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Monday, 18 March 2013
Page: 2483

Ms O'DWYER (Higgins) (12:26): I rise today to speak on this motion by Mr Oakeshott and I thank him for drawing this matter to the parliament's attention. The fact is, in the words of the member, it is clear that the Labor Party has presided over a tax shambles. During its time in government, we have seen more than 27 new or increased taxes brought into effect, and this is despite the fact that this government is already receiving more in revenue than was received during the last year of the coalition government. Why has it done this? It has done this because its view is very simple on the Australian economy. Unlike the Liberals and the coalition, who understand that you need to grow the economy in order to increase the living standards of all Australians, this government believes that you need to increase taxes. Not to grow the pie but simply to increase taxes.

The government needs to increase taxes because it has significantly and dramatically increased spending. This government is spending more than $90 billion more than previously spent by the coalition government each and every year. That is money that has been borrowed in order to fund the government's spending. It has not just been borrowed, but Australians are paying increased taxes in order to fund it. And to fund what? We know the list is long, and includes such things as the pink batts scheme and the $6 billion which has been the cost of the government's failure when it comes to border protection. These are just two examples.

But it is true to say that there needs to be a different way on tax. Let me hark back to the coalition's record when it comes to tax. The coalition was able to pay back Labor's $96 billion of debt and was able to provide for the future with a $70 billion Future Fund and a $6 billion Higher Education Endowment Fund, and it was able to deliver in the last year of government a $20 million surplus. In doing all of this, it was able at the same time to deliver significant company tax cuts in order to help and encourage business to grow and to employ. We saw during that time wages increase in real terms of over 20 per cent. At the same time the coalition also delivered individual tax cuts in almost every budget year. This meant that Australians were free to choose to spend their money in the way that they saw fit. The government takes a different view. It wants to tell Australians how it is that they should spend their money, and we fundamentally disagree.

Who can forget that before last election the Prime Minister and this government made a firm and solid commitment that it would not introduce the very regressive carbon tax? It promised this most faithfully, and within days of coming into government it reneged on that promise. We are seeing the implications already for Australian manufacturing and Australian industry. It goes to our ultimate competitiveness, and we are competing not only in our region but also throughout the world and we need to ensure that we can be competitive. A carbon tax does not assist us in this. The chief economist of AMP recently said that a carbon tax is clearly taking a toll. This comes off the back of business leaders who have warned that it is having a direct impact on business. Figures that were recently released show that 900 Australian firms are currently being placed in administration each month. This is indeed a record high and it is 12 per cent higher than during the GFC. There is no doubt that the carbon tax is making a bad situation even worse, even more difficult.

In addition to the carbon tax, this government has also introduced a mining tax that it linked to increased spending, $15 billion worth of increased spending. We were told that the mining tax in this financial year was going to deliver $2 billion. Yet this government is so ineffective when it comes to introducing legislation, including taxes, that the revenue raised is only $126 million. We said it was a flawed tax. It clearly is a flawed tax and it should be gone.

Coming back to the motion before us today, it is clear that there is much more to do on tax reform. The Henry tax review, a multimillion-dollar review instituted by the government, made 138 recommendations but less than a handful of those recommendations have been implemented. In fact, some recommendations—for instance, not to make any changes to the superannuation guarantee—were ignored, which is rather surprising. We live in a global world and we need to be globally competitive. Being globally competitive with our tax system is critical. The tax review recommended a reduction in the company tax rate to 25 per cent over time, and a commitment to minimise the rate of company tax is one that in broad terms we accept. But from this government we have seen no progress, with the government scrapping its own long-promised company tax cut in last year's budget. We have seen the government's latest efforts in the previous budget to increase the effective tax rate for many companies by moving to monthly tax collection, which again was not one of the 138 recommendations. This increases companies' effective tax rates through funding costs to cover working capital requirements and compliance costs. Far from making Australia's tax system more competitive, we have moved backwards.

PwC recently provided a report on this subject, Paying Taxes 2012. It analyses the significant ground that we need to make up in Australia. Australia is ranked 52nd of medium-sized companies paying taxes and government-mandated contributions. Competitor economies in the region rank far higher, with Hong Kong third and Singapore fourth. But company tax is not the only area where the government's response to the Henry tax review has been found wanting. We have seen no progress on removing inefficient state taxes, with the government refusing to consider a proposal prepared by the states to reduce stamp duty, nor will it consider one on removing distortions in the taxing of savings.

With the Asian Century white paper, we have clearly not learnt some of these lessons, and these are lessons which are very salutary and ones which we need to institute as a matter of urgency. We need tax reform that is efficient and fair. We need to ensure that we can, through our tax system, have people take home as much of their pay that they have earned as is humanly possible. The government can do this by managing the economy well and by refusing to implement new taxes. We have already heard in the Prime Minister's Press Club address that she plans on introducing potentially new tax imposts on superannuation in the upcoming budget. This would be a significantly regressive step and one that we would argue very strongly against.

Tax reform should be a priority. Tax reform has not been a priority of this government. If the coalition is given the opportunity to govern again in September this year we will ensure that tax is placed at the top of the agenda. (Time expired)