Senator MURRAY (6:11 PM) —It was inevitable that I would have to rise to respond to some of Senator Sherry's remarks, and I will pick on a few of those as I go along. The first remark is an element of agreement, and that is that a position we have taken consistently is that the goods and services tax is imposed by the Commonwealth and, as the Auditor-General has outlined, should be accounted for in the books of the government and not moved off the balance sheet, as it effectively has been. The Auditor-General is very clear on that. We are supporters of the goods and services tax, but the issue of accounting integrity is one on which we have a common view with Labor and the Auditor-General.

The next issue comes to matters of principle. The Democrats are of the view that the amount of tax we raise in this country is insufficient for the legitimate expectations of Australians. However, we believe the amount can be raised by broadening the base—in other words, by increasing revenue. In our view you do not have to increase taxes; you have to reduce tax concessions and attack waste and mismanagement where it exists. But the principal target needs to be tax concessions, which the tax expenditure statement indicates is around $30 billion all told. It is the view of the Democrats that anywhere up to $7 billion to $10 billion of that can be pared away, including all those concessions to the well off—high-income corporate welfare for the wealthy; all those things agreed to by the Labor Party.

The coalition were up front, right in your face, with policy and said, `This is what we want to do.' They were perfectly honest in their approach. Labor said: `We actually support the poor but, by the way, we're going to give a nearly $3 billion tax concession for private health insurance, which isn't means tested. Oh, by the way, we're going to pass the schools bill and make sure we give $60 million to $100 million to the very wealthy schools in this country and afterwards we'll complain about it. Oh, by the way, we'll give capital gains tax cuts that amount to well over $1.8 billion, which is welfare for the rich,' and so on. We say that none of those should have applied. If you pared those back, you would have all the money you needed without having to raise taxes for vital education and health needs. And there are many other needs that can be met from similar measures.

Our approach is quite simple really. We say that Australian tax law must be fair for everyone and that it must be consistent for everyone. If the top tax rate is going to be 47 per cent tax plus 1½ per cent, that is what the top tax rate should be. It does not matter whether you are well off or not so well off, that is where the top tax rate should be. What we strongly object to, of course, is tax minimisation and avoidance, which is generated by an ability to manipulate the tax provisions or through the provision of tax concessions that are not justified. We feel very strongly about the fact that the tax threshold is far too low. It commences at $6,000 in income earnings. We feel very strongly about the fact that effective tax rates for poor people can be as high as 80 per cent or more, simply because, if they move on to better earnings, the reduction in welfare benefits, coupled with a 17 per cent tax rate at that level of earnings, produces an exceptionally high effective tax rate.

So, in answer to Senator Sherry's remarks, we suggest that it is not the top tax rate on which you should focus your attention but in fact the real tax rate, the average tax rate, which for the well off, the wealthy and high-income earners is reduced because of what we would refer to as welfare for the wealthy, and all those items I outlined on which the Labor Party in its wisdom has supported the coalition. One would expect the coalition to pursue those policies—that is their rationale, that is their belief, that is their ideology—but the Labor Party seems to act in contradiction to its belief and its ideology by constantly saying one thing and doing another on the tax front.

Let us come to the specific area of superannuation, on which I would acknowledge Senator Sherry as probably one of the foremost experts in the parliament, along with our own Senator Cherry. I am not sure if I should put you there, Senator Coonan. I know you are expert in a number of areas, but I do not know if that is your particular area of expertise. Specifically, what we did on superannuation was to agree with the government an outcome that delivered some of what the government wanted in return for some of what we wanted, which was to really push hard for low-income people to have greater access to savings provisions. If Senator Sherry, who understands this policy field very well, were to take off his politics hat and put on his policy hat, he would understand very clearly what we were trying to achieve: it was not to deliver a big tax cut to the wealthy.

Coming back to this amendment, the question is: what is it about? It is about making sure that there is not a wealth tax. Effectively, what operates at present is a wealth tax. Personally—and with this remark I am speaking entirely personally and not for the Democrats—I can see circumstances where a wealth tax is perfectly reasonable. For instance, I consider a capital gains tax to be a wealth tax in one respect. I consider property taxes in certain respects to be wealth taxes. There are wealth taxes that are worthy. But, if you are going to specifically identify a tax rate for people who are wealthy, you have to pick a threshold and you have to apply it to all people, not just selectively to those who happen to have ETPs. You cannot punish people selectively in a tax system; you have to have a common, consistent and uniform standard. We think this is a matter of fairness. Of course we would like to put the bite on some extremely wealthy people, but you just cannot do that in a tax system. You have to be even-handed. It is a bit like justice: it has to be even-handed.

The other consideration we would always have to take into account is the financial impact. It is $5 million a year. It is really not a big deal and it is not going to do much to make wealthy people any wealthier. It is just a fairness issue. With that broad and sweeping range of responses to Senator Sherry's remarks, I again indicate that the Democrats will oppose the Labor amendment.