Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

It is a great pleasure to rise today to speak on the Appropriation Bill (No. 1) 2007-2008 and the related budget bills. Today, I want to take the opportunity to highlight many of the outstanding initiatives that are in this year’s budget. In doing that, I want to particularly point out some of those initiatives that are not only important for Australians across our entire nation but particularly important for the wonderful people who live in my electorate of Aston. It is important to put the 2007-08 budget into some context. This budget provides for an underlying cash surplus of just under $11 billion, and it is this government’s 10th surplus budget. Since being elected in 1996, the Howard-Costello government has delivered 10 surplus budgets, an unparalleled record. The point behind this is that a strong budget allows for continuing investment to improve our overall economic prosperity and growth and our options for helping Australians achieve their desired objectives in life.

The Australian economy is enjoying one of its longest growth periods in our history. That has not happened by accident; it has happened as a result of dedicated, proven, diligent and prudent hard work by this government over the last 11 years. That is what has resulted in the economic prosperity that we have been enjoying. It is insightful to reflect that since 1996 two million people have gotten jobs. Real wages are up by 20 per cent. It is important to highlight the fact that real wages are up some 20 per cent since we came to office in March 1996 because Labor’s record is that between March 1983 and March 1996 real wages went backwards. Under our government, real wages increased by 20 per cent; under Labor, they went backwards by almost two per cent. The unemployment rate, as we know, is at a record 30-year low at around 4.4 per cent. If we have a look at what unemployment was when we came to office in March 1996, it was not at 30-year lows; it was at 8.2 per cent. There were 8.2 per cent of Australians unemployed. At that time in my electorate of Aston unemployment was just on six per cent, and—I am proud to say—today it is below four per cent; 3.7 per cent in Aston. In that time, real household wealth has more than doubled.

Let me now turn to some of the initiatives which I think are very important to the good people of Aston. In this budget there are personal income tax cuts. This is a continuation of this government’s commitment to giving back to Australians and rewarding Australians for their hard work. What is important to note about the tax cuts in this year’s budget is that it is the fifth time that this government has reduced personal income tax. The personal income tax cuts in this budget are worth $31.5 billion over four years. This is $31.5 billion above and beyond the almost $37 billion of tax cuts that were announced in last year’s budget. It is because of the continuation of this government’s proven economic management that we are in the position to be able to reward Australians in this way.

From 1 July this year, the 30 per cent threshold will rise from $25,001 to $30,001. From 1 July next year, the 40 per cent threshold will rise from just over $75,000 to just over $80,000, and the 45 per cent threshold will rise from just over $150,000 to $180,000. The tax cuts will increase disposable incomes for all Australian taxpayers. This provides much-needed incentives, especially for lower income earners, to participate in the workforce, which will further enhance our overall international competitiveness. Over 80 per cent of taxpayers will face a top marginal rate of no more than 30 per cent. With these changes, over 80 per cent of all of the taxpayers in Australia will now be paying no more than 30 per cent over the forward estimates periods, with taxpayers needing to earn around $134,000 to pay an average tax rate of 30 per cent by the time we get to 2008-09.

Another important fact is that in 2008-09 the top marginal tax rate will in fact only apply to around two per cent of all taxpayers. That means that these cuts are particularly designed to benefit low- and middle-income earners. It is low- and middle-income earners that receive the highest percentage of tax cuts overall. It is interesting to provide some examples of how this might work. Taxpayers earning $30,000 used to pay tax of $6,222 prior to the new tax system and excluding the Medicare levy that we introduced. From 1 July this year, those taxpayers that used to pay $6,222 in income tax will now be paying $2,850, a reduction of around 54 per cent in tax. I will give another example. Taxpayers on $60,000 used to pay income tax of $18,802 prior to the new tax system that this government implemented. From 1 July this year, instead of paying that $18,802, these taxpayers will now pay around $12,600, which is a reduction of 33 per cent. Taxpayers on $100,000 used to pay $37,602. From July next year, they will be paying $26,660, a reduction of around 29 per cent. Taxpayers on $180,000, instead of paying over $75,000 in tax, from July next year will pay over $58,000 tax, a reduction of around 22 per cent. This shows that this government is all about giving back to the Australian people and particularly looking after the low- and middle-income earners. Those examples I have just given demonstrate how it is that the low- and middle-income earners are the greatest beneficiaries of this government’s income tax cuts in the budget.

Another important area of interest in the budget to the people of Aston is child care. The budget builds on this government’s very longstanding commitment to help families meet their childcare needs. This government introduced the childcare benefit in 2000 and the childcare tax rebate in 2004. We will all remember that in last year’s budget we expanded childcare places. From 1 July this year, the childcare benefit will increase and the timing of the childcare tax rebate will be brought forward.

What does this do? It provides more timely and increased childcare assistance for all Australian families, particularly those in my electorate of Aston. As a result, out-of-pocket childcare costs as a share of disposable income will be reduced for all families. These changes will cost just under $2 billion in child care over the next five years. In 2007-08 the government will spend $3 billion on childcare assistance. It is important to highlight that $3 billion, because that is nearly three times the amount that was spent on child care in 1996-97 when we came to office.

It is important to highlight the areas of childcare benefit. From 1 July 2007, the rates of childcare benefit will increase by 10 per cent on top of annual indexation, which is around 3.3 per cent. A family on the maximum rate of $118.40 a week with one child using 40 hours of care per week in a long day care centre will receive just under $135 per week—an increase of just over $16 a week to help them with their childcare costs. Of course, the childcare tax rebate that I talked about covers 30 per cent of out-of-pocket childcare costs up to a maximum of $4,211. From 1 July, the childcare tax rebate will be able to be claimed through Centrelink shortly after the end of the financial year in which the costs are incurred. This is significantly earlier than the current arrangements.

What is important about that is that, as a result of this change, families who incur out-of-pocket costs in 2005-06 together with this year, 2006-07, will receive two rebates in the next financial year. From 2008-09, the childcare tax rebate will be delivered entirely through Centrelink and not through the tax system. Again, this is a wonderful initiative that is designed in the budget by this government to help Australian families. This is an example of how this budget significantly supports the families of Australia.

Another area that I want to touch on in the budget is education. This budget really has delivered an amazing amount of support to our schools and universities. It is all encompassed in a package called Realising Our Potential, a comprehensive package which invests an additional $3½ billion over four years in higher and vocational education and, importantly, in our schools. It is important to highlight that this $3½ billion—regrettably, those on the other side of the House like to lead people astray on this matter—is on top of the $5 billion investment in our new Higher Education Endowment Fund.

I want to talk about some elements of education, because education is an important issue for all of us and it is particularly important for those of us who live in Aston. Firstly, the $5 billion Higher Education Endowment Fund broadly doubles the existing financial assets and the endowments that have currently been accumulated by all of our universities across Australia. The interest and the income that are received from the endowment fund will be distributed annually to universities, and they can use this income for capital works improvements and research facilities.

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