Tim Wilson (Goldstein, Liberal Party) Share this | Hansard source

It is a privilege to be able to stand up and address Appropriation Bill (No. 1) 2017-2018 and, particularly, the case for it—for the substance of it, rather than, as we have unfortunately just heard, a critique indulged with spin that might make people feel good about themselves but does not address the substance. There are a number of measures within this budget that I strongly support. For instance, one of the things that perhaps slipped the headlines but is an extremely important part of the budget is that there is, essentially, a tax cut for Australia's future workforce. In the budget, the government announced that it would not be drawing down from the Future Fund. When it was announced in 2005 by then Treasurer Peter Costello, he said that the Future Fund was established to:

Fund the liabilities—

meaning public sector pensions

we have already incurred but not yet made provision to pay for—

with the intention—

no Government will be able to draw the money out of it until it is sufficient to meet all the unfunded liabilities …

The intention was that the contributions would be made from surpluses from the 2007 budget onwards. What we know, in practice, is that, apart from additional contributions from the sale of Telstra shares, that never occurred. Costello said in his 2007 budget speech:

If you rob capital or earnings from the Future Fund, taxpayers will have to make up the difference. You are passing our bills, our obligations, from our generation to the next. This will limit their future.

He was as right then as that principle and statement are now. In this budget, the coalition has deferred drawing down from the Future Fund from 2020 until 2026. If drawn down earlier, the Future Fund would only be able to cover liabilities for the next 20-odd years. A six-year delay ensures it will mature in fund liabilities for the next century, and amounts to an effective tax cut for over a century, with the primary beneficiaries being those aged less than 20 years old today. So when I hear the pointless and needless rhetoric from the opposition leader about a war against young people, what I am not hearing is his commitment to support the measure by the government to delay drawing down from the Future Fund and that, should he be elected into government at some point in the future, they would not seek to raid the Future Fund. Because we know they have form in the past where they have sought ways to do that—whether through the principle of developing the National Broadband Network as a justification to extract money, or finding measures that may give justification to raid the Future Fund for their political benefit.

There is of course also another important measure within the budget around the instant asset write-off for small businesses. Coming from an electorate with thousands of small businesses, entrepreneurs coming together to create small businesses and invest in the future so that they cannot just take care of themselves and provide goods and services to the market place but also employ people, to create an economy built off the ingenuity and energy of people and to employ others so that they may stand on their own two feet. The continuation of the instant asset write-off is enormously beneficial for the people of Goldstein—and not just the people of Goldstein but for the people they seek to employ from within our community and from without.

Another contentious measure that has raised its head throughout the debate on the budget has been the introduction of a bank levy. I will concede that introducing a bank levy has never been my first preference, but when it comes down to the reality of how banks operate and the capacity for a levy to be introduced to reflect some of the aspects of their enjoyment of guarantees in the past which have lowered the rate at which they are able to borrow capital, particularly in comparison to smaller banks, I do not think it is an outrageous proposition. The banking levy does do something to create a level playing field between larger and smaller banks, though I think there is a case from time to time to look at how the operation of this levy operates. My personal preference is that it would not exist for a long time into the future, particularly because of its contribution towards dealing with issues around deficit and debt reduction.

There have been a lot of arguments on the political left about this budget, and of course they have been using all sorts of perpetual arguments about fairness as a justification for supporting one measure or another, often with heated rhetoric and little substance. As I said, we just heard a large chunk of that in the speech by the member for Rankin. This budget seeks to redress and rebalance some of the issues that face our country, making sure that there is proper investment in things like education and protecting those people who are most vulnerable and can do little to improve their circumstances, particularly by fully funding the National Disability Insurance Scheme and the consummate measures in the Medicare levy.

But this budget is only the beginning, in my opinion. It must be seen as an opportunity to refocus and refresh the discussion around the future of our country, because if you want to protect young people and their interests into the future we do need to have an honest discussion about the budget and an honest discussion about the growth of expenditure and where it is coming from. In the past, governments that have been elected have been able to focus on welfare reform to get people back to work, to privatise assets and introduce revenue into the government to pay down debt. That is not the challenge that we face today, and until we as a country take that issue seriously and understand what is driving our expenditure, not just the nature of debt and how it is created, we will not be able to hand on to future generations the type of country we have inherited. There is a lot of discussion about curbing middle-class welfare and the like, particularly from the opposition. What they invariably mean is reducing assistance to income earning families, which assists them in staying in employment and creating and building their own lives and their own Australian dream of being able to stand as much as possible on their own two feet.

At some point this country needs to have not only a very serious discussion about real growth and where it is coming from and what is driving it and how we as a country are going to deal with the challenges that come both with expenditure by the government of taxpayers' dollars but also a discussion around how we raise revenue. Discussions around revenue are not just about increasing taxes, as some of our opponents would like—it is a discussion about how we rebase the tax system that properly reflects that. What we know is that the real growth in welfare spending since the turn of the 20th century has been in assistance mostly to an ageing population. Since 1999, welfare support for an ageing population has grown from $31.9 billion to about $61.7 billion in 2016 dollars. Similarly, total health expenditure has grown from $28.7 billion to around $71.2 billion—not that all of that cost, I might add, is driven by Australia's ageing population. But, a Productivity Commission report has found that 20 per cent of a person's lifetime health expense is intensely focused at the end of a person's life.

As a society we of course need to assist those people who cannot assist themselves, but it has long been understood that supporting an ageing population will increasingly put more pressure on taxpayers and particularly a diminishing taxpayer base. The trajectory is set because the share of Australians over the age of 65 will increase from around 15 per cent of the population today to nearly 22 per cent by 2054-55. People retiring now around the age of 65 can have up to 30 or 40 years of life ahead of them. Unsurprisingly, they want security, and they should have it, particularly around government policy and programs to make sure that they can retire with both dignity and confidence in their future.

Yet, at the same time, they will receive pensions, aged care, health care and medicines during the most dependent period of their lives, through taxpayer funded support. Concurrently, the private wealth of many retirees is held in superannuation and rarely attracts income tax unless you are over the new refined thresholds that were introduced by this government—that is, unless you are extremely well off. Similarly, many pensioners pay little income tax, as their income barely exceeds the current tax-free thresholds. The 2015 Intergenerational report identifies the challenge that presents, as we have a diminishing number of people who pay tax. It identifies the increasing pressure this will put on presently younger Australians. Currently there are 4½ people of working age for every person over the age of 65. By 2054-55, it will drop to 2.7, and there will be a significant narrowing in the number of taxpayers.

That is why one of this year's most important budget measures is that everyday expenses such as health, education and welfare will be taken from revenue and not debt from 2018-19, and that the government should finally be back in surplus by 2021. The current budget will only stabilise debt. The challenge for all future governments will be to start paying back that debt and ensuring the next generations are incentivised to work.

But, at the heart of it, we have to deal with the problems around the tax system and where revenue is coming from. I spoke of this in my first speech to this parliament: we need a substantial rebasing of the tax system to recognise, firstly, that we operate in an internationally competitive environment. This is the fallacy and the absurdity of our political opponents, who cry foul at the idea that you would reduce tax for companies. We live in a world where capital and labour are mobile. Get real. Recognise that we are going to have an increasing challenge and a diminishing amount of income that can come from company tax, particularly if other countries decide to go down the path of reducing their company tax to attract investment, and with that will go jobs.

Similarly, we need a reduction in personal income tax rates, because in the end, firstly, labour, particularly skilled labour, is now mobile, and people will choose to work partly in the environments where they can seek to enjoy the most return from their effort. But, in addition to that, we know what is actually happening out there in the economy. People, particularly those people who are not on salaries working for other people, face choices. They often will go out of their way to set up company structures and trusts to minimise their tax liabilities. Of course, the response from our political opponents will be simply to dismiss this issue and say, 'Let's get rid of any structure that allows them to do it,' but all they are doing is responding to incentives.

If we want to see a situation where the government raises the revenue it needs, you need a rebasing of the tax system and a consistency across tax rates, whether it is consumption, company or personal taxes, to make sure that everybody is carrying their obligations and that all of the people who are employed out there—and there are thousands of them—as accountants and lawyers to minimise people's tax liabilities go off and find some productive purpose to grow the economy and help businesses to grow their profits and their economic opportunity, not simply to minimise their tax.

There is a very good book that I would recommend to anybody who has not had a chance to read it. I know it probably sounds a bit dull, but it is titled For Good and Evil: The Impact of Taxes on the Course of Civilization. It is by a fellow by the name of Charles Adams, and in it he goes through the history of taxation and how it can lead to the rise and fall of societies, drive incentives within communities and economies, and deliver substantial differences in the trajectory of a nation. That is the challenge that we as a country must face: whether we are going to tax appropriately and focus on the trajectory that we want for our country, which is one that grows and builds opportunity for the future for younger Australians. I particularly note the epilogue of Adams's book, where he talks specifically about the broad themes that can be taken from the role of tax throughout history:

First is the glaring fact that all good tax systems tend to go bad. Unless restrained by the people in some effective way, governments are unable to live with a good working, moderate tax system …

Second, the most challenging problem of our age is whether or not civilization can extricate itself from its own tax self-destructiveness. If we don't address that problem, I believe our children in the next century will …

The destructiveness is not just economic, it endangers more important matters of the human spirit—

which goes to the heart of whether people can stand on their own two feet and enjoy the rewards of their efforts, but also the calling to others to be able to contribute to our society and stand on their own two feet and celebrate their efforts and endeavours. He continues:

Third, the one common denominator of all good tax systems (before they went bad) has been moderation. This principle was riven to us by the ancients as the ideal of the good life and of good government … Aristotle arranged a long list of moral qualities in triads. Virtue was a middle ground between extremes, called vices.

The essential character of what Adams analyses by looking at the whole history of taxation is that it should be simple, it should be consistent and it should be low, because that is the basis on which people will pay it. If people do pay their taxes because they see them as fair and just, as a respectful recognition of their reward and their effort, you will get people doing what they appropriately need to do. Also, they will not be distracted by creating artifices and structures that otherwise seek to advance minimising their tax obligations. But that requires reform and the sort of conversation that unfortunately we cannot have right now, because anything that involves a serious discussion around rebasing the tax system leads to the inevitable cries and shrill responses from those opposite; they cannot and do not understand how you can have a proper discussion around tax and what is in the best interests of this country.

Finally, just to summarise, a number of people have commented on this budget, particularly in relation to what they describe as self-identified conservatives and the problems they have with this budget for one reason or another. I am a liberal, and I am proud to be a liberal and always will be. One of the great follies of why I never describe myself as a conservative, though I do have conservative dimensions, is that when you describe yourself as a conservative you define yourself by what you are against, and that allows others to define the agenda and to simply temper the speed at which they get there. That is why we must always be liberal. (Time expired)

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