Milton Dick (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Curtin proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The need for broad tax reform to address growing intergenerational unfairness.

I call upon those honourable members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

After the economic roundtable two weeks ago, the Treasurer committed to developing a process for longer term tax reform focused on a fair go for working people, including, in intergenerational equity terms, an affordable, responsible way to incentivise business investment and making the system simpler and more sustainable. I welcome this commitment and regard it as a real win for the crossbench. Throughout the last term, I and other Independents consistently called for both long-term tax reform and a focus on intergenerational fairness. In fact, we were the only ones calling for tax reform. These issues were too often ignored by the major parties. The challenge now is to maintain pressure on the government to follow through—and on the coalition to bring its own solutions—on intergenerational equity and tax reform. That's why I bring forward this matter of public importance—to maintain momentum for real, structural tax reform in the coming years.

Keeping a lid on spending must, of course, be part of budget repair, as must productivity, but these are not the only levers. We also need to shift the burden to different taxes that demonstrate the principles of intergenerational equity, business investment and simplification. As we build public appetite for reform, we need to avoid being sucked into the rule in, rule out game that characterises so much of our politics. Every option should be on the table. While an individual measure may have a negative impact on a particular cohort, other measures within a broader package may make that same cohort better off, so we must consider tax reform packages as a whole.

Today, I'm putting forward some options that should be on the table when we look at how to shift the tax burden. They're informed by evidence, by international best practice and by the voices of the people of Curtin. Changes to negative gearing and capital gains tax concessions are increasingly supported by a majority of Australians. In a survey of Curtin residents, 76 per cent supported reform in this area. People recognise how seriously our housing system is broken and how current tax settings encourage Australians to treat housing primarily as an investment, not as a home. Reviewing these concessions must be part of any serious tax conversation.

In Australia, successive governments have relied on bracket creep as their only plan for budget repair. This stealth tax disproportionately burdens younger working Australians while discouraging productivity. Most OECD countries index their tax brackets to inflation, and Australia should do this too. It would ensure governments can no longer rely on hidden tax hikes and must instead make a case for every new spending decision.

The GST is often dismissed as regressive, but a package can be designed that is progressive. I worked with Professor Richard Holden and the Parliamentary Budget Office to develop an example of a progressive GST combining an increased rate with a basic supplement paid to every adult. This can be structured so that the majority of people—those with zero, low or middle incomes—would be better off. The key message here is that tax reform needs to include reviewing GST rates and exemptions.

Stamp duty is one of the most inefficient taxes we have. It discourages mobility, locks people into housing that no longer suits them and makes it harder to use our houses well. Transitioning to a broad based land tax in partnership with the states would enable better housing outcomes. Again, Curtin residents are ahead of the politicians. In my community survey, 65 per cent supported this idea.

Australians are not being fairly compensated for the use of our natural resources. Last year, no tax was paid on two-thirds of the gas exported from Western Australia. PRRT revenue this year will amount to just 0.08 per cent of GDP, which is a staggeringly low return for resources that belong to all of us. It's time for a serious review of resource rent taxes, particularly for fossil fuels that not only deplete our finite resources but also impose global climate costs. Too many multinational corporations shift profits offshore and escape paying their fair share.

The structure of global markets is changing. This undermines fairness, erodes our tax base and disadvantages local businesses that do play by the rules. Australia must work with other countries and strengthen its laws to ensure that we're appropriately taxing the digital economy and multinationals that benefit from access to the Australian market.

Finally, carbon and pollution taxes remain the most economically efficient way to drive a cleaner and more sustainable economy. If we're serious about finding the cheapest and fastest path to net zero, then we cannot rule out these tools. Shifting the balance from income tax to some of these taxes will ensure younger Australians are given a fair go, drive productivity and innovation, and secure Australia as a prosperous and thriving country for decades to come.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Assistant Minister for Immigration) Share this | Link to this | Hansard source

The obligation that we have as members of parliament is to ensure that we deliver better living standards for our kids and generations to come. That is our goal, and that is what we work towards every day as a government. But, over the last decade, that commitment and promise to the next generation has been under threat. Young Australians are facing increasing pressure from the cost of housing, they've inherited a massive debt from the previous coalition government in the wake of COVID, and the threat of climate change is eroding their quality of life.

We have an ageing population, which means there are more people in our economy and our society who require aged care, the NDIS and hospital and health services. That is putting an impost on the budget and, at same time, reducing the same number of taxpayers that are actually paying tax to fund those services. This is putting pressure on the welfare of younger generations of Australians. But this is something that our government is committed to addressing. We are acting to ensure that we make our taxation and welfare systems much fairer to produce more equitable outcomes for future generations. We're putting in place those policies to ensure greater intergenerational equity through our taxation system to ensure our children inherit a better quality of life through a fairer tax system, a more affordable housing market, a clean and safe environment through stronger action on climate change, a sustainable budget position and an affordable and fairer education system.

Making the taxation system fairer, particularly the income tax system, is one of the priorities of our government. It was the principal policy that we took to last election. During our last term in office, we reduced the rate of income tax on all Australians to ensure that the tax system was fairer. We're following that up with two further income tax cuts—one this year and one next year, which will see the rate of taxation on the minimum level income threshold in Australia fall to 15 per cent. The greatest beneficiaries of that reform will be lower- to middle-income workers, the majority of whom would be younger Australians who are starting out in the labour market. This will be a great benefit for younger workers. It will return some of the bracket creep that has crept into the system over recent years. For the average wage earner, it will reduce their taxation by about $30,000 over the next decade. It's a great relief for younger workers into the future. I might point out that this is a policy that has been opposed by the opposition. At the moment, they are supporting higher taxes for younger workers and low- to middle-income workers in this country.

We're not stopping there. We're also increasing the Medicare low-income threshold to ensure there is additional relief for younger Australians who are paying the Medicare levy. We're also making sure that our broader taxation system is much fairer and more responsive to the needs of the economy into the future and to the welfare of younger Australians. We're reforming the multinational taxation system. We're reforming the petroleum resource rent tax system so that it raises more revenue for younger generations for a fairer return on the exploitation Australia's natural resources. This issue has been identified for some time. When the opposition were in government, they refused to act on it. Labor acted in a first our term so that the PRRT is now a much fairer system. Thanks to the assistant minister for the Treasury, we've now got a much fairer multinational tax system in Australia as well.

When we talk about intergenerational tax reform and making the taxation system fairer, one of the greatest demonstrations of our commitment to that is to make the superannuation system fairer in Australia, and particularly the taxation of superannuation. At the moment, we have a system where ultra-high-income earners can shift their income out of the normal income tax system and into superannuation to get a concessional treatment of their income and avoid paying their fair share of tax. It is an unfair system, but it is encouraging people to do that. We are cracking down on that. We are acting on that to ensure that ultra-high-income earners pay their fair share of tax and cannot avoid a fair rate of tax by transferring their income into their superannuation, which most Australian wage earners cannot do. It affects a very small proportion of the population—less than one per cent of the Australian population—and the major beneficiaries of this intergenerational fairness will be younger Australians in a better retirement income system. But—what do you know?—it's opposed by the coalition. It's also opposed by the crossbench, and the irony is that they've proposed this matter of public importance here today. This is a reform that will ensure a greater and better level of intergenerational fairness in our taxation system—opposed by those opposite.

If you give a child an education, you give them a better life. This is something that our government knows all too well. It is deeply committed to ensuring that we have greater equity in our education system, be it through a massive investment in our public schools or finally funding public schools to the level of need in Australia, as recommended by David Gonski over a decade ago. It's also in our tertiary education system. We all know that students have faced a large increase in their HECS debts due to indexation over recent years. We've acted. The first piece of legislation that we put into this parliament was to reduce the HELP debts of Australian students by 20 per cent. Speaking to students in Kingsford Smith, I've heard that it's welcome relief for them in their challenge of getting an education and having an affordable lifestyle as well. We've also increased the repayment threshold, which has been a great relief for students. It means that, for the average student with an average debt of $27½ thousand, their debt is cut by $5½ thousand.

We've also ensured that APRA changed the lending rules and the lending requirements for young people seeking to gain a home loan, ensuring that financial institutions can't use a HECS debt against a person who is applying for a home loan. We're acting to ensure that access to housing through lending is much more affordable.

We're introducing practical payments for students who are required to undertake prac placements as part of their degree or their training. Fee-free TAFE will ensure not just that we're investing in the skills that Australia will need into the future but, more importantly, that those Australians that want to train for a trade or do a traineeship can have access to it at an affordable rate into the future.

In terms of housing, for the first time in a generation, we have a government at a Commonwealth level that is committed to substantially increasing the supply of housing in this country by directly building more homes. That's something that the opposition completely shy away from when they're in government by saying, 'Housing is the responsibility of the states; we're not going to get involved in that.' We take a different view. We know that there is an undersupply of housing in Australia that has pushed up the cost of housing, particularly for young Australians. That is why we introduced the Housing Australia Future Fund, which is now making its first and second distributions that will directly fund social and affordable housing throughout the country. A total of 55,000 social and affordable homes will be built by this government to increase the supply of housing and make it more affordable; 10,000 homes, in a first for Australia, will be specifically reserved for first home buyers and built by this government. If that's not a commitment to increasing the housing supply and making it more affordable for young Australians, I don't know what is.

We're also making it easier for Australians to own their first home. The Help to Buy scheme will encourage a co-investment of up to 40 per cent, and the five per cent deposit scheme has gone through the parliament and will start in the coming months. We're also working to ensure that the rules around housing are liberalised and that the states, in their zoning and planning requirements, ensure that they're focused on delivering more homes, particularly where those homes are going to be built around mass transport, public transport, in Australia.

We're also making sure that young women get a better deal by increasing the superannuation guarantee to 12 per cent, paying paid parental leave for up to 24 weeks and, importantly, paying superannuation on paid parental leave for the first time to ensure that young women get a fairer outcome in the labour market, particularly when they have to have breaks to raise children. So our government is committed to ensuring that we deliver on that promise that every government should make to younger generations of Australians, and that is to deliver better living standards. We are delivering that for younger Australians.

Allegra Spender (Wentworth, Independent) Share this | Link to this | Hansard source

I commend the member for Curtin for putting forward this really important MPI; for her advocacy in the previous parliament, and this parliament, on the need to make sure our system works for every generation; and for her bravery in speaking up on tax. I'm also very proud to have spoken up on tax and to have then delivered a tax green paper last term, because tax has been the missing element of so many of the issues facing younger generations, and we need the major parties to step up and get real and courageous about the changes that need to be made.

It was great to see the Treasurer, out of the Economic Reform Roundtable, acknowledge that the tax system is at the heart of intergenerational inequity as well as absolutely critical to productivity. Now that he has made that admission, it is time for the parliament to get behind this in terms of driving real change, and I urge the opposition to engage constructively in this discussion. That's certainly what I expect will happen from the crossbench, because the crossbench has been driving this debate from the start. This is because tax matters, and, frankly, the future of every generation, including those young people in our country right now, really matters, and they're struggling. Right now, only eight per cent of Australians think that the next generation will have a better standard of living than their parents. This is something you hear every single day on the street. This is really rooted, I think, in three key problems.

Firstly, we have flatlining productivity. Wages won't grow and generations won't be more prosperous unless we can get that productivity moving, and tax matters to productivity.

Secondly, we have a tax system that is unfairly weighted towards being dependent on younger working Australians while their wealth is going backwards compared to different generations. The income tax system is not working for driving incentives and driving businesses, nor is it working for making sure that young generations can get ahead.

Finally, we have a tax system, and an overall system, which is not driving climate action. This gets to the heart of intergenerational inequity. Who's going to be paying the bills for climate adaptation and change? It is the current younger generations and future generations. If we don't take action now, it is a problem, and we know that the tax system can help drive this.

Finally, a piece which is outside tax but is absolutely relevant is fiscal discipline because, if we lade our current generations with debt, we know that they have to pay it off in the future. So this goes to spending as well as tax, in terms of restraint in spending, but I do want to spend the rest of the time really focused on tax because it's absolutely critical.

Firstly, we need a tax system that drives business investment. We are seeing business investment at record lows, and the incentives for business investment are not there. We know that the tax system, in terms of its high headline rate, is not working, and its complexity is also actually stopping investment at the level that we need to see from both international and domestic companies. This has got to be a key focus for tax reform for the government. This is where I'm urging them to focus.

Secondly, I particularly wanted to focus on our income tax system, because we have a tax system that's just not working for every generation. We have a tax system which—I think quite unintentionally—has led to a situation where, in the last 10 years or so, the wealth of households over the age of 65 has grown by around 50 per cent, while the wealth of households under the age of 30 has pretty much flatlined. We have a tax system that is decreasingly relying on older Australians, despite the fact that we know that we are ageing as a population. In the 1990s, around 30 per cent of people over the age of 65 paid income tax. Now, it's only 17 per cent. When we know that our population is rapidly ageing, we've got to know that that is not going to work. We know that our young people are struggling to achieve the same milestones their parents did. They have a 20 per cent lower chance of owning their own home when they're 30 to 34 than previous generations, and this is particularly affecting less wealthy younger Australians.

The tax system is really at the heart of this because, currently, the only way that we are ever going to get back to a budget surplus is through indexation, which is an income tax on younger working people. So the only way we're planning to fix our fiscal deficit will actually have more impact on younger working Australians. These numbers do not add up, and this is why serious tax reform is needed.

The member for Curtin has been advocating on GST, and I think it is absolutely essential that we do consider the breadth of taxes, not just a narrow cast, which some in this House want to do, because, if we are going to fix this tax system to drive productivity, to drive fairer outcomes for younger Australians and to drive climate action, we're going to have to look at the breadth not the narrow.

Sally Sitou (Reid, Australian Labor Party) Share this | Link to this | Hansard source

I want to say at the outset that I really appreciate the constructive engagement from the crossbench on this issue, particularly from the members for Curtin and Wentworth and from so many of the crossbench who have been engaging with this debate in a really constructive and thoughtful way. I know many of the crossbench came into this place because they wanted to ensure we were creating a better place for future generations, and I can say, on behalf of the Labor caucus here, that that is exactly the reason that we are all here. It's certainly the reason I put my hand up to run, and one of the guiding policies that has energised us has been action on climate change. That is the big burden that we will leave for future generations if we do not address it now. Intergenerational inequity, the impacts of climate change and how they will be felt by future generations, I think, are the big, glaring challenges that we have to confront, and they're something that we on this side of the House and, I know, the crossbench are very, very interested in working on.

When we think about young people, on this side in the Labor government, we don't have them siloed in one area; we have them throughout our entire decision making process. We have created youth advisory groups to ensure that young people have a seat at the table when it comes to the decisions that we are making about their lives. We also have four millennial ministers on our frontbench, which I think goes to show that, in this Labor government, we have young people who are at the decision-making table as well. And, of course, we've got the youngest senator in Charlotte Walker. I just wanted to read a few lines from her first speech, because I think they're very instructive of how young people feel about politics. She said:

What I bring to this parliament is the experience of young people today …

Young Australians aren't a side issue. We aren't a future issue. We are Australians now.

She also went on to say:

… in 2050 I won't be in my late 90s, like some who want to abandon net zero; my friends and I will be in our 40s, and we demand an inhabitable planet.

This Labor government is squarely focused on what we need to do to make this world a better place for young people, and part of that will be changes to our tax system, but part of that will also be some of the work that we have already done, including making HECS indexation fairer; wiping 20 per cent off student debt; paying students studying social work, midwifery, nursing and teaching who have to go on prac placements—we heard today that 30,000 people have already taken that up—and also providing fee-free TAFE. These are all measures that are going to directly benefit young people, but I want to address the points around making our tax system fairer.

We have taken bold steps to make our tax system fairer for younger generations. We're delivering tax cuts in a way that is going to be more equitably distributed, and the biggest beneficiaries of our changes to the stage 3 tax cuts were young people—99 per cent of gen Z and 95 per cent of millennials got a bigger tax cut because of the Albanese Labor government. That is something that we are incredibly proud of. I do want to remind the House that the coalition opposed it the whole way through.

A further change that we are making to make our tax system fairer is around the $3 million super balances. We want to make sure that our tax system is working for everyone, not just the few who have super balances over $3 million. Let's be honest: there are very few young people who will have balances over $3 million. And I want to point out a stat to show the inequity: 43 per cent of super earnings tax concessions go to the top 10 per cent of income earners. This change is about bringing intergenerational fairness into action.

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

I'd like to thank the member for Curtin for bringing this important matter to the House. It's clear that our tax system needs reform. It is not fit for purpose. Taxation is not just about revenue raising; it's an important social policy. If it's done well, it can have the heft to deliver equity and the agility to reduce harms and to enhance public good.

But right now our tax system is not doing well. It's too complex. It includes historical measures, concessions and exemptions—and concessions on exemptions on measures—which are simply not achieving their aims. For example, amateur sports clubs were given tax-free charitable status in the 1950s to promote participation in sport. We didn't anticipate then that, one day, billion-dollar professional sports codes would be paying their executives million-dollar salaries with profits made from gambling on those sports—while using those concessions to pay no tax. When a tax concession is no longer fit for purpose, we should change it.

To encourage investment in housing, to boost the supply of rental accommodation, landlords were given capital gains tax concessions in 2000. We did not expect then that that would turn Australian homes into wealth creation schemes. When tax concessions deliver unintended consequences, we should abolish them.

When we introduced the petroleum resource rent tax in the 1980s to ensure Australians received a fair return from our non-renewable petroleum resources, we didn't foresee then how our energy landscape would evolve, with liquified natural gas now dominating our offshore petroleum sector. Despite Australia being the second-largest exporter of LNG globally, we have collected virtually no PRRT revenue for decades. Under the current PRRT framework, many LNG projects won't pay significant tax until the 2030s. The International Energy Agency predicts that, by the mid-2030s, the global demand for gas will drop off precipitously, so there'll be no tax revenue from these massive LNG exports.

The PRRT is designed to tax profits only when projects become cash flow positive. This allows for upfront investment while capturing windfall gains. But LNG projects have high upfront costs, and LNG producers structure their businesses to benefit from this concession. So, despite billions of dollars of our LNG being exported from this country, effectively no tax is being collected. The Albanese government's 2023 changes to the scheme were expected to raise more income, but they have fallen short. It's a massive failure of public policy. We're effectively giving our finite gas resources away for free to multinationals, who are making billions of dollars of profit at the expense of our climate and our environment.

There are things that we could do immediately to make our tax system more equitable and more effective. We could ring fence fossil fuel projects to stop companies passing on losses from one project to offset profits on another. We could stop the practice of compounding the value of deductions, a questionable inflation of expenses to offset profits. A simpler and more robust approach would be to simply remove LNG from the PRRT and to apply to it a resource tax that meets the expectations of Australians, pays this country for the resources extracted and delivers revenue that can be used to supercharge the transition away from gas altogether. When a tax measure is failing, we should go back to the drawing board.

Our tax system needs reform. It needs to reflect modern circumstances and deliver equity and social benefit. As a nation, we need to embrace the principles that the tax system should be flexible, it should be responsive and it should be fair. It should allow government to get on with the business of delivering those things for people. If only politicians weren't responsible for our tax system—because rent-seeking corporate lobbyists, mindless fearmongering by oppositions and a media that makes a sport out of forcing politicians to promise no new taxes all make tax reform a poisoned chalice. Tax reform takes political courage, but the need for it is evident. We have to wait to see whether or not this parliament will put public interest ahead of politics and get on with that reform.

Julie-Ann Campbell (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I want to thank the member for Curtin very much for bringing this important topic to the House today. It's an important topic because taxation is very important to both the social fabric of our country and also the economy. When it comes to this particular matter of public importance, there are two key parts to it—and I want to talk about both of them today. Firstly, I want to talk about tax reform, and I want to look at the difference between our position as a Labor government and the position of those opposite. Secondly, I want to talk about intergenerational unfairness. When you talk about intergenerational unfairness with young people in my local electorate on Brisbane's south side, it is incredibly clear that they bring up a few core things, over and over and over again.

The first thing they bring up is housing. Housing is at the heart of the concerns that young people have when it comes to being able to not only put a roof over their head but also set up for their future, set their family up and make sure that they get a flying start to life. The second is the cost of living and making sure that when they think about their hip pockets, when they think about paying the rent, they have enough money to get by—and not just to get by but also to be able, once again, to set up for the future. The final thing is the environment, because the environment is so crucial not only in terms of making sure that people have a good environment to live in going forward and looking towards their future but also in terms of mental health. We know that young people are facing significant mental health challenges when it comes to the climate crisis. It is not just about warming. It is not just about the environment. It is about the mental health of our young people.

I think that when we talk about the opposition's position on each of these things, it becomes very clear. On housing, we know what they don't support. They don't support five per cent deposits for first home buyers—a policy which is designed only to allow it to be easier for young people, for people who are purchasing their first home, to get into the housing market. We know what they don't support. They don't support reforms to housing that, again, will make housing more accessible and more affordable—and we saw them team up with the Greens to vote down and to block housing policy, again and again. When it comes to the cost of living, we know what they don't support. They don't support free TAFE—a policy that is only in place to make sure that young people, people going to get skills and build a trade, can access something to build their future on. And we know that they don't support 20 per cent off student debt either. When it comes to intergenerational fairness, we know that the opposition have again and again voted against every single measure designed to create a better life for the future.

In terms of tax reform, can I tell you that those opposite, the Liberal and National parties, talked a lot in this place about a talkfest that happened a couple of weeks ago. I don't often agree with the opposition, but I agree that there was a talkfest a couple of weeks ago. But it wasn't in Canberra—it was in Brisbane. In Brisbane, the LNP conference was held, and my goodness it was a talkfest! Did they talk about intergenerational unfairness? Did they talk about tax reform? They didn't. I'll tell you what they talked about. They talked about removing welcomes to country, they talked about lifting the ban on gay conversion therapy and they talked about abandoning net zero. That talkfest really demonstrates what the opposition have in mind when it comes to their priorities. They're about ripping down our pathway to net zero and about ripping down our pathway to making sure that future generations are protected when it comes to the environment.

In contrast, what were Labor doing? We were holding an economic roundtable, an economic roundtable that was designed to address these very points: intergenerational equity, a fair go for working people, and including intergenerational equity terms on top of the three—not one, not two, but three—tax cuts for every Australian. Labor is taking this seriously, and the opposition is only against intergenerational fairness.

Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source

How income tax is applied in Australia ultimately shapes our society, our economy, where we live, how we live and even our family composition. Over the decades, incentives for living in regional Australia have diminished. Zone tax offsets were first introduced in 1945 to compensate for climatic hardships, isolation and higher living costs in rural Australia. The tax offset amount hasn't increased since 1993-94. That's over 30 years with absolutely no indexation. Current annual offset rates are just $338 for zone A and $57 for zone B. The relative value has eroded over time and now has a minimal effect on migration or residential decisions. We have huge regional workforce shortages despite the regions being the best place to raise families.

Advocates are calling for fresh incentives to reinvigorate regional Australia. Westpac's CEO proposed tax-free zones or indexed offsets to attract teachers and nurses to regional Australia. Mark Bouris from Yellow Brick Road suggested revamped zonal incentives—for example, a rebate of $1,500 or $2,000 for regional relocation. This would provide greater equity. Regional Australians do not get a fair share of government spending; in health spending alone, there is a gap of over $8 billion. Meaningful tax incentives for regional Australians will help draw people to the regions and will go some way to addressing this inequity.

We have a system that penalises older Australians who are entitled to the pension but who would like to remain in the workforce. National Seniors Australia, with Deloitte modelling, found that, if just 10 per cent of pensioners took up or increased their work hours, the economy would benefit from an additional 209,000 workers and the government would in fact receive a small boost to fiscal aggregates. It would add benefit to the economy and no cost to the government. If the initiative were confined to just the healthcare and social assistance sectors, there would be a boost of 25,000 workers.

For example, Heather is 68. She works casually as a registered nurse. She would be happy to work additional hours. Her employer would welcome her increased availability. Heather wants to work more hours to boost her income, but she finds the 50 cents in the dollar punitive and the Centrelink reporting burdensome, so she doesn't take the shifts. Workforce participation in Australia for those aged over 65 is just 15 per cent. In New Zealand it's 25 per cent. Not all but many older Australians do want to continue to be in the workforce in some capacity after age 67. The current Centrelink and tax policies penalise older workers and contribute to age discrimination. Reform would increase incomes and savings of lower-wealth pensioners, particularly women, and help to meet growing demand for care workers, teachers, nurses and a whole range of skill-shortage areas.

Australia's fertility rate has dropped to a record low of around 1.5 babies per woman. Our birthrate is a good litmus test, I think, on the confidence of our nation. We want Australian families. We want couples to raise little Australians. Many couples in my community tell me they simply can't afford to have a family. Nearly half, 49 per cent, of young Australians cite the expense of raising children as a major obstacle to doing so. Over half of Australians under 35 have delayed parenthood due to cost pressures. Child care in Australia consumes above the OECD average as a share of household expenses. We provide no meaningful tax incentives for families with young children. We do not offer income splitting, nor do we have any tax offsets.

Income splitting—where the burden of tax is shared across a couple, combining their incomes and then dividing—creates fairness, because the same family income can have two very different tax bills. For example, one family with a whole family income of $200,000, with both earning $100,000, will have a combined tax bill of just over $41,000, whereas another family with the same total income of $200,000, but in which one of the parents is raising children at home and the other is earning the $200,000, pays $56,000 in tax. That's nearly a $15,000 difference. This is unfair.

There are 13 OECD nations that allow income splitting, including the United States, France, Germany, Ireland, Norway, Poland and Spain. Australia should be one of them. Out-of-pocket expenses for child care, whether it's day care or vacation care, are a legitimate work expense, yet we don't allow families to claim this expense on their tax return. We should.

We should be doing everything we can to encourage working families to thrive. Income splitting and assisting with childcare expenses—classing them as a workplace deduction—would go a long way with regard to tax policy solutions.

Renee Coffey (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

I also want to thank the member for Curtin for raising this matter of public importance. My electorate of Griffith is diverse, it's vibrant and it's young. In fact, Griffith has more millennials and gen Zs than both the Queensland and Australian average, with a median age of just 34. Almost half the residents in Griffith are renters, far above the state and national figures. Over months of campaigning, I doorknocked close to 15,000 homes, and I hosted countless mobile offices, 'coffee with Coffey' sessions and free community food trucks. I also spent a lot of time in our local schools and our local educational institutions. I heard time and again from young people that they are struggling with cost-of-living pressures. They are paying rising rents, they are carrying student debt, and they're trying to save for a first home—all while managing the everyday costs of life.

Now, as their representative, I have the privilege of standing in this place and ensuring that their voices—the voices of young people in Griffith—are heard. After a decade of coalition neglect, young Australians face greater challenges than the generations that came before them. Housing is harder to access, wages stagnant, student debt has is soaring and the cost of living is biting harder every day.

That is why I am proud to be part of the Albanese Labor government, a government that is delivering real, practical relief to young people. We are making education more affordable. Over 31,000 students and graduates across Griffith are already benefiting from HECS relief. Indexation is now capped so debt never grows faster than wages, and we are cutting debts by 20 per cent, lifting repayment thresholds and lowering repayment rates. This means young people can plan their futures without being held back by the looming student debt. We are also delivering the new Commonwealth prac payment so teachers, nurses, midwives and social workers can be supported whilst on their placements. With more study hubs across outer suburbs and regions, young Australians can study closer to home and at lower cost. We're investing in free TAFE, with 600,000 places already delivered and more to come.

This government is tackling the cost of living head on. Inflation is at a four-year low, wages are growing again and interest rates have been cut three times in six months. More than 1.1 million jobs have been created, a record for any government in a single term. This benefits all Australians, including our younger Australians. We're delivering practical support: increases to the minimum wage and the superannuation guarantee, energy bill relief for households, tax cuts already delivered—with more to come—and support for apprentices entering the housing and construction industry.

In Griffith, with nearly half the electorate renting, housing is absolutely front of mind. That's why our government is investing $33 billion in housing and supporting first home buyers with a five per cent deposit scheme with no lenders mortgage insurance. We know this will make a real difference to young people living in the electorate of Griffith and across Australia. These initiatives will help more young people buy a home, and we have also delivered the largest increase in Commonwealth rent assistance.

The Albanese Labor government is committed to reducing intergenerational inequality. We're creating a fairer tax system, providing relief for student debt, investing in housing, delivering free TAFE and ensuring that wages are growing again. In short, we are backing young people every step of the way, because they are not just the future of this country; they are its present. And, in Griffith, with one of the youngest populations in the nation, that commitment means everything.

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

I thank the member for Curtin for raising this matter of public importance. It's clear that the Economic Reform Roundtable held last month highlighted the growing issue of intergenerational inequality in our tax system. There's a little bit of irony in that coming out so clearly when there were very few young people sitting around the table to give input. It was certainly noted that the same usual representatives were there in relation to industry, unions and other interests. I call on the government: if genuine intergenerational inequality is going to be addressed, there has to be a broader analysis and taking on board of different perspectives.

We also saw that there was no consideration of climate resilience, though climate will have the biggest impact on future generations and intergenerational inequity, given the debt and the cost that will come from it. There was no focus during that productivity roundtable on climate risk or on investing in the resilience of the economy. The insurance sector wasn't even at the table, and how we're going to actually mitigate risk was not addressed.

What we do know is that Australia's tax system is outdated. It no longer reflects the realities of modern life. Young Australians are being asked to carry a disproportionate burden. They're locked out of homeownership due to an inflated property market and tax incentives that favour investors. Saddled with rising tertiary education costs and student debt, they're struggling to access capital and the supports needed to start businesses and build their futures. They're taxed under a system that rewards asset accumulation over innovation and productivity. The very things that are essential to our wellbeing—housing and education—are the very things that are increasingly out of reach.

These issues were raised in the Henry tax review some 15 years ago, and much of it remains unimplemented. And, whilst there's a lot of talk from government ranks around investment in housing supply, there's a complete silence when it comes to really talking about the other demand levers and other pressures. What we need is ambitious reform. We can't have a 21st century economy continuing to fund 19th century industries. We need to move away from taxing income and productivity. We need to unshackle ourselves from legacy policies, industries and vested interests.

We know what needs to be done. Earlier this year I released the Re-energised Economy paper developed alongside economist Dr Emma Aisbett. It aims to lift productivity and to address intergenerational inequality and its key drivers—especially around climate risk. To restore fairness and accessibility in housing, we have to talk about phasing out CGT discounts for multiple investment properties. We need to talk about reducing stamp duty to incentivise downsizing and greater mobility and better utilise existing housing supply.

We cannot just have a conversation about increasing supply; we have to talk about limiting negative gearing tax breaks to rental properties that meet and ensure minimum energy standards, encouraging greater energy efficiency, solar panels and batteries for rental properties, and making things like the affordable batteries program available to strata.

We have to empower young people to be ambitious and economic drivers by investing in STEM education and future skills and reducing barriers for young people to access start-up capital and flexible finance. We need to enhance opportunities for research and development investment, and we have to move away from taxing individuals to instead raising better revenue from key sectors like fossil fuels. We have to introduce a fossil fuel export levy aligned with the Safeguard Mechanism to prevent that cost externalisation that's occurring. We have to broaden the Safeguard Mechanism to an economy-wide reach, because too many proponents and projects are simply not caught. We have to strengthen the petroleum resource rent tax and urgently wind back the fuel tax excise rebate that overwhelmingly disincentivises the mining sector and the transport sector from decarbonising.

If we're serious about talking about tax reform and intergenerational inequity, we have to address these issues. We have to reward innovation, not extraction. We have to embrace technology responsibly and create opportunities for all. We have to address all of those looming risks to productivity—especially the climate risk. Yet, whilst the government talks a big game about wanting to do this, it continues to approve projects that will only make the problem worse. I call on this new generation of members of parliament in the Labor government to actually have ambition and drive change.

Carol Berry (Whitlam, Australian Labor Party) Share this | Link to this | Hansard source

I'm pleased to have this opportunity to speak about one of the most important challenges facing our nation—ensuring our economy and our tax system are fair and that we deliver the opportunity to flourish for all Australians, particularly young people, both now and into the future. There's no-one better placed than our current leadership team of the Prime Minister and the Treasurer, as well as the broader Labor government, to ensure our economy and our tax system deliver for all Australians, particularly young people.

The foundational principle that drives the Australian Labor Party is the concept of fairness. The Prime Minister has humble beginnings, with his roots in housing commission, as does my family. And, when you come from humble beginnings, you don't forget it. You understand the importance of leaving no-one behind, because you have direct experience of being at risk of being left behind. Social justice is a reality; it's not just a concept. The Albanese Labor government is deeply committed to ensuring our economy works for everyone, especially for young people.

Due to this government's good management, our economy is in a strong position: annual real wages have been growing for seven consecutive quarters; the economy continues to expand; interest rates have been cut three times in six months; more than 1.1 million jobs have been created since we came to government; the average unemployment rate is the lowest of any Australian government in 50 years; the budget position has improved by more than $207 billion; and we've found more than $100 billion in savings, while our predecessors had none in their last budget.

When it comes to tax, this government has a clear agenda. We are delivering three tax cuts for every single Australian taxpayer—one last year, one next year and another the year after. Labor's tax cuts benefit 14 million Australians. We are working hard to make things easier for all Australians. Eight important changes come into effect from 1 July, including an increase to minimum and award wages for 2.9 million Australians, an increase to minimum required super, more paid parental leave, more help with energy bills and more help for people to get into a construction trade.

Our focus on the future for our young people leaves the coalition far behind, as they continue to debate within themselves whether climate change needs drastic action—something which our young people understand acutely, because it will have a direct and dramatic impact on their future. Labor is focused on delivering real outcomes for all Australians, especially our young people, and that's why we've delivered on our commitment to cut student debt. Australians around the country will have an average of $5,000 wiped off their HECS debt, and that includes 15,000 people in my electorate of Whitlam. We're also delivering on our promise to make it as easy as possible for young people to build or buy their own home. That is why, from 1 October, all first home buyers will have access to our five per cent deposit scheme. For the average first home buyer, access to this scheme will cut years off the time it takes to save a deposit and will save tens of thousands of dollars on lenders mortgage insurance.

The Albanese Labor government understands the challenge that exists within our economy around intergenerational equity. We understand the principle that each generation should have equal opportunities, responsibilities and access to resources. Australia, like many advanced economies, is undergoing significant demographic, economic and social change. We are living longer, birthrates are declining and the structure of our workforce is evolving. This is creating growing pressure on public services, such as health care, aged care and social security, while the tax base that funds these services is shrinking in relative terms.

And, while we will need to continue to rely in part on immigration to ensure we can meet the needs of our economy and our workforce, the coalition feeds the lie that immigration presents a problem for our economy and that immigration is causing our housing crisis, which it is not. Fifty per cent of all Australians have a parent that was born overseas, but the coalition is always willing to play the race card to sell down the river Australians who've migrated to this country or who have parents who migrated to this country, despite the fact that this is a reality for so many of us. The coalition is completely out of touch with modern Australia, and that is why they were trounced at the last election.

Intergenerational equity is a core focus for this government. It isn't just a policy principle; it's a moral obligation. It means asking not just what we can afford now but what kind of legacy we're leaving behind. Labor will ensure that Australia's tax system and our broader economy reflect the values of fairness, sustainability and shared responsibility, not just for this generation but for those yet to come.

Sophie Scamps (Mackellar, Independent) Share this | Link to this | Hansard source

Young people today will be the first generation in modern history to be worse off than their parents. It's been nearly a quarter of a century since Australia last undertook broad structural reform of our tax system. Over that time, the warning signs have been clear: productivity growth has slowed through the early decades of the 21st century and Commonwealth spending has continued to rise—just as projected in the very first intergenerational report, back in 2002.

That intergenerational report made clear that, without reform, our tax system would struggle to support the demands of future generations. It warned:

Deterioration of our natural capital would be likely to affect the wellbeing of current and future generations, reduce the economic base and consequently affect intergenerational equity.

It also stated:

Tax reform is … important in terms of providing a robust tax base that will grow in line with the economy.

Then, in 2010, the review of Australia's future tax system, chaired by Dr Ken Henry, laid out another compelling case for change. It warned that our heavy reliance on taxing labour income, transactions and the normal return on capital would ultimately undermine productivity growth and workforce participation—key drivers of future living standards. It identified that a broader, more sustainable tax base, including properly taxing our resources, is essential to meeting the demands of a changing economy. Yet, despite these insights and warning signs over 20 years, we are yet to see the kind of comprehensive reform that matches the scale of the challenges before us.

Today's younger generations face a growing set of economic challenges in the rising cost of education, rising cost-of-living pressures and, of course, lack of affordable housing to rent or buy—such that many young people have given up the hope of ever owning their own home. These burdens are compounded by a tax system that leans heavily on income tax. As our population continues to age and spending continues to grow, including for aged care, health and the NDIS, we will become increasingly reliant on taxing an ever-shrinking proportion of income earners. Former Treasury secretary Ken Henry called this an intergenerational tragedy, and I could not agree more.

The good news is that there are clear opportunities to make meaningful progress to reform Australia's tax system. Many of these opportunities would raise revenue while improving intergenerational equity and long-term sustainability. Reforming the petroleum resource rent tax, for example, could ensure Australians receive a fairer return for the extraction and export of our natural resources. Norway has built an almost $2 trillion sovereign wealth fund from the proceeds of their resource taxation so that future generations can thrive. We, on the other hand, have an almost $1 trillion debt that will burden our future generations for decades to come. Also, here in Australia, the government currently collects four time as much money from student HECS repayments as it does from the petroleum resource rent tax. This is despite these multinational fossil fuel corporations being amongst the most profitable companies in the world. We've got it backwards.

In the area of preventive health, targeted taxes on junk food and gambling could not only reduce harm but also generate revenue to reinvest in public health. What better way to improve the wellbeing and productivity of Australians than to help them live healthy lives? Instead we allow our young people to be the cannon fodder for the profits of predatory multinational gambling and junk food companies at the expense of their health.

In housing, we need to discuss reforming the tax concessions, including the 50 per cent capital gains tax discount and negative gearing, to help give our younger Australians a fairer go when it comes to buying their first home. This does not have to be an all-or-nothing equation. Reforms could be grandfathered or limited to a set number of investment properties.

These are not radical ideas, but we also need to look beyond individual tax reforms. The truth is our inability to deliver fair and future-focused tax policy is a symptom of deeper structural policy dysfunction, which is why I have been advocating for a 'wellbeing of future generations' act and commission.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The discussion has now concluded.