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Monday, 29 February 2016
Page: 1334

Senator SMITH (Western AustraliaDeputy Government Whip in the Senate) (17:02): This afternoon I also rise to join in on this matter of public importance submitted by Senator Claire Moore from Queensland. You have to hand it to the Australian Labor Party. When it comes to pure shamelessness, they are second to none. Labor senators have brought a motion to this parliament which accuses someone else of not being up-front about tax plans. You could not make this up if you wanted to. The party of Julia 'there will be no carbon tax under a government I lead' Gillard now comes into this chamber and complains that other people are not being up-front about their tax plans. I suppose you have to concede, though, that what the Australian Labor Party lacks in credibility on these issues it sure makes up for in pure hide.

Let's go through some of the facts. Firstly, quite contrary to claims in this motion, the government has made it entirely clear what it doing in relation to tax. The government is carefully and methodically working through the elements of the tax system and making an assessment about what changes will be most effective in providing greater incentives for Australians to work, save and invest. Once that work is complete, the government will make an announcement. That announcement will be made before the next election. That is as proper, methodical and careful as it needs to be. The people of Australia will have the opportunity to make their decision based on policy choices that are clear and that will be well known. That is the responsible approach to take.

I understand that it is an approach which is entirely foreign to the members of the Australian Labor Party, as the traumatic experience of the Rudd-Gillard government and its litany of policy disasters amply demonstrates. There is a reason the government are taking this approach. It is that experience has taught us that our approach works and that the approach of those opposite does not.

As senators will be aware, this week marks the 20th anniversary of the election of the Howard government in 1996. In its first term, that government embarked upon what the then Prime Minister described as 'the great tax adventure'. Mr. Howard said that the government would be careful and methodical in reviewing the tax system. He said that any changes would have to pass a number of basic tests. Mr Howard said that the changes must generate more employment, help boost exports and generate higher living standards. He said the tax changes must encourage risk taking and provide greater economic incentives. All of that sounds very much to me like what the current Prime Minister has been saying for the past week—that the government is committed to tax reform measures that 'will both be fair and provide greater incentives to work, save and invest'.

As we all recall, the Howard government undertook that detailed work over the course of its first term, just as this coalition government has been doing. On 13 August 1998, John Howard and Peter Costello announced a significant tax reform package. Just over two weeks later, on 30 August 1998, John Howard called a federal election for 3 October of the same year. It is a campaign I recall well, having had the privilege of being on his staff at the time. So, for all the hysteria we hear from the Labor Party in this place, it turns out that, in fact, this government is following a well-established precedent.

The coalition makes no apology for taking its time to get the detail right, because the damage that can be done by the alternative approach is one that was on full display over the six Labor years when those opposite were in government. The Rudd-Gillard government made a good many promises on taxation, just as they made a good many promises about delivering budget surpluses. In neither case did Labor's good intentions amount to anything.

The last Labor government introduced tax increases and also abandoned income tax cuts it had promised prior to the election. That stands in marked contrast to the record of the Howard government, which announced tax cuts in 1998, again announced tax cuts in 2003, again announced tax cuts in 2004 and 2005 and again announced tax cuts in 2006 and 2007, all the while delivering surplus budgets and paying off the $96 billion in debt that had been inherited from the previous Keating Labor government.

This coalition government is now being criticised by the people who spent $80 million on a wide-scale review of the tax system, known as the Henry tax review, and then proceeded to ignore the bulk of what that review found. The Prime Minister and the Treasurer of the day, still the member for Lilley, fought between themselves over the release of that tax report—as many of us recalled when watching The Killing Season on ABC TV last year. If Labor's last term in office is going to be remembered for anything aside from its horrific legacy of debt, then it surely will be for the endeavours, or lack of endeavours as it turned out, in the field of tax.

Let us just turn specifically to two tax initiatives of the previous Labor government and why they demonstrate more clearly than anything else the reason Labor cannot be trusted on the issue of tax and tax reform. Remember the mining tax? People in my home state of Western Australia certainly do. It was a tax that was designed to slug an industry that is absolutely crucial to the economic growth of Western Australia. It was introduced by a Labor government because it had blown the budget surplus and had to find some means of plugging that budget hole. As if Labor's motivation was not bad enough, its methods were even worse. Remember when the mining tax was first proposed under Kevin Rudd, in his first iteration as Prime Minister, it was projected to raise around $50 billion in revenue. The version of the tax that Julia Gillard cobbled together saw a significant write-down of that projection to $26.5 billion—a notable reduction but still a significant amount of revenue. The problem was not that first downwards revision of projected revenue to be raised by the mining tax but that the reductions kept coming and coming and coming.

In February 2012, the member for Lilley, still the Treasurer, was forced to concede that in the first six months of its operation Labor's mining tax had raised just $126 million, falling ridiculously short of the suggested tens of billions originally projected. It then emerged that only around 20 mining companies had actually been required to pay the minerals resource rent tax but that another 145 had been required to go through the process of compliance—that is, enduring the time and expense of employing accountants, lawyers and other various advisers and submitting reams of paperwork—all for a tax they were not actually required to pay. This, apparently, was the Labor Party's idea of good economic policy. Ultimately, Labor's mining tax raised around $400 million in total over Labor's period in office—$26.5 billion was projected to be raised and a paltry $400 million was, in fact, raised.

We also had tax debacle number 2, the carbon tax, the tragic history of which time does not permit me to repeat in great detail this afternoon. Suffice to say that the carbon tax was also so poorly designed that it too brought in significantly less revenue than the Gillard government projected it would. Anger over the carbon tax and the deceptive way the former Labor government introduced it is a major reason why Labor is in opposition today. But have we heard an apology? Have we heard an apology for the carbon tax? Have we heard an apology for the minerals resource rent tax? Far from it.

Senator Bilyk interjecting

Senator SMITH: I know why Senator Bilyk wants to interrupt me. Indeed, what we know from media reports last year is that there is now a significant push from within the Labor Party to bring back the carbon tax if Labor wins the next election. In fact, the proposal is for a twin carbon tax. Apparently, the problem was not the carbon tax, the problem was that there should have been two of them: one for the electricity industry and one for everyone else. I know Mr Shorten rushed to deny these reports but his denials are not emphatic enough. They are not convincing. There are those in the Labor Party who are determined to bring back this tax and Australians know that Mr Shorten is not strong enough to stand up to them.

Just this month we had another example of Labor's tendency to fudge the numbers when it comes to tax. This time it is regarding Labor's announcement of its plan to increase tobacco taxes. In The Australian Financial Review we learned:

… budget experts have challenged Labor's policy, saying it makes the mistake of using what will ultimately be a diminishing revenue source to fund—

(Time expired)