Tim Watts (Gellibrand, Australian Labor Party) Share this | Hansard source

That is not true. Your budget papers show that the tax take is up under this government. It is up under this government, Member for Kooyong.

Their hypocrisy even stunned members of their own party. When news of the proposed deficit tax first broke, even Liberal MPs could not believe that the Abbott government were going back on their promise not to increase taxes. Liberal MPs described the introduction of the tax to The Sydney Morning Herald as a 'shock'. It was unimaginable to members of their own party that they would go back on such a fundamental commitment. These Liberal MPs pointed out the madness of such a move. They told the press—anonymously at first:

If it's wrong … why would you scare the electorate? And if it's right, then it's even worse because we said before the election there'd be no new taxes.

It is extraordinary to think that there are some sitting opposite who are more honest when they are talking off the record than they are when they are speaking publicly.

It was not long before some Liberal MPs were willing to put their name to their ideological distress. The member for Brisbane condemned this bill as 'a breach of a promise' that will have 'devastating impacts on the economy'. The member for Leichhardt signalled that he had 'very major issues' with this bill. This was the natural reaction of a party that were coming to terms with the fact that they were about to break one of their most fundamental promises. The backflip on tax was then widely condemned by everyone who was previously in the Abbott opposition's corner. The Chief Operating Officer of the Australian Chamber of Commerce and Industry, John Osborn, blasted the policy, stating:

Any income tax—

increase—

would be an unwelcome surprise from a new government that promised no new taxes and no surprises before the election.

The President of the Victorian Young Liberals appeared on Sky News condemning the move, brandishing a placard with the government's 'Plan to lower taxes' in disgust. It was probably not a great career move, but good on him. Even Peter Costello, the name lionised by some of those opposite when it comes to the economy, pointedly warned the government. He warned of the political fallout of breaking tax promises. He said:

If the government put such a levy in place, then long after this budget has been forgotten, the press and the opposition would still be attacking the prime minister over credibility.

We all know that we ought to listen to Mr Costello on this point, as he has long experience in attacking the current Prime Minister's economic credibility. Mr Costello further included his own increase in taxes as a breach of faith with the Australian people. He said:

In 1996 I announced a surcharge on superannuation for higher income earners.

…   …   …

The surcharge was one of the worst things I ever did.

Both MPs and the wider Liberal community knew what this Abbott government seemed intent upon denying—that you cannot define your political platform on the basis of lower taxes, you cannot say that lower taxes are your whole reason for being in politics, and then in your first budget introduce a great big new tax.

To make matters worse, the government cannot even be upfront about the fact that they are breaking their election promises even today. First we heard that this bill was not a broken promise because a levy was not a tax. We then heard that this bill would not be a broken promise because the tax increase would not be permanent. We then heard the Treasurer claiming that the last two years were all just some kind of a mass delusion and in fact the opposition had never promised that they would not increase taxes. In the face of literally dozens of statements to the contrary by the Prime Minister, this was surely the longest bow since Agincourt.

All the while, as the Treasurer and the Prime Minister stretched the boundaries of the space-time continuum to try to construct a universe in which they had not spent the last three years lying their way into government, the discomfort from those opposite, who all remember the promises that they personally made to their constituents in the last election campaign, continued to grow. You can just see them listening to the Treasurer on the radio telling the Australian people that they had not really promised that they would lower taxes, digging himself further into a hole that he had created, and shouting in frustration at the wireless, 'Dig up, Stupid!' The smartest thing that the Prime Minister and the Treasurer could do at this point would be to, finally, level with the Australian people and just tell them straight out that they are breaking their election promises and then try to start rebuilding their credibility with the Australian people from scratch. It is time to give the Australian public a bit of respect and stop treating them like mugs.

Unfortunately, the bill before the House is just more of the same dissembling.

The name of this bill seems to have been written in weaselese. Instead of simply calling this bill the 'income tax increase bill' or, even more accurately, the 'bill to break the Prime Minister's promise not to increase income tax', the government has sought to muddy the waters by naming this bill the temporary budget repair levy bill. Now the title of this bill was at least worth a laugh for those of us on this side of the House as we digested the government's latest set of linguistic contortions to try to wriggle their way out of their election promises. But on further reflection, I got the feeling that I had laughed at the name of this bill before seeing it on the Notice Paper. It gave me a sense of deja vu; I had heard this joke before. After a bit of thinking, I realised that I had seen this bill before on an episode of The Simpsons. The fans of the show in the chamber will know it is the one where Lisa becomes the President of the United States and is trying to work out how to describe her own tax hike. She turns to her trusty political advisor, Milhouse—just as you can imagine the Prime Minister turning to Senator Cormann during budget preparations—and says:

… I'll have to raise taxes, but in my speech I'd like to avoid calling it a, "painful emergency tax".

After a bit of strategising, Milhouse suggests:

Well, if you just want to out-and-out lie we could call it a, "temporary refund adjustment".

A temporary refund adjustment! Surely this was the inspiration for the strategic geniuses in the Liberal Party who thought that they could get away with describing an increase in income taxation as a 'temporary budget repair levy'. Sophistry of this kind worked briefly in the fantasy world of Springfield—it worked on Lenny and Carl in Moe's Tavern—but unfortunately for those opposite, in the real world everything is not 'coming up Milhouse' for the Prime Minister.

Australians have seen through the Prime Minister's weasel words and they are angry. They are angry about being lied to before the last federal election and they are angry about being taking for mugs after the election. They are also angry because this budget slugs the most vulnerable in our community the hardest. The $80 billion in cuts to education and health; the attack on Medicare through the GP tax and the prescriptions tax; the pension cuts; the Newstart changes—the 'learn, earn or starve' changes; the Americanisation of our higher education system; the family tax benefit changes; the increase to the petrol tax: cumulatively these changes will hit the most vulnerable in our community the hardest.

This bill is supposed to be the government's fig leaf that shows that it is not just going after the vulnerable but that high-income earners are also contributing. This is, to put it bluntly, nonsense. NATSEM has done modelling that shows that among families with children, those in the most affluent fifth of our society see a 0.3 per cent reduction in their disposable incomes as a result of this budget, while those in the poorest fifth see a five per cent reduction in disposable incomes. Instead of sharing the burden equally, this is a budget that redistributes income from the poor to the rich.

I can speak personally on this matter. As the Prime Minister and Treasurer have repeatedly stated, this increase in income tax will apply to the federal parliamentarians in this chamber. Well I dare anyone in this room, earning close to $200,000 a year and being asked to pay at most an additional few thousand dollars in tax each year, to look a 25-year-old with no source of income as a result of this budget in the eye and tell them that we are sharing the burden equally. Are any of us facing homelessness as a result of this budget? Are any of us reconsidering our future career options as a result of the changes to higher education? Are any of us now looking at our future with alarm as the pension that we had planned on in our retirement decreases over time, and cuts to pensioner concessions means substantial increases to our cost of living?

To add insult to injury, this last-minute PR exercise is a botched job too. As already indicated by other speakers on this side in the House in this debate, Labor has serious concerns about the shabby and rushed way this tax has been put together, particularly in relation to the fringe benefits regime. It is a quirk of our tax system that the fringe benefits tax year and the income tax year run to different schedules. This means any changes to the tax system should be structured so that taxpayers cannot avoid paying higher taxes by cleverly reconfiguring their affairs. Unfortunately, the rushed nature of this deficit tax means that Treasury has not been able to put these precautions into the legislation as I am sure they would have liked to have done given more time. What this means is that wealthier Australians will have a full year to shift their assets into fringe benefits so as to avoid the increase in tax. We will see a large amount of Australians who earn over $180,000 a year using the difference in the calendars to avoid paying this debt levy. And we will see a large number of Australians earning under $180,000 who will be whacked by their employers.

So once again, under the Abbott government it may be the Rolls Royces pulling into the work car spots that are better off than the battered old Toyotas. It is the fitting outcome of a budget process designed to make ordinary Australians suffer. It is a process that confected a 'budget emergency' when no budget emergency existed. It is a process that claimed to fix this 'budget emergency' by breaking one of the Abbott opposition's most fundamental promises to the electorate: not to raise taxes. Most significantly, this budget process is one that will hurt ordinary Australians.

We need to take a big picture approach to reducing our budget deficit in a way that does not overly harm ordinary Australians. We need to ensure that taxes and spending decisions work together to protect our economic prosperity while giving Australians the fair and equal society that they want to live in. What we do not need is a budget that hits vulnerable Australians the hardest; a budget that fundamentally attacks the tenets of Australian society, including a fair go, exemplified in policies such as universal health care and a quality, accessible education; or a budget that thinks that temporary taxes on the super-rich are enough to justify such an assault on the Australian way of life. The Abbott government's attack on Australian values should be condemned for the sham that it is. Australians did not vote for this and they do not want it.

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