Ben Morton (Tangney, Liberal Party) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. This bill implements this government's responsible plan for personal income tax relief by making personal income tax lower, simpler and fairer. It is tax relief that encourages and rewards hardworking Australians and backs businesses to invest and create jobs. Reward for effort, that's what I'm about and that's what this government is about. We want more money in the pockets of those who work hard and apply their effort to make a better life for them and their family. It's a plan that by 2024-25 will see around 94 per cent of taxpayers projected to face a marginal tax rate of 32.5 per cent or less, compared with 63 per cent if we leave the tax system unchanged. This is a seven-year plan and the government is legislating the whole package now to provide certainty—certainty for hardworking taxpayers that they'll be protected from bracket creep into the future, and certainty that a coalition government will also back hardworking taxpayers with lower personal taxation.

Let's not forget this government is not spending—it's taxpayers' own money. This bill is about Australians keeping more of what they have worked hard for and earned themselves—money that can be saved and invested in better living standards, in saving for the future, in achieving things for individuals and their family, like buying a new home or starting or growing a small business and employing Australians. Money is always more productive and better invested in the private economy. Taxpayers always know how to spend their own money better than the government does. This side of politics wants people to keep as much of their hard-earned money as possible.

In making my contribution to this legislation, I'm proud to be part of a government making sure it lives within its means and making sure that it manages taxpayers' money in a disciplined way. This government has kept a tight rein on spending. Government spending is forecast to grow by an average of 1.9 per cent in real terms—half of the four per cent that we inherited from Labor The underlying cash balance is in the best position we've ever seen since the Howard government's final budget. The deficit has halved in the past two years. The budget returns to balance in 2019-20. Since the 2016 election, this government has legislated over $41 billion of budget repair measures.

With the financial leadership of the Treasurer; one of my local constituents, the finance minister; and the Prime Minister, the Australian economy continues to strengthen. Jobs are being created, investment is rising and the budget is strengthening. For the first time in a decade, the government is not borrowing to pay for essential services, with the lowest level of spending growth of any government in the last 50 years. Important programs such as Medicare, PBS medicines, the NDIS, school funding and hospital funding—essentials Australians rely on—are being funded sustainably and not through debt. The government is funding priority nation-building infrastructure that busts congestion, making our roads safer and getting what we produce to the market more efficiently. A balanced budget enables the government to do all of this and provide the responsible tax relief delivered by this bill.

This government recognises that the battle of balancing the budget is not just a challenge for governments. Every household faces that challenge too, and some find it much harder than others. It's even tougher when you haven't had too much of a pay rise in a while. To build a strong economy, it's vital that hardworking Australians are rewarded for their effort by our tax system. People need to feel confident that they can take on additional work, work extra hours and seek promotion, knowing that their extra hard work will be rewarded by extra income—that it doesn't just go to the government in higher taxes.

This bill outlines an affordable plan of income tax relief for hardworking Australians delivered in three steps. Without action, the personal income tax system increasingly will penalise Australians for earning more as they move into higher tax brackets. Over the seven years of this plan, the government will provide tax relief to encourage hardworking Australians and reduce household pressures. There is an immediate and permanent tax relief for low- and middle-income earners. In 2018-19, around 4.4 million Australians will get the full tax relief of $530 per year, and over 10 million taxpayers will get some tax relief. Many of these Australians will be young people leaving university and trades training to enter the workforce for the first time. Right from the start of their career, this permanent tax relief will leave them with more money of their own to invest in their future, for events like moving out of home, saving for a house or car, starting a family and managing their household budget. $530 in tax relief can go into the savings account, pay bills or pay down the mortgage.

The second step of the personal income tax plan locks in this tax relief for low- and middle-income earners and protects middle-income Australians from bracket creep. From 1 July 2018, this government will provide a tax cut of up to $135 per year to around three million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. From 1 July 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year. This will benefit 3.9 million Australians and prevent about 1.8 million from paying the second top marginal tax rate. In addition, the top threshold of the 19 per cent tax bracket will be increased from $37,000 to $41,000, providing a tax cut of to $540 a year. The low income tax offset will be increased from $545 to $645. The extension of the 19 per cent tax bracket, together with the increase to the low income tax offset, will guarantee the benefits of step 1 are permanent.

The third step finalises the government's plan for more Australians to pay less tax by making our tax system much simpler. From 1 July 2024, the government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000 and we'll remove the 37 per cent tax bracket completely. This is fantastic news for the people in my electorate of Tangney. Around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, in 2024-25. This provides certainty for taxpayers. Most will face the same marginal tax rate through their entire working life. Australians will know that they can take on extra hours, do overtime, accept a promotion, start a business, invest in a business or do better for themselves without their reward for hard work being eroded because they move into a higher tax bracket.

This plan for income tax relief absolutely rewards Australians who work hard. Permanent tax relief will fairly leave more Australians' hard-earned income in their own pockets. This government is committed to a tax system that rewards individual effort, a tax system that is internationally competitive and capable of driving stronger investment and stronger growth for our economy. I highlight also the tax cuts already legislated by this government for Australian businesses with a turnover of under $50 million, taking their rate from 30 per cent to 27.5 per cent and eventually to 25 per cent. We remain committed to extending those tax cuts to all businesses. That is relief for around 3.3 million small and medium businesses employing 6.8 million workers and adds to the personal tax relief that is implemented by this bill.

Small businesses that employ so many Australians also benefit from the extension of the $20,000 instant asset write-off—a policy, a commitment, something that is real and tangible—which is very much welcomed by businesses in my electorate. This is for businesses with a turnover of up to $10 million, not the $2 million under Labor's policy. Streamlined GST reporting for about 2.7 million small businesses is saving small businesses time and money so people can get on with running their businesses. Simpler BAS saves small businesses an average of $590 per year.

These measures support economic growth, create opportunity and boost living standards for all Australians. A balanced budget enables the government to provide responsible tax relief and encourage and reward hardworking Australians. It backs businesses to create and invest in jobs. These measures and the personal income tax relief plan reward Australians who work hard. Some of the best news around this budget and the personal income task relief legislated by this bill is the number of jobs and full-time jobs created. ABS data confirms that Australians created a record number of jobs in 2017—415,000 new jobs, the largest number in our country's history. Seventy five per cent of those jobs were full time. One million jobs have been created since the coalition government was elected in 2013, and jobseekers are taking advantage of the 1,100 new jobs created each and every day.

Our strengthening economy, along with the government's action to ensure our welfare system is well targeted, has resulted in welfare dependency for working-age Australians falling to its lowest levels in 25 years. Around 15 per cent of Australia's working-age population are currently receiving some form of welfare payment. This is down from around 25 per cent two decades ago. I'm the first to say that it's important we have a strong safety net to protect all Australians. The system must support those who are most vulnerable and genuinely in need, but working-age welfare must not be taken for granted. A strong economy is the only way to secure the quality social services we need and to pay for our generous welfare system. This government is committed to jobseekers and people who are supported by the safety net, as well as the taxpayers who make sure Australia is able to provide a generous welfare system.

The personal income tax plan implemented by this bill is a very important part of the government's plan for a stronger economy. The coalition government stands for responsible economic management, and we're delivering that for Australia, with lower taxes, a stronger economy, more jobs and essential services, all while the taxpayers' money is being managed in a more disciplined way. This side of the parliament is about responsible budgets and lower taxes. This bill is about making personal income taxes lower, simpler and fairer, because this government is committed to a tax system that rewards effort and promotes opportunity. The personal income tax plan is affordable. This personal income tax plan rewards those Australians. This personal income tax plan delivers for those hardworking, aspirational Australians.

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