Scott Morrison (Cook, Liberal Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008. However, in doing so, I express my total dismay at the sheer front of this government in making the claims they have made in this House in relation to the bill—and we just heard a few of them from the previous speaker, the member for Moreton. The Treasurer made reference to the bill, when introducing it, as containing ‘our tax cuts’ and said that these tax cuts were reforms that were long championed by Labor. As I sat in this place and heard these words, I had to do a double take. I looked up to make sure it was actually the Treasurer who was making these statements and not the member for Higgins. But a glance was all I needed to know that, sadly, this was not the member for Higgins but rather the new Treasurer. When it comes to comparisons—as the previous speaker has sought to make—between the current Treasurer and the member for Higgins, there is no comparison. It is chalk and cheese when it comes to those who have credentials in managing the Australian economy and those who claim to be managing it now.

What I found was that I had become another terrible victim in this place of the Ruddspeak that has taken control of this government: Labor spending good; coalition spending bad. As we see the members opposite come in here and trot out a reconstruction of the last 11½ years of economic management in this country, I am bewildered. I am sure that after the election they delved deep into the statistical archives to try and find something—anything—to construct an argument around. But I know the Australian people are seeing right through this, because they experienced the last 11½ years of economic management and they know what it was like.

This government have become so convinced of their ability to hypnotise the Australian public that they have embarked on a deliberate campaign to misrepresent the facts—and themselves in the process—cynically believing that just by saying it they can make it true. There is no better example than the representations made about this bill by the Treasurer. The bigger the lie, the more they believe they can pass it off on the Australian public.

Their most outrageous claim is in relation to the state of the economy at the change of government. On 24 November, the Australian economy was in tiptop shape. The Australian people know it, and Labor knows it. The Australian people know that in the past 11½ years they have had the strongest economic management on record. They may well have agreed with Labor’s symbolism on climate change. They may have liked the Kevin07 T-shirts, and their fears were well and truly exploited by a $30 million union-funded campaign. But one puppy they never bought from Labor was that Labor could better manage our economy. The puppy they tried to sell the Australian public on this front was well and truly a dog, and it barks.

The Treasurer’s performance in this House makes it clear that the Australian public were right on the money when it came to judging the respective economic credentials of the two parties. Australia has been the miracle economy, the ‘wonder down under’. If we are going to talk about statistics, our economy has grown to more than $1,000 billion on the coalition’s watch; more than two million extra people have got jobs since 1996—you have working families by creating jobs; and unemployment has fallen to 4.1 per cent compared to the eight per cent plus it was when the coalition government took office.

Labour force participation, which this bill is designed to address, is almost at two-thirds, at 65 per cent, which is the highest level on record. Long-term unemployment has fallen from 26.7 per cent—that was 197,900 Australians—when the coalition took office to just 14.1 per cent, or 66,700 Australians. That is a reduction of 131,200 long-term unemployed people in this country. That is something that I am sure the member for Higgins is very proud to put on his CV.

Growth has been consistently strong, well above OECD averages. Apprentices in training numbered 397,400, which is 242,000 more than in 1996. The budget has been restored to surplus. We have heard many things in this place about the government’s great fiscal credentials, but, when the member for Higgins and the former member for Bennelong became Treasurer and Prime Minister, the deficit that they inherited was two per cent of GDP—not an average of 1½ per cent surplus for the previous three years but two per cent deficit of GDP and more than $10 billion. After that, they converted that into 10 successive surplus budgets. The Prime Minister likes to think that achieving a 1½ per cent of GDP surplus—after we have done that consistently for the last three years and run surplus budgets for 10 years—is some sort of herculean achievement.

A $59.6 billion Future Fund now exists, as does a $6 billion Higher Education Endowment Fund. We have had the single largest superannuation reforms in our nation’s history. Super fund assets have grown from around $200 billion when the coalition took office in 1996 to almost $1 trillion. Real wages increased by 21.5 per cent over the 11½ years of the Howard government, compared to a decline under the previous Labor government of 1.8 per cent. And, most significantly, $96 billion of government debt has been repaid. We moved into a position of the strange economic term, which was completely unknown in Labor’s time, of net negative debt. That was from a position of 26.5 per cent of GDP—that is what our $96 billion worth of debt was—to minus 4.1 per cent of GDP, at a time when the average level of debt by OECD countries was at 43.5 per cent and rising. This measure alone freed up $8.8 billion every year in interest payments that no longer had to be made. Yet the Treasurer has the front to come into this place and pretend that he is in the midst of an economic crisis.

The challenge the Treasurer faces is very simple: how do you run a strong economy? By his performances in this place, he has shown that he is clearly not up to it. The government’s carping and complaining about the strength of our economy—because that is what they are complaining about: the economy is too strong—illustrates that they simply do not have the stomach for managing the heat of a $1.1 trillion economy. If only the coalition government had inherited the problems that this government now claim to have inherited! The first thing the new Treasurer did not have to do when he became Treasurer was tour the world’s financial capitals to shore up our position with our nation’s bankers in relation to that $96 billion worth of debt. Instead, he had to decide where to invest the accumulated surplus. Instead of having to wrestle with unemployment at over eight per cent, he has to contend with a skills shortage caused by a booming economy and a 4.1 per cent rate of unemployment.

The government like to talk about inflation. They should know. When they were last in government, inflation averaged 5.6 per cent, compared to an average during the Howard-Costello years of just 2.5 per cent. The Rudd government fail to understand that their own actions in talking up the challenges of inflation most recently are contributing possibly more to inflationary pressures than anything anyone else is doing. Last month, in the February edition of the Reserve Bank Bulletin, the Reserve Bank drew attention to high inflationary expectations. They noted that, since the Rudd Labor government was elected, inflationary expectations had risen from 3.8 per cent to 4.3 per cent. No wonder Unions New South Wales has most recently lodged a claim in the state Industrial Relations Commission in New South Wales for a 4½ per cent pay increase. I have no idea how the government can pretend they will be able to rein in the unions, after owing them such a heavy debt, to ensure that they place no further pressure on wages and therefore inflation in this country.

While we are talking about keeping control of government expenditure, it is worth noting that under the coalition government there were more than 120,000 fewer federal government employees than when we first took office. This compares to an increase of more than 200,000 state sector employees over the same period in Labor states. And of course there is the steady rise in state debt, forecast to hit $80.5 billion in 2010-11.

Yet probably the most outrageous statement by the government, and more specifically by the Treasurer in his introduction to this bill, is that Labor is the long-term champion of tax reform. I note that the Assistant Treasurer made a reference in this place yesterday to Paris Hilton. He said, in reference to some other matter, that someone was behaving like Paris Hilton claiming to be a champion of public modesty. I think that analysis could be equally applied to the Treasurer when he claims to be a champion of tax reform. The government are content to campaign on their slogans and their jingles—I am half surprised that the government have not brought out a new blue armband in the nature of their long struggle on tax reform. It could have ‘Tax Titans’ on it, I think. It would go well with the T-shirt, and it would go well with all the jingoism to celebrate their long struggle on tax reform. But they are a government that have no understanding of the work or real effort required for real tax reform—or any reform, for that matter. They have simply not done the hard yards to claim the title of ‘combatant’ on tax reform, let alone ‘champion’. Labor have never been on the field of tax reform. They would be hard pressed to find where the field was when it came to tax reform, let alone take it.

Let us remember: this is a Labor Party that opposed the single greatest tax reform in our country’s history, in 1998. In 2001 they gave us rollback. In 2004 at the election they gave us nothing—nothing at all. And they followed it up by opposing tax cuts in 2005. In 2007 what they have given us and what we see before this place today is our own tax policy, having been bludgeoned into action by the finest Treasurer this country has ever seen. And this is what Labor call champion tax reform. Mind you, we must never forget that they are the same party of the l-a-w tax cuts—the ‘now you see them, now you don’t’ tax cuts.

I have no doubt there has been much squirming by those opposite to try and wriggle out of this commitment that they were forced into making to the Australian public by the former Treasurer. The unions wanted the tax cuts scrapped and put pressure on them to be scrapped. And to this extent I must commend the government for resisting at least that pressure. But I am sure there will be a price to pay down the track. If this is what they call championing tax reform, I would like to see what they call something they actually care about—because they are complete agnostics on the issue of tax reform in this country. Whatever pretensions are made in this place, they simply do not believe them. They have never in living memory taken an original proposal for tax reform to the Australian people. They have always believed that taxpayers’ money is better off in their hands on the treasury bench than in the hands of ordinary mums and dads and their families going about their lives right across Australia—that is, those who earn it. Every time the subject of tax reform arises, they run for cover. They have to be dragged kicking and screaming to the table, as they have been on this occasion.

This is what real tax reform looks like. In 1996 the top marginal rate was 47c in the dollar and it kicked in at around $50,000, or 1½ times average male weekly earnings. Today it kicks in at $150,000, or at 2.8 times average male weekly earnings, and you only pay 45c in the dollar. In 1996 70 per cent of taxpayers paid more than 40c in the dollar. Today only 20 per cent of taxpayers pay this amount. Furthermore, 45 per cent of taxpayers today face a marginal tax rate of 15 per cent or less, 85 per cent of taxpayers face a marginal tax rate of 30 per cent or less and 98 per cent of taxpayers face a marginal tax rate of 35 per cent or less. That is what real tax reform is. The product of these initiatives is that Australia today is a low-tax country compared to the standards of the developed world. I refer to the report that was released today, entitled Taxing wages 2006-07, by the OECD. The first sentence of the press release by the OECD says:

Families with children have paid less in tax as a percentage of their income in recent years in Australia ... thanks to family-friendly tax policies ...

That is the headline. That is what is in the first stanza of that statement from the OECD. And the Taxing wages document goes on to talk about their indicator of the tax wedge, which is the difference between labour cost to the employer and the net take-home pay for the employee including any cash benefits from the government or welfare programs. Where did Australia rank on the tax wedge? It ranked fifth lowest out of all the OECD countries. That is the product of genuine tax reform in this country. That is what happens when you introduce tax cuts in five successive budgets and implement the single largest reform of our taxation system, as was done by the Howard government in 1998 and opposed by Labor.

But that is not all. It was the coalition that introduced the senior Australians tax offset. It was the coalition that abolished taxation on superannuation payouts. It was the coalition that reduced the rate of corporate tax from 36 per cent to 30 per cent. It was also the coalition that reduced the tax on capital gains for individuals by 50 per cent as well as reducing the excise on petrol and diesel. And that is just to name a few. This is what you have to do on this side of the House to qualify as a champion of tax reform in this country. This is what being a true economic conservative is all about. It is not about words.

On this occasion the Treasurer has brought a watered-down version of our own policy into this House, claiming to be a champion of tax reform. The Treasurer is clearly delusional—as the member for Wentworth said—when he claims status as the dread champion of tax reform. This is a nonsense and an insult to every serious person who has ever picked up a pen in anger at the Australian taxation system. When it comes to taxation reform we have Winnie the Pooh for a Treasurer, and I do not think Winnie would be terribly flattered by the comparison. The fear I have is not just the Treasurer’s lack of sincerity on this matter but rather that this is the last time that we will see any serious measures to deal with income taxation from this government or taxation more generally. The coalition are the substantive authors of what we have before us today. The former Treasurer announced his bold, long fought for plan on 15 October 2007. The then Leader of the Opposition found himself the Old Mother Hubbard who went to Labor’s tax policy cupboard and—as the member for Wentworth pointed out—found that the cupboard was bare. The Treasurer had announced the tax plan. The shadow Treasurer went with his leader and said: ‘What have we got after 11½ years of opposition? What can we announce? We certainly have not announced anything of any merit in any previous elections.’ And he has come back and found that the cupboard is bare. After 11½ years in opposition the now government had failed to develop a tax policy. So what did they do? They said ‘me too’ to the policy.

In the Canberra Times on 20 October 2007 Tim Colebatch commented:

It is not surprising Labor tried to match them in some way. That it should choose to simply copy them shows an alarming unwillingness to think for itself, in an election campaign in which its capacity to govern is a crucial issue.

That is what we have in this bill. The current Treasurer would not know where to begin to develop policy like the one that we have outlined in this bill. Where will the inspiration come from to take on the fiscal irresponsibility of state Labor governments as their debt balloons to $80 billion? Certainly not from those opposite. They have neither the vision nor the heart or stomach for it. Who on the government side will take on the issues of stamp duty, land tax, payroll tax and the myriad other inefficient taxes and charges that are administered by state governments, these same state governments who have been in a sea of money yet find themselves impotent to address the challenges in the health, transport and education systems? Ratepayers and taxpayers across the country have every right to ask of every Labor state government in this country: where has all the money gone? The Prime Minister likes to paint himself as a new father of a new federation. However, the substance of this seems only to represent Daddy Warbucks, the sugar daddy to the Labor states, compounding and indulging their incompetence, with federal taxes now increasingly footing their bills.

While the new measures must be supported, it is disappointing that the Australian public is being short-changed by this bill. The coalition had a bolder vision for the next step in reducing personal income taxes. I hope that it will not be a long time between drinks for the Australian public before we see the types of measures in this bill seriously considered again by an Australian government.

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