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Wednesday, 13 November 2013
Page: 83

Mr HOCKEY (North SydneyThe Treasurer) (10:54): I move:

That this bill be now read a second time.

Today, the Australian government is taking the first step in honouring its election commitment to repeal the carbon tax.

Abolishing the carbon tax will deliver lower energy bills and lower business input costs.

It will benefit the economy by subtracting from inflation and generating an economic growth dividend.

I am advised that abolishing the carbon tax effective from 1 July 2014 will lower the consumer price index by around 0.7 percentage points in 2014-15.

Average retail electricity prices should fall by around nine per cent and retail gas prices by around seven per cent.

In the first year alone, abolishing the carbon tax will, on average, lower household costs by $550 for the year.

It will also improve competitiveness for trade-exposed emission-intensive industries.

Repealing the carbon tax is also part of the government's deregulation agenda. It will reduce compliance and administrative costs for businesses.

By abolishing the carbon tax, the government will repeal more than 440 pages of primary legislation and 354 pages of clean energy regulations.

The Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 is part of a package of bills that remove the carbon tax.

This bill amends elements of the Clean Energy (Income Tax Rates Amendments) Act 2011 to repeal the second round of personal income tax cuts that are due to start on 1 July 2015.

In its final budget handed down on 14 May 2013, the former government deferred the 2015 personal income tax cuts and booked a $1.5 billion saving over the forward estimates.

But the former government never followed through by legislating this change.

The government understands households will continue to face cost-of-living pressures.

That is why we will keep the current personal income tax thresholds and the fortnightly pension and benefit increases. But with the repeal of the carbon tax, there is no longer any need for the second round of personal income tax cuts.

Therefore, this bill repeals legislated amendments to the Income Tax Rates Act 1986 so that the statutory personal income tax rates and thresholds do not change on 1 July 2015.

This bill also amends the Clean Energy (Tax Laws Amendments) Act 2011 to repeal related amendments to the low-income tax offset.

This bill also repeals legislated amendments to the Income Tax Assessment Act 1936 so that the related amendments to the low-income tax offset do not take effect on 1 July 2015.

Overall, the repeal of these amendments means that the tax-free threshold will remain at $18,200, rather than increasing to $19,400.

The second personal marginal tax rate will remain at 32.5 per cent, rather than increasing to 33 per cent. And the maximum value of the low-income tax offset will remain at $445, rather than falling to $300.

This bill legislates the $1.5 billion saving that the former government announced during the 2013-14 budget but never had the guts to legislate.

Debate adjourned.