David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Why is open public debate about the future of Australia’s tax system important for future economic and fiscal management? Will the minister outline the government’s position on the proposal to flatten the structure of the tax system?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Lindsay for his question. I note that he has 92 projects worth $33 million underway in his electorate including the North Penrith commuter car park worth $5 million, which, if I remember correctly, the member has lobbied me about in the past rather vociferously. So it is good to see that that is underway. In terms of the government’s agenda for building the nation and infrastructure, obviously the wider structure of the budget and the longer term framework of both tax and spending are fundamental to that. Indeed, reforming Australia’s tax system to maximise efficiency and equity in that system is a central component of the government’s longer term approach.

You will recall the Henry review that is currently examining our taxation system, which has a discussion paper out and is engaging in a variety of consultation mechanisms. The Secretary of the Treasury, Ken Henry, made a speech at the National Press Club and there is a variety of public debates going on about some of the specific options. We are not the only ones of course who are engaging in consideration of Australia’s options for future taxation systems. Indeed not so long ago, when a backbencher, the Leader of the Opposition put out a tax options paper. In fact, according to the member for Higgins at the time, there were 280-odd options in that paper. Treasury analysis indicated that the Leader of the Opposition’s preferred option would have seen $100,000 a year in tax cuts flow to people earning more than $1 million a year, contrasting with about a $600 a year tax cut for those on average weekly earnings of about $50,000.

I note today in an article by Glenn Milne in the Australian that it would appear that the opposition is undergoing a variety of other considerations with respect to the options for Australia’s future taxation system. Indeed, early on in its term in opposition the then shadow Treasurer, now Leader of the Opposition, commissioned Henry Ergas to provide options and advice with respect to the future of Australia’s taxation system. Parts of this advice are revealed by Glenn Milne in the Australian today. Amongst the proposals floated to the opposition included flattening the tax rates of the income tax scales and ultimately moving to a flat tax arrangement over 15 years. It also advises that these proposals were presented to shadow cabinet in June or July of 2008 and it was decided by shadow cabinet at the time, according to an unnamed Liberal frontbencher, to:

… let it out on a day when all the focus was on Labor with an immediate disavowal of some of the more controversial elements.

Does that sound familiar? I have got a faint echo ringing in my ears of a few words. Does ‘never ever’ remind anybody of anything? The strategy that is being unfolded by the opposition has a very familiar little ring to it. Yet again we have a secret tax plan. We have an endeavour to squirm into office, to slink into office, not revealing the true agenda on taxation to the Australian people.

We also have a common thread running through the GST package, through the tax cuts that were provided by the then Howard government, through the tax proposals being advocated by the Leader of the Opposition when he was a backbencher, and most particularly through the proposals being considered by the opposition and obviously that were adopted by the opposition in the wake of the Ergas review. That common thread is simple. They all favour higher income earners. They all favour the wealthy at the expense of working people who pay the bulk of the taxes in this country. Now they are working on a secret plan for flat tax rates, which mean one very simple thing: wealthy people pay less and working people pay more. That is what flat taxes mean.

This kind of stuff is always dressed up in fancy rhetoric like ‘aspirations’ and ‘incentives’ and all this kind of stuff, and people who criticise it are always accused of the politics of envy and class warfare and all of that sort of stuff. All it demonstrates is the simple, single, Liberal Party motto. It is all code for that motto: show me the money! That is who the Liberal Party represent. That is what they represent.

Yet they are always reluctant to stand up publicly and fight for the aspirations and the incentives that they purport to represent. I note also that the Milne article indicated that the then Leader of the Opposition, now member for Bradfield, decided not to release the report because it might make people think that they were on about providing tax free kicks to the wealthy. I wonder why that would be the case. I note that according to the article the Leader of the Opposition apparently has now taken to calling this Ergas paper a ‘theoretical issues paper’. I wonder why he would be describing it in those terms.

All this points to a single fact and that is that the Liberal Party has not changed its spots. I call on the opposition leader to tell us about his secret flat tax plan, to release the report and tell the Australian people, the good working people of this country who pay the bulk of the taxes and who would have to pay a lot more if flat tax was introduced into the income tax system. I call on the Leader of the Opposition to tell the Australian public about the flat tax plan that he has up his sleeve for after the next election.