Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of this bill. This bill amends the thresholds so that the rate of tax payable on taxable incomes from $80,001 to $87,000 for individuals is 32.5 per cent. The government announced this measure in the 2016-17 budget and Labor supported it. It means that individuals with taxable incomes from $80,001 and up to $87,000 will now be subject to the lower rate of tax of 32.5 per cent rather than the rate of tax of 37 per cent which currently applies to taxable income over $80,000. It will provide a maximum tax cut of $315 per annum on incomes of $87,000 and above.

With this bill, Labor is pleased to be supporting modest, sustainable tax relief for up to 3.1 million Australians and their families. However, despite bipartisan agreement, the Turnbull government has still managed to make a mess of its implementation. As David Crowe reported in The Australian on 2 September, millions of workers will have to wait until the middle of next year to receive all of the benefits. This is despite the government's assurances in May that workers would receive the gains far earlier. Mr Crowe reported that:

Workers will not see the lower rates applied to their salaries for at least another month, which means they will not collect the cut due to them for the first quarter of the financial year until they lodge their tax returns after July 2017.

Yet, on budget night, Mr Morrison proudly boasted he would deliver income tax cuts from 1 July this year. He said:

From 1 July this year, we will increase the upper limit for the middle income tax bracket from $80,000 to $87,000 per year.

Yet the government did not introduce legislation to ensure that the tax cuts would start from 1 July this year before the election.

When asked on ABC Radio how the how the tax cuts would be introduced by 1 July, given that the government was unlikely to be able to legislate them before prior to the election, the Prime Minister said that:

That is really up to the Labor Party whether it's legislated, but certainly it will be covered administratively after the election, we expect the Parliament to come back and ensure that all of the legislation supporting the Budget measures is passed.

Yet in the Pre-Election Economic and Fiscal Outlook, prepared by the Secretaries of the Departments of Treasury and Finance, it became clear that the tax cuts could not be delivered from 1 July as promised. Instead it said:

(T)he Commissioner has indicated that the Ten Year Enterprise Tax Plan — targeted personal income tax relief measure requires the relevant legislation to be passed before the change will be incorporated into the income tax withholding schedules.

We now have confirmation from the ATO that the income tax cuts scheduled for 1 July 2016 have only come into effect on October 1, and Australian taxpayers will have to wait until they lodge their tax return after 1 July 2017 for the extra tax they have paid for three months to be credited back to them. Labor immediately gave bipartisan support to these income tax cuts, so there was no excuse for the government not to legislate these straight after the budget in May this year. It took five months from when the Treasurer promised these income tax cuts in the budget for him to actually introduce the required legislation into the parliament.

This government is so incompetent that, even with clear and unambiguous Labor support on budget night for these tax cuts, the Prime Minister and Treasurer still manage to fail in the basic task of introducing and passing legislation through the parliament required for them to take effect before the election. The Tax Commissioner confirmed in the Pre-election Economic and Fiscal Outlook, that these tax cuts would not be delivered from 1 July as promised by the Treasurer, but instead would only be implemented when the relevant legislation had passed the parliament.

Scott Morrison must outline when this same advice from the ATO was received by the Prime Minister, himself or his office. This advice goes to the very basis on which the Prime Minister and Treasurer continued to publicly argue, including throughout the election campaign that the income tax cuts would flow 'from 1 July'.

Instances of ineptness by this Treasurer and this government in undertaking their core responsibilities have regrettably not been rare. Other recent examples of the Treasurer's mishandling of policy include: presenting a bill to the parliament that miscounted the savings in the omnibus legislation after weeks of telling us it would be $6.5 billion in savings when in fact the savings were less than $6 billion; recent media reports exposing how he and the Prime Minister got rolled in cabinet by the conservatives in their own party on their desire to pursue reform of negative gearing; being forced to further delay the introduction of savings attached to the government's super package following an embarrassing stalemate, again, with his own backbenchers, and despite the government making an 'iron-clad' commitment to the electorate during the election.

We also need to remember the context in which these tax cuts are being prosecuted by the government. Scott Morrison has offered up this modest tax cut for those on incomes over $80,000 as a crude cover for his cuts that have affected the cost of living of every single low- and middle-income Australian. The government's double dealing in the budget cannot go unremarked upon. Yes, the government is seeking to provide some limited relief to Australian taxpayers, but this in no way makes up for the sustained assault of the Abbott-Turnbull government through its budgets on services Australian people rely upon. The government can try as it likes to provide a fig leaf for its regressive agenda—which has been consistent, irrespective of who happened to be Prime Minister at the time—but no sleight-of-hand tricks can conceal the essential truth of that broader agenda. The 2016 budget was merely the last confirmation of an approach unchanged since 2014. It contained the same $80 billion of cuts to schools and hospitals, the same cuts to working- and middle-class families, the same cuts to Medicare, to child care, to aged care, to universities, to paid parental leave, to pensioners and to carers.

Labor does support the tax cut contained in this bill, but we acknowledge that three-quarters of Australian workers will receive no tax relief from the 2016 budget and that those same Australian workers who miss out will disproportionately bear the brunt of this government's cuts to schools, hospitals and Medicare and to the family supports they rely upon. It is a simple truth that you do not create the jobs of the future by cutting education, making health care inaccessible and unaffordable, underinvesting in infrastructure and making broadband slower.

Labor does believe in delivering a fair and sustainable tax system. We understand that this should provide incentives for all Australians to work and engage in productive enterprise. But it must also guarantee adequate revenue to fund the proper role of government, including quality public services that all Australians deserve.

Maintaining public confidence in Australia's tax system is critical and depends on simplicity, transparency and everyone paying their fair share—something this Treasurer and government have manifestly failed to grasp or deliver. In its recent publication Choosing opportunity, the McKell Institute outlines in a comprehensive fashion why, as policymakers, we must be concerned with the impact of tax and budgetary policy and what it can achieve. As the Choosing opportunity report makes clear, there are issues that demand our urgent attention. In Australia, inequality is on the rise. The middle class is being squeezed. Dignity in retirement is uncertain. The gender pay gap remains effectively unaltered since 1979. And, for a generation of young Australians, the dream of home ownership is simply way beyond reach.

Labor wants Australia to succeed. We want a tax system for a growing, job-creating, wealth-creating economy. As Bill Shorten said in his recent speech on inequality to the McKell Institute, Labor is concerned with issues such as reforming negative gearing, needs based funding for schools, affordable university and equality for women not just as totemic indicators but as economic levers. Used correctly, they are creators of growth, not programs paid for by forgoing growth. They are about investing in lifting people into work and in supporting their full participation in our society and our economy.

Labor supports tax relief for working Australians, but we will never walk away from properly funding schools or Medicare. Labor will never slash Australia's safety net in a misguided effort to provide tax cuts for big multinationals or fight tooth and nail to keep tax loopholes open. We are genuinely forced to ponder what could be achieved if Malcolm Turnbull stood up for everyday Australians instead of trying to implement reckless and unsustainable tax cuts for big business.

In saying that, Labor has and will work cooperatively with the government when what it proposes is reasonable. We have proven that with our principled negotiations on the omnibus savings bill, and we have taken the sensible approach of supporting other budget measures which merit support. This includes supporting the very welcome restoration of Labor's low-income superannuation contribution, an initiative to support low-income earners but particularly women, which the government has renamed but restored in the 2016 budget, three years after announcing its abolition.

Although I canvassed this at some time in the chamber during the last sitting, we are similarly pleased that the government has seen the light on our reforms to tobacco excise to combat the serious health and economic impact tobacco addiction has on the Australian community. With a significant fiscal challenge ahead of us, I invite the government to continue in this vein—to adopt more of our positive initiatives that deliver for ordinary Australians while fairly and sustainably improving the budget bottom line. I can even helpfully direct senators opposite to some other measures that they ought to be considering.

The government should take another look at and reconsider its position on our proposed reforms to negative gearing and capital gains tax. The careful, calibrated reforms to negative gearing and capital gains tax that we took to the election recognised that far too many working- and middle-class families are increasingly being priced out of the housing market. The negative impacts this circumstance has on intergenerational equity, economic growth and the Commonwealth's fiscal position require the urgent attention of this government. Labor's proposal ends what are poorly targeted and clearly unsustainable tax subsidies. By limiting negative gearing to new dwellings, we would help put the Australian dream of home ownership back within reach and simultaneously provide significant improvement, over the forward estimates and beyond, to the budget.

The other key measure that most evidently deserves the government's consideration is the package of superannuation reforms Labor took to the election. When the government's own Financial System Inquiry finds that 10 per cent of Australians receive 38 per cent of Australia's super tax concession, more than the combined benefit of the bottom 70 per cent of Australians, it is patently clear that the system is unbalanced and unviable. This is particularly evidenced when the same inquiry concedes that these tax concessions are unlikely to reduce future age pension expenditure significantly. Without action, the cost to the taxpayer of superannuation earnings tax concessions or forgone budget revenue will almost double over the next four years, from $11.8 billion in '14-15 to $22.4 billion in '17-18 and will continue to grow at a rate that is unsustainable. Labor has proposed a package of superannuation reforms which are fair. They deliver more budget repair than the government's current mess on superannuation and will go a long way towards stemming the ballooning cost to the budget of the existing concessions over the longer term.

In conclusion, I reconfirm to the government: you will have a willing and cooperative partner if you bring into the parliament proposals which meet the test of contributing to budget improvement while making our country a fairer place, and we are pleased to support this bill today.

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

Every time we get up to speak in this place it is a privilege because our words and our actions can actually make a difference. They can make a difference on the issues that matter to us and to all Australians. The Treasury Laws Amendment (Income Tax Relief) Bill 2016, from my personal perspective, is one of the most important pieces of legislation that is going to come to the Senate this year. It is important because it symbolises something that is deeply meaningful to all Australians and in fact to many in the community around the world. It is deeply important because we are now voting on this bill today to sign over $4 billion of Australians' money to the wealthiest Australians in a tax cut.

If you earn over $80,000 in this country, which is 20 per cent of Australians, you are about to be given a tax cut. So 80 per cent of Australian taxpayers will not get the benefit of a tax cut. It is important because inequality and tackling inequality are the true moral challenges of our time. I remind senators that our actions, our voices and our vote in the Senate is what matters. Today it shames me that the Labor Party have joined with the Liberal Party to give a tax cut to the most wealthy Australians—Australians like myself who earn over $80,000 and who do not need $6 a week or $315 a year in a tax cut. That money is needed by less wealthy Australians, many of whom are on the breadline and are struggling.

I cannot fathom that Labor has only put up one speaker on this bill today—one speaker who did not even speak out her time. That equates to an allocation of $200 million a minute. How cavalier of Labor to take this issue so casually. We have had no inquiry through the Economics Committee and we have had a rushed process to get a report and a recommendation to pass this bill because Mr Bill Shorten and Mr Chris Bowen decided to side with the Liberal government during the election campaign.

So here we are at the beginning of the 45th Parliament and we have had two pieces of important legislation. Three weeks ago this Senate passed $5 billion in savings because this Prime Minister said that he believed the moral challenge of our time was budget repair and paying down debt. So Labor teamed up with the Liberal Party to take money off single parents, off students, off Newstart recipients and, sadly, off clean energy action in this country to raise $5 billion because they believed the government and they joined with the government in this bid to pay down debt. What are they doing today? Out of the $5 billion that they ripped off ordinary Australians, they are now giving $4 billion back to wealthy Australians. Out of the $5 billion of savings that we delivered three weeks ago we are now giving back $4 billion to the wealthiest Australians.

In the 1890s US economists first offered up what was called the horse and sparrow theory. It went along the lines: if you give a horse more oats then there will be more to pass through for the sparrows to enjoy. Give the horse more oats and there will be more to pass through for the sparrows to enjoy. Does that sound familiar? With different waves of enthusiasm across generations since, policymakers have been fed the same foodstuffs as the sparrows. Tax cuts to the wealthiest will trickle down to the benefit of the masses. Apparently, we all win if the richest have even more money to play with. But the evidence tells a different story and it leaves trickle-down economics exposed as a naked claim used to shore up the position of those already enjoying wealth and social position. History shows that the wealthiest do not tend to direct their newfound tax cuts into more consumption. Instead, they either increase savings or plough it into tax advantage investment vehicles like superannuation or negatively-geared investment properties. There is an active and growing consensus around the world that the trickle-down theory should be expunged and never again exhumed. Yet that is exactly what we are doing here today. Not only are we standing up to fight inequality, we are actually adding to it by voting for this bill here today.

Let's look at the political winds that are blowing across this globe, including in this country. For those who saw the US presidential debate yesterday, all the commentary in the mainstream media and social media was about Donald Trump and the rise of the Trump phenomenon in the US. We have talked about the Brexit movement in the UK, and of course there has been a lot of speculation on the rise of my colleagues over here on the other side of the chamber, One Nation. Let me tell you what the thread is that ties all these things together: that thread is inequality. People are feeling like they have been left behind. They are feeling that they have been ignored by their political system and their politicians because the gains and spoils of our economic system across decades of globalisation have not been shared evenly. That is why we are seeing such radical political movements around the world and that is actually what we need to act on. Our entire political system is now under a challenge because of rising inequality and our inability in a place like this to tackle this.

Martin Parkinson recently came out publicly and said that he believed one thing this government needed to do was to look at redistributive policies that help share the spoils of globalisation, especially trade deals. A first-year economic student will tell you about this. It is called the compensatory principles. In theory, the winners should compensate the losers, but that has not happened. In no world that I know have the winners—the big multinational corporations—compensated those workers you, Mr Acting Deputy President Marshall, talked about in this place who have been left behind. That does not happen. It is our role in government to make sure that it does happen. Professor Thomas Piketty, one of the world's most famous economists, is in Sydney this week to talk about inequality, which he sees as a severe challenge for Australia, and the need for new policies to tackle inequality. It is the true moral challenge of our time, and this consensus that we need to do something about it is lapping upon our political shores. The last few months have seen Labor MPs join with the Greens, at least in their public speeches, attacking trickle-down theory with gusto. I have heard this issue talked about during Senate debates in this chamber. We have seen economics spokespeople shifting from being past advocates of tax cuts to staying silent on who benefits from cutting taxes. It even culminated in the opposition leader, Mr Bill Shorten, claiming on the eve of the election that the Turnbull government:

… want Australians to embark upon a radical, expensive experiment in trickle-down economics.

We know how this story ends.

Reagan tried it. Thatcher tried it.

A generation later we got Trump and we got Brexit.

Correct. I totally agree with Mr Shorten. So why is Labor giving a tax cut to the most wealthy Australians today? Anyone who earns over $80,000 gets a measly $6 in their pocket per week—$315. What economic benefit is that going to have in terms of increased consumption? It would be a lot more valuable for those on the breadline—$6 a week would matter. But we are not giving them money. We are giving it to the most wealthy people in this country.

It is not just Mr Shorten who has had strong words on the subject. Mr Chris Bowen has recently given a number of speeches on the need to tackle inequality and trickle-down economics. Words are cheap if they are not backed up with actions. Senators from my home state of Tasmania have spoken about this. Senator Polley told the Senate on 4 May:

I rise to speak about the Turnbull government's budget that puts high-income earners and big business before families, students, patients, pensioners and low-income earners. This morning in my home state of Tasmania, four out of five workers who make less than $80,000 woke up to find out that they were getting nothing from Turnbull's government's budget. Eighty-two per cent of the working population in Bass have been left off the map and will not get a tax cut.

That is exactly what Senator Polley is going to vote for today. On the same day, Senator Singh said:

'Let's protect the higher income earners'—that is the mantra of the Turnbull Liberal government—'and let's do it at the expense of families …

…   …   …

Those who earn more than $80,000 may look forward to this tax cut, but if you look at Tasmania 80 per cent of its workforce earns less than $80,000. That is how out of touch the Turnbull government is with the states that it is supposed to be thinking about and providing for, as it was last night in its budget. Four out of five Tasmanians earn less than $80,000. They are the people who are going to be affected.

I know that Senator Singh is not here, but, if she were, either she would abstain from the vote in the chamber, as she often does on controversial votes, or she would also vote for this. On 9 May, Senator Carol Brown tweeted, 'More than 230,000 Tasmanians will not benefit from the government's tax cuts. This shows Turnbull is out of touch.' I have here a whole list of other MPs who have gone out in a similar vein.

Senator Cameron interjecting—

Senator Cameron, let me finish with your leader, Mr Bill Shorten: 'This is a budget that favours millionaires over battlers, high-income earners over families.'

Senator Cameron interjecting—

Well, Senator Cameron, guess who is going to get a tax cut today out of nurses, clerks, store people, aged and disability carers and millionaires. Millionaires—you are correct. Millionaires are going to get the tax cut today. Congratulations, Labor, and congratulations, Liberal Party.

I want to deal with a couple of specific issues that have gone unnoticed about this bill in terms of increasing inequality, gender inequality. Under this bill, women are half as likely to receive the benefits of a tax cut than male workers. Twenty-eight per cent of male workers in this country will receive a tax cut, but only 13 per cent of women will receive a tax cut. The Australia Institute did some fantastic work on whose electorates benefit from this tax cut. I do not know whether it is just a coincidence, but the first electorate in the top 10 electorates to benefit from this was Wentworth, the Prime Minister's electorate, where 34 per cent of people earn above the threshold. Sadly, the electorate of Lyons in my state of Tasmania is in the bottom 10 electorates, with only six per cent of people in Lyons earning above $80,000.

We can put these two measures side by side—the omnibus bill that was before us in the parliamentary sitting three weeks ago and the bill before us today, which will give $4 billion in tax cuts to Australia's highest income earners. It is going to cost us $4 billion in lost revenue. This paints a very dire picture for those of us in this place who care about tackling income inequality. The income tax cuts will put $315 into the pockets of each of us as members of parliament, and into the pockets of banking executives—I would have loved to have been involved with the banking inquiry last week, but it was only members of the other place. I would have dearly liked to have asked each CEO how they plan to spend the extra $6 a week they are going to be given by this government.

If this measure is truly targeted at bracket creep, we should be recouping revenue from those earning above $180,000. According to a number of submissions to the Senate Economics Committee, those in the tax bracket below $80,000 are the ones that most sufferer from bracket creep. That is not part of this bill. I have written to Mr Chris Bowen, the shadow Treasurer, asking him—if he is going to vote for this bill today—to at least consider maintaining the so-called deficit repair levy for high-income earners that was introduced in the 2014 budget. The Greens have always wanted to make that permanent so that high-income earners do not get their tax back from that measure.

These issues do not often get covered by the mainstream media if Labor or the government do not want them to be covered. But let us address the issue of this being a tax cut for middle-income earners or middle-income Australians. That is absolute claptrap. This is an income tax cut for the wealthiest Australians—the wealthiest 20 per cent of Australians.

The Australia Institute has looked at what constitutes middle-income earners. It is true that the average income in this country is around $80,000, but that is dragged up because it includes the multimillionaires and the CEOs who were at the banking inquiry last week, who are earning $8 to $10 million a year. That average income of $80,000 deals with full-time workers. If you include part-time and casual labour then that figure drops considerably.

The true measurement would be the median income earnings. According to the ABS, the median income in this country for 2014 was $69,000, while the average wage—average versus median—was nearly $80,000. Again, that is only for full-time workers. When we include all kinds of workers the average wage falls to $62,000 but the median income in this country falls to $52,000. So middle-income Australia, according to all the experts who use median income, is $52,000, which is way below the threshold of those who are going to get this tax cut above $80,000.

Whichever way you look at it this is a tax cut for high-income Australians. I think we in here can all agree that, on a personal level, we do not need the extra $6 a week. I do not think the economy is going to benefit from that either. But those who do need it are not going to get it. The savings that we booked three or four weeks ago—which we took off clean energy, which we took off tertiary education students and which we took of single parents—are nearly gone. Now we are there is another bill about to hit the Senate that will give businesses tax cuts. It will give big businesses tax cuts. This is ramping up trickle-down economics and it will make inequality worse.

We have an opportunity in our limited time—and in the scheme of things we all have limited time in this place—to make a difference, to make our vote count and make our words mean something, and that means voting against this bill today.

I do agree with some of the things Senator Gallagher said today. The big things we do need to tackle in this parliament, like concessions of negative gearing, capital gains tax and proper superannuation concessions, are things we should work at together with Labor and with the Liberals to get some real economic reform done in this country. That is what is going to raise revenue and tackle inequality. We can walk and chew gum at the same time.

Why is Labor going along with this neo-Liberal agenda of trickle-down economics? I do not understand. I genuinely do not understand it. Senator Cameron, because I always enjoy hearing you speak—that is the truth—I wish you were on the speakers list today so you could explain that to me—

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

I will see if I can get on.

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

Please do. Through you, Acting Deputy President, I would very much enjoy your contribution. I move:

That this bill be withdrawn and redrafted so that bracket creep is addressed without further propagating income inequality in Australia on the flawed theory of trickle-down economics by providing a tax cut to the top 20 per cent of Australian taxpayers.

Now is not the time for tax cuts. Now is the time for the Labor opposition to match its media releases with its actions and stand against the expansion of income inequality and gender income inequality in Australia. Now is the time for our parliament to give momentum to the global discrediting of the horse and sparrow theory, which started nearly 100 years ago and continues to be propagated, which by any other name smells just as bad as the vision of that theory. I say to Labor: this is your last chance on this bill to make a difference. Please vote this down and work with the Greens and the crossbench on policies that tackle inequality.

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

Today I vote for $4 billion of tax cuts over the next four years. I can do this and look the next generation in the eye because, in the previous sitting week, I voted to cut government spending by $5.9 billion over the next four years.

My position is clear and responsible: to reduce the tax burden, to reduce government spending by even more and to ease the burden of debt on future generations. There will be some who take a different position. Some, like the Greens, oppose both cuts to government spending and cuts to tax. Taking this position reveals a misguided faith in big government—dare I say 'social ownership, comrade'—but at least it would not be burying future generations in debt.

But there is another completely indefensible position. This is to oppose spending cuts, but to let tax cuts sail through without a whiff of opposition. Any party that takes this position has a lot of explaining to do, not just to the parliament and the people but to future generations. Those who voted against spending cuts in the previous sitting week were the Greens, the Nick Xenophon Team, Senator Lambie, and Senator Culleton, of Pauline Hanson's One Nation. I expect each of them to express their opposition to today's tax cuts. If they do not, then their position of opposing spending cuts but supporting tax cuts would represent a failure to have any regard for future generations—that spending by today's generation can be paid for by future generations.

Today's bill will reduce the income tax burden by up to $315 for Australians earning more than $80,000 a year. This is justified, given how huge the tax burden is for these Australians and how much more these Australians pay in tax compared with other Australians—for instance, even after the passage of this bill, Australians earning $87,000 a year will still pay $21,562 in income tax, including the Medicare levy. That is a quarter of their income. Even with the passage of this bill, middle- and upper-income Australians will still lose a much greater share of their income through taxation than lower-income Australians.

This is called progressive taxation, but it is really just gross discrimination against people who earn money. Even a flat tax would have high-income earners paying well in excess of the benefits they get from government spending, so I welcome this bill's slight reduction in the extent of discrimination.

We need to go further than this, by flattening our tax rates and winding back the welfare state. The combination of our welfare system and progressive income tax rates means 48 per cent of households pay no net tax. This cannot continue. It is unjust for high-income earners and promotes dependency for low-income earners.

Australia's tax burden is high, no matter how you look at it. It is high by historical standards—for instance, 50 years ago taxes averaged $5,000 per person in current dollar terms, in other words, after adjusting for inflation. This tax burden has grown consistently from decade to decade so that it now averages more than $18,000 per person, with middle- and upper-income Australians paying much more than this average, which, as I said, is in real terms.

Australia's tax burden is also high by international standards. Once you account for Australia's system of compulsory superannuation contributions and the system of social security contributions prevalent in Europe, our tax burden is higher than the weighted average for the OECD.

When we look outside the OECD, each country that is richer than us has a markedly lower tax burden than Australia—for instance, the tax burden in Hong Kong is around 15 per cent of GDP, which is around half the tax burden in Australia, and the tax burden in Singapore is even lower.

My position is clear. I commend the tax cuts in the bill we are currently debating, just as I commend the spending cuts that made them possible. I urge other senators to come in here and put their position on tax and spending cuts on the record.

(Quorum formed)

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

I rise today to speak against the Treasury Laws Amendment (Income Tax Relief) Bill 2016. Our political debate is often defined by where the parties stand when they oppose each other, when they have competing views on different pieces of legislation. But, actually, you get a lot more insight into Australian politics when the two parties that form the government and opposition in this place agree.

What we see are the Liberal Party and the Labor Party always agreeing to give tax cuts to the wealthy. We see them agreeing on areas of public policy like the brutal treatment of asylum seekers; the overreach in the approach to counterterrorism; going to war without parliament approving the committing of Australian troops; and, of course, on donations reform, where they both get a huge benefit.

Now, it is no surprise that the Liberal government are keen to give a tax cut to the wealthy. They represent themselves as the party of big business—as the party for the big end of town. So it is hardly surprising that the Liberal party, who have for many years now decried the state of revenue within the budget, would put a lie to their claim that we have a budget emergency and argue for a huge tax cut to the wealthy. We expect that from the Liberal Party.

But what makes this united support more interesting is that we have the Labor Party supporting it. When you consider the words of the shadow Treasurer, who has, indeed, begun to make a big deal out of the issue of rising inequality and the failure of trickle-down economics, it makes their support for this legislation much more interesting.

What it does is indicate that those words are just hollow words—that they are used in some political positioning opportunity to position the ALP as a party that is committed to fairness. Instead, the actions of the Labor Party now in supporting this government legislation prove that they are just hollow words.

You need to look at this piece of legislation against the recent omnibus bill from the last sitting weeks to show the bipartisan consensus between the Coles and Woolies of politics—the Labor and the Liberal parties—to support the big end of town and people on high incomes at the cost of the most vulnerable people in the Australian community. So let us remember that the omnibus bill that this party approved only a few weeks ago—indeed, during our last sitting week—cut billions of dollars from renewable energy, from families and from carers. It was a real attack on some of the most vulnerable people in the Australian community.

The impact of this bill is that 383,000 families with a household income of $80,000 lose around $730 per child. With the passage of this legislation, if you are a family earning $200,000 to $300,000 a year you will get a boost of about $630 each year. So just consider that. The omnibus legislation that took the knife to a whole lot of really critical family support payments and, indeed, other social supports and that passed in last week of parliament with the support of the Labor and Liberal parties means that families earning $80,000 are going to be worse off—383,000 families worse off to the tune of $730. With the passage of this legislation, if you are earning $200,000 or $300,000—that is, those of us in this chamber; many of us are earning well above the average wage—you will get a boost of $630 a year. We do not need it. Those families that are struggling and on the margins need the support more than we do.

So this is the government and the opposition—the Coles and Woolies of politics—working together over the last few weeks to grow the gap between the rich and poor at a time when rising inequality is something that the shadow Treasurer espouses is one of the great challenges before us as a nation. I simply do not understand the point of $6 billion of spending cuts on renewables and on carers when, in the next week, you wipe out those savings with $4 billion of tax cuts for the top 20 per cent. These are cuts to the people who need it most and a huge pay cheque for those of us who do not.

Shadow Treasurer Bowen made a speech recently. I will quote him because I agree with him. I think he was absolutely right. The case for the middle class was the speech. The sentiment was this:

… middle income earners are facing increased job insecurity as a result of the rise of technology and automation.

And together with increasing income inequality they are deciding that the system is no longer working for them.

Well, of course it is not when you have the two parties in this place ensuring that we provide tax cuts for the wealthy and cut services for those at the bottom. Of course, Labor will claim that this is targeted at everyday income earners. Let us actually have a look at that claim in more detail. Last week, the RBA released data that the average salary is $60,372. That is about $20,000 away from where this tax cut is targeted. The average wage is just over 60 grand. This tax cut kicks in for people earning over $80,000. So the tax data shows us that these tax cuts will go to the top 20 per cent of income earners. Let us again make that really clear: 80 per cent of people miss out; the top 20 per cent of income earners will benefit from this tax cut. Every single one of those banking executives that the Labor Party stood before the recent banking committee—those executives on multimillion dollar pays—are going to get a tax cut from this. Every one of us in this chamber will get a tax cut from this. Those top 20 per cent of income earners will get a tax cut, while real middle-class, ordinary, average Australians will miss out. That is the impact of this legislation that has the support of both the Labor Party and the government.

The ostensible reason for the bill that has been given is that we have to assist people who are approaching $80,000 a year not to be in the second highest tax bracket—addressing so-called bracket creep. Yes, it is true: bracket creep can be a problem. We do not dispute that it needs to be mitigated where necessary. But, as Deloitte said in its submission, the group most adversely affected by bracket creep are people approaching $37,000 a year. Where is a solution for them? Rather than providing a solution, we saw the parliament a couple weeks ago make life harder for them. The government is looking in the wrong place. We expect this from the coalition; we expect this from the Liberal Party. But given the recent words of the shadow Treasurer, to have bipartisan support for tax cuts that go to the top 20 per cent of income earners is most disappointing.

So it does mean nothing for the average worker. This is a tax cut that provides little or no relief for the average worker. Based on the RBA's average income, what we do know is that the everyday worker—people on that average wage—will not be eligible for these tax cuts for the next 15 years. If you assume that wages growth hovers at about two per cent, it will be 2031 when the average worker starts to enjoy a small benefit from this legislation that we are passing today. For the richest 20 per cent of workers, who already earn over that 80k, the tax benefit is pretty instantaneous. This is bad policy because it drives the gap between the rich and poor faster and harder. At a time when we are looking to cut vital social services, what we should be doing is ensuring that our revenue base increases rather than shrinks.

One opportunity that was open to both the government and the opposition, if they were serious about addressing bracket creep and if they saw that this was the only option available to them, was to ensure that the $4 billion cost of this bill—let's remember this is $4 billion in lost revenue at a time when we are being told that we cannot afford to fund healthcare, we cannot afford to fund our schools and we cannot afford to fund vital social services—would not add to inequality. But this is $4 billion at a time when our budget is facing so-called structural challenges.

Rather than taking money out of the pockets of the most vulnerable and giving it to those people on high incomes, there are other solutions. If both the government and the opposition are intent on addressing bracket creep through this measure, why not recoup the $4 billion from the top three per cent of income earners in the top marginal rate by making the temporary two per cent levy on incomes over $180,000 permanent? Why not make it permanent and at least offset the $4 billion price tag that comes with this tax cut for the people who need it least? That is a policy that we Greens took to the election and one that Labor adopted. Here is an opportunity to take a stand and say to the government: if you want this, you have to make that two per cent levy on people with incomes of over $180,000 permanent. My colleague here Senator Whish-Wilson wrote to the shadow Treasurer seeking cooperation on this matter, but he refused. He was all the time citing increasing income inequality as a problem for the Australian community while refusing to work with the Greens on a measure that we know would address the issue of income inequality in a much fairer and more sustainable way.

So we Greens will not support this Treasury Laws Amendment (Income Tax Relief) Bill. We do not support it because it makes income inequality worse at a time when it is one of the great challenges that lies before us as a nation. We will not support it because that $4 billion could be spent on making Medicare more sustainable over the long term. That $4 billion could make a contribution to Gonski funding so that we can provide an education on the basis of need rather than who can afford to send their child to a wealthy private school. We will not support it because we believe that carers and people on single incomes, particularly sole parents, need support rather than having it stripped away. It is the Greens in this chamber who will continue to advocate for a much fairer and more caring agenda. This bill works in precisely the opposite direction to that agenda.

Skye Kakoschke-Moore (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

This is not my first speech. When Treasurer Scott Morrison appeared at the National Press Club to sell the federal government's plan to reduce the tax burden on Australians earning $80,000 or more he told the country it was about tax relief. Hardworking Australians in the middle-income bracket would be better off under the plan, the Treasurer said, and the move would help prevent bracket creep for those moving into higher income brackets. I respect the Treasurer, and NXT has had a constructive working relationship with him, but on this point we do disagree.

What the Treasury Laws Amendment (Income Tax Relief) Bill represents is a misguided initiative from a government that has its priorities wrong and, while we must stress that those who are benefiting from this tax cut are not undeserving of tax relief, our opposition to this bill does not come from a place of hostility or antagonism but one of concern about how this money could be better spent. All told, the measures proposed would cut almost $4 billion in future revenue over the course of the next four years and, in turn, would only deliver a total benefit of $315 a year to the top 20 per cent of income earners. I will say it again: the total saving from this measure would equate to $315 a year or $6 a week for those among the top 20 per cent of income earners. In point of fact, those who are going to benefit do not represent middle income earners. According to the Australian Bureau of Statistics, as of May 2016 the average income of the working Australian was $1,160 a week before tax. This equates to $60,000 a year. Under the proposed change, those who fall into this category will see no relief. Another study published by the Australia Institute counted those who did not file a tax return and found that just 14 per cent of Australians earned $80,000 or more—the bulk of whom are men. As the Age reported yesterday, the proposed cuts will help 28 per cent of male taxpayers but only 13 per cent of female taxpayers—a point which my colleague Senator Peter Whish-Wilson has discussed and with which the Nick Xenophon Team agrees. That same article also broke down who would benefit from the proposed tax cut. One in nine surgeons will benefit, so will eight in 10 mining engineers and seven out of every 10 psychiatrists. Among those who will miss out are 78 per cent of truck drivers and 70 per cent of manufacturing workers. Of those who make our food, some 95 per cent of chefs will not benefit from this tax cut, and 98 per cent of aged care and disabled workers, those who care for our elderly and our vulnerable, will get nothing.

Earlier this year the Evatt Foundation examined wealth distribution across the country and found that the top 10 per cent of Australian households have watched their earnings grow at the expense of the middle 50 per cent of Australian households. That same report also found that the bottom 40 per cent have either no or negative wealth due to high levels of personal debt. The gap between Australians is growing, and it is against this backdrop that the proposed tax cut to the top 20 per cent of income earners is proposed.

If Australia is to be considered a nation that pulls together, that chips in and that cooperates in the pursuit of a better tomorrow, offering this tax cut is going in the wrong direction. I am reminded of something former Treasurer Joe Hockey said once in talking about the Medicare co-payment when he described the $6 federal government plan to charge people to get Medicare advice as 'just the price of two middies of beer'. For those earning over $80,000 or more, the $315 a year they may save on their tax bills is just the cost of a pizza delivered to their home once a month. For the bulk of Australians who fall outside of this income bracket, that money represents a lot more.

This tax cut is not the right priority for the government or the opposition, and the NXT is surprised that the Australian Labor Party has agreed to this measure given what could be done for the most vulnerable Australians or for our manufacturers, given all the other uses to which $4 billion could be put to use. It is not just that this money is not being spent better; the $4 billion that would be lost with this measure could be put to better use helping save Arrium from collapse—an event that would, as Professor John Spoehr has described, constitute a Detroit level economic event. This money could help manufacturing communities across southern Australia facing the spectre of 200,000 job losses with the end of the Australian car industry in 2017 transition to a better future and save tens of thousands of jobs. It is money that could be better spent in our aged-care industry, which has endured $1.8 billion in savage cuts and which supports some of our most vulnerable Australians with complex healthcare needs.

This money could help alleviate the cuts made to parents living in the country's poorest households. These are the parents, as ACOSS described in its submission to the Community Affairs Legislation Committee, who are facing cuts to social security. The cuts mean a sole parent with two children and no private income is now $50 a week worse off. But they do not have to be. We could put this money to work where it is most needed. We, as responsible, elected representatives of the Australian people, should put this money to work where it is most needed, and that is why the Nick Xenophon Team opposes this legislation.

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

This bill, if passed by the Senate, will deliver tax cuts for hardworking families across Australia. It will help provide an incentive for people across Australia to get ahead and to work harder and not be penalised by moving into the second-highest tax bracket while on a medium wage. I thank all the senators who have contributed to this debate and I commend the bill to the Senate.

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

The question is that the second reading amendment moved by Senator Whish-Wilson be agreed to.

The Senate divided. [13:50]

Stephen Parry (President) Share this | Link to this | Hansard source

The question is that the bill be now read a second time.