Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. Can the minister confirm that since 2001 the cost to taxpayers of dividend imputation refunds has increased from $550 million to $5.6 billion?

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

What I can confirm is that this is money that has been overpaid in tax and that is appropriately refunded to the taxpayer. If the senator wants me to comment on specific numbers going back to 2001, I will take that part of the question on notice. But what I would say to you is that this is not money that is spent by the government. This is money that is reimbursed to taxpayers.

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

It's revenue forgone.

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

Revenue forgone—that is a fancy way of calling it a tax hike. If you're going after revenue forgone—this reminds me of a conversation I had with Senator Cameron in a scrutiny of new taxes committee some years ago when he essentially argued that all of the money in the economy is the government's money and through the tax system we decide how much of the money we leave with the people. Our view is that all of the money is the people's money and through the tax system we've only got to take as much as necessary to officially fund the services of government.

We believe in smaller government and lower taxes so that businesses across the community can grow, can prosper, can create jobs and can pay higher wages, whereas your starting position is that all of the money in the economy is yours to take and that you decide through the tax system how much you leave with people.

Senator Wong interjecting—

Let me say that the importance of franking credits to the Australian economy is very simple: they represent tax that has already been paid by companies on shareholders' behalf. That is actually what the Labor Party used to believe. For 20 years this was a bipartisan position, and it took Bill Shorten to walk away from it and to put his hands into the pockets of self-funded retirees and pensioners while trying to pretend that this is about going after the rich. (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator McAllister, a supplementary question.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Given the minister described the blowout in the impact of the cash refundability of the imputation credits—which is now upwards of $5 billion—as 'not that much at all', is it any wonder that, under this minister, the deficit has blown out eightfold to $23.6 billion, net debt has doubled to $350 billion and gross debt has reached the highest level in the nation's history, crashing through half a trillion dollars?

Opposition Senators:

Opposition senators interjecting—

Scott Ryan (President) Share this | Link to this | Hansard source

Order on my left!

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

I'm surprised the Labor Party would go back there, because this is very embarrassing to the shadow finance minister and the shadow assistant minister. The question that I was asked in an interview was whether this was a blowout that cost the economy too much. The point I made was: no, it doesn't cost the economy too much at all because the money stays in the economy. Leaving the money with the people doesn't take it out of the economy; it leaves it with people that are better able to spend the money more efficiently on their own needs than the Labor Party in government would ever be.

Clearly the Labor Party doesn't understand the difference between the budget and the economy. If you refund money to people that belongs to the people, does that have an impact on your budget bottom line? Yes, it means that your revenue is lower than it would be if you stole people's money, or if you stole more people's money. But it stays in the economy. I would challenge you to explain to me how that money does not stay in the economy by leaving it with the Australian people.

Honourable Senators:

Honourable senators interjecting—

Scott Ryan (President) Share this | Link to this | Hansard source

Order! I will have some silence before I call Senator McAllister for a final supplementary question.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The cash refundability of the imputation credits is heading rapidly towards a cost to the budget of $8 billion per year. Can the minister confirm that $8 billion is more than the government will spend on public schools or child care, and that it's three times what it will spend on funding the Australian Federal Police this year?

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

(—) (): That is a completely illogical argument. Essentially what you're saying is, if the government don't keep raising more taxes, we are imposing a cost to the budget. By that argument, you're saying, if we don't take 100 per cent of people's income out of people's pockets in tax, we are somehow imposing this massive cost on the budget. Well, do you know what? There is a limit to how much money you should take out of people's pockets, and no amount of Bill Shorten trying to pretend that he's going after the undeserving rich will hide the fact that he is putting his hands into the pockets of pensioners and self-funded retirees—the people that Kim Beazley used to stand up for, and the people that Bill Shorten is selling out in his desperate pursuit of more cash to direct into his reckless spending promises. Remember, he took $16 billion in higher deficits to the last election. (Time expired)

Honourable Senators:

Honourable senators interjecting—

Scott Ryan (President) Share this | Link to this | Hansard source

Order, Senator Wong and Senator Bilyk!