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Tuesday, 22 May 2018
Page: 4184


Mr PASIN (Barker) (18:07): It's always lovely to follow the member for Chifley in this place, but it was a little painful to sit through what was effectively a 15-minute lecture on magic pudding economics. To summarise, I think the member for Chifley was saying, 'We will tax less, we will spend more and we will have more left over.' Forget about trickle-down economics—which is something they want to talk down as well—that's a recipe for magic pudding economics. You can't tax less, spend more and have more left over, unless they've found a money tree out the back of the building. I've spent a fair bit of time walking around the grounds and I haven't found it yet.

I love it when a plan comes together. When I came to this place for the first time in September 2013, we talked about a plan. We had a plan for a million jobs. We were going to transform the economy and take people from welfare to work. Those opposite don't want us to talk about that plan because—guess what?—it's coming together. We have the flexibility to do what we need to do in relation to the personal income tax regime in this country because our plan has come together. There are over a million people who woke up this morning and got ready for work who were looking for work this time five years ago. In fact, there are 415,000 people who got up this morning who were looking for employment one year ago. Now those people—those 415,000, not to mention the million in total—are adding to revenues of this government. They are providing tax revenues to the government in circumstances where they were previously receiving Newstart and other benefits. In sport we call that a two-goal turnaround. In this place we probably call it prudent economic management, which has let to this.

So what are we attempting to do? Well, in the short term, we want to give, if you like, personal income tax relief to low- and middle-income earners, and that's where you should always start, because, despite the fact that high-income earners in this country contribute most to the tax receipts of government, they are the people best positioned to do that because of, by their very nature, the high incomes they earn. So we're focusing first where the cost-of-living pressures hit hardest, and they hit hardest low- and middle-income earners. Just like in your electorate and my electorate, Mr Deputy Speaker Buchholz, those are people earning middle incomes, and we're providing to them a tax relief of up to $530 as a low-income tax offset. That's step 1 of the plan. Those opposite are supporting that proposal but don't want to lock into other elements of the plan.

The second element of the plan is to increase the threshold of the 32.5 per cent tax bracket from $87,000 to $90,000, and that will also provide relief to those on those incomes. Long term, though, we want an income tax regime that rewards effort. I'm sure many in this place can think of individuals or couples, who look at their individual or combined incomes and think to themselves: 'You know, I could do that extra bit of overtime. I could do that extra shift. I could take on more work'—in the case of independent contractors—'but where's the incentive, quite frankly? I seem to be working for government in that circumstance.' My own sister, who works in the disability sector, is someone who recently bemoaned to me the fact that she seems to be working a lot and, when she sits down with the accountant, it doesn't seem to make economic sense to put in all the hours she does and do all the overtime she does. So what we're seeking to implement is a program that over time will see that top threshold for the 32.5 per cent tax bracket go from $120,000 to $200,000, effectively abolishing the 37c-in-the-dollar step in the income tax system. It's an incentive for people to continue to work hard and earn additional income.

Those opposite are running bit of a myth about this around the community. They say, 'Why should someone on $200,000 pay the same tax as someone earning a small fraction of that amount?' That's a really cute argument, but let me debunk it. The rate might be the same, but the amount of taxation is nowhere near the same. If I'm paying tax at 32.5c in the dollar on $200,000, I'm paying something in the order—forgetting about the lower tax brackets—of $60,000-odd in taxation. If I'm paying 32½c in the dollar on $100,000 then I'm paying $32½ thousand. The rate is the same; the amount of taxation is not the same.

This feeds into the argument about relief that can be offered. What we need to understand is that the overwhelming majority of income tax receipts that come in come from those on high incomes. Those on high incomes pay significantly more in taxation, so some small reduction in the income tax rate is going to deliver a stronger benefit to someone on a higher income than someone on a lower income. For those opposite, this is really a kind of respectful request. Don't seek to hoodwink the Australian people by saying someone on $200,000 under our plan is scheduled to pay the same amount of tax as someone on $60,000. They might pay the same rate, but they certainly aren't paying the same amount of taxation.

The member for Chifley effectively threw down the gauntlet and said, 'I'm looking forward to there being a substantial difference between us and them'—presumably he means those on this side of the chamber—'in the lead-up to the next federal election.' So am I. I share the energy that my good friend and colleague the member for Boothby has for this impending dichotomy. The reality is that those opposite want to run a big spending, big taxing government. None of my colleagues likes that approach. None of my colleagues came into this place and wanted to run big government or big taxing operations—quite the opposite. Certainly, I didn't. My colleagues and I share the view that taxes should be as high as necessary but as low as possible—and that's the situation.

So when the member for Chifley says he's looking forward to that debate and the forthcoming federal election, well, so am I. I don't share his optimism about issues like the dividend imputations being prohibited, and I don't think it's finding favour as he says. Equally, I don't think the idea of disallowing negative gearing is something the wider community supports. The member for Chifley comes in here and says, 'Our unbelievable plan is to offer middle-income earners additional tax relief.' What he should say is 'Oh, by the way, if you happen to be negatively gearing an investment property, we're going to be taken away that opportunity'—which, let's face it, is one of the only mechanisms to get ahead if you're earning a wage.

I encourage the member for Chifley to speak to people working hard investing in his electorate and tell them, 'You won't have the ability to do that.' If you are so confident that this is a measure that is going to find favour, then don't grandfather it. Your proposal is to grandfather those investment properties currently subject to negative gearing. That is to say you're not going to take away an existing entitlement from someone who actually has it but you're going to prevent people from taking up that opportunity prospectively. If you're so confident that this is a measure that will find favour, then don't grandfather it. Go around the country and speak to every person, every couple, every nurse, every police officer, every council worker, every baker and others and say to them 'We're going to take away your ability to negatively gear that investment property.' You won't do that because the reality is you know this won't meet with favour.

Can I say to the member for Chifley and those opposite that if you think older Australians are happy with the idea that you're going to undermine their ability to seek a refund for dividend imputations paid on their behalf on shares in their name then you haven't spoken to the people I have spoken to, some of whom are on very small incomes. I met a gentleman whose total receipts were in the order of $26,000 or $28,000 who was scheduled to lose something in the order of $6,000 depending on the performance of shares in his name. That is a significant whack. Talk about a regressive approach! Frankly, that has him petrified. He asked me what to do about that and I told him he ought to speak to everyone he knows. He told me I was the first conservative politician he'd ever spoken to in his life; he'd certainly never voted for one, but he couldn't see himself voting for his beloved Labor Party at the next election. This is the kind of thing that shows the member for Chifley is wrong to think these measures have been met with favour; they haven't; they're being met with vitriol, to be honest. And we're turning these otherwise fairly passive members of our community into political activists. I'm meeting more and more low- and middle-income earners who say to me, 'You know what? I've never been that politically active but I will be in the lead-up to the next federal election because I can't believe this is happening.'

Our plan will see 94 per cent of all taxpayers facing a marginal tax rate of 32½ cents or less by 2024-25. What those opposite need to consider is that 94 per cent of Australian taxpayers will, by 2024-25, not pay a cent more than 32½ cents in every additional dollar they earn under this plan. Those opposite don't want to have a discussion about this. They don't want to lock into an academic argument about a flat tax rate and how it incentivises individuals to work harder, to work longer. They don't want to lock into that. They just want to run around the country on a 'Mediscare' type of campaign and say, 'Oh, those members of the government, they want you to pay the same tax as someone earning $200,000.' No, we don't. We want them to pay the same rate because guess what? I want someone earning $50,000 to earn $200,000. I want them to take that extra shift, to take up another opportunity, and I don't want bracket creep to disincentivise people, to punish people for getting a wage increase.

This is part of our overall plan that I spoke about. It's part of a plan which has been facilitated by the fact that, when we came to government in 2013, we said we would create a million jobs, and guess what? That plan has come together. It's delivered additional resources to government. It's allowing us to reinvest in lower, fairer, simpler taxes, and those opposite hate it. They hate it! Those opposite absolutely hate it because it speaks to the Australian people. Australian people don't elect their members of parliament to turn up here in Canberra and be chauffeured around in white cars and put taxes up. By the way, I should say to those opposite that if any of their constituents want to donate additional tax to the Treasury, they can do that—there are provisions to do that. I encourage those opposite who find those people to encourage them do that. They don't want to. The reality is they don't want us to talk about lower, fairer taxes because they want higher taxes and a bigger spending government and we don't.