Josh Frydenberg (Kooyong, Liberal Party, Assistant Treasurer) Share this | Hansard source

The Labor 2013-14 Budget Savings (Measures No. 1) Bill 2014 repeals the second round of carbon tax related personal income tax cuts, which are due to start on 1 July 2015. This measure was originally announced by the former government. In their final budget, in 2013-14, Labor announced they would repeal the second round of personal income tax cuts, due to take effect from 1 July 2015. Labor banked $1.5 billion to the budget bottom line over the then forward estimates period, to 30 June 2017. Due to the addition of two further years to the forward estimates, this means the measure will now boost the budget bottom line by $2.8 billion. But, as we all know, they did not get around to legislating their own repeal. This measure has now been introduced to the parliament twice, under the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 as part of the package of carbon tax repeal bills. The Senate has now twice voted down this measure put forward by the former government. I welcome the recent commitment from the opposition members to support their own budget repair measure. They have an opportunity to now contribute to the task of budget repair our nation must undertake.

The 1 July 2015 round of personal income tax cuts were originally introduced to provide additional assistance to households following an expected increase in the carbon price from a fixed price of $25.40 in this financial year to a floating price of $29 next financial year. In their final budget, the former government revised their carbon price estimates for the next financial year, and this had fallen to around $12. But the former government never followed through by unwinding legislation they put through the parliament to implement the personal income tax cuts due to take effect from 1 July 2015. The former government did not reverse their decision to defer the second round of personal income tax cuts in a 2013 economic statement or in their document outlining their costings for the 2013 federal election. Since coming to opposition, Labor have now twice voted against legislation which implements their own budget repair measure, without outlining an alternative plan to pay for the measure they are now choosing to keep.

When we came to government, we inherited an unsustainable budget position from the previous government. It was plain for all to see. It is now time for parliament to get serious about repairing the budget. This bill gives the opposition the opportunity to show they are serious by supporting their own measure from the 2013-14 budget. Above all, it gives them the opportunity to keep their commitment to the Australian people. We all know now, of course, that the former government never delivered on their promise of a surplus last financial year, but they did talk the talk about the principle of returning the budget to surplus. Supporting this bill gives them an opportunity to finally take a small step in the direction of action.

We inherited $123 billion of deficits when we came to office. We have now brought that down to $82 billion over the next four years. This is despite the fact that we lost $90 billion in expected tax revenue over the same period. A $40 billion improvement in the budget bottom line is good, but we need to do more. If we had not taken action to address government debt—if we had left it to continue on the trajectory of deficits and excessive spending we inherited from the former government—debt would have been $667 billion at the end of the medium term. Without action, the budget outlook is rising debt for at least another 10 years. The budget would never get to surplus, and the debt would never, ever begin to be repaid.

While Labor promised a real spending cap of two per cent per annum, they actually delivered 3.6 per cent per annum, or almost double the cap that they promised. In contrast, we are keeping real spending growth in check at 1½ per cent on average over the five years to 2018-19. We have taken some tough decisions. We have taken them in order to change course and put the budget back onto a secure and sustainable footing. The benefit of making these decision now is that in the years ahead we will be able to afford a sustainable quality of life. Every generation before us has helped to build the quality of life we enjoy, and we can do no less for future generations. Budget repair is about government living within its means and ensuring the sustainability of government services. This government is committed to living within its means. We refuse to keep borrowing money to pay for consumption today at the expense of generations of taxpayers into the future. It is unsustainable and, frankly, immoral.

The government is redirecting spending to measures that will boost productivity and workforce participation to build a stronger economy. This includes the Infrastructure Growth Package, the Asset Recycling Initiative and other new investments in infrastructure. It includes building a new Medical Research Future Fund within the next six years. We are eliminating waste by reducing the government's share of the economy over time so that we can keep providing assistance to those who need it most and free up resources for private investment. Our plan will allow us to start paying down public debt. We want to reduce the amount Australian taxpayers spend on their interest repayments while also making sure that more of their tax dollar is spent on delivering front-line services.

The repeal of the carbon tax has helped all Australian households, with households better off by $550 on average this year alone. But the government understands households will continue to face cost-of-living pressures in spite of that repeal. That is why we will keep the current personal income tax thresholds and fortnightly pension and benefit increases. This bill amends the Clean Energy (Income Tax Rates) Amendments Act 2011 to repeal the personal income tax cuts that were legislated to commence on 1 July 2015. It also amends the Clean Energy (Tax Laws Amendments) Act 2011 to repeal associated amendments to the low-income tax offset which were also legislated to commence on 1 July 2015. After repealing these amendments, the tax-free threshold will remain at $18,200, the second personal marginal tax rate will remain at 32½ per cent and the maximum value of the low-income tax offset will remain at $445.

This bill is an important step towards getting the budget back on track. This bill will help to ensure that future generations will enjoy the high standard of living that we enjoy and that they will not be shackled with debt. It is time for this parliament to repair the budget and ensure Australia's prosperous future. I commend this bill to the House.

Question agreed to.

Bill read a second time.

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