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Wednesday, 23 May 2018
Page: 4292


Mrs WICKS (Robertson) (11:00): I rise in support of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 and I commend this legislation to the House. As I've previously said in my contributions to the debate on the appropriation bills before the House, and also in a matter of public importance debate, I strongly endorse this budget and the work of the Treasurer and the Prime Minister on our plan for a strong economy.

As we've heard in this debate, the Australian economy continues to strengthen and is shaking off the downturn in mining investment. Under our economic plan, jobs are being created, investment is rising and the budget is strengthening. This budget is about building on that plan to ensure the benefits of stronger economic growth can continue to be shared and secured so we can keep guaranteeing the essential services Australians and their families rely on like Medicare, schools and hospitals.

But there's no doubt that, while the economy is continuing to strengthen and the budget position is improving, many people in my electorate on the Central Coast are experiencing cost-of-living pressures. I hear a lot from individuals across my electorate about the costs of living, and that's why I rise today to support this bill. Plain and simple, it will deliver lower, fairer and simpler taxes for nearly 60,000 middle- and low-income earners in my electorate of Robertson. It is the first priority of the government's seven-year plan to make personal income tax in Australia lower, fairer and simpler.

This fully funded tax relief, achieved while bringing the budget back into balance, will target low- and middle-income earners first, help ensure that income earned by Australians is protected from bracket creep and make personal taxes simpler and flatter over the next seven years. Low- and middle-income workers in my electorate of Robertson will under this plan receive tax relief of up to $530 per year. Under this plan, by 2024-25 around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, compared with 63 per cent if we leave the system unchanged.

When I'm out in places like Saratoga, Erina or Umina Beach, I hear responses to our budget measures from local residents. Elizabeth, from Gosford, welcomed the tax changes and said they give more flexibility to individuals and families. Jenny, from Narara, said she thought the budget was very good, especially our plan for financial support for families in the form of tax relief. Robyn and Richard, from Hardys Bay, tell me tax cuts are always welcome for any taxpayer. Bob, from Kincumber, said the move towards a flatter tax is great.

This bill is going to benefit hardworking Australians in my electorate like Elizabeth, Jenny, Robyn, Richard and Bob. Like our plan for a stronger economy this bill is carefully laid out, with tax relief for Australians being delivered in three steps. As the Treasurer said in his second reading speech our plan will mean that individuals will be able to take on additional work, seek advancement and put in the extra hours knowing that their extra income from their hard work will remain with them and that a higher proportion will not go to the government in higher taxes. Our plan will deliver a personal income tax system that is lower, fairer and simpler, consistent with our values as a government.

The plan will be delivered in three steps. Firstly, it will provide tax relief to low- and middle-income earners first; secondly, it will protect what Australians earn from bracket creep; and, thirdly, it will ensure that Australians pay less tax by making personal taxes simpler and flatter. This is the money of hardworking Australians, including people on the Central Coast. It's not the government's money, although members opposite seem to think otherwise. Hardworking Australians like those in my electorate of Robertson have earnt this money, and they deserve more of it back in their pockets. Working Australians don't need the government of the day telling them how to spend their money. They need a government that is on their side, and that is exactly what this plan demonstrates. This government has outlined a clear plan for tax relief for hardworking Australians, and it's a plan that's affordable and simple.

I'd like to speak briefly in some more detail about these measures. Step 1 of this bill will start permanent tax relief by introducing the low- and middle-income tax offset. This is a new, non-refundable tax offset for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. The offset will assist over 10 million Australians, with a maximum benefit of $530 being provided to around 4.4 million taxpayers. Nearly 60,000 people in my electorate of Robertson who are low- and middle-income earners will benefit from this plan. Importantly, this major tax relief will not be clawed back by other tax increases, nor increases to the Medicare levy, which I'm pleased to see will remain unchanged, nor will it be funded by putting a higher tax burden on others. For example, a high school teacher in Ettalong Beach earning $75,000 will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan. A shop assistant in Kincumber on $45,000 will have an extra $440 in their pocket from the budget year onwards, with an extra $3,380 in their pocket over the first seven years of the tax plan, as the tax relief increases. A hairdresser in Erina on $50,000 will have an extra $530 in their pocket from the budget year onwards, with an extra $3,740 in their pocket over the first seven years of the tax plan, as the tax relief increases. These are funds that will help more local families pay their electricity bills, fill the car up with petrol on the long commute to Sydney or Newcastle, or pay for the school textbooks for their kids.

The second step is about providing hardworking Australians with certainty about their future and combating bracket creep. It will provide certainty for the many working Australians that they will face the same tax rate over the span of their working lives. It's making sure that a nurse at Gosford Hospital or a barista at a cafe in Kariong can take extra shifts or earn more knowing that their wages won't get eaten up by higher tax rates. Hardworking Australians who have earnt a pay rise or have taken on extra hours at work should be able to keep more of their money, not pay more tax because of bracket creep. From 1 July 2018, the top threshold for the 32.5 per cent income tax bracket will be increased from $87,000 to $90,000, reducing taxes by up to $135 for taxpayers earning over $87,000. From 2022-23, the top threshold of the 32.5 per cent bracket will be further increased from $90,000 to $120,000 and the top threshold of the 19 per cent bracket will be increased from $37,000 to $41,000.

Step 3 of the plan will make the personal tax system simply and flatter. 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, simplifying the personal income tax system and reducing the number of tax brackets from five to four. This will mean that people may stay in the same tax bracket over their working lives. The top marginal rate of 45 per cent will remain, but only after their incomes reach more than $200,000. These changes will mean that around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent or less in 2024-25. This compares with a projected 63 per cent of taxpayers in 2024-25 under current settings.

There's been some speculation about the way this government has gone about this plan, but I believe that by legislating this as a package we are delivering the commitment and certainty that families want when they go to work. They don't want the Labor Party or any government in the future putting their hands deep in their pockets and ripping out their hard-earned money. Sadly, it's exactly this approach that Labor appear to be taking with their plan. Labor's retirement or retiree tax has the potential to hurt retirees and low-income earners by abolishing tax refunds for share dividends. Labor's tax grab means 875,000 individuals and self-managed super funds will pay tax twice on what they earn from their savings. This includes more than half a million Australians on taxable incomes of less than $18,200, which is simply not fair.

I'd like to share just one example from Julie in Terrigal, who wrote to me about why our tax plan is stronger than the tax plan of those opposite. These are Julie's words. She said:

My husband and I married in 1971, we both left school at 14 years old (1963 and 1965) and we both had jobs to go to immediately. My husband has worked exceptionally hard all his life, mostly in the construction industry (and mostly six days a week) and is still working 6 days a week now at almost 69 years of age paying all our taxes along the way and never once asking the Government for one single cent our entire lives.

A few years ago we got serious about making a financial plan to set ourselves up for retirement, part of that plan was to buy shares that would pay us a Franked Dividend during our retirement, a retirement that hopefully will commence later this year.

We could in no way be classed as wealthy, our share portfolio amounts to $450,000 and when we combine that with our superannuation of around $400,000, it means that we belong to that unfortunate group of people who will have saved just a little too much to qualify for any sort of pension.

Labor's plan to abolish the Franking Credits Refunds, if they are elected, will mean we'll receive even less income, but still not qualify for any pension.

We'd be punished for making ourselves Self Funded Retirees. That would be a very disappointing outcome for two people who have worked hard all their lives, took the initiative to make a financial plan to support their retirement only then to have the rules changed yet again.

I know when speaking with my friends, (some of whom are also self-funded retirees) don't fully understand the huge impact this is going to have on their retirement incomes.)

To Julie, I say: thank you for sharing your story with me. You are being hurt.

I'd like to end by saying that this budget represents the sixth successive update where the underlying cash balance is projected to reach surplus in 2020-21. Through sustainable budget management, for the first time in a decade, the government is no longer borrowing to pay for everyday expenses, and it's thanks to this responsible economic management that I can confidently back the measures in this bill on behalf of the people of the Central coast. I commend this bill to the House.