can secure $22 billion of revenue and make this country fairer.' It is no surprise to me that, three days later, Labor caucus finally approved their negative gearing plan, 12 months after Chris Bowen started talking about it. Thank you for the leadership from the Greens and thank you, Labor Party, for entering the fray.

We also have a vision for infrastructure spending around this country. We have a vision for getting rid of fossil fuel subsidies and other areas where we know we can get up to $80 billion worth of revenue in this country, which we can redirect into schools, into hospitals, into affordable housing, into where it is needed, and look after those who are least well-off in this society. That is the role of government—not what Senator Bernardi said. The role of government is, when markets fail, being there to protect those who are vulnerable.

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

This week marks just 12 sitting days before the budget is brought down—just 12 sitting days. The government is in a shambles over tax, and that was amply demonstrated last week in the embarrassing Press Club address by the Treasurer, Mr Morrison. To this end, I saw a news headline last week which said 'Malcolm in a muddle'. Is it any wonder? Last week there was a universally bagged speech by the Treasurer which, at best, went down as a backdown on his rhetoric about the generous tax cuts he wanted to deliver, which, according to the Treasurer, would have enabled Australians to get on. But, of course, that was just a furphy, as any gains would have been swallowed up by their big fat new tax: their proposal for a massive hike in the GST.

And where is the government on GST? Who knows. On the day the Prime Minister ruled it out, Senator Cash ruled it in. Over the last couple of days we have had Mr Morrison ruling out changing super to enable low-income earners to opt out and, at the same time, the new Deputy Prime Minister ruling it in. One assumes the Deputy Prime Minister outranks the Treasurer. But wait—there's more. Two more government members have taken the proposal a step further by saying, 'Let's extend this exemption to include students.' That's right, students—and why? Well, they will need additional income to pay off their HECS debt, their $100,000 degrees, because that proposal is still on the table.

Back to Mr Morrison's National Press Club address: it should have been a bit of a hint and a promise of what was to be expected in the upcoming budget just 12 sitting days away, but instead it was once again a contradiction on the issue of bracket creep. We heard that Mr Morrison said that bracket creep was a job killer and a growth killer, and he confirmed that again at the National Press Club by saying it was something that should be a priority. However, his cigar-smoking mate, the Minister for Finance, Senator Cormann, contradicted him the very next day when he said that bracket creep is not there to the same extent as it might have been in the past. Let's not get to the real issues of the tax avoidance of some almost 600 companies in this country that those opposite have refused to do anything about. We saw their pathetic deal with the Greens last year, which did not go any way to looking at how we might really address companies paying their fair share of tax in this country. So the real issues are still there. The Turnbull government simply wants to attack those at the bottom end. It thinks Australians should pay more through a GST or through cutting back on pensions or through all the other sorts of measures we have seen in the two budgets which have failed it so far.

What about when the PM said he wanted to have a conversation with the Australian people about tax? That is pretty much all he said from the day that he took over from the other failed Prime Minister, Mr Abbott. My advice to the Prime Minister is that he really needs to start that conversation with his own government in their caucus room, as we see senior members of government, cabinet ministers, on a daily basis contradicting one another and indeed contradicting the Prime Minister.

Goodness knows what is going to be in the budget. It would seem that Mr Morrison has had to rip it up and start again because he was getting contradictory messages from all sorts of people—not backbenchers, but senior members of the government who want to be out there contradicting one another. It is shambolic and it is a disgrace. I have not heard it, but we know there is an internal conversation going on, and it is one of dissent within the Turnbull government about where to go on tax. That is what we have seen: shambolic government and empty promises among other things. There are 12 sitting days until the budget and we have seen no real hint of what is going on, apart from there will be announcements at some point into the future. It is shambolic and the Australian voters know that—they know it well and truly—the gloss is off.

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to contribute to this very important debate today. I want to focus on two or three areas of tax policy, and the first is the achievements of this coalition government. When it comes to tax, we got rid of the Labor Party's carbon tax. We got rid of that job-killing carbon tax for the good of households—so they had lower electricity bills, more money in their pockets and lower gas bills. We lowered the cost of doing business by lowering the cost of electricity; that was a great achievement and good for business. We got rid of the Labor Party's ill-thought mining tax, which was an attack on one of our most important industries. We came in promising to get rid of it and we got rid of it. We have focused on giving tax relief to small business—hard working men and women who employ millions of people and who go out and take risks. We said to them, 'We will give you a small business tax cut and a small business instant asset write-off.'

Our runs are on the board when it comes to tax. They are in stark contrast to the attitude of the Labor Party, and not just the taxes they imposed on us when they were last in office. They did their best to take one of the best performing parts of our economy, the mining industry, and kill it and they did their best with the carbon tax to have an additional hit on families and on business. Unfortunately, we know that the Labor Party, if they came back into office, have a plan to tax Australians more. Having not learnt the lessons in their last failed experiment in government—which was all about taxing more and spending more—they have a plan, if they come back in at this year's election, to tax more and to spend more. Who would have thought? They have very clearly laid that out on the table. Their plan is to tax Australians more—not to try to get the budget under control or to have policies that stimulate and grow the economy and grow jobs. We have seen 300,000 jobs created in this country in the last 12 months; that does not come about by accident; it comes about through policies which encourage business, policies which encourage people to employ others and which encourage people back into work. That is what we have been focusing on.

The Labor Party's alternative is to tax more. We know they are going to whack people's retirement savings by hitting their nest eggs with additional taxes. I want to focus on one of those proposals, their plan to tax housing in Australia—this massive housing tax proposed by Bill Shorten and the Labor Party. If they seriously think that this will not have a significant negative impact on ordinary Australian homeowners and on the broader Australian economy, then they have to be kidding themselves. The idea that you can make such a dramatic change to a longstanding, bipartisan policy and that it will not have a significant impact on house values! As the Prime Minister has pointed out, if you take out 30 per cent of the buyers, what is going to happen? We know what will happen—people's homes will be worth less.

If you vote for the Labor Party and you vote for this negative gearing policy, your home is going to be worth less. They can pretend that that is not the case, but we all know it to be true. We have heard from a range of voices in this debate, including from the Property Council and the Master Builders Association, which makes its living from building homes. You would think such a group would like a policy that is apparently about building more homes, but they see severe dangers to the property industry as a whole. But do not just take their word for it, what about the Grattan Institute? The Grattan Institute supports this policy; they are not critics of this policy and, along with Labor's McKell Institute, they helped to create this policy. Regardless of whether that is the case, they support the policy, but what do they say about housing values? According to the Grattan Institute, they will drop by up to 10 per cent. But that is the opinion of the group that supports the policy, and so it may well be more.

We talk about first home buyers and the reason that so many first homebuyers are locked out of the market is that state and territory governments, particularly of the Labor bent, have held back on land release and have unreasonable planning laws which restrict the amount of land coming on board. Is this going to magically change under Labor's policy? Of course, it will not. What about all those home buyers who purchased a house a year ago or two or three or four years ago and who took out large mortgages to make a major investment? The Labor Party is saying to them, 'We do not care about you. We are happy to see the value of your home drop.'

What is this going to mean for future borrowings, as banks consider whether houses remain a good risk? People might find they cannot get into the property market, even with those lower values, because it will be harder to access finance. What kind of flow-on impact will this have on the economy—when people lose significant amounts of their wealth, do not have any confidence, do not have the same disposable income, do not have the same ability to access funds necessary to make major purchases? What is that going to do for business and spending? This is the Labor Party's future. This is the future for Australia under the Labor Party—more taxing, more spending and, most importantly, when it comes to negative gearing changes in particular, a whack on the value of the family home and a whack on the value of all properties. This is what the Labor Party is advocating, and a coalition—(Time expired)