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Wednesday, 23 May 2018
Page: 4286


Mr TIM WILSON (Goldstein) (10:31): I'd like to start off where the previous speaker, the member for Barton, finished. She talked about intransigence, and there is intransigence, but it's by the Australian Labor Party and their opposition to the government's tax reform proposals. It's quite clear why that's the case. While they talk about the tax system being complex, as the previous member being did, it's because they don't actually understand what the point of a tax system is. More importantly, the tax system is complex—that's true—and that's part of its problem, and that is what the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 is seeking to address.

This budget and much of the tax relief proposals before us are built on three pillars. The first pillar is one of responsibility. Responsibility, because it provides for the budget to finally be returned to surplus. The Labor legacy of debts and deficits accruing, which has been almost intractable for our government, is now coming to an end. There is light at the end of the tunnel. Instead of waiting and delaying, as our political opponents have done, we are not just finally bringing a point of surplus together, credibly, but actually bringing it forward so that we can start to pay down the debt of the Commonwealth.

The second pillar is, of course, security to make sure that people who are in a vulnerable stage of life get the support and assistance that they need. That comes through our support for mental health packages and support for people who are vulnerable throughout different stages of life, and our increase in support for people in aged care to make sure that they have dignity and choice as they enter the latter stages of their lives. But you can only deliver that sense of security and support if you actually have (1) a strong economy and (2) the means to deliver it, and by delivering a responsible budget you can also deliver a secure one.

Critically, and most importantly, the third pillar of this budget is one of opportunity—opportunity for all Australians to be able to realise their ambitions and their dreams. Critical at the heart of that is the tax relief proposal put forward by this government in this budget. It builds on the principle that I started with earlier: if you don't have a responsible budget that manages the finances of the nation in a measured and considerate way, if you don't have a responsible budget that recognises that government has to live within their means and if you don't have a responsible budget that recognises that we cannot imperil generations of the future to pay for our lifestyle today, you cannot deliver a budget that also delivers opportunity—opportunity for every Australian to be able to choose how they live their lives and to be able to make choices about how they want to secure their own futures.

That's what the tax relief proposals in this budget are about. They're about removing the complexity that seems to be loved and enjoyed by those opposite, including the member who just spoke, the member for Barton. They love and indulge in the fact that people can find ways to minimise their taxation obligations and love the fact that people see a huge discrepancy between tax arrangements so that the well off and the privileged are able to organise their affairs in their own interests and against their obligations to society. That's what complexity delivers, a worse outcome for every Australian, a worse outcome for government revenue and a worse outcome for taxpayers except for the select and privileged few. The core of the tax relief proposal that is being put forward to this parliament is to remove one of those prongs of complexity, particularly to change the structure of the income tax base so that those people who are in the middle class and low- and middle-income earners pay less contribution towards the tax system, so that they don't have the dead hand of government and the tax system sneak up on them and touch them on the shoulder just as they seek to achieve more in their careers and achieve more in increasing their incomes and helping to secure the position of their families. We're doing that, particularly by changing the tax rate so that for the middle income tax rate of 32½ per cent the threshold goes from $87,000 to $90,000. That will reduce taxes by up to $135 a year for taxpayers earning above $87,000. From 2022-23, the top threshold, the 32.5 per cent bracket will be further increased from $90,000 to $120,000, making sure that more and more middle-income-earning Australians will never contribute more than a third of their income in income tax. The top threshold in the 19 per cent bracket will also be increased, from $37,000 to $41,000. Meaning low-income earners, those who put the effort into making sure that they can secure their income—sometimes part-time workers, many women—will have tax relief as well. The low- and middle-income tax offset will be replaced by increasing the low-income tax offset from $445 to $645. The increase in the low-income tax offset and increasing the top threshold of the 19 per cent bracket will guarantee the benefit of every part of the tax proposal that's been put forward and legislated for already. Critically, and more importantly, the next stage of the tax reform proposal will be to flatten the tax system to take the entirety of the Australian middle class into one tax bracket where they will not pay more than 32.5 per cent, or more than a third of their income in income tax.

If you want to dismiss this proposal and the proposal being put forward by the government, you are turning around to every mum, every dad, every person and every professional who believes in their capacity and their ingenuity to support themselves and their families and saying, 'You are not contributing enough to the burden of the nation and you should be paying more than a third of your income to the tax system.' You are saying to all those mums and dads and professionals and small business people and those who are making a wicket and making a go so they do not have to be dependent on others that they must make a greater contribution to the affairs of the nation and that more than a third of their income, more than 33 cents in the dollar that they earn, should be going to support the people in this place, rather than going out there and making sure that they can earn their income, keep it and make their choices and decisions about how they are going to secure the future of their family and community. That's why, from the 2024-25 income year, the top threshold of the 32.5 per cent tax bracket, will be further increased from $120,000 to $200,000, completely removing the 37 per cent tax bracket and simplifying the personal income tax system. This will mean that people will stay in the same tax bracket over their entire working life. The top marginal rate of 45 per cent will remain but only after incomes reach more than $200,000.

So under this progressive tax plan we will see the middle class paying the same tax rate. Lower income earners will be paying a lesser rate and high-income earners, after they earn more than $200,000, will be paying a higher rate. But, critically, we will be supporting those families and those individuals to get their support and assistance. These changes will mean that around 94 per cent of taxpayers are projected to face a marginal tax rate of 32½ per cent or less in 2024-25. This compares with the projected 63 per cent of taxpayers in 2024-25 under the current policy setting, which shows you that the plan the government has put forward is one focused on people, focused on families and focused on Australians who want to put their own position and their own security at the fore, who want to make sure they enjoy the dividends and rewards of earned work and effort so that they can provide for their families. It's about understanding that the tax system, by its complexity, is undermining the future opportunity of this great nation, because sitting at the heart of this great nation isn't the opportunity of unleashing the power of bureaucracies, as our opponents would like, and it's not sitting at the heart of Canberra and its capacity to be able to overgovern and overregulate our lives; it's where people come together and form families as the foundation of community and nationhood, and through their freedom and choice they are able to support themselves and the community around them. This is a plan to support Australia being governed from the citizen up and the family up rather than Canberra down. The more we move towards this trajectory the more we are going to profoundly empower the average Australians to be able to live their lives and their dreams without burdening them too heavily on the obligations they have towards the rest of the country.

But, critically and more importantly, what this tax plan does is start to address the deep imbalance in our tax system. The government's tax plan reduces the dependence on income tax, which critically hits so many young and working and aspirational Australians. When more than 70 per cent of the revenue that comes into the federal government's coffers comes from income tax and hits critically within a short period of life—mostly between the ages of 35 and 55—what you're indulging, as we are presently, is a tax system that takes from the young and aspirational who have not yet had their go, principally to reward those who have. If you look at who pays tax, holds wealth and consumes the benefits of the tax system, there is no alignment. We must make sure that we provide a legal framework and a tax environment that supports the workers of the future, so that when they're going through the process of getting married—and thankfully we can now say that every family has that opportunity—we have a tax system where working people are not overburdened while they're trying to save to buy their own home. It's about the foundational principles of people being able to live large lives beyond themselves and that they will not be asked to carry the vast majority of the burden of the nation. Instead, we are going to recognise that they too have a right to be able to aspire to and achieve their own dreams and enjoy the benefits of the tax relief that is being put forward by this country.

I'm not going to try to pretend that this is the end of the tax reform that I would like to see. I would like to see a concrete plan into the future to address the intergenerational theft that often exists at the heart of our tax system, where some people pay while other people enjoy the benefit without any recognition of the obligations of everybody who sits in this society. But that plan and that solution does not come from those who sit on the opposition benches, because those who sit on the opposition benches are only interested in fiddling at the margins. They're only interested in working around the system to try and reward their own friends, their own mates and the tax system and target the people who do not vote for them. Their position is not one anchored on a sense of justice in society but, instead, appealing to voting blocks and bases in the hope that they can make their way from the opposition benches into the government ones. It is a plan that is fundamentally unjust and does not respect reward for effort or understand the contribution and the effort that people have made to make themselves independent of the welfare system. We believe strongly in making sure that people who have earned income and saved for their future are able to have a degree of security without having grabs and focuses designed to achieve populist political objectives.

Dr Leigh: You're just repeating yourself.

Mr TIM WILSON: It's pretty easy to keep repeating yourself when you guys don't listen. The opposition benches don't actually understand the serious consequences of their policy framework. They don't understand that the consequences of what they are putting forward will do nothing to address housing affordability moving forward. It will have no effect in trying to improve the opportunity for younger Australians when all their objective is to hit some people so they can redistribute wealth to other parts of the community to achieve their broader political objectives. They're not actually focused on the future of this country and what we need—to continue being a liberal democracy, to have an investment in society built on ownership and responsibility, to have a society that recognises that aspirational entrepreneurialism is something to be celebrated and to be recognised. Those who have worked hard and secured reward for their effort should have recognition and respect for that effort. That's what we need to achieve in this country, that's not what is being put forward by our opponents and that is precisely what is being achieved in the government's tax relief proposal before us today—the Treasury Laws Amendment (Personal Income Tax Plan) Bill. It is the beginning of a journey to build a better stronger liberal democracy for our great nation.