Jim Chalmers (Rankin, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

I move opposition amendments (1) and (2) on sheet 2, as circulated in my name:

(1)    Schedule 2, item 2, page 5 (starting at line 11), omit the item, substitute:

2 Clause 1 of Part I of Schedule 7 (table dealing with tax rates for resident taxpayers for the 2024-25 year of income or a later year of income)

Repeal the table, substitute:

(2)    Schedule 2, item 4, page 6 (starting at line 8), omit the item, substitute:

4 Clause 1 of Part III of Schedule 7 (table dealing with tax rates for working holiday makers for the 2024-25 year of income or a later year of income)

Repeal the table, substitute:

What the government has just done is vote against a tax cut for every Australian worker this term. This so-called party of lower taxes just came over to this side of the House to vote with the Greens to prevent the bringing forward of part of stage 2, which would have given every Australian worker a tax cut from this week. At a time when the economy is floundering and middle Australia is struggling, they voted with the Greens against bringing forward their own tax cut. They say it's a great idea in 2022. They say it's a horrible idea in 2019, when the economy of 2019 has slowed so dramatically on their watch and needs so much help right now from those opposite and isn't getting it.

What the government is doing here more broadly is holding hostage to a tax cut in five years time the tax relief that the economy needs now to try to get the place moving again. And so what this second set of amendments does is attempt to pull out of the bill stage 3of the government's tax cuts. The reason we are seeking to do that and seeking the support of the parliament to do that is that, from a government which has got all of the big economic calls wrong and has routinely and repeatedly got the economy wrong, we've now got this floundering economy. They want us to believe that they know what the show will look like in five years time. They want us to believe that they know what the economy will look like and what the budget will look like in five years time. They don't know what the place will look like in five minutes time the way that they are going. So this amendment seeks to bring out that part of the income tax package—to bring out stage 3. They can consider it at some future point, but it shouldn't get in the way of us as a parliament passing stages 1 and 2 this week and bringing forward part of stage 2, as the member for Lalor points out.

If those opposite don't want to take our word for what's going on with stage 3 of the tax cut, I draw the House's attention to the detailed analysis that was done by the Grattan Institute. If you read the Grattan Institute analysis, you will see they say that stages 1 and 2 are good ideas, that they give the economy a boost and give people a bit of tax relief—that's important. The Grattan Institute are right to point that out. But what they say about stage 3 is that stage 3 of the tax plan needlessly reduces fiscal flexibility. That is an important point. Stage 3 mainly benefits high-income earners—a point made by the Grattan Institute. The other point they made is that it will make Australia's income tax system less progressive. So what the Grattan Institute says about stage 3—and this really accords with our own thinking about stage 3 and why we are attempting to pull it out of the bill which will pass the House of Representatives tonight—is:

Locking in such substantial tax cuts in 2024-25 carries plenty of downside risk in Australia's current highly uncertain economic environment. The economy is softening, the budget position is uncertain, and calls for the Government to use fiscal policy to stimulate the economy are growing. Tax cuts in 2024-25 are likely to come well after stimulus is needed.

We couldn't have put it better ourselves. That is precisely why we need to pull stage 3 out of this bill.

As everybody here knows, we will enthusiastically support stage 1 and stage 2. We think part of stage 2 should come forward. The government voted against that. Remarkably, the government of lower taxes voted against a tax cut a few moments ago. We need to get stages 1 and 2 through this parliament this week. Stage 3 doesn't come in until 261 weeks from now. There's absolutely no reason for the parliament to pass those tax cuts that come in in five years time. What we're seeking to do is to come to a reasonable and responsible conclusion, that it's not the right thing to do to commit $95 billion five years out when those opposite don't have a clue about what the economy or the budget will look like at that point.

That's the core of our amendment that we're moving now. We're seeking the support of the parliament. We'll seek it here. We'll seek it in the Senate as well after tonight, because it is important that we do the right and responsible thing: stimulus into the economy now, stages 1 and part of stage 2. Stage 3 can be debated at a future point, at some point in the next five years, in the next 261 weeks, before this comes in. They should stop holding tax cuts now hostage for tax cuts in five years time.

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