Wednesday, 25 October 2017
Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017, Fringe Benefits Tax Amendment (National Disability Insurance Scheme Funding) Bill 2017, Income Tax Rates Amendment (National Disability Insurance Scheme Funding) Bill 2017, Superannuation (Excess Non-concessional Contributions Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Superannuation (Excess Untaxed Roll-over Amounts Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Income Tax (TFN Withholding Tax (ESS)) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Family Trust Distribution Tax (Primary Liability) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Taxation (Trustee Beneficiary Non-disclosure Tax) (No. 1) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Taxation (Trustee Beneficiary Non-disclosure Tax) (No. 2) Amendment (National Disability Insurance Scheme Funding) Bill 2017, Treasury Laws Amendment (Untainting Tax) (National Disability Insurance Scheme Funding) Bill 2017, Nation-building Funds Repeal (National Disability Insurance Scheme Funding) Bill 2017; Consideration in Detail
by leave—I move amendments (1) to (4), as circulated in the name of the member for McMahon, together:
(1) Schedule 1, page 3 (after line 7), after item 2, insert:
2A After section 7
8 Levy in cases of incomes not exceeding $87,000 (other than small incomes)
Where the taxable income of a person:
(a) is not income of an amount mentioned in subsection 7(1) or (2); and
(b) does not exceed $87,000;
the rate of levy payable by that person upon that taxable income (but for sections 8 and 9) is 2%.
(2) Schedule 1, item 3, page 3 (lines 9 to 10), omit "2.5", substitute "x".
(3) Schedule 1, item 3, page 3 (lines 9 to 10), omit "0.075", substitute "y".
(4) Schedule 1, page 3 (after line 10), after item 3, insert:
3A At the end of subsection 8(2)
(a) if the family income threshold does not exceed $87,000—2; and
(a) if the family income threshold does not exceed $87,000—0.08; and
The NDIS was fully funded by Labor. Those who doubt this need only look to the DisabilityCare Australia document in the 2013-14 budget, page 4, which sets out the impact of private health insurance reforms, changes to tobacco excise and changes to import processing fees, among others. The question before the House is whether or not the exercise of budget repair should be done by slugging low- and middle-income earners or by reinstating the budget repair levy. As the Leader of the Opposition noted in the budget reply, Labor won't be supporting an increase in the Medicare levy for those with taxable incomes below $87,000. But, by reinstating the budget repair levy, our position leaves the budget more than $4 billion better off over the medium term.
The Treasurer asks: why is more revenue required? Anyone who did their tax return early will know the answer to that because they would have seen on their tax receipt that gross debt has now crashed through the half-trillion-dollar mark. The question is whether we tackle the challenge of debt in Australia by slugging the middle or by raising taxes on the top. The Treasurer said in July that inequality has 'actually gotten better'. But as the late professor-turned-politician Daniel Patrick Moynihan said, 'You are entitled to your own opinion, but you are not entitled to your own facts.'
Let's just run through a few facts on inequality. Since 1975, real wages have grown 72 per cent for the top 10th and 23 per cent for the bottom 10th, meaning that the top 10th of earners earned twice as much as the bottom 10th in 1975 and nearly three times as much in 2014. The labour income share in the economy has fallen from 75 per cent in 1975 to 60 per cent today. The Treasurer said his preferred measure of inequality is the Gini coefficient. According to the Australian National University's Peter Whiteford, the Gini in 1981-82 was 0.27 and by 2013-14 was either 0.30 or 0.33. My own work on pre-tax male Gini coefficients again suggests a significant rise from 1942 to 2010. The top one per cent share of national income has almost doubled since 1980. The top 10 per cent income share has increased by a quarter. Wealth inequality has risen significantly over the course of the last generation. There has been an unambiguous rise in Australian inequality. As Roger Wilkins of the Melbourne Institute summed it up to me recently, 'Inequality is currently high by modern Australian historical standards.'
We see now from the coalition a plan to increase taxes so that a worker on $55,000 would pay $275 extra a year in tax while somebody on $80,000 would face an extra $400 in tax—effectively, a tax rise that would wipe out the benefit of last year's sandwich-and-milkshake tax cut for a worker earning $85,000 a year. Parliamentary Budget Office analysis shows that the average tax rate for individuals in every quintile will increase from 2017-18 to 2020-21, but the largest increase in average tax rates is for people in the middle income quintile under the changes proposed by this government. The Parliamentary Budget Office specifically states:
… average tax rates are projected to increase due to policy changes, most notably the policy decision to increase the Medicare levy from 2019/20.
This statement clearly disproves the Treasurer's claim that he is reducing taxes.
At a time when we have earnings inequality up, when the labour's share is the lowest in a generation, when income inequality by the Gini coefficient has risen and when wealth inequality is up, we have a government that wants to increase average taxes for those in the middle income quintile by 3.2 percentage points, significantly higher than the two-percentage-point increase for people in the top quintile. That would increase average tax rates on middle-income earners to 20-plus-year highs, according to the Parliamentary Budget Office. Labor's plan raises more for the budget over the medium term—an excess of $4 billion more. Most importantly, it tackles the challenge of rising inequality. It just isn't fair, with inequality as high as it's been in three-quarters of a century, to be slugging the middle and letting the top off scot free.
The amendment that is put forward by the opposition is not supported by the government. I'm a little puzzled as to why the shadow Treasurer hasn't come in to speak to his own amendments and has delegated this duty. If he really wants to own these, he should actually come in here and put his reasons for them rather than delegating it to the intern to go and put these issues forward in this place.
To deal with what has been put forward, the shadow assistant minister has just exposed the Labor Party on this issue. He says there's no funding gap on the NDIS—which is wrong, by the way; the budget papers clearly demonstrate a $55.7 billion funding hole. But the Labor Party have just said clearly here that there is no need to raise additional revenue to support the NDIS. So they are using people's disabilities as an excuse to raise levies on the Australian public. They have just admitted to this. I mean, if it weren't obscene enough that they couldn't live up to their own principles, as ordinary as they were, when they were in government, they now come in here and use people's disabilities to whack up levies on the Australian public. They don't believe it is necessary to raise additional revenue to support the NDIS.
So what is the purpose? He says it's to reduce the debt. He says it's to reduce the deficit. Under the Labor Party's election policies at the last election, the deficit was higher. Their position is to have a higher deficit. They're not reducing debt as a result of this; they're just spending even more money on things they don't have the courage to come in here and explain to the Australian people: why they want to increase the levy.
I'm going to be straight with the Australian people: we need to increase the Medicare levy by half a per cent to make sure that the National Disability Insurance Scheme is fully funded. Australians are fair-minded people. They understand that if you're unfortunate enough to have been born with a disability, that in this country you should be given every opportunity to realise your potential—just like any other Australian. I don't think there's an Australian in this country who doesn't think that's a fair thing and who isn't prepared to put their bit in, to put their fair share in, to make sure that all can benefit, particularly when they themselves might be in a position where they have to draw on that. The lack of faith shown by the Labor Party in the Australian people and their sense of fairness on this issue is abysmal, and they should be ashamed of themselves.
We understand that Australians would be prepared to step up for people with disabilities. The Labor Party used to think that; they are just using people's disabilities as an excuse to raise levies.
Mr Deputy Speaker, I withdraw. Let me rephrase: the Labor Party has said clearly that this levy does not need to be raised to fund the National Disability Insurance Scheme. That's what the shadow assistant minister at the table has said. What is then the purpose of raising this levy? It has been done under the guise—the truth on the government's part—to pay for the National Disability Insurance Scheme. Those opposite do not support that purpose for this levy, but they want to increase the levy anyway. They're doing it in a bill that is designed to help people with disabilities, but they have no intention to use the money to help people with disabilities. So the glass jaw of the opposition on this has just been demonstrated and they have been called out.
But on top of that, it's bad tax policy. The effective marginal rate of tax that applies to how they propose to deliver this in their amendment would mean that in the absence of phasing arrangements a taxpayer might incur an additional tax liability of $435.39 on the first $1 earned above $87,000. That is an effective marginal tax rate of 43,539 per cent. It's a daft idea in the practice of policy, and it's a heartless idea in the absence of morality on the part of the Labor Party.