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Wednesday, 16 March 2005
Page: 27

Senator MURRAY (11:05 AM) —Senator Coonan, I was happy for you to go first if you wished but you would probably like us to complete our skirmishing before you wrap up the response.

Senator Coonan —I always enjoy it.

Senator MURRAY —It is not possible in this debate to hear those sorts of remarks by Senator Sherry without them needing to be corrected. The first correction relates to the relationship of Labor and the Democrats and our present situation of relatively low regard in voter support. I am acquainted with the three-decade-old history of the Democrats and I am aware of how we have been the enemy of Labor all this time because they do not like the competition we introduced nor the values and views that we espouse.

I have not forgotten that even with regard to my election in my state Labor allied themselves with the Greens against me and they have done that to the Democrats consistently throughout Australia. Nor have I forgotten Labor’s determination to contribute to political ill fortune for the Democrats by making sure they stole—let us not use the word ‘seduced’—Senator Kernot from us to try to destroy us. There is a long history of Labor’s aggressive desire to knock us off. They have that attitude towards minor parties. Indeed, they prefer a one-to-one contest with the Liberal Party, and everybody else can be pushed out the door. So I put forward those remarks in the perspective of a long-term attitude, to which I do not take personal offence. That is just the way it is.

Much more important though than the remarks about the Democrats are the remarks about the GST and the new tax system. Senator Sherry does himself a disservice. I know from long experience that he is far brighter than his remarks seem to indicate. He knows full well that the economic and fiscal circumstances six years ago were very different from those today. The amount of money available to complete the circle was limited. The new tax system changes were focused primarily on indirect tax system changes but were also accompanied by swingeing tax cuts on the income tax side—$13 billion worth. You will clearly recall, Senator Sherry, that the Democrats have been roundly criticised for paying for our changes to the new tax system by reducing tax cuts for higher income earners but you will recall that we retained the cuts for low-income earners. So our prejudice in favour of low-income earners was apparent then and is apparent now.

Like all political parties should—and perhaps the Labor Party will take note of this and lift their game because they have been severely criticised for varying between small-target and opportunistic attitudes with respect to tax policy—we have assessed the situation of our income tax system as reaching a crisis in confidence. It is not a crisis in terms of the ability to collect revenue or the ability of most Australians to comply with the primary requirements of our tax system but a belief that it is not as fair as it should be. We are saying that, if you are going to attend to the psychology—the perception people have about the tax system—you have to revise income tax in such a way that it is capable of being understood by the taxpayer as being fair. That is why we talk about certainty and equity, but it is also why we talk about the psychology of the matter and finding those tax reform statements and systems which press the perceptual, psychological and emotional buttons as well as the economic and accounting buttons, which is too often where tax bureaucrats and policy orientated politicians focus.

We have said that there are some fundamental things you need to pay attention to. We can afford to pay attention to them now. That is the point, Senator Sherry. Six years ago, in 1999, it was not possible to contemplate the kinds of structural reforms for income tax which it is now possible to contemplate. That is exactly why the backbench and indeed the frontbench of the coalition are interested in the area of income tax reform. We might not always agree with each other, but they are discussing the matter. The problem for Labor is that they have failed to assess the matter in policy terms—to take a long-term view. If I have one criticism of Labor over the nine years that I have been in this place it is that, despite some very bright, capable, good and decent individuals, their political tactics and strategies have been almost invariably opportunistic and responsive to the moment. They have ditched principle in favour of politics. They have ditched policy in favour of an ephemeral attachment to the leader or spokesperson of the day.

It is no good taking on an easy target like the Democrats, with our seven—soon to be four—senators. That just shows weakness, frankly. You have to address the issues which confront you as an alternative government: in what respects are you failing to deliver for the hopes, aspirations and long-term goals of Australians? I would suggest to you that one of the long-term goals of Australians is to have a fair go in a taxation system, to have a fair go with regard to income tax, to know with some certainty that somebody down the road is not having a lend of them and to know that somebody down the road is not getting a benefit which they are not getting. If you look, for instance, at the tax-free threshold you will see that there are effectively many tax-free thresholds which exist as a result of the law. There is actually a circumstance in our law, passed by all parties, whereby certain retirees effectively operate on a $20,000 tax-free threshold right now. Why would you accept that some people in the community who are poor, who are short of money or who merit it should have a high tax-free threshold and not other poor people or low-income people?

Why, when we are discussing an issue of fundamental importance, would you take the opportunity to be superficial and mocking about it, when we are talking about trying to give more disposable income to people who would benefit most from it? You might disagree with the route we are taking, but why would you disagree with the motive? Why would you mock the motive? Why would you diminish the motive and say that we are just trying to put ourselves back into the tax debate, when I am expressing views that I have consistently expressed over a number of years? That is, we need to index tax rates because, if we do not index tax rates as inflation moves along, people on the margins, between tax rates, suffer a real loss in income. This is a very credible and reasonable policy proposition. You might disagree with it, but you cannot disagree with it being a serious proposition put by serious people.

If you already accept the principle of a tax-free threshold—which you did as a government and which we do within this chamber—why would you then insist that it should remain at the same level, regardless of the fact that every year its real value declines because of inflation, and regardless of the fact that people on incomes below the basic subsistence income of $12,500 are paying income tax? Why would you think, when nearly two million people are earning less than $20,000, that it is not a good idea for many of those people who are working part time—many of whom are women—to get more disposable income in their pockets and be able to raise their living standards? If there were two people, both of whom are cleaners earning $20,000, why do you think that it would be a bad idea to put more money in their pockets?

We are essentially saying that structural reform of income tax is required now on the same basis that structural reform of indirect taxes was achieved. We are saying that the three components of that which would be most simply understood by taxpayers should be: raising the tax-free threshold, so everybody would know that below a certain level you do not pay tax; indexing the rates; and, of course, raising the top threshold. We are not saying that that should be done tomorrow; we are saying that that should be done over a number of years as it is affordable. And how would it be paid for? Obviously through the use of surpluses that have been achieved but also through broadening the base. We know that works.

Why is it that the Democrats, who are interested in high revenue—we are not interested in high tax rates; we are interested in high revenue—would have supported lowering the company tax rate and broadening the base regime? We felt that it would contribute to a simpler system, it would represent structural reform and it would deliver more revenue. I do not mind if you disagree with our approach, Senator Sherry, and if you have alternative proposals, because it is a policy debate. What I do mind is that you mock and falsely allude to our motives. We have been doing this for years, regardless of the circumstances of our party. Our motive is not to get back into the tax debate. We are in the tax debate. I would suggest to you that I personally, over these nine years, have probably had more effect with the government on tax than the Labor Party has—and that is to your shame, not to my credit. I just think that you have got to keep your eye on the main ball. If you want to be the alternative government, come out strongly, use the very real talent and very fine brains that are within your party—

Senator McGauran —Name them!

Senator MURRAY —Senator McGauran, you are ungenerous, frankly. You are so used to the argy-bargy, you forget that there are fine people within your own party—

Senator Sherry —You could name them!

Senator MURRAY —and that is so within the opposition party. I am not going to name them on either side, because it would only make the ones who are not named jealous. You understand the tenor of my remarks, Senator Sherry—and I recognise that there was a bit of impish humour within your remarks. But I have a serious point to make—that is, we think structural reform is necessary. Every time there is a tax bill we try to make a little contribution, where we can, to that view and that vision.