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

I'd like to seek to move some amendments immediately and then make a few comments. Obviously, in the second reading debate we have outlined in detail Labor's approach to this tax package. We've outlined Labor's better, bigger and fairer tax relief for working Australians. We have also indicated that we do not support steps 2 and 3 of the government's plan and the reasons why, so I don't propose to traverse those again.

I would again remind the Senate that, apart from the Australian Greens, as I have discerned, every contribution from senators in this place has supported step 1 of the tax plan. What we are part of at the moment is a debate on a bill where the government is seeking to hold those tax cuts for working Australians—which would start next month—hostage to a tax plan it wants to implement in six years time. There is no logical reason for that, and the Senate ought not to agree to it.

In addition, I want to come to step 3 of the government's tax plan. As I outlined yesterday, we do regard this as both fiscally irresponsible and inherently unfair. It is fiscally irresponsible because, as I outlined in my speech on the second reading, this is a series of changes which grows in terms of its cost to the budget when it comes to fruition, or when it matures, at 12 per cent a year. I made the point in my speech on the second reading yesterday that that is substantially higher than the growth in expenditure we see across other areas of the budget. It is, for example, from memory, some three times faster annual growth than the defence budget and, I think, close to six times faster annual growth than expenditure on family tax benefits and so forth.

What the Senate is being asked to do is to lock in a change to the structure of taxation in this country which will grow over the longer term at 12 per cent per year, thereby either rendering other decisions by government unsustainable or imposing decisions on key expenditure programs by government such as health, education and arguably even defence. If there were an expenditure program that was growing at 12 per cent a year you would hear those on the other side demanding that it be reduced.

I intend to move a range of amendments consistent with Labor's position that I've outlined in the speech on the second reading. What I would like to get to, because I think it is the area where there is most concern in the chamber about the tax plan, is our amendments on sheet 8450 which seek to remove the step 3 tax rate changes and those in later income years. I would seek leave to move items (4), (6) and (8) together, which remove the step 3 tax rates.

These are the tax rates that the government is seeking to change from 2024-25. What I would say to members of the crossbench and senators in this place is that we have two objections to this. One is a fundamental policy objection. It is a fiscal risk. It locks in a very fast-growing program which costs not only billions of dollars a year but grows at 12 per cent, which has consequences both for the budget and for economic and fiscal risk. It is also a fundamental restructure of our tax system. As I referred, one of the academics who made submissions to the Senate committee talked about this as being contrary to essentially 100 years of progressive taxation in this country. It is the wrong thing to do. I make the third point that it was well made by Senator Storer in his very careful and considered speech on the second reading that there is no reason to allow the government to hold these tax cuts, which would occur in six years time—you would have to elect Malcolm Turnbull twice—and make them a pre-condition of tax cuts which can be delivered next month. That is nothing other than a political strategy. As Senator Storer said:

There is no reason to legislate tax cuts four and six years away except to hold future parliaments to ransom and hold out to voters what may well prove to be false hopes.

I seek leave to move amendments (4), (6) and (8) together.

Leave granted.

The Labor Party oppose schedule 2 in the following terms:

(4)     Schedule  2 , item  2 , page 14 (starting at line 3) , table dealing with tax rates for resident taxpayers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]

(6)     Schedule  2 , item  5 , page 15 (starting at line 6), table dealing with tax rates for non-resident taxpayers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]

(8)     Schedule  2 , item  9 , page 17 , table dealing with tax rates for working holiday makers for the 2024-25 year of income or a later year of income to be opposed .

[tax rates]

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

The government will be opposing these amendments. We obviously believe—in fact, we are confident—that the bill as drafted is in the best interests of all hardworking Australians. It of course prioritises low- and middle-income earners in the first instance, providing cost of living pressure relief to low- and middle-income earners. It then also ensures that we provide the right and appropriate incentive to all working Australians to continue to work hard and ensure that working Australians don't go backwards as a result of bracket creep. Bracket creep is the result, even without moving up the career ladder, of inflation. Our income tax thresholds aren't indexed, which means that, if we do nothing, more and more middle-income Australians will be pushed into the higher and higher income tax brackets, which is a significant disincentive to work harder. It is also recognised as a drag on economic growth. What does a drag on economic growth mean? It means that growth will be less than it could be. A growth that will be less than it could be means that there will be fewer jobs created in the economy. Who hurts the most when there are fewer jobs created in the economy? It's low- and middle-income earners. They are the most exposed to lower growth and they have the most to gain from stronger growth, and there are a lot of economic studies that back that up.

I would also make the point in response to what Senator Wong has just indicated. This is not an item of government expenditure. This is a decision by the parliament to leave working families around Australia with more of their own money. It's their money. The government should only take as little as possible but as much as necessary to fund the services and the administration of government, which ought to be and must be as efficient and as effective and as well targeted as possible. That is, of course, the commitment of our government.

Senator Wong says that this somehow completely undermines the progressivity of our tax system. That is completely and utterly wrong. Right now, the top 20 per cent of income earners across Australia have to pay more than 60 per cent of the income tax revenue generated by government.

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

So they should.

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

'So they should,' says Senator Whish-Wilson. Okay. Guess what happens if we legislate our seven-year plan in full? At the end of that seven-year period, do you know how much the top 20 per cent of income earners will be paying in income tax generated across Australia? More than 60 per cent. So, there's no change to the progressivity of our tax system. You know what will happen if we don't legislate this plan in full? We will be hitting aspirational, hardworking middle Australians harder and harder, and that 60 per cent will become 65, 70, 80 per cent.

We in this country don't have automatic indexation of our income tax thresholds. That means that just by wage inflation, just by simple inflation, more and more middle-income earners get pushed into the higher tax brackets, where they have to pay more tax on the income they take home. That is not even taking into account the fact that if you work more hours you get penalised. You work more hours; you get penalised by being pushed into a higher tax bracket. So why would you work more hours if working more hours means that you go from 37 per cent to 45 per cent plus the Medicare levy? It is absolutely recognised that bracket creep is a drag on economic growth and that it is absolutely desirable for bracket creep to be addressed in order to ensure that there isn't an entrenched structural disincentive for working Australians to continue to do everything they can to get ahead.

Senator Wong says that this is about binding future parliaments and that Malcolm Turnbull would have to get elected two more times for this to take effect. No, no; that is actually not true. The Senate is able to legislate today the full seven-year plan and give certainty to working families right across Australia that not only will we provide cost-of-living-pressure relief in the short term, prioritising low- and middle-income earners; we also will do everything we can to appropriately address bracket creep so that all working Australians have the right incentive, the right encouragement, the right reward for effort, the right incentive to continue to work hard and to contribute to our great country. They don't have to elect Malcolm Turnbull two more times to lock this in. The Senate is able to lock this in today.

The Labor Party are making an assumption about what future parliaments might want to do. It might well be that the Labor Party want to add further tax increases to their pre-election agenda. Good luck to them! Good luck to them going to the next election promising to the Australian people that they will increase the tax burden on the economy by more than $200 billion, which everybody knows will hurt the economy. It will hurt families; it will cost jobs. The Labor Party is quite entitled to go to the next election with a higher-taxing agenda. We will not go to the next election with a higher-taxing agenda; we will go to the next election with a commitment to keeping taxes on families as low as possible and to ensuring that taxes on business are maintained at a level that is globally more competitive so that all Australians, today and into the future, have the best possible opportunity to get ahead.

Senator Wong also says these tax cuts are not affordable. Yes, they are. Over the medium term the cost is $144 billion, which is a figure that we've openly and transparently released to the public and to the parliament, in sharp contrast to what the Rudd and Gillard governments did when they tried to increase the tax burden on the mining industry. We had to drag them kicking and screaming into releasing the medium-term projections of the revenue they expected to raise from their resource super profits tax and the minerals resource rent tax. We've provided that information quite openly and transparently. And do you know what you can see in the budget papers? What you can see in the budget papers is that over the medium term, over that whole period, not only does the budget get into a small surplus by 2019-20 and progressively into a larger surplus but we are projected to exceed a surplus of one per cent of the share of GDP by 2026-27 and to remain in surplus all the way through—and that is after we have factored in the cost of this important reform which allows working families around Australia to keep more of their own money.

I just close on this point. I'm very interested to see that Senator Wong is moving an amendment effectively to excise the third stage out of our three-stage, seven-year long-term plan. I guess that means that the Labor Party have already given up on actually doing what they said they would do, which is to oppose everything other than the first stage of our seven-year plan. It's very interesting. Normally in this chamber the way this process is managed is that you start off with getting all you want and then you progressively work your way backwards to being forced into the position where, if you can't get everything you want, you aim to get an amendment up that gives you 70 or 60 per cent of what you want.

It's interesting that Senator Wong in her first amendment hasn't even tried to implement the policy of the Leader of the Opposition. It must mean that the Labor Party's split. It must mean that Senator Wong has stabbed Bill Shorten in the back and turned on Bill Shorten, because she's not in here promoting Bill Shorten's policy to actually excise stages 2 and 3. Maybe Senator Wong is a secret supporter of stage 2 of our three-stage, seven-year plan to provide income tax relief to working families around Australia. I'm very intrigued that the first move that Senator Wong makes in this chamber would not be a move to implement the policy that was articulated by the Leader of the Opposition. Is it now the Labor Party position that you support stages 1 and 2 of our seven-year plan to provide income tax relief to working families around Australia? I would be very interested. Is that now your position? It's a very interesting move by Senator Wong here which is in sharp contrast to what Bill Shorten, as leader of the Labor Party, has signalled into the community would be the Labor Party position.

In fact, as the Labor caucus finished and the Leader of the Opposition and the shadow Treasurer gave a press conference yesterday, the indication that the Australian people were given was that Labor would move to remove both phase 2 and phase 3 from this income tax bill. That is not what Senator Wong is doing in her move now. Senator Wong, essentially, has now accepted stages 1 and 2. I congratulate the Labor Party that you've moved along from one to two. There's only one more step to go! Now that you support the first two phases of our income tax relief plan, which is in three parts, I encourage you strongly to reflect on the fact it is very much in our national interests and in the interests of working families around Australia for us to, yes, provide cost-of-living-pressure relief for low- and middle-income earners but also to address bracket creep so that all working families around Australia have the right incentive, the right encouragement and the right reward for effort so the Australian economy can continue to grow as strongly as possible and as many jobs as possible can be created.

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

The Greens have been very consistent throughout this debate that we won't be supporting any elements of this government's tax cuts package; nor will we engage in an arms race or an auction on tax cuts with the Labor Party. We've been very clear all the way through that we believe in services and not tax cuts. Anybody who thinks that you can take $144 billion out of our economy, out of revenue raised by taxes, without savage cuts to—

The CHAIR: I beg your pardon; sorry, Minister. Are you seeking a point of order?

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

Yes. On a point of order: the senator is misleading the Senate. We are not taking anything out of the economy. At best, there is something that comes out of the budget.

The CHAIR: Minister, that's a debating point, thank you. Please continue, Senator Whish-Wilson.

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

The Greens as a party believe that government has a strong role to play in the lives of Australian people. We believe that governments and the provision of services are absolutely essential to our quality of life, for caring for people, for looking after the environment. We've always said that. We also believe governments have a role, a collective responsibility, to invest in the Australian people and in the economy through, for example, infrastructure programs. You can't have $144 billion of revenue without an opportunity cost, Senator Cormann—to you, Chair.

Sadly, we haven't had a debate about the opportunity costs of $144 billion. But I do want to pose this question to the Australian people: if you could invest $144 billion, what would you do with it? What this government's doing today and what the Labor Party are doing with their package is simple. They are saying: 'How much is your vote worth at the next election? If you're earning $37,000, $40,000 or $45,000—up to $60,000—we'll give you $1, $2, $3, $4, $5, maybe $10 a week. That's what your vote is worth to us. This is a bribe.' This is an election trick. It is a bribe for the Australian people.

But if you were to say to the Australian people, 'Would you rather your $5 a week was invested back in a world-class education system, a proper healthcare system, a fully funded NDIS, an NBN, a threatened species plan or reducing climate change?' I bet you, London to a brick, that Australians would say: 'That's your job. That's what I elect you for. You invest that money for the future of our society and our kids.' That's what the Australian people would want. That's not the way this question has been posed, but that is fundamentally what we're debating here today.

We've had a very consistent position that we won't be supporting any of these tax cuts. Now is not the time to be cutting revenue—taking revenue and giving it back in tax cuts. What else have we seen cut in recent times? Can any senator in this chamber put their hand on their heart and say that we have enough revenue now to cover our services and fund our needs in society? No. Everywhere we look, this government is cutting funds, and it has been cutting funds since it was first elected. Think back to the zombie budget cuts in 2013-14. Think of the efficiency dividends. I'll list a few things for you, Senator Cormann. Hundreds of millions of dollars were cut from ARENA and $334 million was cut from the ABC, with more to come—there's absolutely no doubt about that. There've been cuts to legal aid funding, the Medicare rebate freeze, billions cut from family tax benefit supplements, cuts to ASIC, cuts to CSIRO, cuts to the environment department, R&D offsets cut, local government grants cut, ATSI Affairs cut—I could go on. We don't have enough revenue at the moment, so why are we taking $144 billion of tax revenue and giving it back in tax cuts, a few dollars a week, to the Australian public, who I'm sure have put us in this place to make sure that tax revenue is properly invested?

So, while we don't support tax cuts at this point in time, we do want to make sure that what we do in this committee stage at least improves the bill in any way, shape or form so that, when it gets to the final vote, we can at least try to get a better outcome for the Australian people. This tax package is not a good outcome. It is a total con. We'll have a lot more to say about this during the continuing committee stage.

Rex Patrick (SA, Centre Alliance) Share this | Link to this | Hansard source

As foreshadowed in my second reading speech, Centre Alliance will be supporting this Labor amendment which achieves the same effect as the Centre Alliance amendment—that is, that stage 3 tax cuts will not occur. If this amendment is successful, I will just state that we will not proceed with our amendment on sheet 8463.

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

I can't let this go unchallenged. I listened to Senator Whish-Wilson and his comments that we want to cut services. He made a list of where cuts have been made. I think the majority of Australians have no doubt that the ABC budget should be cut back, and it has been cut back, to the tune of about $84 million. But let's have a look at the Greens. What they're saying is that they are concerned about services here in Australia. They want to make sure that there are good educational services and good hospital care for the Australian people. Yet, if they had their way, our foreign aid would go up to $12.28 billion. That's not for Australians. That's to go overseas. They're worried about everyone else around the world. They're not worried about the Australian people here. Where's their concern? They are saying that the people here, hardworking Australians, are not entitled to a tax cut because we need the money for services. How can they say that when they're supposed to be here representing the Australian people and yet they're prepared to say they want over $12 billion to go on foreign aid if they had their way? So I think it is not fair to make that comment. They need to start focusing on Australia and the Australian people, because they want to open up the floodgates to 50,000 refugees. Every refugee in this country in detention costs the Australian taxpayer $572,000. That is a huge cost to the taxpayers. They want to start focusing on what is right for this country and the Australian people.

As I said earlier, the Australian people are doing it tough because of extra costs due to the Greens pushing for renewables. That has escalated the cost of living for every Australian. The cost of electricity is out of control. I was just over in England with a delegation. An average family is charged 500 pounds to 600 pounds a year for electricity. An average household here is looking at around $2,000 a year. This is due to the Greens and the Labor Party wanting to raise the cost of renewables and the billions that will be paid to foreign companies. No-one is really addressing this. So stop tinkering around the edges. Be up-front and honest with the Australian people. Give the Australian people some assistance, because that's what they're crying out for. You are obviously not listening to them.

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

I have just a few very brief points. The first is that these parts we are opposing are in relation to step 3. The government would be aware and the chamber should be aware that we have a range of amendments across step 2 and we are seeking to insert Labor's tax plan. We seek to knock out the tax changes that would apply only from 2024-25. Senator Cormann sought to rebut some of what I said. He said, 'It's not a fiscal risk.' Well, you don't have to take my words for it. Take John Daley's words. His evidence at the Senate inquiry was:

… economically, the chances of a significant economic downturn over the next six or seven years are pretty large …

He also said:

… we do not think it is prudent to be providing tax cuts of this magnitude that far in the future—certainly not to be legislating them …

Second, he said that it's still progressive. Miranda Stewart of the ANU said that these changes are 'both an inefficient and a retrograde step that undermines 100 years of progressive income tax rate structure in Australia'.

And he said that they're fair. The ANU's Ben Phillips has estimated that the effect of the government's plan is as follows: the top 20 per cent of taxpayers will see a 2.2 per cent rise in their income and the bottom 20 per cent will see a 0.2 per cent rise in their income. So the top 20 per cent of Australian taxpayers get more—a 2.2 per cent rise—and the lowest 20 per cent of Australian taxpayers get 0.2 per cent. Guess how much of this government's tax package will go to the top 20 per cent of households in Australia by 2027? Sixty per cent. I urge the chamber to support our proposal.

The CHAIR: We are dealing with amendments (4), (6) and (8) on sheet 8450, as moved by Senator Wong. The question is that the tables dealing with tax rates for resident taxpayers, non-resident taxpayers and working holiday makers for the 2024-25 year of income or a later year of income stand as printed.

Tim Storer (SA, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (3) to (8), (10), and (12) to (15) on sheet 8441 together:

(3) Schedule 1, heading, page 3 (line 2), omit "and Low Income tax offset".

(4) Schedule 1, item 1, page 3 (lines 7 and 8), omit "and Low Income tax offset".

(5) Schedule 1, item 1, page 3 (lines 24 and 25), omit "2018-19, 2019-20, 2020-21 or 2021-22 income year", substitute "2018-19 income year or a later income year".

(6) Schedule 1, item 1, page 4 (lines 5 and 6), omit "2018-19, 2019-20, 2020-21 or 2021-22 income year", substitute "2018-19 income year or a later income year".

(7) Schedule 1, item 1, page 4 (lines 17 and 18), omit the note.

(8) Schedule 1, item 1, page 5 (lines 1 and 2), omit the note.

(10) Schedule 1, page 9 (line 12), omit the heading.

(12) Schedule 1, item 6, page 9 (lines 20 to 22), omit the item, substitute:

6 Section 13 -1 (table item headed " low income earner " )

Omit:

substitute:

(13) Schedule 1, item 7, page 10 (lines 1 to 4), omit the item.

(14) Schedule 1, page 10 (line 5), omit the heading.

(15) Schedule 1, items 8 and 9, page 10 (lines 6 to 15), omit the items.

I also oppose schedule 1 in the following terms:

(9) Schedule 1, item 1, page 6 (line 10) to page 8 (line 12), sections 61-110 and 61-115 to be opposed.

(11) Schedule 1, item 5, page 9 (lines 13 to 18), to be opposed.

(16) Schedule 1, Part 3, page 11 (line 1) to page 12 (line 16), to be opposed.

Given our substantial debt challenge—$341 billion net debt in 2017-18, and growing—it is irresponsible to proceed with the full income tax plan proposed by the government at this point in time. The measures commencing in 2022 and 2024 lock in over $120 billion in reductions in revenue out to 2028-29. By Treasury's own admission, uncertainties generally tend to increase as the forecast horizon lengthens; therefore, there are larger error bands around estimates three, four or more years ahead. The geopolitical and economic uncertainties noted by Treasury in budget estimates in May demand the government prepare by focusing on debt and deficit reduction as well as maintaining essential services. We are in a substantially weaker budgetary position now than we were in 2007 in the lead-up to the GFC. There's no need to rush these changes that commence in 2022 and 2024. They are well beyond the scope of the forward estimates and the next election. There will be ample time between now and then for parliament to re-examine the appropriateness of these measures and decide whether to proceed with the additional elements of the government's plan.

History tells us that tax cuts, once legislated, are very difficult to wind back; therefore, we cannot rely on an assumption that these cuts could be repealed or amended if unforeseen economic developments materialised. In the context of a recent uplift in government revenue, the measures set to commence from 1 July 2018 are affordable. Given rising cost-of-living pressures and wage stagnation, the new low- and middle-income tax offset is particularly warranted and should be locked in to provide lasting targeted support to low- and middle-income earners beyond the forward estimates. With that extension, information received from the Parliamentary Budget Office indicates that the amended plan I am putting forward would cost $46.75 billion compared with the $143.95 billion for steps 1, 2 and 3 of the government's plan as it stands, and $102.35 billion for steps 1 and 2. The amended proposal I am putting forward of $46.75 billion generates savings that would help us return to surplus sooner, pay down debt quicker and free up money to spend on critical social and infrastructure programs, and I hope that it meets with the approval of the chamber.

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

The government will not be supporting this amendment. We will be opposing this amendment. This amendment proposes to keep taxes around $100 billion higher than the government's plan over the medium term. I have to correct Senator Storer: it's not a saving; it is an increase in taxes compared to what the government is proposing to do.

The government believes in lower taxes because individuals should be rewarded for working hard and be encouraged to get ahead. The government's Personal Income Tax Plan will make personal income tax lower, fairer and simpler. Without action, the tax system will increasingly penalise Australians for earning more as they move into higher tax brackets. This is why the government does not support the amendments proposed by Senator Storer.

The government's plan will simplify and flatten the tax system, reducing the number of brackets from five to four by completely removing the 37 per cent marginal tax rate so that hardworking Australians keep more of what they earn. Senator Storer's amendments would mean that by 2024-25 taxpayers on an average full-time wage would still face a marginal tax rate of 37 per cent. The government's plan rewards these hardworking Australians by removing the 37 per cent marginal rate and will ensure that most Australians will face a marginal tax rate no higher than 32.5 per cent for their whole working life. Under the government's plan, around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent or less, compared with the 63 per cent if we leave the system unchanged.

The plan is a package and the government is legislating the whole package. We're committed to giving certainty to Australian families that they will keep more of what they earn in the future. Step 2 of the plan will have to ensure that incomes earned by Australians are protected from bracket creep. It helps to ensure that a pay rise, extra overtime or working more hours do not get eaten up by higher taxes. Step 3 of the plan will make the personal income tax system simpler and flatter by completely removing the 37 per cent tax bracket. By sticking to our plan for a stronger economy, the government is returning the budget to surplus and guaranteeing the essentials.

Because a stronger economy delivers more revenue to the budget, we are able to afford our Personal Income Tax Plan. It is affordable and fiscally responsible. The plan is fully accounted for in the forward estimates and over the medium term fiscal projections, with the underlying cash balance returning to balance in 2019-20 and sustained surpluses thereafter over the medium term. The government is committed to a tax system that rewards effort and promotes opportunity, that is internationally competitive, that is capable of driving stronger investment and stronger growth for our economy and where, above all, all individuals and businesses pay their fair share so the government can deliver the essential services Australians rely on.

In relation to the observations on the fiscal position of the budget, the return to surplus in 2019-20 and continuing projected surpluses over the medium term will, of course, enable a reduction in debt. As a result of living within our means, the government has turned the corner on debt. We're no longer borrowing for our day-to-day living expenses as a government. Net debt, as a share of GDP, is expected to peak at 18.6 per cent of GDP in this 2017-18 financial year. It's projected to fall to 14.7 per cent by 2021-22 and to 3.6 per cent at the end of the medium term. The gross debt will also peak in 2019-20 at below 30 per cent of GDP. Over the medium term gross debt will fall and be $126 billion less in 2027-28 than was estimated in the MYEFO last December, six or seven months ago. I should also say that government net debt is forecast and projected to reduce by $30 billion over the current forward estimates and $232 billion over the medium term. This reduction in debt has been achieved through careful management of the nation's budget, with the average annual real expenditure remaining below two per cent, which is the lowest of any government in the last 50 years, while delivering much needed tax relief to hardworking families and investing to further strengthen our economy and deliver a more prosperous future for all Australians.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

I just want to draw people's attention to the fact that we've just seen Senator Pauline Hanson, Leader of One Nation, in here voting to give herself a massive tax cut. I want to be really clear about this, because Senator Hanson was in here only an hour or so ago saying, here on the Hansard record during this debate, that she would not be getting any tax cut if this bill passed. Can you believe it? She's either got no idea what on earth she's voting on or she's lying to the Australian people and she's misleading the Senate. Let's crunch the numbers. Let's find out exactly how much Senator Pauline Hanson is going to get from this tax cut: an $11,815 tax cut. That's how much Senator Pauline Hanson has just pocketed for herself. That's what she's just voted for. She's just voted to feather her own nest. She came in here and lied to the Australian people. She lied to One Nation voters. She said she wasn't getting a tax cut at all. What a fraud.

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

Point of order: Senator Hanson-Young is using unparliamentary language directed at a fellow senator and she should withdraw.

The CHAIR: Thank you, Minister. Senator Hanson-Young, I ask you to withdraw those remarks, without repeating them—without using the terms that you used in relation to Senator Hanson.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

Which words were they? I didn't call her a liar. I said she lied.

The CHAIR: Nevertheless, I'm asking you in the spirit of good debate to withdraw the comment.

I didn't actually refer to her as a liar, even though I think she probably is. I said she lied.

The CHAIR: Senator Hanson-Young, this is not a debating point. I am asking you to withdraw those comments.

I would like a ruling on this, because I did not call her a liar. I said she lied to the Australian people.

The CHAIR: Senator Hanson-Young, as Chair I am asking you to withdraw those comments. Is there a further point of order?

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

Yes, Madam Chair. Yesterday I was present in the chamber when Senator Macdonald repeatedly stated: 'Labor lies, Labor lies,' ad infinitum. So, if we're going to raise this point, I think we have to be consistent across the chamber.

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

On the point of order, it is clearly against standing orders to reflect on senators in this chamber and to impute improper motive. That is what Senator Hanson-Young has been doing.

The CHAIR: In response to you, Senator Gallacher, in my view it is clear that Senator Hanson-Young has reflected on a fellow senator. On the broader issue, when parties are referred to, I too was concerned about that and I raised it and sought advice. In my view there has been a reflection on a senator. Senator Wong.

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

Chair, I make a couple of points. I understand Senator Gallacher's frustration. We get a lot of 'lying' accusations from the other side. I think your ruling is correct. If you look at precedents, past Presidents have ruled that an assertion that a group is lying doesn't have the same status as an assertion that an individual senator is lying. I personally don't quite understand the distinction but, as I understand the advice, that appears to be a distinction that has been observed—the former has been permissible and the latter hasn't. I would implore Senator Hanson-Young to recognise the Chair's request.

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

On the same point of order, my understanding of the standing orders is that the context of how things are said is important, in terms of rulings. Senator Hanson-Young didn't say that Senator Hanson deliberately lied. She said she lied. It may have been inadvertent or it may have been deliberate; we don't know. In that sense, I'd ask you to reflect on the fact that she didn't say she deliberately lied.

The CHAIR: Senator Whish-Wilson, I am attempting to uphold the standing orders and the spirit of debate. I think we can have a spirited debate without reflecting on, or coming very close to reflecting on, what may or may not have motivated other senators. I have asked Senator Hanson-Young to withdraw her comments. In consideration of open, and yes, robust debate, I would ask her to withdraw those remarks.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

In the spirit of the discussion, I will withdraw those comments and I will say this: Pauline Hanson's One Nation party came in here and lied to the Australian people, because their leader is getting an $11,815 tax cut and she, Senator Pauline Hanson, pretended in this place that she's not going to bank it. Senator Pauline Hanson is a fraud.

The CHAIR: Senator Hanson-Young, please resume your seat. Minister.

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

On a point of order: Senator Hanson-Young is misleading the chamber because she's making an assumption that, by 2024-25, Senator Hanson is still going to be a senator—

The CHAIR: Minister, that is not a point of order.

She's clearly very confident that Senator Hanson—

The CHAIR: Minister, please resume your seat. That's a debating point, which you are free to debate next time you stand.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

The important point here is that Senator Pauline Hanson has no idea what on earth she's voting on and what her party is voting on today, because she came into this chamber and she said that these tax cuts don't affect anybody who earns more than $200,000.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Why don't you get back to the substantive debate?

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

That is what Senator Hanson put to this chamber earlier today. So either Senator Pauline Hanson and One Nation have no idea what on earth they're voting on today or they want to cover it up and keep the Australian people and their voters in the dark. It'll be up to the voters to decide whether they think they're being misled or whether, in fact, Senator Pauline Hanson just has no idea what on earth is going on in this place.

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

I'd like to add to that and take the interjection of Senator O'Sullivan: why don't we get back to the substantive debate here? We have a situation in this chamber where a single vote will dictate whether a $144 billion tax package gets locked in for the Australian people, a package that my party, the Australian Greens, disagrees with so strongly on so many levels. If a senator in this place—and none of us is perfect; we all make mistakes, myself included—gets up in here during a critical committee stage before a vote to remove stage 3 of this bill and doesn't understand what she's voting on—literally doesn't understand the detail of why, even by changing a tax bracket, a threshold, she will benefit from that—then she simply doesn't understand how any of it works. That is not only dangerous for the Australian people—

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

It's negligent.

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

It's negligent. We haven't heard the end of this.

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

What I would say is what I've said before: this is a very important, long-term plan to provide the right incentive, the right encouragement and the right reward for effort to hardworking families around Australia. We have a long-term plan to provide income tax relief to families around Australia which prioritises low- and middle-income earners. Over the next four years, the benefit goes to low- and middle-income earners. What I would say to the Senate and what I would say to the Greens is that I would draw the attention of the Greens to the fact that the value of the personal income tax cut for low-income earners is significantly higher than the value, as a percentage, for people at the higher income end.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

As a percentage!

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

Senator Rice laughs: 'Ha, ha! As a percentage.' 'As a percentage,' Senator Rice says, 'Oh! Oh!' So let me just explain to the chamber what this means. This means that, if they earn $30,000 a year, the value of our proposed personal income tax cut is a reduction of 8.3 per cent in their tax, an 8.3 per cent cut in their tax, in 2018-19, in 2019-20, in 2020-21 and—yes, you guessed it—in 2021-22. And do you know what happens to somebody on $200,000 in that period? Do you know what happens to somebody on $200,000 in the years 2018-19, 2019-20, 2020-21 and 2021-22? The value of the small proportion of the personal income tax cut that flows through to the higher income earners, because we are lifting the threshold from $87,000 to $90,000, is 0.2 per cent—0.2 per cent!

Do you know how much tax somebody who earns $30,000 a year pays? They pay $2,197. I'm really sorry that we can't cut the tax for somebody who pays $2,197 in tax by $5,000! I'm really sorry! Not even this government can cut the tax for somebody who pays $2,197 by $5,000. That is not physically possible. But do you know how much tax somebody who earns $200,000 pays? They pay $67,097. So somebody who earns $30,000 a year pays $2,197, and somebody who earns $200,000 a year pays $67,097. And do you know what? In 2018-19 the percentage of cumulative tax relief is 0.2 per cent, in 2019-20 it is 0.2 per cent and in 2021-22 it is 0.2 per cent.

It's great to see that the Greens have great confidence in the competitiveness of Pauline Hanson's One Nation and the Greens are very confident that Pauline Hanson's One Nation will secure Senate seats in the election after next. We're going to have an election next year. We're going to have another election in 2022, which is when Senator Hanson will be up for re-election, and clearly the Greens have given Senator Hanson their vote of confidence today. Senator Hanson-Young today has expressed a clear, strong and unambiguous vote of confidence that Senator Hanson will be re-elected at the 2022 election. That is the implication of what Senator Hanson-Young has been saying—that outrageous slur that she has directed at Senator Hanson, one of our fellow senators in this chamber.

Let me just explain further to all Australians who might be listening. If you are earning $50,000 a year, you will get, under this package that we are proposing to legislate today, a 6.2 per cent tax cut every single year over the next four years. If you are earning $80,000 a year, it'll be a lesser tax cut, but you're still getting a 2.8 per cent tax cut. So the point is: the more you earn, the lower the value of the tax cut. Obviously, if you pay more tax in nominal terms, in nominal terms it is inevitable that a small—

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

Nothing about this is inevitable; it's a series of choices.

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

Hang on. So here we have Senator McAllister having just stabbed her leader in the back, because she's just voted against Labor Party policy. Yesterday, out of the caucus came the Labor Party, including the Leader of the Labor Party and the shadow Treasurer, and they said, 'We will move to remove phases 2 and 3 of this long-term tax relief plan. Well, guess what: Senator McAllister has just voted in support of both stages 1 and 2, in complete conflict with the stated Labor Party position. She doesn't even realise that she has voted that way. Senator McAllister just shakes her head. Well, that is precisely what you've done: instead of putting your preferred position forward in front of the Senate chamber today, instead of coming in here with a policy that your Labor caucus allegedly adopted and trying to get majority support for the position that you adopted, you came in here with a position of another party. So clearly, somewhere overnight, the Labor Party position has shifted. Yesterday you only supported stage 1 and you were opposed to stages 2 and 3. Today you have voted—including you, Senator McAllister—for stages 1 and 2. That is the reality of it.

Senator McAllister interjecting—

Are you saying that you did not vote in favour of stages 1 and 2? You did. That is the implication. The implication of supporting the removal of stage 3 only is that you are now supporting stages 1 and 2. It makes absolutely no sense for you not to have tried to get your policy tested in the Senate. You didn't test it in the Senate. You did not even try. Yesterday, with lots of fanfare, there were Bill Shorten and the shadow Treasurer, Chris Bowen, saying, 'We are opposed to stages 2 and 3.' But here you're coming in now and endorsing stage 2. You're endorsing it. Senator Wong is shaking her head. That is precisely the implication of what the Labor Party has done in the chamber here today. The Labor Party has now shifted from just 1 to 1 and 2. If we keep this debate going for a bit longer, I'm sure that Labor will come all the way with the Liberal and National Party coalition to 1, 2 and 3. Try it! One, then 1 and 2; if we keep going a bit longer—we know that Bill Shorten is the wibble-wobble man—we get to 1, 2 and 3. Just go back to the Labor caucus. Say, 'We've already rolled over on our opposition to stage 2. We have voted for an amendment that locks in stage 2.'

Progress reported.