Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 18 September 2003
Page: 20510


Mr SWAN (2:42 PM) —My question is directed to the Prime Minister and it concerns revelations today that his department has alarming figures on the tax and benefit disincentives faced by families when they earn extra money. Prime Minister, do you stand by Minister Vanstone's comments on ABC radio on 14 May this year where she commented that there is nothing wrong with effective marginal tax rates of up to 100 per cent when families earn extra? And do you agree with her subsequent comments in a 7 July speech entitled `The needy and the greedy' that people who feel angry about high effective marginal tax rates are `greedy' and have an `entitlement attitude'? Prime Minister, do you stand by your minister or do you believe families are justified in their anger about paying effective tax rates of 60 per cent or more for their hard work and overtime?


Mr HOWARD (Prime Minister) —I thank the member for Lilley for the question. Effective marginal tax rates is an expression that describes a combination of the impact of the withdrawal of a benefit and the actual tax paid on your taxable income. The truth is that effective marginal tax rates, as so defined, have existed under Labor governments and Liberal governments and no attempt was made by Labor in office to abolish them. The reality is that unless this country is willing to have a completely non-income tested welfare system—and I do not hear the Australian Labor Party advocating that—you will always have a situation where, as people's incomes rise and if those people are in receipt of benefits or family tax payments, once they reach certain points of income the value of those benefits will decline and ultimately disappear. That is the ordinary operation of the welfare and benefit system. It is quite dishonest of anybody in this House to try and suggest that there is some new revelation about that. When Labor was in office, it made a virtue of targeting, on an income-tested basis, welfare payments and family allowances. The reality is that that has been a policy followed by both sides of politics for a very considerable period of time.


Mr Swan —Mr Speaker, I rise on a point of order on relevance. I asked the Prime Minister about Senator Vanstone's comments and whether he agreed with them or not.


The SPEAKER —The member for Lilley is well aware that the Prime Minister's answer was relevant.


Mr HOWARD —Because the question relates to the position of families under the Australian tax and welfare system, I would like to inform the opposition of the results of some analysis carried out by the federal Treasury of the impact of the new tax system—that is, analysis of the disposable incomes of Australians before the new tax system was introduced and a year after the introduction of the system. This analysis found that all family types—all family types, Mr Speaker—had a greater real disposable income 12 months after the introduction of tax reform. The increase in real disposable income was generally significantly higher for couples with children and for sole parents than for households without children.

The analysis found—contrary to what the Labor Party is trying to allege—that couples with children in the bottom income quintile received a real increase in average disposable income of $36 a week. Couples with children in the second bottom quintile received a real increase of $51 a week. Couples with children in the top income quintile received an real increase in average disposable income of $32 a week. Sole parents across all income quintiles received an average real increase of between $34 and $46 a week. Working families in the lower income quintiles saw greater proportional increases in their disposable incomes than those in the highest income quintiles. The Treasury notes that its analysis did not include the additional benefits from improved child-care subsidies, which would significantly add to the benefits I have outlined. What those figures demonstrate conclusively is that under this government the real value of benefits, both tax and otherwise, to Australian families has increased significantly.


Mr Swan —Mr Speaker, I ask the Prime Minister to table that document provided by the federal Treasury from which he was quoting.


The SPEAKER —Was the Prime Minister quoting from a document?


Mr HOWARD —It is marked `confidential'.