Mr BAIRD (12:08 PM) —It is my pleasure to speak on the Taxation Laws Amendment (Personal Income Tax Reduction) Bill 2003—following the member for Chifley, who is always an interesting speaker. He is in the wrong party of course but we need to be kind to the member for Chifley, as I am sure Mr Roozendaal has told him the bad news that he is likely to lose his seat at the next election. We would not want that to happen, but what can you say when you hear the types of economic policies that have been outlined by the member for Chifley and the whole of the opposition?

I was here in the chamber when the Leader of the Opposition gave his response to the budget—with rent-a-crowd up in the gallery—on this very issue of the tax cuts proposed by the Treasurer. It was very interesting. Afterwards I went through the Parliament House web site using ParlInfo and searched for the word `economy'. I could not find the word `economy' in the speech by the Leader of the Opposition, despite the fact that that was the centrepiece which we were all debating. The words `economy' and `economic' did not appear once in his budget reply speech, yet he had all of his supposed supporters cheering in orchestrated response to each syllable he uttered—but that was for different reasons to do with his own failing leadership.

When you look at the Leader of the Opposition's speech, it is particularly interesting to see that he starts off with the question of the tax cuts. We would have thought that this would be the centrepiece, because we remember in the lead-up to the budget questions about taxation cuts and attacks of the type we have heard from the sandwich and milkshake brigade. The Leader of the Opposition in his speech on 15 May said:

I thought, `Here we go. He's going to say, “We are going to have far more generous tax cuts under our proposals and we regard this as not enough.”' But what happened? He was singularly silent. He did not utter another syllable on tax cuts—as he well might have done, because he had created the expectation that this would be forthcoming—and instead outlined all of his great spending commitments. What he was saying, based on the old magic pudding formula, was that it is simply a matter of taking a whole lot of tax cuts—the government's tax cuts being not enough—increasing expenditure very significantly and increasing the surplus. At the bottom line, how do all of those things relate to one another?

There was a very interesting article in the Daily Telegraph on Saturday, 17 May following the budget. Mr Michael Duffy had looked at the response from the Labor Party and said that it reminded him of `the widespread nostalgia in Russia for the good old days of communism'. I have just led a delegation from the Joint Standing Committee on Foreign Affairs, Defence and Trade through the former Eastern bloc. It is a pity none of the Labor Party members could join us on that occasion. People talked in those places about how part of their population look back to the good old days when the communists were in power. There was quite a bit of that sort of looking back in the speech the Leader of the Opposition gave. Michael Duffy said:

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I think that says it all about the response by the Leader of the Opposition to the budget. The Leader of the Opposition talks about increasing the size of the tax cuts, increasing government expenditure and increasing the surplus, but we all know that this is not possible in a finite world.

What we have in this bill are some sensible reforms in taxation and an acknowledgment of bracket creep. I listened with interest to the statement by my colleague the member for Chifley that the Labor Party had always returned bracket creep to members of the public. We on this side of the House remember those famous lines about l-a-w and we are still waiting for the delivery of those tax cuts. The tax cuts in this bill are real. They are modest, in line with the commitments the government has made to defence spending, the war on terror, drought assistance to farmers, assistance with Medicare, the higher education changes that have been outlined, very significant assistance to older people and assistance to people buying their first home—all important aspects of the budget. Considering the constraints under which the budget was framed, I believe that any tax cuts at all are a significant achievement by the Treasurer—and indicates that he is interested in tax cuts, but in a responsible way. Being responsible is something that does not come easily to the members opposite, but on this side of the chamber we believe in sound economic management—sound economic management which produces a surplus of $2½ billion. That is one of the reasons, through the sale of assets—

Mr Fitzgibbon —Underline, underline—

Mr BAIRD —Absolutely; as you did. I remind the member at the table about the sale—as I remember it—of Qantas, Australian Airlines and the Commonwealth Bank. They all seem to forget when they go into opposition that that is what they did. We are not saying there is anything wrong with that, but let us be credible and honest—

Mr Fitzgibbon —You had a fire sale.

Mr BAIRD —It was no fire sale. You know quite well that delays in the sale of Telstra have cost the Australian taxpayer a significant amount of money. This government has now repaid $66 billion of the some $84 billion of accumulated debt that you racked up on the government credit card while you were in office. I think that stands as one of the monumental reasons why people do not trust the Labor Party and why there is such strong confidence in the coalition to administer the economy. To show no regard for the level of debt that you accumulate and no interest in repaying the debt is basically irresponsible.

These tax cuts provide incentive for the community and for those workers who are out there working hard day and night. They do provide some modest relief, but the budget has also been framed in the context of being responsible, providing for a budget surplus and ensuring that we have the growth rates that are appropriate in this country. The 3½ per cent growth rate that is forecast in the economic papers that have been produced as part of the budget puts us in front of the league of modern industrial countries. If we look at the OECD countries, we see that it puts us right at the top of the table. These figures would be the envy of some of the past stellar performers that we have seen. If we look at the economies of the USA, the UK, Japan, Germany or France and compare them with the growth rate of Australia, Australia leads hands down—it is no contest. Part of the reason is ensuring that we have a surplus. It says in the budget papers:

Australia continues to do better on its budget performance than most developed countries. OECD projections show most OECD countries are expected to record budget deficits in 2003 and 2004. The average budget deficit for the OECD as a whole is expected to be 3½ per cent of GDP.

Not this government, not this Treasurer.

It is clear that we have taken a very responsible approach to the framing of the budget. It provides modest tax cuts, it provides a surplus, it provides for continuing economic growth, and it allows for all the significant aspects of managing the economy and expenditure that we have in Australia today—particularly the war on terror, assistance for farmers in relation to the drought, assistance for the older community and tax breaks.

The tax cuts are in addition to the tax cuts that were outlined in July 2000, and these tax cuts—which I am sure the members opposite would like to forget—were the largest tax cuts in Australia's history. Some $12 billion was provided to the workers of Australia, and it was extremely well received. As I was going around and speaking to people in my electorate, I found that it was extremely well received. People expected that they would receive incentives. This attacked bracket creep in a head-on, dramatic and significant way. I would like the members opposite to go through their own records and point out whenever they had tax cuts that came within a percentage—that even came close—to the tax cuts that were outlined in July 2000.

Mr Fitzgibbon —It was compensation for the GST.

Mr BAIRD —It was far more than compensation for the GST. As we know, the GST goes to the states, for them to enjoy the increased revenue flow. Of course, your mates in New South Wales have got not only the benefits of stamp duty increasing year by year in an extraordinary way but also the increased GST flows. The track record of each of the states, when you look at it, is increased taxation. They love increased taxation. Tax cuts are not part of their curriculum, but they are part of ours.

From 1 July 2003, there will be increases in personal income tax thresholds and additional assistance for low-income earners through a more generous income tax offset. The new thresholds mean that taxpayers on incomes of $35,000 per year will have a reduction in tax of $208 per year. For those on $55,000, the reduction in tax paid will be $448 per year and, for those on an income of $75,000, the reduction in tax paid will be $573 per year. The increases in the threshold will also be reflected in the amount of tax that is withheld from taxpayers' income. That is in terms of personal income tax. Altogether it is worth $2½ billion—quite a substantial amount. Listening to members opposite as they spoke on this, as they went on with the normal rhetoric, I did not hear too many of them congratulating the government on the assistance to low-income earners—it was just not there. They are supposed to be concerned about it, but the chardonnay set opposite are not interested.

The government will assist low-income earners by increasing the low-income tax offset from $150 to $235 per year. This means that they will not pay tax unless their income exceeds $7,382, which is up from $6,882. And of course, the income tax offset will not start to phase out until a taxpayer's annual income reaches $21,600. As a result of the changes to the low-income tax offset, the income level up to which the offset can be claimed increases from $24,450 to $27,475; so this is a significant benefit.

Of electorates around Australia, mine has one of the highest levels of older Australians, with some 18½ per cent being over the age of 65 years. The incentives provided for older people in this budget have been welcomed in my electorate. In fact, from the budget outline, senior Australians eligible for the senior Australians tax offset will pay no tax on an annual income of up to $20,500 for singles, compared with the current $20,000, and up to $33,612 for couples, compared with the current $32,612.

There are three significant pillars in terms of this budget's tax changes: firstly, a change in personal income tax; secondly, assistance derived by low-income earners from the offsets provided and the increase in the threshold of the phasing-out point; and, finally, assistance to older Australians and those who have retired who, as a couple, will not have to pay tax on income of up to $33,612, which is a significant amount. I would have thought that all members of the House would welcome these changes.

It is interesting to compare the opinions of those in the community with the attitude of those opposite. The outline of the opinion page of the May 17-18 weekend edition of the Sydney Morning Herald—which does not always provide editorials favourable to the government or attack the opposition—states:

That is what we have seen opposite—cheap political expediency, rather than a constructive approach to the issues that confront us and support for the government in its war on terrorism and with its assistance to those confronted by drought. What we should be seeing is support for these tax changes—support for this budget's assistance to older Australians and to those who are in the low-income bracket. Not only does the coalition say this but also a Sydney Morning Herald editorial states that it is `cheap political expediency'. It is not responsible economic management. It is not considering the constraints under which the Australian economy operates in this time of uncertainty and modest tax cuts that are very welcome by the community. Suggestions about what is required are simply overlooked by those opposite.

Mr Edwards —Thousands of dollars a night being spent on the PM's hotel accommodation.

Mr BAIRD —I am glad I have touched a raw nerve. They do not like the fact that others say that they are not offering a responsible alternative. What we have seen is those opposite simply ignoring the reality that we have a budget that is in surplus and we have provided tax cuts.

Despite the rhetoric opposite, the Leader of the Opposition had his chance to come into this House and say, `Look, this is not enough and, as far as I'm concerned, I would double the tax cuts.' He had his opportunity, but he gave all of one sentence to the words `tax cuts'—and the word `economy' was not mentioned at all. As I have said, he calls this tax cut miserly. But has he offered to change it, increase it, double it, triple it or take it away? There is nothing but a total void. What we have from those opposite is a whole lot of hypocrisy. If they are serious in that they do not think these measures are enough, then they should say, `We would increase them.' If they want to spend them on other areas of the budget, fine; they should say, `We would not provide these tax cuts.' But they cannot have it both ways, as Michael Duffy said in his article of 17 May.

This is a responsible budget that provides modest tax cuts for the workers and professionals of Australia, and it is welcome right across the board. It is obvious that we look forward to a time when even greater tax cuts will be provided, where even greater expenditure will be possible. But, given the constraints under which we are operating, I believe that it is to be commended that we have these tax cuts with the outlines that are here—the changes that are being made in the percentage and the thresholds that are being changed. I believe these types of initiatives will ensure that the coalition is supported by those in the community.

I listened with interest to those opposite in their response to the budget. But clearly it is the coalition government that is taking responsible economic management parameters in framing the budget. Those opposite like to outline where they would spend and how they would increase taxation cuts. But they have not outlined how those two relate to each other—it is magic pudding time. Real responsibility lies with this government, and I certainly commend these measures to the House.