Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

My question is directed to the Treasurer. Would the Treasurer detail to the House information released by the Australian Bureau of Statistics on the effects of the government’s tax and family assistance policies? Treasurer, are you aware of any alternative proposals?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Moreton for his question. I can inform him that yesterday the Australian Bureau of Statistics released its five-yearly report entitled Government benefits, taxes and household income. Here it is. It is a very interesting snapshot of what the position of households was in 1998-99 compared to what it was in 2003-04. When you read this report you find that after households receive their benefits, principally family tax benefits, only 40 per cent of households pay net tax—that is, they get more back in family tax benefits than they actually pay in tax. When you look across all of the households in Australia, the average total government benefits allocated exceed the taxes they pay by about $15 a week—that is, on average an Australian household does not pay net tax. This is because corporate taxes are allocated to some degree back to family benefits. These findings show that the benefits are greatest to the lowest income earners, who are measured in this case by quintiles—that is, by 20 per cent levels. The interesting thing about this study, which was done between 1998 and 2003, is that it still does not include additional benefits which this government introduced as part of the 2004-05 budget. This is before the increased benefits for families in the 2004-05 budget, including the $600 annual payment per child, which really does exist and which is real money.

The other thing that I would like to draw the House’s attention to is that because this independent study by the Australian Bureau of Statistics goes from 1998 to 2003, a five-year snapshot, it really does measure Australia—and here is the point—before the ‘day of fundamental injustice’ and after the ‘day of fundamental injustice’, because ‘fundamental injustice day’ was 30 June 1999. Members of this House will remember one of the great speeches that have ever been made in this chamber—on ‘fundamental injustice day’, 30 June 1999—when one of the members of this House predicted:

It will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up.

Let me record what happened in the five years after ‘fundamental injustice day’. Get a load of this! What this shows is that the bottom quintile—that is, the 20 per cent who are on the lowest incomes in Australia—increased their share of final income from 12.7 per cent to 13.2 per cent, that the next quintile increased their share of income from 15 per cent to 15.1 per cent and that the next quintile increased their share of income from 17.8 per cent to 18.1 per cent. Bear in mind that this was a growing pie. When you look at the distribution of that growing pie, the three bottom quintiles—that is, the bottom 60 per cent by income—actually increased their share. That is, as a proportion of growing national income, the 60 per cent of lowest income earners in Australia actually increased their share. That was between 1998 and 2003, and the report still does not take into account the changes which this government put in place in 2004.

One would have to remark that the ‘fundamental day of injustice’ did not turn out too bad after all! The day which was going to be recorded as the ‘day when the social compact was broken’ actually turned out to be the day when the poor in this country got a much better stake in the country as a result of a government that was determined to undertake reform. I have not heard the author of the ‘fundamental day of injustice’ speech give an explanation. Has he given an explanation? Is the explanation that he was wrong? Is the explanation that despite his projections things worked out much better and he would like to congratulate the government on doing so, or is his explanation that he just did not understand, that he did not know about economic policy and that he had not done the work to find out? That is my suspicion. My suspicion is that he does not understand the economy, that he has not done the work and that he cannot be trusted with economic policy in this country.