Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

I seek leave to incorporate my second reading debate speech in Hansard and I commend the bills to the Senate.

Leave granted.

The speech reads as follows

I am pleased to bring what has been a lively debate to a close and to thank those members who have made a contribution.

I would like to take this opportunity to provide an overview of the package of appropriation bills. I will start with the budget bills.

These bills provide for substantial funding totalling approximately $62.7 billion. They reflect the government's commitment to build opportunities for the future by investing in families, the aged, defence and security, and transport and water. The initiatives for which the budget provides include:

• Funding of $48 billion on health and aged care, including a new $1.9 billion package over five years for mental health services;
• A comprehensive tax reform plan that provides another instalment in income tax reform; incorporates a major improvement in business tax; and includes a proposal to simplify and streamline superannuation which represents the most significant change in nearly 20 years;
• Provision of additional assistance to almost half a million Australian families through the Family Tax Benefit System, costing $993 million over four years;
• Removing the limit on the number of subsidised outside school hours care and family day care places, which is expected to generate an additional 25,000 places by 2009;
• $5 billion to enhance our training and skills under the new national training agreement covering 2005 to 2008; and
• An additional $389 million over four years to combat illegal fishing, which will include increased surface and air surveillance and patrol capability, which is expected to double the number of fishing vessels apprehended in Australia's northern waters each year.

Also included in the package of five appropriation bills are two supplementary additional estimates bills for this financial year, 2005-06. These bills propose expenditure of $3.6 billion for important initiatives that can be accommodated this financial year because of the strength of our fiscal position and the Australian economy generally. The funding in the supplementary additional estimates bills provides, amongst other things:

• Increased funding of $2.1 billion for the AusLink Programme;
• An additional $521.2 million to extinguish the Australian Government's liability for the superannuation entitlements of former State Rail employees of South Australia and Tasmania;
• An injection of $500 million to the Murray-Darling Basin Commission to undertake a range of capital works and improvements to protect the resources of the basin and enhance environmental flows;
• An additional $310.4 million to fund a co-ordinated package of measures to assist those adversely affected by Tropical Cyclone Larry;
• Grants totalling $265 million to a number of medical research facilities; and
• A payment of $270 million to the Australian Rail Track Corporation to assist with investment in Australia's interstate rail network.

Strong Economy and Sound Budget Management

I wish to emphasise that the significant level of expenditure proposed in the package of bills is only possible because of the government's continued strong management of the economy and ongoing economic reform.

Through its commitment to sound financial management, the government has put the budget in surplus, retired Government net debt, and commenced saving for its future obligations. This has freed the next generation of Australians to meet their own challenges, unencumbered by the legacy of past Labor Governments that spent beyond their means.

Australia's impressive economic performance of the last decade is set to continue. The outlook is for ongoing solid economic growth coupled with low unemployment and moderate inflation.

Tax Reform

The tax cuts announced in the 2006-07 budget build on the reforms delivered through the New Tax System (announced in July 2000), and the initiatives contained in the 2003-04, 2004-05 and 2005-06 budgets. The combined effect of these tax reforms has been to deliver significant reductions in tax for all taxpayers.

The Opposition has made misleading comments about the equity of the tax reforms announced in the Budget. As the Treasurer has demonstrated, the largest tax cut in percentage terms is for people earning $10,000 –they have a tax cut of 100 per cent.

Of course, in dollar terms, the tax cuts are greater for the higher income earners, but that's because they are paying more tax.

In distributional terms, however, the greatest percentage tax cuts go to lower income earners.

To those who argue that we have not addressed bracket creep, it should be remembered that eighty per cent of taxpayers are on taxable incomes of $75,000, or less. As their income increases, they do not move to a higher marginal tax rate. The great bulk of taxpayers can move through the range of $25,000 to $75,000 without changing their marginal rate, which means that most Australians will not be facing an increase in marginal tax rates over the course of their working lives.

Superannuation Reforms

However, this budget not only re-structures the income tax provisions, it also proposes the most significant and far sighted reforms to Australia's superannuation system in decades.

At the heart of the proposed changes is a plan to exempt people aged 60 or over from any tax on payments from their fund, where these are paid from a taxed superannuation fund.

In addition, reasonable benefit limits and age based limits would be abolished, and the self employed would be able to claim a full deduction for their contributions and would also be eligible for the Government co-contribution.

These reforms are simple to understand and will encourage people to save for their retirement and to stay in the workforce longer.

Conclusion

In conclusion, the three budget bills for 2006-07 and the two supplementary additional estimates bills for 2005-06 are important pieces of legislation underpinning the government's activities and reforms to be introduced over the next 12 months. The initiatives contained in the budget will ensure that the economy continues to prosper and will position us to meet the challenges that lie ahead. I commend the budget bills and the supplementary additional estimates bills to the Senate.

Question agreed to.

Bills read a second time.