Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

The government will be opposing these amendments. We obviously believe—in fact, we are confident—that the bill as drafted is in the best interests of all hardworking Australians. It of course prioritises low- and middle-income earners in the first instance, providing cost of living pressure relief to low- and middle-income earners. It then also ensures that we provide the right and appropriate incentive to all working Australians to continue to work hard and ensure that working Australians don't go backwards as a result of bracket creep. Bracket creep is the result, even without moving up the career ladder, of inflation. Our income tax thresholds aren't indexed, which means that, if we do nothing, more and more middle-income Australians will be pushed into the higher and higher income tax brackets, which is a significant disincentive to work harder. It is also recognised as a drag on economic growth. What does a drag on economic growth mean? It means that growth will be less than it could be. A growth that will be less than it could be means that there will be fewer jobs created in the economy. Who hurts the most when there are fewer jobs created in the economy? It's low- and middle-income earners. They are the most exposed to lower growth and they have the most to gain from stronger growth, and there are a lot of economic studies that back that up.

I would also make the point in response to what Senator Wong has just indicated. This is not an item of government expenditure. This is a decision by the parliament to leave working families around Australia with more of their own money. It's their money. The government should only take as little as possible but as much as necessary to fund the services and the administration of government, which ought to be and must be as efficient and as effective and as well targeted as possible. That is, of course, the commitment of our government.

Senator Wong says that this somehow completely undermines the progressivity of our tax system. That is completely and utterly wrong. Right now, the top 20 per cent of income earners across Australia have to pay more than 60 per cent of the income tax revenue generated by government.