Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

How income tax is applied in Australia ultimately shapes our society, our economy, where we live, how we live and even our family composition. Over the decades, incentives for living in regional Australia have diminished. Zone tax offsets were first introduced in 1945 to compensate for climatic hardships, isolation and higher living costs in rural Australia. The tax offset amount hasn't increased since 1993-94. That's over 30 years with absolutely no indexation. Current annual offset rates are just $338 for zone A and $57 for zone B. The relative value has eroded over time and now has a minimal effect on migration or residential decisions. We have huge regional workforce shortages despite the regions being the best place to raise families.

Advocates are calling for fresh incentives to reinvigorate regional Australia. Westpac's CEO proposed tax-free zones or indexed offsets to attract teachers and nurses to regional Australia. Mark Bouris from Yellow Brick Road suggested revamped zonal incentives—for example, a rebate of $1,500 or $2,000 for regional relocation. This would provide greater equity. Regional Australians do not get a fair share of government spending; in health spending alone, there is a gap of over $8 billion. Meaningful tax incentives for regional Australians will help draw people to the regions and will go some way to addressing this inequity.

We have a system that penalises older Australians who are entitled to the pension but who would like to remain in the workforce. National Seniors Australia, with Deloitte modelling, found that, if just 10 per cent of pensioners took up or increased their work hours, the economy would benefit from an additional 209,000 workers and the government would in fact receive a small boost to fiscal aggregates. It would add benefit to the economy and no cost to the government. If the initiative were confined to just the healthcare and social assistance sectors, there would be a boost of 25,000 workers.

For example, Heather is 68. She works casually as a registered nurse. She would be happy to work additional hours. Her employer would welcome her increased availability. Heather wants to work more hours to boost her income, but she finds the 50 cents in the dollar punitive and the Centrelink reporting burdensome, so she doesn't take the shifts. Workforce participation in Australia for those aged over 65 is just 15 per cent. In New Zealand it's 25 per cent. Not all but many older Australians do want to continue to be in the workforce in some capacity after age 67. The current Centrelink and tax policies penalise older workers and contribute to age discrimination. Reform would increase incomes and savings of lower-wealth pensioners, particularly women, and help to meet growing demand for care workers, teachers, nurses and a whole range of skill-shortage areas.

Australia's fertility rate has dropped to a record low of around 1.5 babies per woman. Our birthrate is a good litmus test, I think, on the confidence of our nation. We want Australian families. We want couples to raise little Australians. Many couples in my community tell me they simply can't afford to have a family. Nearly half, 49 per cent, of young Australians cite the expense of raising children as a major obstacle to doing so. Over half of Australians under 35 have delayed parenthood due to cost pressures. Child care in Australia consumes above the OECD average as a share of household expenses. We provide no meaningful tax incentives for families with young children. We do not offer income splitting, nor do we have any tax offsets.

Income splitting—where the burden of tax is shared across a couple, combining their incomes and then dividing—creates fairness, because the same family income can have two very different tax bills. For example, one family with a whole family income of $200,000, with both earning $100,000, will have a combined tax bill of just over $41,000, whereas another family with the same total income of $200,000, but in which one of the parents is raising children at home and the other is earning the $200,000, pays $56,000 in tax. That's nearly a $15,000 difference. This is unfair.

There are 13 OECD nations that allow income splitting, including the United States, France, Germany, Ireland, Norway, Poland and Spain. Australia should be one of them. Out-of-pocket expenses for child care, whether it's day care or vacation care, are a legitimate work expense, yet we don't allow families to claim this expense on their tax return. We should.

We should be doing everything we can to encourage working families to thrive. Income splitting and assisting with childcare expenses—classing them as a workplace deduction—would go a long way with regard to tax policy solutions.

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