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Tuesday, 11 October 2016
Page: 1422


Senator LEYONHJELM (New South Wales) (13:19): Today I vote for $4 billion of tax cuts over the next four years. I can do this and look the next generation in the eye because, in the previous sitting week, I voted to cut government spending by $5.9 billion over the next four years.

My position is clear and responsible: to reduce the tax burden, to reduce government spending by even more and to ease the burden of debt on future generations. There will be some who take a different position. Some, like the Greens, oppose both cuts to government spending and cuts to tax. Taking this position reveals a misguided faith in big government—dare I say 'social ownership, comrade'—but at least it would not be burying future generations in debt.

But there is another completely indefensible position. This is to oppose spending cuts, but to let tax cuts sail through without a whiff of opposition. Any party that takes this position has a lot of explaining to do, not just to the parliament and the people but to future generations. Those who voted against spending cuts in the previous sitting week were the Greens, the Nick Xenophon Team, Senator Lambie, and Senator Culleton, of Pauline Hanson's One Nation. I expect each of them to express their opposition to today's tax cuts. If they do not, then their position of opposing spending cuts but supporting tax cuts would represent a failure to have any regard for future generations—that spending by today's generation can be paid for by future generations.

Today's bill will reduce the income tax burden by up to $315 for Australians earning more than $80,000 a year. This is justified, given how huge the tax burden is for these Australians and how much more these Australians pay in tax compared with other Australians—for instance, even after the passage of this bill, Australians earning $87,000 a year will still pay $21,562 in income tax, including the Medicare levy. That is a quarter of their income. Even with the passage of this bill, middle- and upper-income Australians will still lose a much greater share of their income through taxation than lower-income Australians.

This is called progressive taxation, but it is really just gross discrimination against people who earn money. Even a flat tax would have high-income earners paying well in excess of the benefits they get from government spending, so I welcome this bill's slight reduction in the extent of discrimination.

We need to go further than this, by flattening our tax rates and winding back the welfare state. The combination of our welfare system and progressive income tax rates means 48 per cent of households pay no net tax. This cannot continue. It is unjust for high-income earners and promotes dependency for low-income earners.

Australia's tax burden is high, no matter how you look at it. It is high by historical standards—for instance, 50 years ago taxes averaged $5,000 per person in current dollar terms, in other words, after adjusting for inflation. This tax burden has grown consistently from decade to decade so that it now averages more than $18,000 per person, with middle- and upper-income Australians paying much more than this average, which, as I said, is in real terms.

Australia's tax burden is also high by international standards. Once you account for Australia's system of compulsory superannuation contributions and the system of social security contributions prevalent in Europe, our tax burden is higher than the weighted average for the OECD.

When we look outside the OECD, each country that is richer than us has a markedly lower tax burden than Australia—for instance, the tax burden in Hong Kong is around 15 per cent of GDP, which is around half the tax burden in Australia, and the tax burden in Singapore is even lower.

My position is clear. I commend the tax cuts in the bill we are currently debating, just as I commend the spending cuts that made them possible. I urge other senators to come in here and put their position on tax and spending cuts on the record.

(Quorum formed)