Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 23 May 2018
Page: 4306

Ms OWENS (Parramatta) (12:00): I think the word that comes to my mind when I look at the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, combined with the government's plans to give a $70 billion-plus tax cut to big business, is 'irresponsible'. I come from a small-business background. I spent quite a bit of my time running my own small business, and then I managed a national trade association for small businesses. One of the fundamental rules in small business is that you don't use a windfall gain to build into your base. If you get a windfall gain, if something happens that suddenly delivers unexpected money that is not actually due to you, you don't build that into your operational base. You use that to improve your capacity to grow your business. You might use it for infrastructure. You might use it to retrain your staff. You use it in a one-off way which builds a capacity for growth. What you don't do, if you get a one-off large contract without an expectation of more, is move into bigger premises and build higher rent into your base.

We saw the Howard-Costello government make that fundamental mistake when they were in government, when, for reasons due to extraordinary global growth, particularly in China, we had unprecedented growth in Australia. Rather than taking that boom, which was not of our own making—in a sense, it was actually the massive growth in China—and investing in productive infrastructure, in education, in positioning Australia in a better place to drive our own growth, they built it into our base through massive tax cuts and increases in welfare and by the introduction of negative gearing, reducing capital gains tax, making superannuation tax free and a whole range of other things. When money flowed in, they did a whole range of things that built that money flow into the base, even though it was coming from another source and it couldn't be guaranteed to continue.

Now we've got a government doing exactly the same thing. We hear the Treasurer talk about growth. They're projecting growth to continue at that level. They're projecting, for wages that have been flatlining, the growth to suddenly double. They're projecting heroic growth in a whole range of areas of the economy, and they're then building that projected growth into the base through these massive, massive tax cuts. And, next time the economy turns, we will find ourselves in exactly the same position we found ourselves in when the economy turned last time: with a base which cannot be sustained through the economic cycle.

We've been protected in Australia from understanding what downturns are by what is now over 25 years of uninterrupted economic growth. Even during the global financial crisis, when the rest of the world used the word 'recession', we didn't go backwards. We continued to move forwards, largely because of the extraordinary stimulus packages that the Labor government introduced. We in Australia have forgotten what that looks like. But it is foolish to assume that the growth projections through 2027 and through 2028, even if they're accurate for that long, would continue through 2030 and 2035, yet they're building it into the base in such a way that it would be almost impossible for any future government to pull that back out when it's needed.

Let's look at what they're actually promising here. It is still just a promise because they've got to get it through this House. The government are promising tax cuts through 2018, 2022 and 2024. The first tranche starts on 1 July. It's around $530 a year for taxpayers earning up to $125,333, so it's a modest tax cut for low- and middle-income earners. We on this side of the House support that, and we're ready to vote for it anytime the government put that up as a separate bill. Then in 2022—some four years away—they're going to increase the low-income tax offset from $445 to $645. Again, it's a modest increase for low-income earners, but they're also increasing the top threshold of the 32.5 per cent from $90,000 to $120,000. So they're giving a more substantial cut to the higher end of the middle-income tax bracket in 2022. Then in 2024 they're abolishing the 37 per cent tax bracket, which gives quite a substantial tax cut to the top threshold of $120,000 to $200,000. They're effectively abolishing the 37 per cent tax rate completely, which, again, is a substantial tax cut for people at the upper end of incomes.

So we've got a modest tax cut now and a promise of tax cuts in 2022 and 2024. They're seeking to pass a bill now which locks future governments into that. Of course, you can't actually lock a future government into that, but by seeking to have it passed now they're increasing the difficulty of governments to be able to respond to global movements. They're effectively building what is a projected windfall gain from global growth into the base for future governments.

We on this side are happy to support the first one tomorrow. Any time the government wants to bring in a bill that provides that first cut, we will be more than happy to vote for it. But we are not happy to vote for a bill that introduces the three right up to 2024, when the government cannot come into this House and tell us what the cost of each of those is because, apparently, the projections are unreliable. If the projections of the costs are unreliable, then the projections of the revenue are unreliable. You can't say, 'Sorry, we can't trust the projections' and then say, 'But we can afford it because the projections are right.' You can't have it both ways. The projections of wage growth suddenly recovering from the slump it's in now are heroic at best. This is the same mistake that the Howard-Costello government made. This is the same mistake of assuming that the world economy will not go through the normal economic cycles, and building into our cost base what they believe we can afford in the best of times. It's foolish. It's irresponsible.

We on this side know better than that. We actually governed in the global financial crisis, which nobody saw coming, and we suddenly found ourselves in circumstances where the decisions on negative gearing, the decisions on capital gains tax and the decisions that the Howard and Costello government made in the last years of their term about imputation credits and the non-tax of super were all unsustainable. We see this government now trying to deal with the some of those impacts but not others. The impacts of building high expectations into the base by the Howard-Costello government are still being felt now by this government, and this government hasn't learned a thing.

We on the Labor side have a different view of what should happen in the tax cut arena. We also are proposing personal tax cuts, just like the government, but for low- and middle-income earners they're about twice the size. A person earning less than $125,000 a year will receive a bigger tax cut under Labor than the Liberals, and nearly four million people will be better off by about $398 a year compared to under the Liberals' plan. That means a teacher on $65,000 will receive a tax cut of $928 a year, and a couple earning $90,000 and $50,000 respectively will receive a tax cut of $1,855 a year. We believe that the difference between the government's approach and Labor's approach demonstrates our attitude to fairness and our understanding of the word 'fairness'.

The government's unfair budget gives big business and the banks an $80 billion tax handout and it makes Australians pay for it with savage cuts. That's the other side of a tax cut—our taxes actually pay for things. I shouldn't even have to say this, but they actually pay for things that we all value. The government says: 'We'll give the money back to you. It's in your pocket. Go and spend it as you see fit.' I dare anybody out there to find a way to spend their additional $10 tax cut on providing better schools for their children, making sure there is a hospital bed when they need one or making sure they can catch a train to the city. I dare anybody to take their individual $10 and make any of the things happen that we as a country need to happen in the next decade.

We as a country need an education system that prepares our children for a future which is profoundly different to the future that I prepared for. We need an education system which is flexible, which has strong capacity and which builds capacity in our population, yet we see cuts to the education system, whether it's TAFE, universities or schools, from this government. We need a country that can build the infrastructure that we need. We see a lot of spin from this government on infrastructure, but when you actually look at the figures it's not there. The cuts that this government are already making across the board in order to afford their tax cuts—in spite of their heroic projections, which they say are going to pay for them—are quite shocking.

This is not about fairness. Those of us on this side know that people on low and middle incomes are struggling and haven't received pay rises. Their work is becoming more casualised. The cost of living is outstripping wages, and they are desperately in need of relief. Anybody in this House that goes out to their communities will hear that. They will hear the people that provide meals for the homeless telling you that more and more people, particularly older women, are coming in for meals because they need the rest of their income to pay their rent and their utilities. Anybody who goes out into their community—apart from those that live in the extremely wealthy suburbs—will tell you that low- and middle-income earners are struggling, and they're the ones that need the support.

We on the Labor side are focusing our tax cuts where they are most needed. That's what we believe our economy can afford over the long term, and that's what we are delivering—fairness and help where it is most needed now. Unlike the government, we're not trying to pay for those cuts out of projected growth. We're not saying: 'Oh, the economy is going to grow. Let's spend it!' We've actually looked through the tax system to see where we can introduce fairness. Most people listening to this will know that we've already announced, over a number of years now, a number of policies that close down some of the unfairness in our tax system.

Our changes to negative gearing will allow people to negative gear new properties but not existing ones. We'll make changes to the capital gains tax, which will take some of the heat out of house prices, which are currently driving houses out of reach for most people and dramatically affecting rents as well. If people are looking at household stress and the impact of high rents on households, they don't have to look much further than Parramatta. The median price to buy a house in Parramatta went past $1 million last year, and our rents are some of the highest in Sydney—and that's Parramatta, 25km from the CBD. We have an incredibly flat bell curve. We have a lot of people in our community that are on low incomes and an equal number that are on high incomes. Housing prices, rent and the cost of living are putting a lot of people under incredible stress. We don't believe that it's fair that taxpayers continue to subsidise people to buy their second, third, fourth and fifth investment properties when there are so many people that can't even afford their rent—that, in order to pay their rent, are turning up to Meals Plus to get a free meal. Shockingly, an increasing number of those people are single women.

I would urge anybody looking at the bill that we're looking at today to consider the fairness of it. Consider why it is that the government won't split the bill into two so that we on this side and in the House today, if they wish, can pass the tax cuts for 1 July. Consider why they are insisting that if the parliament doesn't pass the plan right up to 2024 then nobody will get a tax cut on 1 July. Consider why this government would decide that, when presumably they know, as I do, that there are people out there for whom even a $10 tax cut will make a difference—so difficult are their circumstances when it comes to the rising cost of living in our communities. Consider why a government would prevent people from getting a tax cut on 1 July in order to play the political point. It's hard to see a policy rationale for it, but there is a political point: trying to force us to pass all of it in order to give it on 1 July. We're not going to fall for it. We have our own policy. Come 2019, if Labor wins government, the tax cuts for low- and middle-income earners will be twice the size of what this government is providing. Even under this government, no-one gets it till the end of the financial year anyway, because they get it as a refund, not week by week. So people won't actually be worse off from waiting, quite frankly. When people wake up to that, they will see absolutely through this cheap political attempt to force this side of the House to pass tax cuts on a projected revenue which is so unreliable that they can't even give us the actual costs. This is, I think, one of the most stupid debates I've ever been involved in, and it's irresponsible.