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Tuesday, 22 May 2018
Page: 4095


Mr BOWEN (McMahon) (12:02): Just before the budget was delivered, the Treasurer held a press conference in his normal style, full of bluff and bravado, and said that all Australians would pay more tax under the Labor Party. He kept saying it. 'You will pay more,' he said. 'You will pay more under Labor.' In fact, Labor is proposing bigger tax cuts than the government for 10 million Australians. That's the fact of the matter that this government perhaps didn't predict and didn't see coming, but it is a fact of life. In this legislation, at the consideration in detail stage, I will be moving amendments which enable the Treasurer and all members opposite, if they choose to, to vote for tax cuts that are bigger than those in the budget, or they can choose to vote against bigger tax cuts for 10 Australians. The choice is theirs, but they will have the opportunity to do so.

The bill introduces a tax cut scheme which is in three tranches and, likewise, I'll deal with the bill sequentially. Firstly, regarding tax relief on 1 July 2018, as I made clear on budget night in the very first post-budget statements that I made on behalf of the Labor Party, we support the 2018 tax cuts. They should be implemented. The government could pass this legislation through this House today and, as soon as the Senate resumes, could pass it through the other place with our full support. The Greens don't support it; that's a matter for them. But the Labor Party, the National Party and the Liberal Party voting together would give you the numbers in both houses. It can be done. But, to do that, the government should split this bill. It should split it in this House, and it should also split it in the Senate and allow the parliament to take a detailed and considered position on each of the three tranches.

As I said, we are also proposing better and bigger tax cuts in 2019. When the Labor Party comes to office, should we win the next election, everyone earning less than $125,000 will receive a bigger tax cut under Labor's plans—for many of those people, the tax cuts are almost double those being proposed by the government. A teacher on $65,000 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. We, on this side of the House, are able to do this, as well as commit to bigger surpluses than the government has projected over the forward estimates from the election in the 2018 budget. We are able to do this because of the big, difficult but well-calibrated decisions this side of the House has been prepared to make for several years, enabling us to deliver bigger surpluses as well as bigger, fairer and better tax cuts.

The government says: 'Maybe the Labor Party's tax cuts are bigger, that might be true, but you can't believe that they'll implement them.' Well, we are prepared to have the House vote on it and we will be voting for those tax cuts in this parliament, in this chamber. If the government's so concerned to ensure that they're implemented, make them the law! We're happy to make them the law. That's our position. The government will vote against those tax cuts, I predict. They might surprise me, but I predict they'll vote against those tax cuts—because they don't actually believe in them. They don't believe in better tax cuts for people on low and middle incomes.

Of course, the government is also proposing further tax cuts in 2022 and 2024. So ordinary are the tax cuts that the government is delivering in 2018 that they are determined to change the focus to 2022 and 2024. All knowing, omnipotent, the government—knowing what the financial situation will be like in 2022, knowing what it will be like economically around the world and in Australia in 2024—says this can be afforded. Normally a parliament votes on things which occur during the course of the parliament. The government wants us to vote on the first day after the budget, to just tick and flick very big tax cuts in 2022 and 2024—because they know exactly what they think they can deliver in those years. I wonder what their track record is on consistency when it comes to tax, five or seven years out. Well, it was just last year that the Treasurer stood at the dispatch box and said all Australians earning more than $21,000 should pay more in income tax. We were told we were irresponsible, obstructionist and even un-Australian—because we wouldn't just immediately agree with that. Now, 12 months later, we're told that everything has changed and we don't need that tax rise—we now need tax cuts. And we're expected to believe that these guys know what they can deliver in 2022 and 2024!

Their other big priority, corporate tax cuts, hit a stumble block. But I will give the government due credit. That's their big priority—at least $80 billion worth of corporate tax cuts. That's the big line in the sand for them, their No. 1 issue. Well, it wasn't that long ago that members opposite were proposing an increase in corporate tax. Some members might have forgotten this. They went to the 2013 election proposing to increase the tax on large corporations to pay for the member for Warringah's paid parental leave scheme. That's what they were doing. They told us: 'We know what's right for Australia. We're going to increase corporate tax to pay for the member for Warringah's pet project.' So just five years ago they said their No. 1 priority was increasing corporate tax, and now their No. 1 priority is reducing corporate tax. But we're meant to believe that they know what they'll think in 2024!

Mr Hawke interjecting

Mr BOWEN: I'll give the member for Mitchell credit. He opposed that corporate tax rise. It probably did his career development no good at that particular point! But it is probably an investment which paid off for him in the longer term. We'll give him that. At least he stood up for that. But he remembers it very well. He remembers that he was bound by the solidarity of the Liberal Party to support an increase in corporate tax. He had to argue for it in the public sphere even though he argued against it privately. Does the honourable member for Mitchell really expect us to believe that he, who argued against the corporate tax rise in 2013, is now for the corporate tax cut and his colleagues will be able to stick to the plan for seven years? This is a government which can't stick to a plan for seven minutes! We had state income taxes—that didn't last a news cycle!

The Prime Minister had an answer to all Australia's problems. He was going to withdraw all Commonwealth funding from public schools—keep it for private schools but withdraw completely all Commonwealth funding for public schools—and give states the power to levy income tax. That was a particularly dumb idea but he dropped it the next day. The Australian people, unsurprisingly, said, 'No, thank you.' That's the consistency. They can't keep a plan from one day to the next but we're meant to believe that they know what they'll do in 2024.

The Australian people know a con job when they see it—particularly as this Treasurer has been so shifty when it comes to matters of costings and the impact on the budget. We've seen it day after day after day in question time. They're pretty simple questions. They're not trick questions. We can do trick questions from time to time, I do confess. Sometimes we'll ask a particularly clever question. These are just straight questions: what's the cost? Some members would remember: 'Tell them the price, son.' Well, tell them the price of the tax cuts. Tell them the price, son, of the tax cuts year by year. Why is it so important to know the cost year by year? The Treasurer says, 'I've told you over four years, I've told you over 10 years. That's all you need to know. Just vote for it.' That's his position: 'Just vote for it. Put the blindfold on. Trust me. Just vote for it.' The reason that the year-on-year data is so important is precisely because the Treasurer has designed these tax cuts in three tranches, so we need to know the impact of each tranche. That's what we're voting on. We, by and large, know the impact of the 2018 tranches. That's pretty clear, by and large, but the comparative impact by the end of the process, when this scheme is fully implemented, of what each tranche has cost the Australian people is not clear. It's not clear at all. We do not know because the Treasurer will not tell us.

I give the Treasurer this: he's not so incompetent that he does not know. He does know the answer; he just won't tell us. That's probably even worse than not knowing. To know the answer and to refuse to reveal it to the parliament, in sustained questioning from this side of the House, shows that they have something to hide. It is particularly disappointing that the Treasurer just says, 'Vote for it. We won't tell you what it costs and, also, we won't tell you the impact.' There used to be good graphs in the budget paper, honourable members will recall. The distributional impact and the impact of government decisions on families at different income levels. It used to be there for all to see: what do the government decisions mean for families at this income and that income? It disappeared. I don't think it was a savings measure. I don't think it was designed to save Treasury resources—

Mr Husic: It was a face-saving measure.

Mr BOWEN: A face-saving measure maybe, as the honourable member for Chifley points out—because they didn't like what it said. That was the reason for the withdrawal of those graphs. I don't think they want us to know what the graphs would indicate for the two and three later stages of the government's tax scheme either. The government are really failing the responsibility test because they are asking us to write a cheque today when we do not know whether the funds will be in the account in seven years time to pay for that cheque. They're asking us to vote for a scheme about which they cannot or will not tell us the cost, and they are endangering the sustainability of strong and healthy surpluses as they do so. It's good that the budget is projected to get back to balance in 2019-20 if wages growth comes back to a level we have not seen in this country for a long time and assuming no downturn internationally. That's good, but we need surpluses which are healthy and sustainable. The government, having engaged in the process of trying to avoid attention on the 2018 tax cuts, because they are relatively modest, particularly compared to the Labor Party's, by engaging the 2022 and 2024 tax cuts, are failing the responsibility test and the fairness test. I'll get to the fairness test now.

The government has not been keen to provide information, but where there's a vacuum it shall be filled, and modellers around the country have been filling that vacuum. We've seen that Ben Phillips, a respected modeller from the Australian National University, has estimated that when the government's full plan is in place the highest quintile will receive a 2.2 per cent rise, the middle-income quintile will receive 1.1 per cent and the lowest will receive 0.2 per cent. That's what the ANU modelling indicates. We've also seen NATSEM determine that the government's plan worsens the progressivity of the tax system. That is their conclusion. And of course we had the Grattan Institute find that, when the scheme reaches its maturity—that is, when it is costing, on their calculations, $25 billion—$15 billion of the annual cost will go to the top 20 per cent of income earners. That all makes sense. That's the way the Treasurer has designed it. That's what he meant to do. It's not a mistake, it's not a bug, it's not a kink in the system; it's what he set out to do. But he should own it. He should be honest about it. I'm happy to have a debate with him about it, but instead he refuses to admit that's the case.

So, just as in so many other matters, the government finds that they're being too clever by half. They thought, 'We know what we'll do. We'll have modest tax cuts in 2018. We'll be able to say they're targeted on low- and middle-income earners. The Labor Party won't match them.' In fact, the Labor Party has matched them and exceeded them. We have exceeded them because of our priorities. Our priorities and our values tell us that's the right thing to do—to have bigger tax cuts focused on low- and middle-income earners—because, firstly, they certainly deserve them; and, secondly, these are people that drive the economy through their spending. Low- and middle-income earners, by definition, have to consume a high degree of what they earn to put food on the table, to send kids to school. A tax cut for them will be spent, by and large. That helps drive the economy.

Whatever claim the government had on fiscal responsibility was pretty thin. But, whatever claim they had, they have mortgaged it by refusing to get us to one per cent of GDF surpluses on a realistic and sustainable time frame by writing into the budget now tax cuts in 2022 and 2024 which may or may not be affordable. The revenue may or may not be there to engage sensible, sustainable tax cuts at that time. And their mortgage responsibility is at the exact time that we should be strengthening the budget. As the IMF said:

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

That's the point: there is a global cyclical upswing in activity. It will not last forever. Anybody who thinks it can be built into the budget, baked in to the estimates for the next four or 10 years is wrong.

There are risks in the global economy. Global debt is at record levels, much higher than it was in 2009. We're seeing that reflected in the bond rate and in its impact on the world economy. We don't know what's going happen in the global trade situation. We hope for the best, but the risks are material and the impacts on Australia would be very significant indeed if there was a trade war. And yet the government say, 'Don't worry about that; we know better. We know better than to provision now for sensible tax cuts which can be afforded and to see what can be done down the track in future years as to what could be afforded. And you must take it all; you can't get the tax cuts in 2018 unless you sign on to the tax cuts in 2022 and 2024.' That's what the government's position is. That is an unsustainable position. I say to the government: that is an unsustainable position.

Just as the government said it was all or nothing on corporate tax and they had to give in, so they will have to give in on personal income tax and they will have to split this bill. If they don't, if they actually think that they can stand in the way of personal income tax cuts in 2018 and the Australian people say, 'Yes, we don't want those tax cuts in 2018 because we're holding out for the tax cuts in 2024', they are kidding themselves. I'm going give the government the opportunity to vote for a second reading amendment to split the bill. I think the honourable minister at the table has supported other Labor Party second reading amendments in the past. She can support this one; that wouldn't be a problem.

This is a very sensible amendment which, while not declining to give the bill a second reading, calls on the government to: amend the bill into separate measures which implement personal income tax relief from 1 July 2018 so these measures can be passed by the parliament without delay; introduce new legislation implementing the remainder of the measures in the bill only when further financial information—call us radical, but we want to see the impact on the budget—including year-on-year costs of each step of the government's full seven-year personal income tax scheme is made available to the parliament; and support the opposition's personal income tax plan to deliver bigger, better tax relief to the Australians. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House calls on the Government to:

(1) amend the bill to separate the measures which implement personal income tax relief from 1 July 2018, so that these measures can be passed by the Parliament without delay;

(2) introduce new legislation implementing the remainder of the measures in the bill only when further financial information, including year-on-year costs of each step of the Government's full seven-year personal income tax scheme, is made available to the Parliament; and

(3) support the Opposition's personal income tax plan to deliver bigger, better and fairer tax relief to Australians".

We will then give the government other opportunities when we get to the consideration in detail stage. I flag that I will move amendments to take out the 2022 and 2024 tranches of income tax cuts from this legislation. Bring them back in. Let us have a debate just on those. Let's argue about it. Let's see the data. Let's shine a light upon the government's plans. Let's have a good look at them. I am more than happy for them to be debated, if that's what the government wants. But separate them; don't hold the tax cuts hostage to the 2022 and 2024 tax cuts.

Finally, I will move an amendment to implement Labor's tax plans for 2019. The government talks the talk on lower tax. They keep telling us they're the party of lower tax. They keep telling us they're the party of tax relief for hardworking low- and middle-income Australians. Well, here's an opportunity to vote for it—to vote for better tax cuts for those people who are earning less than $125,000 a year. We'll give the opportunity to the government to vote on those. If they choose to vote against them, their names will be recorded as people who oppose those better, bigger personal income tax cuts for Australians who earn less than $125,000 a year.

These are the amendments that we'll move in the House. In the unlikely and unfortunate event that those amendments aren't carried—if the government doesn't see sense—of course we'll facilitate the passage of this bill through the House to send it to the other place, and the other place will be able, with their different working conditions and different numbers, to pull apart the legislation if they see fit and send it back to the House. If the government isn't able to get the entire package through but can only get the 2018 package through the Senate, we'll be encouraging it to accept the will of the Senate. That's what we'll be doing: encouraging the government to accept the will of the Senate. But we'll facilitate passage of the bill through this House, because I'm a realist about how this vote will end up. We'll send it to the other place and let the other place do its job, and we'll be prosecuting the same case in the other house as we have in this House: better tax cuts, better targeted, and more responsible budgeting for Australia's future, without risking Australia's financial and fiscal stability but delivering real tax relief where it's needed, and delivering it now.

The SPEAKER: Is the amendment seconded?

Mr Thistlethwaite: I second the amendment and reserve my right to speak.