Mr SWAN (4:26 PM) —These tax cuts are now destined to pass the Senate despite the fact that the economy and individual taxpayers would have benefited much more from Labor’s positive, constructive alternative, which was put in this House and in the Senate and found majority support in the other house. In the Treasurer’s rush to buy votes in the Liberal party room, a massive opportunity was lost. A massive opportunity to deliver a fairer and more internationally competitive tax system was simply squandered.

The Howard government would like to pretend that these tax cuts are real reform. They are not. When tax reform is done correctly it can create wealth. It can encourage work and it can act as a vehicle for fairness and as a vehicle for aspiration. On both counts Labor’s package was massively superior to that which was put forward by the government.

The government produced a package that simply put wealth redistribution before wealth creation. As I said in this House before, this was a Sheriff of Nottingham package. It massively redistributed tax cuts to the top, left the great mass of the work force out of the equation altogether and squandered an opportunity to do something about participation. We are constantly lectured in this House about the three Ps. With participation, with Labor’s package, we could have delivered a massive boost to this economy—the sort of boost, by the way, Treasurer, that has been called for by the Governor of the Reserve Bank, by the OECD and by the BCA because we had a massively superior package to yours.

We acknowledged that marginal rates are too high across the board, but especially for low- and middle-income earners, who were completely dudded in your package. They are the same people that you are lining up to remove their unfair dismissal laws altogether and to massively attack their take-home pay when it comes to penalty rates. You have low- and middle-income earners in your sights. You have hit them once with the tax package and you are now about to hit them with your extreme industrial relations package. The great bulk of workers that make up middle Australia are carrying an even greater tax burden and are penalised very heavily when they work overtime by the Treasurer’s tax proposals—

Mr Rudd interjecting—

Mr Costello interjecting—

The DEPUTY SPEAKER (Hon. IR Causley)—The member for Griffith and the Treasurer will desist from debate across the table!

Mr SWAN —and those trying to move from welfare to work still face very high effective marginal tax rates, as high as 80c in every additional dollar. So we have no effort in this package to do something about effective marginal tax rates, no effort in this package to do something about simplifying the tax system and its complexity—9,000 pages of the tax act is the Treasurer’s legacy to this country—and no real attempt at reform at all.

What is the outcome of that? The outcome is that the burden on low- and middle-income earners in this country is rising. They are facing higher amounts of tax than they faced in 1996. Even with these tax rates the average tax rate for someone on average earnings will increase from 22.5 per cent to 22.7 per cent. The average tax rate for someone on half the average wage will increase from 12.9 per cent to 15.3 per cent. What does that add up to? Someone on the average wage will pay just over $100 a year more in tax than if the average tax rate on their income in 1996 applied. Someone on half the average wage will pay almost $700 a year more tax than if the average tax rate on their income in 1996 applied. These figures simply blow away the claims that this Treasurer has to be a great supporter of the working class or a friend of the worker. If you throw in the changes to the industrial relations system, what you see is the continual attack on the living standards of low- and middle-income earners.

Of course, that is before you get to the participation challenge. The public record will show Labor proposed a genuine tax reform package that did seek to tackle the participation challenge. There was no effort by the government to target reductions in marginal tax rates for those whose participation would respond the most. The analysis by the Melbourne Institute of Labor’s tax proposal showed that it not only delivered more tax relief for all but the highest income earners but also would have encouraged 75 per cent more Australians into the labour market than the government’s plan: that is 75 per cent more Australians—78,000 in total—many from welfare to work, including 81 per cent more sole parents and a massive 121 per cent more single males than the government’s proposal. The analysis of the Melbourne Institute also shows that Labor’s package would have delivered double the increase in the average hours worked compared to the government’s package. (Time expired)

The DEPUTY SPEAKER (Mr Jenkins)—The question is that the House insists on disagreeing to the amendments insisted on by the Senate.

Question agreed to.