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Tuesday, 11 October 2016
Page: 1414


Senator GALLAGHER (Australian Capital TerritoryManager of Opposition Business in the Senate) (12:47): I rise to speak in support of this bill. This bill amends the thresholds so that the rate of tax payable on taxable incomes from $80,001 to $87,000 for individuals is 32.5 per cent. The government announced this measure in the 2016-17 budget and Labor supported it. It means that individuals with taxable incomes from $80,001 and up to $87,000 will now be subject to the lower rate of tax of 32.5 per cent rather than the rate of tax of 37 per cent which currently applies to taxable income over $80,000. It will provide a maximum tax cut of $315 per annum on incomes of $87,000 and above.

With this bill, Labor is pleased to be supporting modest, sustainable tax relief for up to 3.1 million Australians and their families. However, despite bipartisan agreement, the Turnbull government has still managed to make a mess of its implementation. As David Crowe reported in The Australian on 2 September, millions of workers will have to wait until the middle of next year to receive all of the benefits. This is despite the government's assurances in May that workers would receive the gains far earlier. Mr Crowe reported that:

Workers will not see the lower rates applied to their salaries for at least another month, which means they will not collect the cut due to them for the first quarter of the financial year until they lodge their tax returns after July 2017.

Yet, on budget night, Mr Morrison proudly boasted he would deliver income tax cuts from 1 July this year. He said:

From 1 July this year, we will increase the upper limit for the middle income tax bracket from $80,000 to $87,000 per year.

Yet the government did not introduce legislation to ensure that the tax cuts would start from 1 July this year before the election.

When asked on ABC Radio how the how the tax cuts would be introduced by 1 July, given that the government was unlikely to be able to legislate them before prior to the election, the Prime Minister said that:

That is really up to the Labor Party whether it's legislated, but certainly it will be covered administratively after the election, we expect the Parliament to come back and ensure that all of the legislation supporting the Budget measures is passed.

Yet in the Pre-Election Economic and Fiscal Outlook, prepared by the Secretaries of the Departments of Treasury and Finance, it became clear that the tax cuts could not be delivered from 1 July as promised. Instead it said:

(T)he Commissioner has indicated that the Ten Year Enterprise Tax Plan — targeted personal income tax relief measure requires the relevant legislation to be passed before the change will be incorporated into the income tax withholding schedules.

We now have confirmation from the ATO that the income tax cuts scheduled for 1 July 2016 have only come into effect on October 1, and Australian taxpayers will have to wait until they lodge their tax return after 1 July 2017 for the extra tax they have paid for three months to be credited back to them. Labor immediately gave bipartisan support to these income tax cuts, so there was no excuse for the government not to legislate these straight after the budget in May this year. It took five months from when the Treasurer promised these income tax cuts in the budget for him to actually introduce the required legislation into the parliament.

This government is so incompetent that, even with clear and unambiguous Labor support on budget night for these tax cuts, the Prime Minister and Treasurer still manage to fail in the basic task of introducing and passing legislation through the parliament required for them to take effect before the election. The Tax Commissioner confirmed in the Pre-election Economic and Fiscal Outlook, that these tax cuts would not be delivered from 1 July as promised by the Treasurer, but instead would only be implemented when the relevant legislation had passed the parliament.

Scott Morrison must outline when this same advice from the ATO was received by the Prime Minister, himself or his office. This advice goes to the very basis on which the Prime Minister and Treasurer continued to publicly argue, including throughout the election campaign that the income tax cuts would flow 'from 1 July'.

Instances of ineptness by this Treasurer and this government in undertaking their core responsibilities have regrettably not been rare. Other recent examples of the Treasurer's mishandling of policy include: presenting a bill to the parliament that miscounted the savings in the omnibus legislation after weeks of telling us it would be $6.5 billion in savings when in fact the savings were less than $6 billion; recent media reports exposing how he and the Prime Minister got rolled in cabinet by the conservatives in their own party on their desire to pursue reform of negative gearing; being forced to further delay the introduction of savings attached to the government's super package following an embarrassing stalemate, again, with his own backbenchers, and despite the government making an 'iron-clad' commitment to the electorate during the election.

We also need to remember the context in which these tax cuts are being prosecuted by the government. Scott Morrison has offered up this modest tax cut for those on incomes over $80,000 as a crude cover for his cuts that have affected the cost of living of every single low- and middle-income Australian. The government's double dealing in the budget cannot go unremarked upon. Yes, the government is seeking to provide some limited relief to Australian taxpayers, but this in no way makes up for the sustained assault of the Abbott-Turnbull government through its budgets on services Australian people rely upon. The government can try as it likes to provide a fig leaf for its regressive agenda—which has been consistent, irrespective of who happened to be Prime Minister at the time—but no sleight-of-hand tricks can conceal the essential truth of that broader agenda. The 2016 budget was merely the last confirmation of an approach unchanged since 2014. It contained the same $80 billion of cuts to schools and hospitals, the same cuts to working- and middle-class families, the same cuts to Medicare, to child care, to aged care, to universities, to paid parental leave, to pensioners and to carers.

Labor does support the tax cut contained in this bill, but we acknowledge that three-quarters of Australian workers will receive no tax relief from the 2016 budget and that those same Australian workers who miss out will disproportionately bear the brunt of this government's cuts to schools, hospitals and Medicare and to the family supports they rely upon. It is a simple truth that you do not create the jobs of the future by cutting education, making health care inaccessible and unaffordable, underinvesting in infrastructure and making broadband slower.

Labor does believe in delivering a fair and sustainable tax system. We understand that this should provide incentives for all Australians to work and engage in productive enterprise. But it must also guarantee adequate revenue to fund the proper role of government, including quality public services that all Australians deserve.

Maintaining public confidence in Australia's tax system is critical and depends on simplicity, transparency and everyone paying their fair share—something this Treasurer and government have manifestly failed to grasp or deliver. In its recent publication Choosing opportunity, the McKell Institute outlines in a comprehensive fashion why, as policymakers, we must be concerned with the impact of tax and budgetary policy and what it can achieve. As the Choosing opportunity report makes clear, there are issues that demand our urgent attention. In Australia, inequality is on the rise. The middle class is being squeezed. Dignity in retirement is uncertain. The gender pay gap remains effectively unaltered since 1979. And, for a generation of young Australians, the dream of home ownership is simply way beyond reach.

Labor wants Australia to succeed. We want a tax system for a growing, job-creating, wealth-creating economy. As Bill Shorten said in his recent speech on inequality to the McKell Institute, Labor is concerned with issues such as reforming negative gearing, needs based funding for schools, affordable university and equality for women not just as totemic indicators but as economic levers. Used correctly, they are creators of growth, not programs paid for by forgoing growth. They are about investing in lifting people into work and in supporting their full participation in our society and our economy.

Labor supports tax relief for working Australians, but we will never walk away from properly funding schools or Medicare. Labor will never slash Australia's safety net in a misguided effort to provide tax cuts for big multinationals or fight tooth and nail to keep tax loopholes open. We are genuinely forced to ponder what could be achieved if Malcolm Turnbull stood up for everyday Australians instead of trying to implement reckless and unsustainable tax cuts for big business.

In saying that, Labor has and will work cooperatively with the government when what it proposes is reasonable. We have proven that with our principled negotiations on the omnibus savings bill, and we have taken the sensible approach of supporting other budget measures which merit support. This includes supporting the very welcome restoration of Labor's low-income superannuation contribution, an initiative to support low-income earners but particularly women, which the government has renamed but restored in the 2016 budget, three years after announcing its abolition.

Although I canvassed this at some time in the chamber during the last sitting, we are similarly pleased that the government has seen the light on our reforms to tobacco excise to combat the serious health and economic impact tobacco addiction has on the Australian community. With a significant fiscal challenge ahead of us, I invite the government to continue in this vein—to adopt more of our positive initiatives that deliver for ordinary Australians while fairly and sustainably improving the budget bottom line. I can even helpfully direct senators opposite to some other measures that they ought to be considering.

The government should take another look at and reconsider its position on our proposed reforms to negative gearing and capital gains tax. The careful, calibrated reforms to negative gearing and capital gains tax that we took to the election recognised that far too many working- and middle-class families are increasingly being priced out of the housing market. The negative impacts this circumstance has on intergenerational equity, economic growth and the Commonwealth's fiscal position require the urgent attention of this government. Labor's proposal ends what are poorly targeted and clearly unsustainable tax subsidies. By limiting negative gearing to new dwellings, we would help put the Australian dream of home ownership back within reach and simultaneously provide significant improvement, over the forward estimates and beyond, to the budget.

The other key measure that most evidently deserves the government's consideration is the package of superannuation reforms Labor took to the election. When the government's own Financial System Inquiry finds that 10 per cent of Australians receive 38 per cent of Australia's super tax concession, more than the combined benefit of the bottom 70 per cent of Australians, it is patently clear that the system is unbalanced and unviable. This is particularly evidenced when the same inquiry concedes that these tax concessions are unlikely to reduce future age pension expenditure significantly. Without action, the cost to the taxpayer of superannuation earnings tax concessions or forgone budget revenue will almost double over the next four years, from $11.8 billion in '14-15 to $22.4 billion in '17-18 and will continue to grow at a rate that is unsustainable. Labor has proposed a package of superannuation reforms which are fair. They deliver more budget repair than the government's current mess on superannuation and will go a long way towards stemming the ballooning cost to the budget of the existing concessions over the longer term.

In conclusion, I reconfirm to the government: you will have a willing and cooperative partner if you bring into the parliament proposals which meet the test of contributing to budget improvement while making our country a fairer place, and we are pleased to support this bill today.