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Wednesday, 10 May 2000
Page: 16173


Mr BEAZLEY (2:09 PM) —Mr Speaker, my question is to the Prime Minister. I refer to the tables on pages 5-6 and 5-20 of Budget Paper No. 1. Don't these tables show that one year after your tax cuts are introduced revenues from personal income taxes will be back to where they are now and, after two years, the average Australian taxpayer will be paying $600 more in personal income tax than they are today? In the light of these budget figures, can you guarantee that your promise that 80 per cent of taxpayers will be on a top marginal rate of no more than 30 per cent will still hold two years from now?


Mr HOWARD (Prime Minister) —Mr Speaker, I certainly do stand behind the statements that we have made in relation to the benefits of the government's income tax package. I thank the Leader of the Opposition for the opportunity of explaining how, under our proposal, bracket creep is a lot less than it is under your rate scales. It is a lot less. To start with, 80 per cent of Australian taxpayers will be on a top marginal rate of no more than 30 cents in the dollar. As a result of the introduction of the new taxation system, it will be possible for an Australian employee to move from $20,000 a year to $50,000 a year without suffering any increase at all in any income tax rate on any proportion of that person's income. This represents an unprecedented flattening of the income tax scales in this country. It introduces far more equity into the income taxation system.

The other point to make about bracket creep, to which the Leader of the Opposition has referred, is that, when the rate of inflation is lower, the impact of bracket creep is less. The Leader of the Opposition and the Deputy Leader of the Opposition have been running around the airwaves this morning talking about the spike in the inflation rate that is going to occur in the September quarter as a result of the introduction of the GST. I would point out to the Leader of the Opposition—oh, the $80 billion man is on his feet again.


Mr Beazley —Mr Speaker, I raise a point of order and it goes to relevance. The first part of the answer was relevant—I am not disputing that—but he has diverted and he has not yet come to grips with what the question actually was. It was: in light of these budget figures, can you guarantee your promise that 80 per cent of taxpayers will be on a top marginal rate of no more than 30 per cent two years from now?


Mr SPEAKER —While I do not have the tables on 5-6 and 5-20 or whatever with the appropriate designations at my fingertips, the question, it seemed to me, related to bracket creep, and on that the Prime Minister is responding.


Mr HOWARD —The point that I was making, before being interrupted with an utterly irrelevant point of order, was that one of the things that bears upon the extent of bracket creep is, of course, the rate of inflation. The Leader of the Opposition has been running around talking about the increase in the CPI in the September quarter of this year. That increase, which of course will be reflected on one occasion only and will recede in subsequent quarters, was the average of inflation under the years that the Labor Party were in government. Our spike was their average. Through the years that they were in government they had an inflation average of what it is now predicted it will be on a once-only basis as a result of the introduction of the goods and services tax.

The Leader of the Opposition asked me about some of the reasons for increased income tax collections. One of the reasons why we have increased income tax collections is that we have more taxpayers. And we have more taxpayers because we have more people in work. One of the distinguishing features of this government is that we have added 653,000 Australians to the job list of this country as a result of the policies of this government, and most particularly our policy of reducing debt. Never let it be forgotten that, when that man was in charge, in five years that government ran up $80 billion of debt—and in just five years, under the stewardship of this government, we will have repaid $50 billion of that $80 billion of debt. Whenever the Labor Party talk about budgets and whenever we hear a lecture on fiscal rectitude from the Labor Party, it is like hearing a lecture on corporate propriety from Christopher Skase! When we hear a lecture from them on fiscal propriety, I will remind them, and every one of my colleagues will remind them, that in five years they ran up $80 billion of debt. You left this country in hock. You stopped every attempt we made in our first, second and third budgets to claw back the position. It will always be the proud boast of this government that, having inherited that $80 billion of debt, run up in only five budgets—that is a phenomenal performance; you have to be really great financial geniuses; you could understand it in 10 budgets; you could understand it in 20 budgets; but five budgets!—we have paid back $50 billion. And it will be ever to the credit of this government that, despite the obstruction of the Labor Party, despite the legacy and the mess they left us, despite all of their attempts in the Senate to stop us getting it right, we have put the books back into balance, we have got this country out of hock, and that is why the international community and the Australian people admire and respect the economic management of this government under this Treasurer.