Mr SHORTEN (Parliamentary Secretary for Disabilities and Children’s Services) (1:30 PM) —In rising to support the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008, I realise that this debate is occurring on two levels. On the one hand the government is proposing tax reform and honouring its electoral promises and on the other, listening to the contributions from the opposition, I realise that we are getting a day-to-day display in what could only be described as wool-gathering. There is a forgetfulness about the past which even the shadow Treasurer, the member for Wentworth, cannot deny. The opposition, it would seem—having said that the coalition is the party of tax reform—has indeed chosen to overlook the 300-pound gorilla in the room, the number whose name cannot be spoken, the fact which unfortunately cannot be ignored. This is the simple statistic. In 1995-96, which was the last time a Labor government sat on the treasury bench, the proportion of Commonwealth government tax receipts as a proportion of GDP—in other words, the slice of the action that the government takes from the economy in order to carry out its functions—was 22.3 per cent. Yet in the last year of the Howard government, the proportion which the greedy, tax-grabbing opposition was taking from the taxpayers of Australia had risen to 24.7 per cent. There had been an increase.

Whilst the coalition members opposite may be proud of taking more money from the economy, I suggest that their forgetfulness when they look back in some form of nirvana-like, lotus-eating contemplation about the pleasure of the glory years of the past is much mistaken. In fact, we look at how greedy and rapacious the coalition were when they were in government by taking tax as opposed to returning tax. Using the pea and thimble trick they would say, ‘We’re giving you money back.’ In fact, 2005 and 2006 were the glory years of the coalition tax bandit team. They were taking 25.1 per cent of the economy. By taking 25.1 per cent of the economy the coalition were reaching into the pockets of hardworking Australians and saying, ‘One for me.’ There had been an increase, not a decrease. Indeed, the estimate for this year—not including some of the one-off bargains that the government will always try and offer the electorate—is still 24.6 per cent.

Opposition members interjecting—

Mr SHORTEN —Members of the opposition find these numbers uncomfortable, unpalatable and unpleasant, but there is one thing which they cannot say. They cannot deny that these figures are definitely accurate.

Turning to the economic legacy which has necessitated the significant electoral promises being honoured by the Rudd government, championed by the Treasurer, let us look at foreign debt. Members of the opposition think that foreign debt is the amount of change you leave in the charity bin in business class on the Qantas plane when you come back from London. In 1996 foreign debt stood at $194 billion. What did the now opposition do in their lazy, tax-grazing years of government? They saw an increase in foreign debt—$610 billion in 2007. These people were playing the Las Vegas roulette wheels: ‘Come in spinner.’ When Labor was last in power our foreign debt was 37.4 per cent. But under the indolent hand, the dead hand, of coalition economic management, foreign debt blew out to 57.3 per cent of GDP. Again, members of the opposition think that foreign debt is what you pay on a foreign car. These are significant numbers and they reflect the poor legacy of the opposition’s economic management.

If we do not want to talk about the proportion that the tax bandits of the coalition used to take and we do not want to talk about the foreign debt of the frequent flyer miles constructed by the opposition, let us talk about labour productivity growth. Now that is a shameful number. In the last six years of coalition rule—indeed ‘rule’ as an active sort of a word, as opposed to a more passive term like ‘sleep’ or ‘nano-nap time economically’—productivity grew by only two per cent. Multifactor productivity grew by only 0.7 per cent per annum. Yet in the previous decade, when we saw the accomplishments of the previous Labor government, productivity grew at 2.6 per cent per annum—contrasted with the very sorry and lamentable two per cent under the coalition. Multifactor productivity stood at 1.6 per cent—contrasted with the lazy, indolent, nirvana, lotus-eating years of the coalition government.

If we want to look at poor numbers and debate the mantle of tax reform, there is a university in the Netherlands which the former Treasurer was fond of quoting—and I apologise to the Dutch speakers in the parliament for my pronunciation—the University of Groningen and its Conference Board. Their analysis revealed that Australia’s productivity as a percentage of United States productivity, which was viewed as best practice, was 80 per cent in 1990. Yet by 1998 it had grown to 88 per cent, courtesy of the range of reforms of the Labor government, including tax reform. Looking at it as a proportion of the OECD, under the Labor administration productivity grew from 93 per cent to 100 per cent. Surely these Everest-like accomplishments would have been repeated by the coalition government—if we believed some of the opposition speakers. But what we discover is not a climb. We are not moving up in the game of snakes and ladders—we do not have a ladder when the coalition is in government—we have actually slipped on the snake and gone backwards, from 88 per cent to 82 per cent. Courtesy of the coalition when they left government, they got us back to where we were in 1992. And that takes some doing.

By contrast, what we see here is that the government is putting forward tax cuts, which were an electoral promise. Labor knows that it has to implement the promise. It is part of a responsible plan of fiscal discipline which we are seeing in a range of policies the Prime Minister has outlined. These tax cuts are necessary. They are what we need to restore at least some of the balance in the Australian economy because, let’s face it, the tax bandits of the coalition, on some Pancho Villa like raid into the Australian taxpayers’ pocket, increased their tax take. What we have to do is return it to the people, as opposed to the fishing hall of fame.

This is part of improving the overall benefit to workers, who suffered so poorly under those Work Choices laws—again, another 300-pound gorilla the coalition still does not know whether to pat or shoot. These tax cuts have to compensate, in part, for the Liberal legacy of inflation. Labor is committed to restraining inflation. The tax take of the federal government during the coalition years has been at too high a level and Labor is going to give some of it back.

We will not allow the opposition to misrepresent what they did not do regarding tax reform. It was more a case of tax passivity or of the manx cat sitting on the rock outside in the sun, casually licking its paws, grabbing more of the taxpayers’ milk and not doing much to deserve it. These taxes will help Australian workers and working families ensure that they are okay in life. It is certainly the case that a number of factors improve the quality of life for Australian families and workers in general. One is the proportion of tax they pay. Others include the income they have to spend, their wages and their superannuation. All these items add up to having a fair and decent standard of living. This tax cut legislation is one part of the package. It helps compensate for frustrations that people have about wage rises and also inflation. This tax cut legislation is an effective mechanism to help people. These tax cuts in fact provide incentive for people to participate in the economy.

When we look at what the coalition actually say about tax reform, we discover that they have a history, not, as the member for Cook would suggest, of being reformers, but perhaps of being reformers with a little ‘r’. ‘Reform’ means to clean things up, to remedy, to renew, to uplift, to repair, to rehabilitate, to correct or to change. When I have a look at the legacy which these tax bandits left by their laziness and lack of interest in the Australian economy, I see they are not tax reformers; they are tax tinkerers. They are tinkerers, because in their 11 years they could never manage the real changes in the Australian economy.

Mr Morrison interjecting—

Mr SHORTEN —We had some big challenges in the Australian economy, as the member for Cook may be interested to learn. How did we wake up today and find we had a shortage of skilled labour? Why was the Reserve Bank ignored 20 times when it said that there are real problems in capacity restraint? In the last five years, with the commodities boom, we have seen a five-fold increase in job vacancies. What was so difficult to work out? We had cut the conditions of apprentices; we actually discouraged people from going into that area.

There was another big change other than the skills shortage which appeared on the opposition’s watch—the environment, climate change. Unfortunately for the Australian economy and the Australian society, the opposition believe that climate change is an added extra on a Lexus motor vehicle. That is about as seriously as they took the issue.

Then we had their wasted agenda on industrial relations, which in fact has decreased productivity, not encouraged it. Then there is infrastructure—the failure to support the states to build the infrastructure we need. The prime achievement in infrastructure by the coalition in the last 11 years, because one would not want to be unfair to the tinkerers on the other side, was the Adelaide to Darwin railway. But that is it. After building that railway, it all got too hard: ‘We stopped and had a bovril, a bex and a bit of a lie down.’

As for the coalition’s record of tax reform and economic management, we see that the best economic management they had was previously given to them by Labor—the floating exchange rate, the national savings scheme. These are things which help enhance productivity. Interestingly, when I listen to the shadow Treasurer there seems to be a clear loss of memory about one specific event, which is the economic management of the coalition whilst they were in government. It is called lacuna amnesia. The difficulty for these lacuna amnesiacs opposite me is that the first time there were problems when the big issues came along—and the commodities boom has generated what growth we have had—we had a coalition which were skilled at missing the boat. They missed the boat on improving superannuation, they missed the boat on the skills shortage, they missed the boat on handling the environment and they missed the boat on infrastructure. I would not want these people to be my travel agents because we would all miss the boat.

On the one hand, the opposition want to stare mistily into the past and remember the glory of the Prime Minister’s years but, on the other hand, they want to play in the traffic and say, ‘That wasn’t really us.’ I always listen with interest to the current shadow Treasurer—and who knows where he’ll end up—and the difficulty that he has is that you can argue that you are a fresh face and you can argue that you support tax reform, but there is something called ‘your record’. You cannot disown the past. The problem for the opposition is that they have been tinkerers. We have seen an inability of the opposition to grasp the fundamentals of reform.

Mr Robb interjecting—

Mr SHORTEN —The member for Goldstein referred to unemployment. I tell you what the unemployment rate is for people with disabilities in Australia—although I hesitate to guess that, when you are a person with disabilities, the coalition might not know how low your unemployment rate is—and what the participation rate is. It is a sad 39 per cent, well below the rate in OECD countries. So, when it comes to protecting the vulnerable, the opposition are in trouble trying to claim that mantle.

We see that our individual tax burdens, compared to OECD standards, are relatively high. Take 2004-05. If you have a look at who was paying half of the income tax of $101.6 billion, which the tax bandits of the coalition were taking to feather their electoral promises, you will see that half of the income tax burden was being paid by people who earned less than $660. What a fantastic year that was! They get to pay half of the income tax burden of Australia, then they get Work Choices in their stockings at Christmas—a truly frightening sort of Stephen King political outcome!  What we see is that low income—

Opposition members interjecting—

Mr SHORTEN —As much as you do not wish to wear the record, you did the time so now you have got to pay the price. Low-income families, single people and childless couples lost ground in the last decade. Have a look at these changes. These will improve participation. Courtesy of the wisdom of our Prime Minister and our Treasurer, 3.4 million people will benefit from change to the low-income tax offset. Eligible taxpayers receiving the senior Australian tax offset will gain increases in the threshold by the consequential increases of the low-income tax offset. According to recent information from the Australian Tax Office, 600,000 Australians will benefit from this. In addition we have Labor advancing further on the reform front. Not content to do just this, Labor is going to decrease the number of tax rates from four to three. It is going to lift the effective tax rate threshold of $20,000.

Tax cuts are part of a balanced package and we cannot expect the Reserve Bank of Australia to take all the load. Labor have a five-point plan and we are not asking the low paid to bear the burden. We are going to do good things in superannuation, in these tax cuts and in the bargaining system, and you are seeing a real dose of fiscal discipline—something which would have given nightmares to the former cabinet of the opposition when they were in government.

There is one thing about these tax cuts: they do help to compensate for inflation. Over the course of the lost 11 years of tinkering by the now opposition, the proportion of tax taken from Australians by the government increased from 22 per cent plus to 25 per cent plus and it is still at 24.7 per cent. This is a coalition opposition who made a hallmark of taking money from people and spending it on their particular priorities. What we see now is a reforming Labor government that is consistent with the best traditions of Labor, ensuring that the low paid and the middle-income earners receive their fair cut. I hope—and indeed I believe—that these tax cuts are the start of a package to deal with the legacy of inflation, the runaway foreign debt and the crippling fall in productivity. When it comes to the big issues of the Australian economy you would want to leave it to Labor, because the last 11 years of the coalition have been a sorry disappointment.