Sophie Scamps (Mackellar, Independent) Share this | Hansard source

Young people today will be the first generation in modern history to be worse off than their parents. It's been nearly a quarter of a century since Australia last undertook broad structural reform of our tax system. Over that time, the warning signs have been clear: productivity growth has slowed through the early decades of the 21st century and Commonwealth spending has continued to rise—just as projected in the very first intergenerational report, back in 2002.

That intergenerational report made clear that, without reform, our tax system would struggle to support the demands of future generations. It warned:

Deterioration of our natural capital would be likely to affect the wellbeing of current and future generations, reduce the economic base and consequently affect intergenerational equity.

It also stated:

Tax reform is … important in terms of providing a robust tax base that will grow in line with the economy.

Then, in 2010, the review of Australia's future tax system, chaired by Dr Ken Henry, laid out another compelling case for change. It warned that our heavy reliance on taxing labour income, transactions and the normal return on capital would ultimately undermine productivity growth and workforce participation—key drivers of future living standards. It identified that a broader, more sustainable tax base, including properly taxing our resources, is essential to meeting the demands of a changing economy. Yet, despite these insights and warning signs over 20 years, we are yet to see the kind of comprehensive reform that matches the scale of the challenges before us.

Today's younger generations face a growing set of economic challenges in the rising cost of education, rising cost-of-living pressures and, of course, lack of affordable housing to rent or buy—such that many young people have given up the hope of ever owning their own home. These burdens are compounded by a tax system that leans heavily on income tax. As our population continues to age and spending continues to grow, including for aged care, health and the NDIS, we will become increasingly reliant on taxing an ever-shrinking proportion of income earners. Former Treasury secretary Ken Henry called this an intergenerational tragedy, and I could not agree more.

The good news is that there are clear opportunities to make meaningful progress to reform Australia's tax system. Many of these opportunities would raise revenue while improving intergenerational equity and long-term sustainability. Reforming the petroleum resource rent tax, for example, could ensure Australians receive a fairer return for the extraction and export of our natural resources. Norway has built an almost $2 trillion sovereign wealth fund from the proceeds of their resource taxation so that future generations can thrive. We, on the other hand, have an almost $1 trillion debt that will burden our future generations for decades to come. Also, here in Australia, the government currently collects four time as much money from student HECS repayments as it does from the petroleum resource rent tax. This is despite these multinational fossil fuel corporations being amongst the most profitable companies in the world. We've got it backwards.

In the area of preventive health, targeted taxes on junk food and gambling could not only reduce harm but also generate revenue to reinvest in public health. What better way to improve the wellbeing and productivity of Australians than to help them live healthy lives? Instead we allow our young people to be the cannon fodder for the profits of predatory multinational gambling and junk food companies at the expense of their health.

In housing, we need to discuss reforming the tax concessions, including the 50 per cent capital gains tax discount and negative gearing, to help give our younger Australians a fairer go when it comes to buying their first home. This does not have to be an all-or-nothing equation. Reforms could be grandfathered or limited to a set number of investment properties.

These are not radical ideas, but we also need to look beyond individual tax reforms. The truth is our inability to deliver fair and future-focused tax policy is a symptom of deeper structural policy dysfunction, which is why I have been advocating for a 'wellbeing of future generations' act and commission.

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