Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

I withdraw. Perhaps the Treasurer thinks that if he can repeat his tax fiction enough times it might become tax fact. This is a Treasurer who cannot tell the truth about his morning run, a Treasurer so full of hubris that he is increasingly desperate. The Treasurer has not proven himself up to the task when it comes to the detail of the tax system. Notwithstanding the improvements in this budget, the Treasurer has proven himself to be somewhat inept at addressing disincentives in the tax system. Indeed, up until recently he denied that high effective marginal tax rates were a problem that potentially hampered labour supply. The Treasurer has argued on many occasions that high effective marginal tax rates are just an inevitable part of any targeted welfare system, inferring that no care should be taken to avoid the worst disincentives.

Thankfully, Treasury have succeeded in bringing him around—and I welcome the Treasury secretary’s comments in his post-budget address pointing to the importance of resolving these issues and the potential labour supply spin-offs. This is something that Labor has been raising in this House year after year after year, so I am delighted that the Treasury have bolstered their modelling capacity, particularly in relation to labour supply effects, using a modified version of the Melbourne Institute’s MITTS-B model. This expertise will add significantly to the policy debate about tax reform, and that is a very good thing. I am glad we are now having a more sophisticated debate about tax reform in this country. But despite the progress in this budget there are still hundreds of thousands of Australians who need and deserve better incentives, and they will not get them from the Howard government. (Time expired)

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