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Wednesday, 23 May 2018
Page: 4320


Mr PERRETT (MoretonOpposition Whip) (13:00): Just before this year's budget was delivered, people might remember the Treasurer junking the Liberal and National Party plans to increase taxes on every single Australian with their NDIS and Medicare levy hike. That plan was based on the completely untrue suggestion that Labor did anything other than fully fund the vital NDIS. I repeat: the member for Lilley, as Treasurer under prime ministers Rudd and Gillard, completely funded the NDIS, an initiative that flowed from the policy work of Bill Shorten and Jenny Macklin. So, the Medicare levy increase proposed by those opposite and opposed by Labor was thrown on the scrapheap, joining some distinguished company in the Abbott and Turnbull government's waste-policy bin.

Right after this volte-face, the Treasurer held a press conference filled with his usual style of bluster and hot air. He said, 'You will pay more under Labor.' Well, how untrue that has turned out to be. In fact, I remind those opposite—and I see that the member for Swan is here—that, if you look back over the last 50 years in terms of taxing governments, nine out of the 10 highest-taxing governments in the last 50 years have been Liberal and National Party governments. That's a fact that those opposite don't like to remember. However, we know that under Labor we've got the balance right. Labor is proposing bigger, better and fairer tax cuts for 10 million Australians than the Turnbull government.

The Morrison budget as it stands introduces a tax cut scheme which is in three tranches. On 1 July 2018, which is only 39 days away, the first tranche would introduces a low- and middle-income tax offset, a non-refundable tax offset of up to $530 per year for taxpayers earning up to $125,333. They'd also increase the top threshold of the 32.5 per cent personal income tax bracket from 87 grand up to 90 grand. The second tranche, coming into place on 1 July 2022, which is 1,500 days away today, would increase the low-income tax offset from $445 up to $645, and the 19 per cent personal income tax bracket would be increased from 37 grand to 41 grand. It would increase the top threshold of the 32.5 per cent tax bracket from 90 grand up to $120,000. The third tranche, to come into place on 1 July 2024, which is 2,231 days away, would abolish the 37 per cent tax bracket and increase the top threshold from 120 grand to $200,000, which, as people have described, is all but a flat tax for that 32.5 per cent personal income tax bracket.

Labor have been up-front right from the start on budget night in responses from the member for McMahon and the Opposition Leader, Bill Shorten. Labor have said that we'll support the government's proposed changes that are due to take effect on 1 July 2018—39 days away. If the government split the bill so that we could vote for the 1 July changes only, it would have Labor's full support and they could pass it instantly. I do note that it would provide relief only in tax returns a year later. It is an offset, not a refund—a different treatment to the dividend imputation, I note, but that's a story for another day. I have heard that the Greens political party does not support this tranche, but that's a matter for them.

With Labor's support, the coalition government would have the numbers in both houses, and this could be done right now. To do this, however, Prime Minister Turnbull and the Treasurer would have to get off their high horse and split the bill. And—to mix equine metaphors—it looks like they're flogging a dead horse with their tax plan. But, if they split the bill in this House, it could then be split in the Senate, and that would allow the parliament to take a detailed and considered position on each of the tranches. A plan that costs over $13 billion over the forward estimates and—according to the government—$140 billion over the medium term deserves intense scrutiny. That is an incredible amount of money. As I said, there's no rush. We have 2,231 days, which is about 53,544 hours, to have a look at the legislation.

In question time after question time we've seen that the Prime Minister and the Treasurer have been unable or unwilling to give or deliberately hiding specific details of this tax plan that they want us to sign off, including the year-by-year costs beyond the forward estimates. It's not good enough for the Treasurer to come into this House and demand that we support a plan for which the detailed costings are not available. Because of its design, tranches come into force outside the forward estimates periods but inside the medium-term projection. Surely it is entirely reasonable that the parliament should be provided with the details to enable an informed decision.

There is no way that Labor would ever be a rubber stamp for this mob. We can't trust them. My constituents would be furious if we didn't do our job and scrutinise this budget. Our senators have asked Treasury for more detailed financial information, the year-by-year breakdown of the tranches and the individual components of those tranches, so that we—the parliament, the opposition and the Australian people as a whole—can have better information about what the government are proposing. We've also asked for a breakdown by gender as well as electorate based information to ensure that the Australian people get the best possible deal.

As I said earlier, Labor is proposing a bigger, better and fairer tax cut in 2019. Should we win the election, everyone earning less than $125,000 will receive a bigger tax cut under Labor's plans. For so many of those people, the tax cuts are almost double those being proposed by the government. To help display the benefit of Labor's plan to working Australians, we've launched an online calculator tool at www.biggerbettertaxcut.com.au, and I encourage everybody to get online and have a look. You can actually do some calculations. The website showed earlier that a teacher on $70,000 a year would receive a tax cut of $982 a year under Labor. A couple earning $90,000 and $50,000 respectively would receive a bigger tax cut than that which the government is proposing—nearly $2,000, in fact, which is $800 better than the coalition government's plan. That website again, so everyone can have a look, is www.biggerbettertaxcut.com.au.

We don't believe the hype and the heavy breathing coming from those opposite. As I pointed out, when they're talking about taxing governments, nine out of 10 of the highest-taxing governments over the last 50 years have been coalition governments.

I've spoken about why Labor will support the initial stage—the one that begins on 1 July this year—and how Labor will go further to deliver bigger, better and fairer tax cuts for 10 million Australians. But what are some of the other problems with this Turnbull government plan? Obviously, we haven't seen the full picture, but early indications are that, once the government's three-stage plan is in place, it will deliver larger benefits to those on higher incomes. Who would have thought of a coalition government doing that, looking after the top end of town? But we know that this is an out-of-touch government. Obviously if you're putting your money in a bank in the Cayman Islands rather than investing in Australia, you've got some other things on your mind.

It makes sense, for a government that have demonstrated time after time their commitment to support the top end of town, that that's where they're going to send the benefits. Teachers, nurses, labourers—no. Casuals, those who rely on penalty rates or are forced into labour hire—no. CEOs, company directors and their mates—of course, they get the biggest tax cuts. For example, ANU's Ben Phillips has estimated that, after the government's full plan is in place, someone in the highest quintile, the highest 20 per cent, will see a 2.2 per cent rise in their income—good luck for them—compared to those in the middle quintile, who will only get a 1.1 per cent rise. And the lowest quintile, those who need it most, will only get a 0.2 per cent rise. Of the tax cuts by 2027, over 60 per cent of the cuts will go to the top quintile, the top 20 per cent, of households.

NATSEM modelling suggests that this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality. The rich get more of the tax cuts than anyone else, effectively baking in a less egalitarian society.

As part of the new proposal, low- and middle-income earners getting a tax offset in 2018-19, with high-income earners getting very little. This part of the plan is progressive: more money goes to lower-income earners. However, looking after the long-term, by 2024-25 the tax cuts mean high-income earners gain $7,225 per year while those earning $50,000 to $90,000 only gain $540 per year. The Grattan Institute has assessed that, while the government's plan doesn't make the tax system much less progressive, it does find that, once the three-stage plan is complete, $15 billion of the annual $25 billion cost of the plan will result from collecting less tax from the top 20 per cent of income earners.

And it doesn't just start at income. Analysis by the Australian Institute shows that roughly two-thirds of the benefit of the government's proposed income tax cuts will flow to men, with men dominating the ranks of the high-income earners. For every dollar in tax cuts for women, men will get two.

I suspect that the government members contributing to this debate may use some statistics to claim there is a greater benefit to low- and middle-income earners. That doesn't surprise me. We've seen this sort of exaggeration before. But 2022 and 2024 are a long way away. The government is locking in policy commitments that don't come into force for seven years. We don't know what the world will look like by then. I'm not sure what the international economy will be doing by then, and also we should be focusing on strengthening the fiscal buffers and building Australia's resilience to any such stocks. As the IMF stated just last month:

Decisive action is needed now to strengthen fiscal buffers, taking full advantage of the cyclical upswing in activity.

When it comes to economic forecasts, it's not just Labor saying that the wage forecasts are questionable. Economist after economist has come out backing up this claim, saying:

… uncertainty persists on whether wages growth will pick up significantly enough to support revenues.

That's from Moody's.

'We're doing the tax cut before the revenue is realised', says Stephen Anthony, chief economist with Industry Super. 'One area that is questionable is the forecast for wages growth in the final two years of the forward estimates,' says Saul Eslake.

What I hear from locals in my electorate is that the wages growth is anything but certain. Most of the people I meet find their wages flat, effectively going backwards when you factor in cost-of-living pressures. What we need now is more money in the pockets of working Australian families, and Australians know that Labor is the party to deliver on that promise.

One thing is clear: the 2018 budget is not fair. It gives big business and the banks an $80 billion tax handout and makes Australians pay for it with a savage cut. It fails the fairness test on pensioners. Prime Minister Turnbull is cutting the energy supplement, costing pensioners $14 a fortnight and forcing people to keep working until they are 70. It fails the fairness test on education. Prime Minister Turnbull is still cutting $17 billion from schools and has $270 million in new cuts to TAFE. It fails the fairness test on hospitals and it fails the fairness test on Medicare because the freeze on specialists means that people pay more when they visit their doctor.

So here's the choice. Under the Liberals and Nationals, the cost of living will increase for the workers in the retail, food and accommodation industries, who stand to lose up to $77 a week in penalty rates. Families are paying around $20 a week or $1,000 a year more for private health insurance. Parents are paying $40 a week or $2,000 a year more in fees for child care. There are record costs to see a GP: $9 more out of your pocket every time you visit the doctor.

But let's look on the other side of the ledger. What does Leader of the Opposition Bill Shorten want to deliver for Australia? For a start, Labor will restore penalty rates. Labor won't slash the energy supplement or make pensioners work until they're 70. We'll cap the out-of-control rises to private health insurance. We'll restore the $17 billion cut from schools and all the money cut from hospitals. Labor will abolish the unfair cap on university places, allowing 200,000 more Australians to fulfil their dream of a university education and, of course, all the productivity boost that comes from such investment. Labor will also—and I'm particularly proud of this one—scrap up-front fees for 100,000 TAFE students who choose to learn the skills that Australia needs.

To make it simple for people: we'll provide bigger, better and fairer tax cuts to 10 million working Australians. The choice is simple. You can either invest in the future of Australia or invest in the top end of town. The battle lines are clear in the lead-up to the next election. This budget has set out an agenda of unfairness. When you compare it against the last five budgets rolled out by those opposite, it is arguably not as cruel as some of them. But that is not a glowing reference. I remember when the then shadow Treasurer said at the Press Club that they would deliver a surplus in their first year of government. I remember when he made that statement. What have we seen under the coalition? We have seen no surplus. We've seen the deficit blow out, and debt skyrocket.