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Wednesday, 20 June 2018
Page: 3381


Senator PRATT (Western Australia) (09:51): We've heard a lot from the government so far in this debate about their tax plan making things more fair; however, it's very clear to Australians, because they're fair-minded people, that there's nothing fair about the 2018 budget or about the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. What most people think is fair in this nation is a greater sense of equity and equality. For example, when there are two people at a football match, and one can see over the fence and the other can't, it's not fair to keep them both standing on the ground; it's fair to give the short person a leg-up and put them on a box so they can see. That is the principle of progressive taxation. Fairness is about levelling the playing field for people.

What we have in this budget is big business and the banks getting an $80 billion tax handout, which will be paid for with cuts to our schools and hospitals. In this bill the flattening of the progressive nature of our tax system would give high-income earners in our country a much higher benefit than lower income earners. Here we have it again for all to see: high-income earners and big business are the true priorities of the Turnbull government. Under the proposal the government has put forward, 62 per cent of the benefits would go to higher income earners while just seven per cent would go to the 30 per cent of Australians on the lowest wages. Why would you do that? Are you insane? Do you not care about the working poor in our nation?

This bill continues to demonstrate how out of touch this government is with the reality of Australians' lives and in particular the people doing it toughest. This bill also demonstrates a government that is prepared to risk the budget bottom line—our capacity to pay down debt, to pay for services, to have a good Defence Force and to bail ourselves out of bad times—so it can hand out tax cuts to big business and top-income earners while doing very little for middle-income households. Whilst those opposite will argue that they're flattening the tax system, making it fairer, and that lower income households are getting a tax cut, it's a much smaller tax cut in dollar terms than the one for those who are already substantially much better off.

In our current economic climate, we should have a government that's concerned about workforce participation, concerned about lack of wage growth and concerned about increasing the disposable income of targeted households as a way of boosting consumer spending. It's very clear that this government is not interested in that. What happens when you boost the incomes of higher income households? They invest more. They save more. These are worthy aspirations, but, when you put income into lower income households, they spend it and stimulate the economy, and everyone benefits. Investing more when you are on a higher income is all very well, except that people are accumulating wealth, in many instances, above and beyond that which ordinary Australians will ever be able to see or access in their own lives.

Under the coalition, we see the cost of living set to increase. Workers in the retail, food and accommodation industries are losing up to $77 a week in penalty rates. We see families and pensioners paying around $20 a week or more, or about $1,000 a year, for private health insurance. We see parents paying more for child care—$40 a week, or $2,000 a year, more in fees. And we see record costs to visit a GP—on average, about $9 more every time you visit a doctor. These are the reasons why Labor is very prepared to support the government's proposed changes that are set to take effect on 1 July—those tax cuts that are targeted at people who need them. Labor will support tax cuts for 10 million people on 1 July, and we are ready to vote for those tax cuts today.

If Labor is elected, we want to double these tax cuts and make them permanent, while asking those in the top tax bracket to pay a little more to help reduce debt. People in the top tax bracket, relative to people in the lower tax brackets, still have the resources to pay for their accommodation and pay for their retirement. Labor's bigger, better, fairer income tax will see those earning up to $125,000 a year better off when compared to Malcolm Turnbull's plan for the next four years.

It is simply absurd to us in the Labor Party that someone on $200,000 a year should pay the same tax rate as someone on $40,000 a year. It is unfair and absurd. So we don't agree with the Turnbull government giving more tax cuts for the top bracket—and this is after the Turnbull government cut the tax rate for high-income earners just last year. The idea that a corporate executive or a politician on $200,000 a year should pay the same marginal tax rate as a worker earning close to the minimum wage, on a salary of about $41,000, strips away every shred of progressiveness in our taxation system. Yet, absurdly, this government is trying to pull the wool over Australians' eyes—and I don't think they will fall for it—to sell the idea that this is a tax cut for ordinary Australians. It's not a tax cut for teachers, police, cleaners or aged-care workers. It's a tax cut for the high end of town, for well-paid professionals, who will have a high standard of living relative to others without a tax cut. That's why Labor will move amendments in the Senate to the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 to ensure the passage of tax cuts starting on 1 July.

We will seek to implement better, fairer tax cuts through Labor's tax refund for working Australians. This would double the tax relief up to $928 a year. It will mean that the 57,000 people in Canning, the 63,000 people in Forrest and the 65,000 people in Moore will receive an increased tax refund. However, what we've seen is the Turnbull government's tax cuts overwhelmingly benefit wealthier electorates. So it's not surprising to me that this government has seen tax cuts that overwhelmingly benefit inner Melbourne and inner Sydney electorates, but it is of great concern and a disgrace that Mr Andrew Hastie and the Turnbull government are not standing up for the people of Canning—the good, hardworking people of Mandurah, Pinjarra and Byford and all those across the Canning electorate. As I move around Canning, I talk to constituents about their struggle to make ends meet and the fact that they juggle numerous jobs just to earn a modest income. They will tell you how they're overworked and underpaid or struggling to find enough work to get by. People who are struggling to find enough work to get by deserve a better, bigger tax cut than the high end of town because they rely on every cent of what they earn just to get by. There's no rational reason to take the same amount of tax out of their income as is taken out of my or your much higher incomes.

We see that up to 70 per cent of taxpayers will be better off under Labor's fairer tax plan, and that includes 57,000 residents who live in Canning. Seventy per cent of the hardworking taxpayers in Mandurah, Pinjarra and Byford will be better off under our tax plan. And I suppose the Prime Minister does try to help, in his own way, when he says, 'They should just get a better job.' Try telling that to every single cleaner, storeperson, shop assistant, orderly, retail worker or hospitality worker. We need people to do these jobs. We need them to have incomes that keep those industries viable. They need good wages. We need to see wages growth in those industries. We know those industries will never see wages growth that compares with wages growth for high-paid professionals, but we need them to do those jobs. Why do you rub people's faces in their own professions in that way? We have to value the work that Australians do, because it needs to be done. Every day, in our communities and in our cities, we depend on the great diversity of work that people do, be it well paid or low paid. People on low wages should get better pay, but the simple fact is, because they are on lower wages and we need people to do that work, we should not, in our right mind, ever consider taxing them at the same rate as wealthier Australians. The absurdity of it is absolutely disgusting.

In our nation, inequality is at a 70-year high. We should be taking steps to do exactly the opposite of what the government is doing, and that is taking steps to improve and address inequality and to remove inequality in our system by using our tax and transfer system and implementing principles that are exactly the opposite of what this government is seeking to do.

With overall inequality worsening, there are negative impacts on our economic growth. The best thing we can do to fix that is to have a strong, progressive taxation system where those who can afford to pay more do pay more and those who can't afford to pay as much aren't asked to pay as much. We need a government that stops standing in the way of tax relief for the 10 million Australians who need it. We need a more progressive taxation system, not a less progressive one. Tax cuts this year for teachers and tradies should not be held hostage to tax cuts for bankers or highly-paid professionals in six years time.

The Turnbull government's priority is for tax cuts for big business and high income earners, at a stupendous cost of $25 billion a year in 10 years time. I don't think our nation can afford that—our schools and hospitals can't afford it, our TAFE system can't afford it, our social services can't afford it, our public sector can't afford it and our defence force can't afford it. The fabric that holds our community together simply cannot afford it.

Labor, on the other hand, because we're not giving millionaires another tax cut and we're not giving big business an $80 billion tax handout, can put more money into the pockets of working Australians while funding better schools and hospitals and paying down debt quicker. This bill will make our tax system in Australia less progressive and it will continue to erode our tax base. It doesn't deserve the paper it's written on.