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Thursday, 10 March 2005
Page: 71


Senator CHAPMAN (3:09 PM) —The claims made by the Labor opposition about the tax policies and the impact of tax on Australian workers derived from the OECD statistics just show how statistics can be misused. The Labor Party is using these statistics to falsely claim that the present government, the Howard government, is the highest taxing government in Australia’s history. That ignores the fact that within these OECD statistics are contained state taxes—payroll tax is included in these statistics, a state tax, a tax levied by the six state Labor governments around this country. To say on that basis that the federal government is the highest taxing government in Australia’s history is demonstrable nonsense.

The second point Labor ignores, very conveniently, is that the OECD report very clearly shows that average Australian workers in 2004, as was the case in 2003, had the second highest disposable incomes of average workers anywhere within the OECD countries. Taking tax and benefits into account, this means that average Australian workers have higher real incomes than average workers in any country other than Korea. Higher real incomes is the key to the purchasing power of the wages earned by average Australian workers. Because of the federal government’s policies over the last nine years, wage increases have been matched by productivity increases, so they had been noninflationary and they have increased the purchasing power of the average Australian worker. That is to the great credit of the policies of the present Howard government.

You need to look at not only tax rates but also family payments—the benefits that are received by workers on particular income levels. As we know, in the last budget the government significantly increased family payments. Families that have two children and earn 100 per cent of the average production wage, as it is defined, have an increase in family tax benefit A. That, combined with the lowering of the taper rate in the current budget, means that a person earning the single-income average production wage who has two children is this year receiving more than $1,800 in additional family assistance. When you combine that with the last budget’s tax cuts that came into effect on 1 July last year and the additional family tax benefit B announced during the election, such a family is now more than $40 per week better off. So the numbers being used by the Labor Party to put forward their arguments are demonstrably false.

A single-income family, for example, with a child aged under five does not even become a net taxpayer until its income exceeds $41,800. There have been a number of claims made on this issue—for example, that the tax burden on Australians has increased over the past eight years. This is based, again, on the OECD findings, but the OECD press release notes that the tax wedge on earnings rose in more than half of the OECD countries last year. The increases are different for different groups of taxpayers. For a single person earning 100 per cent of the average production wage, Australia has a tax rate of 28.6 per cent, which is well below the OECD average of 36.5 per cent. It is important to note that the OECD has not allowed for the inclusion of payroll tax in the tables prior to 2002. So you are not comparing like with like when you are looking at the eight-year period over which this claim is made by the Labor Party that the tax burden has increased. In one period you have got payroll tax included, and in another period payroll tax is not included. So the comparison simply is not valid.

An important point needs to be made with regard to family benefits being paid to taxpayers. The OECD report claims that the increase in tax has been worse for those with a mixture of family payments and earned income. This ignores family benefits. When they are taken into account, this group has been a net beneficiary. This is very clear. If you read the OECD report completely, you will see than on page 88 it clearly shows that fact, so Labor’s claims cannot be substantiated. (Time expired)