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Wednesday, 15 June 2005
Page: 3


Senator MURRAY (9:45 AM) —My great frustration with the media throughout the debate over tax cuts is that they have failed to do the job which is their fundamental responsibility. The political parties and their spokespersons have been expressing not only their political views but also, of course, their policy views in the parliament. But the ability to transmit those policy views as well as the political views is the responsibility of the media. In Senator Sherry’s exposition you would have heard a careful dissection of many of the issues which are relevant here. I think the media have failed the public of Australia by failing to address the absolutely fundamental concern that many voters have with the income tax system. They find it complex and difficult to understand. They find the relativities difficult to comprehend—in other words, they think that their neighbour or colleague may be having a lend of them in this system, because they cannot easily grasp the structure and relationships that apply.

It is one of the reasons that I and others in my party have been arguing that structural reform is necessary, not just because of a desire to address issues of competitiveness, which is one of the themes that the government has been talking about, or because of issues of equity and fairness, which are some of the themes that we and Labor have been talking about, but because of the need for the community to be able to understand our system better and the need for greater simplicity in the system.

If you contrast the income tax changes that have been made over the last few years with the indirect tax changes or the business tax changes that have been made, you can see the difference. The ANTS package, as it was known—the A New Tax System package, which included the GST and other indirect tax changes—was structural reform. It has ended up being clearly understood by the community; it knows what should be applied and what should be taken off and so on. I think the country should remain indebted to the coalition for producing what was, despite its controversy, a well thought through, properly modelled and fully assessed package.

Similarly, the coalition produced, as a result of the Ralph review, a business tax structural reform package. Once again, that has had a number of themes. It has resulted in fundamental changes and adjustments to the way that business tax is assessed and to the broad principles that underlie it. My criticism of that package, of course, is that they have not completed the job—they have not done all that Ralph recommended. Nevertheless, it was structural reform. On the finance side, we have had the Wallis reforms. That was structural reform and it was very good. It was initiated by Labor and carried through by the coalition. It was first-rate stuff. The financial services stuff is structural reform in terms of disclosure and the way that the consumer is dealt with. But in income tax I think the coalition has failed us, not because it has failed to address pressure points at various times and not because it has failed to make changes—it has made changes over time—but because it has failed to address the income tax area from a structural approach.

I think the media have failed in this debate to grasp that nettle. It is a nettle well understood by the coalition, Labor and us. But it is not an area that has been properly explored. All the media have concentrated on and have been concerned with—and I am generalising, of course, because there have been individual journalists and newspapers which have addressed structural issues—is telling the parliament to get out of the way of these tax cuts and seeing this whole issue as a question of the Leader of the Opposition’s strength and how he looks in terms of his ability to carry through an issue. It is a far deeper and more important matter that we face. The community, generally speaking, from top to bottom, is dissatisfied with the way in which income tax is presently levied and the way in which it operates in our system. The Democrats do recognise that there are alternative ways of addressing the problem. We have made it clear throughout this debate that we are not averse to tax cuts when you have a surplus. We are not averse to tax cuts for high-income earners. We just do not think they are the priority.

We recognise that the difficulty with our proposition is that it is just one of a number of steps that we think need to be taken. We have outlined five steps which we think would constitute structural reform and which would deliver simplicity and make the system understandable. They would also deliver the essential need for low-income people—particularly those below what is known as the poverty line, which in this country is $12,500, roughly speaking—not to pay income tax. We cannot understand any system which requires people on incomes below the poverty line to pay income tax. That is a very basic principle that we start off with. Our five steps constitute raising the tax-free threshold, indexing the rates, broadening the base, raising the top rate and reforming the tax-welfare intersects. What we have presented in this amendment is just one step in that process.

We acknowledge and recognise that Labor have attempted to take a number of steps within their approach. I would always expect them to prefer the policies which they have laid out to ours. It is their job to argue that. But I am concerned that the Labor approach was cobbled together after the budget. I do not think you can address structural tax reform in a sudden way. We Democrats have tried to develop our approach over a number of years. We have been consistent with it. Obviously, the government thought through its approach. It did not arrive at its approach suddenly.

My criticism of Labor is not that it is not moving towards structural reform, because in some respects it is, although insufficiently. My criticism of the government is that its changes and reforms do not constitute structural reform. They constitute shifts and changes in rates, but they do not introduce a permanency to our system and make it one which will not shift and adjust over time. That is what structural reform means: certainty as to how the system will look into the future. I am afraid that the government is not providing that concept in the same way in which it provided it with the indirect tax system, with the new tax package and with business tax.

I recognise the reality of what has been put to us. But once the media have got over the obsession with this whole debate having been a question of Mr Beazley’s strength or the Labor Party’s positioning, perhaps they will do Australia a service and return to the question of just how we achieve proper, permanent, complete and broad structural reform so that income tax in this country ceases to be the thorny issue which it still will be following this debate. I hope that Labor will finally throw out the idea that income tax change is an election policy issue or is something that you just produce after a budget and commits itself to a permanent view as to how it sees the income tax system and its main component parts should be structured. That, as I said previously, is my main criticism of their present stance.