House debates

Monday, 20 August 2018

Private Members' Business

Income Tax

12:19 pm

Photo of Trevor EvansTrevor Evans (Brisbane, Liberal Party) Share this | | Hansard source

I move:

That this House:

(1) notes that the Parliament recently passed the Government's Personal Income Tax Plan;

(2) further notes that:

(a) this legislation gives everyone who works a cut in their income tax bill; and

(b) the effect of this legislation means that over the next seven years 94 per cent of Australians will not face a tax rate of higher than 32.5 cents; and

(3) congratulates the Government for supporting working people and providing the economic leadership our country needs.

The coalition government is all about delivering lower, fairer, simpler taxes. Lower taxes are part of the Liberal Party's DNA, just as higher taxes are the constant hallmark of other parties. The government is building a personal tax system that encourages aspirational Australians to get ahead whilst being fiscally responsible. That's why the government's personal income tax plan is such an important step towards making lower, fairer and simpler taxes a reality for everyday Australian workers.

The first step of the government's plan provides tax relief straight to where it's needed most: to low- and middle-income earners. The second step will help tackle bracket creep, and the third step will simplify the tax system. Together with our company tax relief already being delivered right now, today, to Australia's small and medium businesses—helping, I add, incidentally, to drive the strongest growth in jobs on record—and the tax integrity reforms, these personal income tax reforms will reward hardworking Australians and drive an even stronger economy. At its core, the effect of the legislation means that, over the next seven years, 94 per cent of Australians won't face a marginal tax rate higher than 32.5c.

Let's put these tax reforms into some historical context just to understand how significant they are for everyday Australian taxpayers. Years ago, at the time of the tax summit held at the beginning of the Hawke government's second term, just over half of all Australian taxpayers were subject to a marginal tax rate of over 30c in the dollar and around 10 per cent of taxpayers were subject to a marginal tax rate of 60c in the dollar. By the time Paul Keating had taken over from Bob Hawke and the 'fightback' election took place, almost 80 per cent of all taxpayers were subject to a marginal tax rate of over 38c in the dollar and around 20 per cent of all taxpayers were subject to a marginal tax rate of 47c in the dollar. By the end of the Keating Labor government, around 80 per cent of all taxpayers were subject to a marginal rate of 34c in the dollar or more and about nine per cent of all taxpayers were subject to that marginal tax rate of 47c in the dollar.

By around midway through the Howard government, in the aftermath of the implementation of the GST and the new tax system, around 75 per cent of all Australian taxpayers were subject to a marginal tax rate of 30c in the dollar or more and around 10 per cent of all taxpayers were subject to a marginal tax rate of 47c in the dollar.

By the middle of the Rudd-Gillard-Rudd government years, around 70 per cent of all taxpayers were subject to a marginal tax rate of 30c in the dollar or more and around two per cent of taxpayers were subject to a marginal tax rate of 45c in the dollar. By the start of this coalition government coming to office in 2013, around 75 per cent of all those with taxable incomes were subject to a marginal tax rate of 32.5c in the dollar or more and around four per cent of all taxpayers were subject to the highest marginal tax rate of 45c.

Over time, more and more taxpayers have been pushed into higher tax brackets, dampening the incentive to work more, innovate and get ahead, and having all sorts of perverse and unintended consequences when the tax scales intersect with eligibility thresholds for other government programs, rebates and other payments. I reiterate: the effect of this recently passed legislation is that, over the next seven years, 94 per cent of Australians won't face a tax rate of higher than 32.5c in the dollar. Given that personal income tax accounts for over half of the government's overall tax revenue, it's just imperative that we get the settings right and build a better tax system for the long-term benefit of this country and for all Australians, including future generations.

This government is doing something about the tax burden faced by Australians. We are delivering, despite the efforts of those opposite to frustrate and obstruct good reforms like this over the term of this government. Higher taxes, including bracket creep, reduce the reward for that. It undermines the incentive to work hard, take risks and succeed. Our plan delivers a tax system that encourages aspirational Australians to get ahead. If we'd left the tax system unchanged, only 63 per cent of taxpayers would have faced that marginal tax rate of no more than 32.5c by the time this plan's implemented—in other words, about one in three Australian workers in the future will be avoiding unnecessary bracket creep.

Photo of Sharon BirdSharon Bird (Cunningham, Australian Labor Party) Share this | | Hansard source

Is the motion seconded?

Photo of Bert Van ManenBert Van Manen (Forde, Liberal Party) Share this | | Hansard source

I'm happy to second the motion and reserve my right to speak.

12:24 pm

Photo of Cathy O'TooleCathy O'Toole (Herbert, Australian Labor Party) Share this | | Hansard source

Since the Turnbull government announced their budget in May 2018, I have been hosting budget community forums around my electorate of Herbert, and, let me tell you, the feedback from the community is a huge thumbs down. Both Labor and Liberal have made announcements regarding changes to income tax, but there is a stark difference between the government's and the opposition's policies. The Turnbull government is planning to radically rewrite the tax rules for this nation. The more Australians learn about these new tax rules, the less they like them. The Turnbull government is including workers on $40,000 a year in the same tax bracket as workers earning $200,000 a year. How on earth can it be fair for a nurse, for example, earning $40,000 to pay the same rate as a doctor, for example, earning $200,000, or for a cleaner to pay the same tax rate as a CEO? How can it be fair that, under this tax experiment, the doctor who earns five times as much as the nurse is entitled to a tax cut that is 16 times greater? New research has revealed that, under this plan, $6 in every $10 will go to the wealthiest 10 per cent of workers in Australia. It is becoming clearly evident that this tax scheme is looking like another 'mates rates' tax plan deal from the Turnbull LNP government, a tax scheme in which the government's business and banker mates get more and workers get less. This is simply not fair.

But Labor's personal income tax plan will deliver bigger, better and fairer tax cuts and it will deliver for more than 10 million working Australians. It's Aussie workers who need assistance, not the top end of town. Labor's tax refund for working Australians increases the tax cuts currently being offered under the Turnbull government's tax offset proposal. Under Labor, you will pay less income tax because we think you are more important than the multinationals, big banks and big business. Labor will give working Australians a bigger tax cut and not big businesses, the banks and multinationals. More importantly, our tax cuts will be permanent. Everyone earning less than $125,000 a year will receive a bigger tax cut under Labor when compared to the LNP.

What does that mean for my electorate? The median weekly personal income in Herbert is $672. Under Labor, that person in Herbert will be $350 better off. That's $150 more than under the Turnbull government's plan. Families will be better off as well. The median weekly family income in Herbert is $1,640. Under Labor, families in Herbert will be $928 better off. That is more than $398 better off than under the Turnbull government's plan. To put professionals into perspective, with Labor's tax refund a teacher earning $65,000 will be $2,780 better off. That's an extra $928 a year. A married couple, one serving in our defence forces earning $90,000, and the other working in aged care, on $50,000, will be $5,565 better off under Labor and they will have a combined $1,855 extra each year under Labor.

Under Labor, working- and middle-class Australians will pay less tax, and we will deliver vital infrastructure for Townsville as well as proper funding for our schools and hospitals. Under Turnbull, hospitals and schools will receive cuts, but big business and the banks will be billions better off. If you don't believe me, try Labor's tax calculator for yourself. You can enter your income and your partner's income and work out the tax cut you will receive under Labor. You can visit my Facebook page for the link. The Turnbull government is not interested in supporting working Australians, and its personal income tax plan certainly isn't either. Our most vulnerable and hardworking citizens deserve to make sure that they can survive, and the tax cuts for big business and the banks, at the expense of our vulnerable low-paid workers, schools, health system, aged-care system and supports for veterans, are completely unacceptable.

Photo of Sharon BirdSharon Bird (Cunningham, Australian Labor Party) Share this | | Hansard source

I thank the member for Herbert. I just remind members to refer to other members by their titles, not their names.

12:29 pm

Photo of Bert Van ManenBert Van Manen (Forde, Liberal Party) Share this | | Hansard source

It's indeed a pleasure to support the motion moved by the member for Brisbane in this House on a very important matter for 94 per cent of Australians, with the coalition government bringing down their tax rates over time. This is a really important opportunity to speak about these reforms, because the end result of these reforms will be more money in the pockets of hardworking Australian men and women. The workers of our nation know that the action we are taking is designed to reduce the financial burden on families and ensure that Australians don't face the travesty of being punished for working harder. We want every working Australian to retain more of the money that they earn. Why should anyone be punished for taking on extra shifts, earning overtime or being promoted if the end result is that it'll push them into a higher tax bracket? These measures make sense. They will put an end to bracket creep, so that working Australians can keep more of their money to help pay the bills, save for their future or spend in our local communities. I'm very happy to say that nearly 74,000 taxpayers in my electorate of Forde will benefit from the low- and middle-income tax relief in the 2018-19 financial year. Importantly, this government plan is fully costed and is, therefore, affordable for the future. It will provide tax relief now for low- and middle-income earners, and, over time, provide a simpler and fairer tax system for all taxpayers.

The government's measures will be implemented in three steps. The first stage will see the delivery of tax relief to low- and middle-income earners in the current financial year to help ease the rising cost of living pressures. In this financial year alone some 4.4 million Australians will get tax relief of up to $530, which will be delivered at the end of each year when they have completed their tax return. The second stage of the bill will lift the tax brackets to protect taxpayers from bracket creep. This second step will ensure that as inflation and incomes rise workers don't get pushed into higher tax brackets and pay a higher percentage of their income in tax. From 1 July 2018, the government will provide relief for up to three million Australians by increasing the top threshold for the 32½ per cent tax bracket from $87,000 to $90,000. When the low- and middle-income tax offset concludes in 2021-22 the top tax bracket for the 19 per cent tax bracket will be $41,000. As we can see, these measures are going to directly help low- to middle-income earners in the first instance. The third stage is about making personal taxes simpler and flatter and finalising the government's plan for more Australians to pay less tax through a simplified tax system. The end result will be a plan that means that 94 per cent of all taxpayers, including the majority of those working in my electorate of Forde will face a marginal tax rate of 32½ per cent or less from 2024-25. This compares with a projected 63 per cent of taxpayers in 2024-25 if there are no changes to the current settings.

Under our plan we will see Australia's tax system become internationally competitive. It will be a system that rewards effort and helps grow a strong economy. We all know that with a strong economy we see more jobs, more enterprise and more opportunity. But as we've just heard from the contribution from the member for Herbert, this is in stark contrast to those opposite, who always rely on taxes increasing on small and family businesses, on electricity, on incomes and on housing. Shamefully, Labor intends to rip money from the nation's retirees, who have spent a lifetime paying tax. It's classic Labor. They want to increase taxes by over $200 billion on hardworking families, small businesses, retirees and pensioners. Above all, their higher taxes will hurt the Australian economy. It is only the coalition government that is delivering responsible, affordable and well thought out tax relief that is costed and looks forward to how we can make a stronger and better economy for the future, because we know that in doing that we create jobs and opportunity for all Australians.

12:34 pm

Photo of Justine KeayJustine Keay (Braddon, Australian Labor Party) Share this | | Hansard source

I welcome the opportunity to debate tax in this place. It's often said that between Labor and the coalition there's not much difference. It is true we agree on some issues, but when it comes to tax policy there are vast differences. On business and personal income tax in my electorate you'll be better off under Labor. The government keeps going on about wanting to put more money in the back pockets of Australians. Well, Australians would have more money in their back pockets under Labor.

One would think the Prime Minister would have learnt the lessons from the recent by-elections, particularly in my electorate of Braddon and in Longman, and actually started listening to the people. The recent by-elections were largely a referendum on tax cuts for big business and the big four banks. At the Tasmanian chamber of commerce business forum during the Braddon by-election, my Liberal opponent was asked on three occasions to justify how this policy would be good for local business. Just as the Prime Minister is not listening to the 6,500 businesses in Braddon, my opponent at that time simply ignored the question.

Labor has listened, and we recognise that small and medium businesses need certainty and confidence for the future. We will not reverse the company tax rate of 27.5 per cent that will be in place at the time of the next election for small and medium businesses with up to $50 million in turnover a year. Under Labor, 99.8 per cent of businesses will be equal or better off.

We have better policy with our Australian Investment Guarantee. The Australian Investment Guarantee ensures business investment takes place in Australia, supporting Australian jobs. Braddon businesses, large and small, will be able to immediately deduct 20 per cent of their investments in eligible depreciable assets. Small and medium businesses are our priority, not multinationals or the big banks.

Local small and medium businesses will also benefit under Labor's bigger, better and fairer personal income tax cuts. Low- to medium-income households generally spend all of their disposable income. Increased disposable income for these households will see increased spending in local businesses.

Under Labor, we will deliver permanent tax relief to 39,000 taxpayers in the electorate of Braddon. Everyone in Braddon earning less than $125,000 will be up to $928 better off a year over the next four years—that is, $398 more than under the coalition. The median income in Braddon is just over $41,000 per annum. This prime minister wants someone on $200,000 a year to pay the same tax rate as someone on $41,000 a year. How is that fair? How is that delivering a fair go?

Only an out-of-touch prime minister would have a policy that sees the top tax bracket being the largest beneficiary in six years time. I guess he could be accused of simply representing his own electorate. My electorate would rank 147th out of 150. The Prime Minister's electorate ranks No. 1 under his Personal Income Tax Plan. It just demonstrates to me that he is completely out of touch with the rest of Australia. If Labor is elected, we will almost double the Prime Minister's tax cuts that the member for Brisbane is proudly trumpeting.

I say to the member for Brisbane and those opposite: why did you oppose bigger, better and fairer tax cuts for low- to middle-income earners? How can you possibly say it is fair to give working people a smaller tax cut while cutting funding to schools and hospitals and giving $17 billion in a taxpayer funded handout to the banks? From the outset, I said I welcomed the opportunity to debate tax policy—

Government Member:

A government member interjecting

Photo of Justine KeayJustine Keay (Braddon, Australian Labor Party) Share this | | Hansard source

The member just said a very unparliamentary word. It is not a lie; it's the actual truth of their corporate tax cuts that they will yet again try and get through the Senate, and I'm sure that it will fail because they fail to listen to the electorates in this country. It is clear both households and businesses in my electorate will be better off under Labor. It's rather a simple choice: back local small to medium sized businesses and households with bigger, better and fairer tax cuts or give $17 billion to the banks. It's a pretty simple choice, in my estimation.

The Prime Minister is under a lot of pressure this week on energy and tax. They're all in disarray, completely conflicted in the Liberal Party room this week. He can make his life a little bit easier, and the lives of the people of Braddon, by listening and dumping his corporate tax cuts. He could also make things easier by adopting Labor's tax plans for businesses and households. They will be better off under a Shorten Labor government.

12:38 pm

Photo of Ted O'BrienTed O'Brien (Fairfax, Liberal Party) Share this | | Hansard source

I'm delighted to rise today in support of the government's Personal Income Tax Plan and to endorse this motion from the very good member for Brisbane. In 2015-16, Australians paid $186 billion in personal income tax, approximately 45 per cent of which was paid by the top 10 per cent of income earners, compared with around 36 per cent coming from the top 10 per cent in 1995-96. Our tax system must be fair for all Australians. To continue to drive jobs and growth in our economy, our tax system must also reward effort and empower aspiration. We can't persist with a tax system that effectively penalises Australians who are prepared to have a go and work hard.

The Turnbull government takes very seriously the role that a balanced and properly weighted tax system plays in sustaining not only fairness and justice but also a strong economy that not only underpins jobs but is also the means by which essential services are assured for millions of Australians. The government's Personal Income Tax Plan, rolled out in three steps, is targeted to bring immediate tax relief to low- and medium-income earners, protect Australians from the impact of bracket creep and ensure more Australians keep more of their own hard-earned money. The government's plan is about lower, fairer and simpler taxes.

From 2018-19, over 10 million hardworking Australians will receive up to $530 in tax relief, and by 2024-25 94 per cent of all taxpayers are projected to face a marginal rate of 32½ per cent or less thanks to the abolition of the 37 per cent tax rate from that year. This will mean that the only part of the income tax spectrum untouched by the government's plan is the highest income category, being the six per cent of taxpayers projected to earn over $200,000 in 2024-25. In keeping with the key principle of fairness that instructs Australia's progressive tax system, this level of taxable income will continue to attract the top marginal tax rate of 45 per cent.

The coalition's vision is for a better and fairer tax system—a tax system that rewards effort and encourages aspiration for individuals and for business, a tax system that drives a strong economy—rather than a regressive and uncompetitive tax system that risks jobs and is a drag on growth. The government's personal tax plan has achieved these objectives in spades. I congratulate the government on striking the right balance of encouraging aspirational hardworking Australians to get ahead while at the same time ensuring these reforms are sustainable and fiscally responsible. I concur wholeheartedly with my colleague the member for Brisbane in recognising that this key reform from the Turnbull government does demonstrate true economic leadership.

Sadly, economic leadership is a quality almost non-existent on the opposition benches these days—

Mr Dick interjecting

because, by Labor's own admission, they just don't get aspiration. They even heckle as soon as the word 'aspiration' is spoken in this chamber

Photo of Maria VamvakinouMaria Vamvakinou (Calwell, Australian Labor Party) Share this | | Hansard source

Order! The member for Oxley will allow him to continue.

Photo of Ted O'BrienTed O'Brien (Fairfax, Liberal Party) Share this | | Hansard source

In fact, it completely mystifies not only the members opposite in this chamber, clearly, but indeed the member for Sydney, and the evidence strongly suggests that it's not just the member for Sydney and those in this chamber alone. As always, Labor's only plan is for higher taxes, with over $200 billion in new taxes announced. By pledging to undo steps 2 and 3 of the government's legislated tax cuts, Labor would effectively rip a further $70 billion from the pockets of hardworking Australians in just 10 years and push Labor's total tax grab toward $300 billion. That is why the choice at the next election will be simple: lower taxes under the coalition; higher taxes under Labor.

12:44 pm

Photo of Milton DickMilton Dick (Oxley, Australian Labor Party) Share this | | Hansard source

The member for Fairfax, who has just finished speaking, spoke about leadership. Of all days for this parliament to get lectures from the LNP about leadership! The member for Fairfax and the member for Brisbane come from the division of the LNP in Queensland. A short moment ago, on leadership, Queensland LNP president Gary Spence urged MPs to topple Malcolm Turnbull for Peter Dutton. Of all the things, they talk about leadership! This is the most dysfunctional government that this dysfunctional government that this Commonwealth has ever had! The Prime Minister, the Deputy Prime Minister and ministers are backgrounding people today.

Government Members:

Government members interjecting

Photo of Milton DickMilton Dick (Oxley, Australian Labor Party) Share this | | Hansard source

Those opposite are laughing. Turn on Sky News and you will see a cavalcade of desperate LNP MPs wanting to talk about everything other than the issue of the day.

So today we are hearing lectures from members opposite about leadership. Well, I can tell you what the people of Australia want. They want a government focused on them, not the LNP, who are focused on themselves.

Government members interjecting

The member for Chisholm is having a lot to say. You're not going to be here after the election, so don't worry! If today's polls are any indication, 25 of you are going to lose your seats! What do two years of continually losing poll after poll say? It says the people of Australia are not interested in what you are selling! Take the hint. Talk to the community. They will tell you very clearly they are sick and tired of the government being focused on itself, worried about its own survival, not the economy of Australia. Time and time again, we are seeing a government hopelessly divided, completely at war with each other, unable to even sit around a cabinet table to make decisions.

Of course, we know, by listening to community and listening to our residents, the trickle-down rubbish that we are seeing time and time again. Today we are seeing the winding back of the progressive nature of Australia's world-leading tax system into a shambles where the rich get richer and the poor are left to pick up the scraps of those opposite, who just want trickle-down economics right across. Their one ideological hit is to make sure those at the bottom end of the scale pay more but those at the top get the benefits. That's what the government tax plan in the motion put forward by the member for Brisbane has left us already. I cannot believe the member for Brisbane and his colleagues come into this place wanting to be congratulated for making the residents that I represent pay more tax. You want people on lower incomes to pay more tax. It is that simple. You don't want people on low incomes to pay a smaller share; you want people at the top end to pay less.

They look puzzled when I talk about this. A resident in my electorate who is earning $40,000 a year will get a tax cut of $455, while someone on $200,000 a year get a tax cut of $7,255 per year. That is your definition of fairness. Someone on $40,000 gets $10 a week, but a surgeon on $200,000 a year gets a tax cut of over $7,255. If you think that's fair, if you think that's reasonable, good luck going out and selling that. You talk to working Australians, who are under record financial stress in their household budgets, and tell them: 'Guess what? I'm giving you $10 a week under this government, but the person across the river will get $7,000 worth of tax cuts.' That is just outrageous. If those opposite want to come to my electorate and argue that case, good luck; bring it in, any time, any place. Those opposite can come out and argue in the member for Batman's electorate and in the member for Morton's electorate. We will take a day and night. When it comes to fairness, it gets up my nose that time and time again we are seeing the members of this government wanting to be congratulated. I can understand that if you are an addict of trickle-down economics—sure. If that's what you think is fair—fine. But do not come into this parliament and expect to be congratulated for your policies. It will not happen, and we will make sure the people of Australia continue to know what you are up to.

12:49 pm

Photo of Graham PerrettGraham Perrett (Moreton, Australian Labor Party) Share this | | Hansard source

It's great to follow my good friend the member for Oxley on this motion put forward by the member for Brisbane. Normally I'd be following the fourth speaker from the government side, but they couldn't find a fourth speaker to support the notion that Prime Minister Turnbull's government is 'supporting working people and providing the economic leadership our country needs.' They're in government and they couldn't find a fourth speaker to support the current Prime Minister. That's very disconcerting. Obviously, they're off doing their numbers.

This is a motion put forward by the current member for Dixon's former chief of staff, I think. It seemed like a good idea at the time, but things have just snowballed. We've got a strange set of circumstances where people are doing the numbers on the current Prime Minister. Obviously, the reality is: you would not put this lot in charge of your goldfish. It is unbelievable. We've got a government that comes in here trying to do self-praise and it can't even organise a pat on the back. It can't line up four speakers to back in this motion. Why? Because we have a government that could not care less about hardworking Australians, especially the middle and working class. We see this time and time again.

Let's go through what those opposite have trotted out as they're about to commence their sixth year in government. We've got a government that's been bending over backwards to give the big banks $17 billion while cutting money from local schools and hospitals. They've been sitting idle while the penalty rates of 700,000 Australians have been slashed, and we've seen the Prime Minister washing his hands like Judas Iscariot, saying, 'This has got nothing to do with me.' We've seen the Prime Minister and the coalition, for 600 days, rejecting Labor's call for a royal commission into the banking and financial sector, rejecting the pleas of hardworking families and, most importantly, Australian small businesses that have been hammered by this sector. Before the mid-year break, with the willing support of Senator Hanson and the One Nation political party, we saw the coalition give itself a huge personal tax cut, with 80 per cent of all of those benefits going to the top 20 per cent of income earners. That's a shameful figure and an un-Australian figure, I would suggest. How unfair is that! It shows that those opposite are out of touch. They're just three examples. There are many, many more.

These are some key statistics to consider when it comes to Australian workers, sadly not mentioned by the member for Brisbane in his speech. He sees fit to come in here and offer self-congratulation without offering any concern for workers and their families. I listened to all of the speeches of those opposite, and there was no mention at all of flat wages, even though we had more wage increases under Labor in one year than we've had in five years under those opposite. I guess this is what happens when you bring in the former CEO of the National Retail Association, someone who doesn't get what it's like to be an employee or a working-class or a middle-class Australian. In September 2013, when this lot came to government, there were 702,300 people unemployed. As of June 2018, there are now 719,000 people unemployed. That's 16,700 more people unemployed. We have record underemployment—people who are actively looking for more work but can't find it. We have record low wage growth, something not touched on by any of those opposite. We have 40 per cent of workers now in insecure work—contract, casualised or labour hire. For young Australians under 25, it's actually over 50 per cent. That makes it difficult for them to ever get ahead or to even get started.

Labor offers a far more comprehensive vision of support for working Australians in our economy. Let's now look at Labor's vision for personal income tax rates. We are proposing a bigger, better and fairer tax cut. Should we win the election, everyone earning less than $125,000 will receive a bigger tax cut under Labor's plan. For many of those people, the tax cuts are almost double those being proposed by the Dutton government. I beg your pardon—the Turnbull government. To help show the benefit of Labor's plan to working Australians, we've had an online calculator tool running for a few months at Check it out. Do some calculations using your own individual circumstances and you'll see. For example, a teacher on $70,000 a year would receive a tax cut of $982 under Labor. NATSEM modelling shows that Labor's plan is much better. Those opposite are proposing something that is un-Australian. (Time expired)

Debate adjourned.

Sitting suspended from 12:54 to 16:00