Allegra Spender (Wentworth, Independent) | Hansard source

We're here to talk about tax. A lot of people are intimidated by the mention of tax, so let's start with why tax matters. It matters because tax shapes the country we want to be. When I think about why it's great to be an Australian, I often think of my mum's life, because she was a kid who arrived from Italy at the age of 11 with no money, no English and no connections. She finished school at 14 and, because of her own talent, energy and luck, she was able to create a great life for herself and her family.

When I think about the country we want Australia to be, I think we want it to be a country that encourages innovation, creativity and entrepreneurialism, a place where every individual can boldly bring their best talents to the community and to the world. But we also want it to be a country where every Australian can create a good life for themselves and their families, whatever their background, whatever job they do. We want it to be a country where you're not on your own when things go wrong. Our tax system needs to support these goals: entrepreneurialism, fairness, a good life and compassion. But right now it isn't, and that is why we need to talk about tax.

The topic today is the stage 3 reforms that the government has made changes to and the bills for which, the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 and the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024, are now before the House. I acknowledge that right now many people across the country, including in my community, are experiencing enormous financial strain. These are some of the hardest times they've ever faced, and I see that it is appropriate that government does whatever it can to ease their burden right now. I acknowledge that the stage 3 changes that the government is going to put through will help a lot of families who need help right now, so let's understand not only what the government is putting through but also what the choices and costs are of what they have decided to reject.

Firstly, as I acknowledged, this is going to help a lot of people, a lot of working families experiencing financial strain. Secondly, I acknowledge that the changes to stage 3 will improve labour participation, and that is really important. I think they expect that there are going to be about 930,000 more hours per week that people will be more working in the economy. That is actually a really positive difference, particularly in the lives of women.

I think that this is a package that has support from a broad range of the community, but we are also giving things up by making these changes to stage 3, and I do not think these have been acknowledged appropriately. Firstly, we are giving up a lot of benefits in terms of simplifying the tax system—in particular, instead of having four different brackets, having one bracket from $45,000 to $200,000, which was the original stage 3. That would ensure that, for a lot of people, the desire to plan taxes and to use many company structures or other things to try to minimise their taxes was no longer attractive. That would actually add to the integrity of our tax system. It would make it simpler, make it easier to administer and make it less likely that people are going to use other complicated structures to avoid taxes. Secondly, the original stage 3 addressed bracket creep and incentives that the revised government proposal doesn't. While I support the opportunity that the government's proposal has made to increase labour participation, particularly at the lower income scales of the country, this also misses out on the opportunity to do it at the higher income scales and address bracket creep at the higher income scales, which I think is absolutely appropriate as well.

I supported the original stage 3, and when I came to considering whether I'd support the government's changes, the thing I thought was most important was going back to the community, because I knew that the community was going to be significantly affected by these changes and I wanted to know what they thought. In Wentworth, what we found through extensive consultation with people on the street, through emails and also through a survey, which ended up with over 1,700 responses, was that 70 per cent of the community supported the changes and that there was strong support, particularly among older parts of the community. There were many people who said they would benefit enormously from these changes. There were also people who said, 'You know what? I would've been better off under the original package, but I am supportive of the changes because I believe that these are the right ones.' As one person said to me, 'I will pay more tax, but I do not have a problem with that. I think we need to maintain a fairer progressive tax system.' That was something that came across from many members of the Wentworth community.

However, there are some people in Wentworth and across the country who are significantly negatively affected by these changes and have real concerns about them. One person wrote to me and said: 'It's going to have a big impact on my family. We are both in our 30s, two kids full time in day care, huge mortgage, cost of living increasing. We were relying on this cut, and now half of it has been stripped away.' I think it is really important to raise that and to talk about these people, because I do not think we've been having the conversation about the people who are affected in this case.

I started my speech talking about the idea of fairness and everybody being able to build a good life. One group I really think about a lot is younger people who don't have family backing to buy a house or get themselves set up. All they've got is the sweat of their brow, what they can build themselves. I admire those people who can really build up and create a different life to the one they were brought up with. This is what I think a lot of the Australian dream is really based on. But, in a country where we rely so heavily on income taxes and on taxing working people, as we do currently, it means that those people, if they don't have financial backing, can't get ahead in the way that previous Australian generations could. I think of this group of young people in their 30s. Maybe they don't have family who can help them with a mortgage. Maybe they don't have family who can help them with a deposit. They've started out and built something up. They were relying on the government to do what they said they were going to do and deliver a tax package, and that's what they expected in terms of their family budgeting.

As we think through this, we need to reflect on what else needs to change on tax. Based on the feedback from Wentworth and on broader considerations, I am going to support this package, but what I'm going to say to the House—which I've said publicly before—is that this mustn't be the end. We have a flawed tax system, and this must be the parliament that starts to address it. At the next election, we need to see ambitious tax reform going onto the agenda. I think what we have with the original stage 3 and right now is a missed opportunity. When I look at the tax system, the question I ask is not the academic one of, 'How do we optimise this from an economist's point of view?' What I really care about is, 'What is this going to do for Australian people?'

There are three massive challenges we are facing as a country that our current tax system does not address: intergenerational equity and housing; growth and productivity; and how we address climate action. Our tax system currently does not address these. While the changes to stage 3 and the other changes that the government has made will make some impact on the economy, they do not fundamentally affect or address the major issues facing our economy, and that is why we need broader tax reform.

I will give you a couple of perspectives on intergenerational equity. If you look at what is happening to younger generations, there is a sense—as there was from a young man who came to see me—that you can do everything right, you can study hard, you can get a big HECS debt, you can get a good job, but you still don't know if you'll ever be able to afford a home. That's the feeling on the street, but that's also represented in the numbers, where you see that a household that is headed by somebody over the age of 65 has had an increase in wealth by around 50 per cent in the last 10 or so years, but a household headed by someone under the age of 35 has had pretty much no increase in wealth.

So we've seen a disparity emerging between the wealth and prospects of different generations in our society. I do not support that, and I think it's why we need to look at tax, because tax influences that. Our capital gains tax system, our negative gearing tax system and our stamp duty all influence the housing market in different forms, and the housing market has been one of the biggest ways that younger people have been kept out of building the wealth and the security that previous generations have. For example, regarding stamp duty, the New South Wales Treasury's own estimates said that 350,000 more people would be owning their own home if we could move from stamp duty into land tax. This is where reform is urgently needed across our system.

The second major issue facing our economy is growth. Australia has low productivity growth, and so do many other economies. Why do we care about productivity growth? Because it drives our ability to pay for the services we want. If we had the long-term productivity growth that we had in the past we would have an estimated $50 billion more in our budget right now to supply and support things that are important or to give back to the people who earn that money, the taxpayers. But we don't have that strong productivity growth, and my concern is that we also don't have the policy settings to drive that.

One of the big policy settings we need to be aware of is the tax system. We have a corporate tax system where companies with revenue of over $50 million are now paying 30 per cent tax. This is way out of step with the OECD, where the average is 24.5 per cent. We cannot pretend in this country, one of the most open and trading countries of the world, that our tax system and the fact that we have an uncompetitive tax system for medium-size businesses does not affect the attractiveness of Australia as a destination for investment. Right now we are seeing Australia being a capital exporter rather than a capital importer .We're also seeing Australia with lower R&D investment and dropping foreign direct investment. These are all indicators that not only do we have sluggish productivity but also we're not making the changes we need to in order to grow our productivity in the future, and that is problematic for our system.

Finally, on climate, I think we're in a situation where we know we need to make changes and we're starting to make those changes to address the climate catastrophe that we have in front of us. But the ways that we're doing this, because we will not deal with the tax system, are some of the most expensive ways that we could possibly do it. We are wasting money because we won't face up to the fact that our tax system is not equipped to deal with the climate emergency we're facing. It means the investments we make cost us more money than they otherwise would. That is why we need to also reform our tax system in relation to climate.

So, when I look at the stage 3 change and I look at the other changes the government has put through—which include changes to superannuation, PRRT, changes to FBT on electric vehicles and other pieces—there are some parts I agree with, some parts I disagree with and some bits on the margin. I know tax change is difficult, and I accept that many a career has been won or lost on the basis of tax changes. But my point is that we need to be more ambitious, and we across the parliament have responsibility both to not wedge each other on these issues—and I'm afraid I haven't seen that yet—and to make sure we face up to the extreme issues the country is facing and have the guts to deal with them.

A major question I need to address in this speech is around integrity and broken promises, because this is clearly a broken promise. My electorate, probably more than any other, feels that because of the incomes of people in my electorate. I have three issues with what the government has done in this regard. I recognise that governments will need to change when circumstances change. I think that is appropriate. However, from a timing point of view, if the government had been contemplating a change like this they should have done as much as possible to do it as early as possible so that the people who are affected—the people who were budgeting, the people who got into rentals and maybe made decisions about houses based on what they expected their income to be—knew what they were getting into. So, I think that is unacceptable.

The second piece I'm really concerned about is the lack of acknowledgement by the government that some people really lost out and some people took the government at their word. The government has spoken a lot about the difference it's making to other people in the country, and I support that, and that is why I'm voting for this. But they should also acknowledge the people who have been affected negatively by this change in taxes who took the government at its word and were told that they were able to trust the government on this.

Finally, my question to the government is whether they should have made the commitment to stage 3 in the first place, given that they have now said they're not interested in further changes that would support the original stage 3 package. If they're not willing to support further changes that would address what stage 3 was trying to do, that gives us a real sense that they weren't really backing it in the first place, and I have real concern about that. This is the moment to deal with tax reform. We must do it coming into the next election, and this is a challenge across the parliament.

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