Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

Obviously the member for Moreton does not travel into Logan City. He is wondering whether people in Browns Plains are millionaires. I can set his mind at ease. Member for Moreton: there are no millionaires in Browns Plains, but there are hardworking Australians. There are people who are receiving family payments and there are people who are on forms of welfare—and many of them would like to move from welfare to work. When the Treasurer is examining and benchmarking Australia’s tax system against those of other countries, he could have a look at the massive disincentives in the Australian tax and welfare systems for people moving from welfare to work.

The Prime Minister gives welfare payments to millionaire couples while expecting poor single mothers to go out and work for as little as $3 an hour, after taking into account taxes paid, benefits lost, the cost of travel to and from work, and other work costs. That does not even take into account the child-care costs. If they are taken into account, under the government’s so-called welfare reform, a single mother is expected to go out and work for as little as $2 an hour. That is a scandal, that is a disgrace and that is unfair while the wealthiest women in this country—the wealthiest families in this country—are receiving payments of around $3,000 so long as they agree to stay home. Such is this government’s definition and understanding of fairness. The government knows that it is unfair. It thinks single mothers will not vote for it but wealthy doctors’ wives will, so it gives the welfare payments to high-income earners and to single mothers it says: ‘Here’s a kick up the bum for you. You go out and work for $2 or $3 an hour.’ It is a disgrace.

When the Treasurer does his international benchmarking, he can look at the punitive disincentives for people on welfare to move from welfare to work. He can look at the disincentives for people in middle Australia who earn between $70,000 and $125,000 a year and who are on a 42c marginal rate. They jump from 30c to 42c. That is a big jump in an income tax rate, yet there are a million Australian taxpayers in that 42c bracket. If the government, through its insidious bracket creep over the next three years, does not drop that rate or change the threshold, another 400,000 will join those taxpayers and, by 2008, 1.4 million Australians will be confronted with the 42c marginal rate of income tax. They will be in that tax bracket. I urge the Treasurer to have a good hard look at the 42c rate when he is going through his tax reform proposals and look at what people who are in those income ranges pay overseas and whether they are in fact facing a 42c rate.

Reducing the 47c rate over time is affordable. It would be affordable within the sorts of budget surpluses that are being projected—up to $15 billion by private sector forecasters for the year 2006-07. Two Fridays ago, I asked the Governor of the Reserve Bank: ‘Is tax reform affordable?’ I did that because ringing in my ears was the Treasurer saying, ‘It may not be possible to provide tax reform and substantial tax relief, because to do so might stimulate the economy too much and trigger a Reserve Bank decision to increase interest rates.’ The Governor of the Reserve Bank said: ‘Tax reform is affordable.’ That pulled the rug from under the Treasurer. He is running out of excuses as to why he is so opposed to tax reform. He has now embarked on a process, when all of the evidence is there through OECD comparisons. Everyone, apart from the Treasurer, knows what the problems are with our tax system. It is time for genuine reform. It is time to remove those incentive-crushing barriers and to give people genuine reward for effort in this country.

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