Wednesday, 25 October 2017
Treasury Laws Amendment (Untainting Tax) (National Disability Insurance Scheme Funding) Bill 2017; Consideration in Detail
I move the opposition amendment circulated in the name of the member for McMahon:
(1) Schedule 1, page 3 (after line 3), before item 1, insert:
1A Subsection 4 -10(3) (note 2)
Omit "of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary", substitute "(which is about the".
1B After section 4 -10
4 -11 Budget repair levy
Budget repair levy
(1) Extra income tax is payable for a financial year (budget repair levy) if:
(a) you are an individual; and
(b) your taxable income for the corresponding income year exceeds $180,000; and
(c) the financial year is a budget repair levy year.
Amount of budget repair levy
(2) Your budget repair levy is worked out by reference to your taxable income for the corresponding income year using the rate or rates that apply to you.
Note: See Part IV of the Income Tax Rates Act 1986.
Interaction with other provisions
(3) For the purpose of working out your income tax for the financial year:
(a) section 4-10 has effect as if it made you liable to pay the extra tax mentioned in subsection (1) of this section; and
(b) subsection 4-10(3) has effect as if step 4 of the method statement in that subsection were omitted and the following were substituted:
Step 3A.Subtract your tax offsets from your basic income tax liability.
For the list of tax offsets, see section 13-1.
Step 3B. Add the extra income tax you must pay as mentioned in subsection 4-11(1).
Step 4. If an amount of your tax offset for foreign income tax under Division 770 remains after applying section 63-10, subtract the remaining amount from the result of step 3B. The result is how much income tax you owe for the financial year.
(4) To avoid doubt, budget repair levy is not included in your basic income tax liability.
Note: As a result, you cannot apply any tax offsets against budget repair levy under Part 2-20 (apart from the foreign income tax offset applied under step 4 of the method statement in subsection (3)).
Meaning of budget repair levy year
(5) Each of the following is a budget repair levy year:
(a) the 2017-18 financial year;
(b) each financial year after the 2017-18 financial year, until the Parliament otherwise provides.
While we are constitutionally barred from actually reinstating the budget repair levy, this amendment puts in place the legislative framework for so doing. As I noted in my earlier contribution, the House faces two choices as to how the budget might be repaired, with the Treasurer having taken gross debt through the half-trillion-dollar mark. The choice is between raising taxes on low- and middle-income Australia or reinstating the same tax rate that prevailed under Tony Abbott. The Liberal Party would have you believe that it is socialism to put in place the same tax rate that Tony Abbott put in place. Labor takes a different view. Labor's view is that it is appropriate, at a time when inequality is as high as it's been in three-quarters of a century, to ask those at the top to pay their fair share.
I won't repeat the statistics on rising inequality in Australia, which thoroughly debunk the Treasurer's claim that inequality is getting better. But the question we have before us is whether the House should continue with the plan that the government announced on budget night, which the Parliamentary Budget Office estimates would see the largest increase in average tax rates for people in the middle income quintile—they're people earning an average of just $46,000—or whether it's appropriate to put in place the same tax rates that prevailed under the first couple of years of the Abbott government.
The Treasurer would say that you can't do this because it's a tax on success. This reflects everything that the Liberal Party stand for. They on that side of the House think that success is about money. They think it's about how many mansions you've got or how many jet skis you've got. We on this side of the House think that a teacher earning $70,000 who is looking after kids and turning their eyes to the love of learning is a success, even though they're not in the top tax bracket. When we look at a police officer who is keeping our streets safe and earning maybe $65,000, we think that person is a success. When we look at the childcare workers—those who are there looking after our kids, not just babysitting but engaging in active early childhood education of the most vital kind—who are earning maybe $45,000 a year, we think those people are successes. We think those Australian families raising their kids with love, those union representatives out there trying to get a better pay deal for Australian workers, those families looking to pay the mortgage—in an environment in which housing affordability is as low as it's been in six decades—are a success.
Labor has nothing against the top two per cent of Australian adults who find themselves in the top tax bracket. Labor has nothing against the top one per cent of Australian adults who pay nine-tenths of the tax in that top tax bracket, but it has been a very good generation for the top one per cent, a generation that has seen them nearly double their share of national income. When the Treasurer says that it would put us out of step with other countries, were we to go back to the marginal tax rate that we had under the Abbott government, you simply have to look at OECD data. A fact check done by Kathrin Bain for The Conversation on 19 May found that Australia's highest marginal tax rate ranked us 13th among 34 OECD members, meaning that 12 OECD members have a higher top marginal tax rate than Australia.
The top one per cent can afford to pay a little more. It is better for the budget. It is better for fairness. It is the right decision for an Australian economy where consumer confidence and growth is still too fragile. Low- and middle-income Australians spend their pay cheques; they put that money straight back into the economy. Those at the top have higher savings rates, and so tax cuts given to them don't flow through to consumer expenditure. This is the right solution for fairness, the right solution for growth, and I urge this amendment upon the House.
The government does not support this amendment, and the tell in what the shadow assistant minister said in his presentation is this: not once did he say that this money was going to be used to support the National Disability Insurance Scheme. Do you know why? Because it's not. There is no suggestion here and there is no mechanism either. These funds from raising the top rate of marginal rate of tax will not go in to the special savings account for the National Disability Insurance Scheme. They will just go into another Labor slush fund to further expand wasteful spending and drive up the deficit. There is nothing in what the opposition is putting forward here that is designed to support Australians with disabilities. There is nothing in its design to guarantee funding and support for the National Disability Insurance Scheme.
Once again I'm disappointed that the shadow Treasurer has not come in here and owned these amendments himself. He is as gutless as he is heartless in the way he has engaged with this issue. Going through the things that have been put forward, once again, under the cover of a bill that talks about the National Disability Insurance Scheme, we see the Labor Party is using this as an excuse to raise taxes. This is just a tax grab sought under the cover of a bill seeking to provide support for the National Disability Insurance Scheme. Labor has no intention of providing any support for the National Disability Insurance Scheme through raising these taxes. This is just another episode in Labor's class war to raise taxes on Australians who work for a living and provide a disincentive for them to do even better.
Under the Labor Party, this amendment would take the top marginal tax rate, with the measures already passed by this House already today, to 49.5 per cent. So the great reward you get for your effort is you work one day for yourself and one day for a Labor government. They're not much worth working for in the first place, but you shouldn't be charged more for the privilege; you're always charged more for the privilege of serving under a Labor government in this country. Labor is addicted to taxes for one reason only—that is, they are addicted to spending. The budget would be $14.7 billion better off right now if it weren't for the constant opposition of the Labor Party as the government has sought to repair the budget mess.
This measure won't go to reducing the deficit. Labor's deficit will be higher than the government's because the budget deficit in the last fiscal year was under two per cent. It came in at under two per cent, at 1.9 per cent, is continuing to fall and is projected to be back in balance in 2021, where that projection has been retained consistently since the end of 2015. When the deficit levy, which was a temporary levy and came off just as we promised to do, was introduced, this is what the Labor Party said about exactly what they're proposing to do here in this place today. The Leader of the Opposition said: 'It's a cheap trick of the government to sling on increasing the highest marginal rate of taxation.' The shadow Treasurer said:
We've been clear about our position on the deficit levy. We don't like it and we don't support it.
He also said:
… we don't believe that the answer of increasing the marginal tax rate is an innovative one or it's good policy …
Yet it's recommended here by the shadow Assistant Treasurer, and I have no doubt that's why the shadow Treasurer wouldn't dare show his face in this place to speak to this amendment, given the pathetic hypocrisy he is displaying in bringing this amendment forward. It's under his name, Mr Speaker. That doesn't mean much in this place when he's not prepared to come in here and speak to his own amendments. He also said, 'This is not something we would do if we were in office,' but they seem to be doing it in opposition.
We've learnt this about the Labor Party in opposition: they'll say all sorts of things—'Oh, we're going to stand against making the pension more sustainable'—and they have their petitions and go on about it day in, day out, leading people to believe they're going to do one thing, and then on the eve of the election, as we saw with countless measures, such as the schoolkids bonus and pensions, over they flip. They backflip on the eve of the election. And you know what? Even still their deficit is higher. So this is what the shadow Treasurer said. Then, on the issue, apparently everyone who earns over $180,000 is rich, according to what the shadow Assistant Treasurer has just said, but not according to the Leader of the Opposition when he was asked by Neil Mitchell, 'Is $180,000 a year rich?' and he answered, 'No, it's not.' (Time expired)