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

'So they should,' says Senator Whish-Wilson. Okay. Guess what happens if we legislate our seven-year plan in full? At the end of that seven-year period, do you know how much the top 20 per cent of income earners will be paying in income tax generated across Australia? More than 60 per cent. So, there's no change to the progressivity of our tax system. You know what will happen if we don't legislate this plan in full? We will be hitting aspirational, hardworking middle Australians harder and harder, and that 60 per cent will become 65, 70, 80 per cent.

We in this country don't have automatic indexation of our income tax thresholds. That means that just by wage inflation, just by simple inflation, more and more middle-income earners get pushed into the higher tax brackets, where they have to pay more tax on the income they take home. That is not even taking into account the fact that if you work more hours you get penalised. You work more hours; you get penalised by being pushed into a higher tax bracket. So why would you work more hours if working more hours means that you go from 37 per cent to 45 per cent plus the Medicare levy? It is absolutely recognised that bracket creep is a drag on economic growth and that it is absolutely desirable for bracket creep to be addressed in order to ensure that there isn't an entrenched structural disincentive for working Australians to continue to do everything they can to get ahead.

Senator Wong says that this is about binding future parliaments and that Malcolm Turnbull would have to get elected two more times for this to take effect. No, no; that is actually not true. The Senate is able to legislate today the full seven-year plan and give certainty to working families right across Australia that not only will we provide cost-of-living-pressure relief in the short term, prioritising low- and middle-income earners; we also will do everything we can to appropriately address bracket creep so that all working Australians have the right incentive, the right encouragement, the right reward for effort, the right incentive to continue to work hard and to contribute to our great country. They don't have to elect Malcolm Turnbull two more times to lock this in. The Senate is able to lock this in today.

The Labor Party are making an assumption about what future parliaments might want to do. It might well be that the Labor Party want to add further tax increases to their pre-election agenda. Good luck to them! Good luck to them going to the next election promising to the Australian people that they will increase the tax burden on the economy by more than $200 billion, which everybody knows will hurt the economy. It will hurt families; it will cost jobs. The Labor Party is quite entitled to go to the next election with a higher-taxing agenda. We will not go to the next election with a higher-taxing agenda; we will go to the next election with a commitment to keeping taxes on families as low as possible and to ensuring that taxes on business are maintained at a level that is globally more competitive so that all Australians, today and into the future, have the best possible opportunity to get ahead.

Senator Wong also says these tax cuts are not affordable. Yes, they are. Over the medium term the cost is $144 billion, which is a figure that we've openly and transparently released to the public and to the parliament, in sharp contrast to what the Rudd and Gillard governments did when they tried to increase the tax burden on the mining industry. We had to drag them kicking and screaming into releasing the medium-term projections of the revenue they expected to raise from their resource super profits tax and the minerals resource rent tax. We've provided that information quite openly and transparently. And do you know what you can see in the budget papers? What you can see in the budget papers is that over the medium term, over that whole period, not only does the budget get into a small surplus by 2019-20 and progressively into a larger surplus but we are projected to exceed a surplus of one per cent of the share of GDP by 2026-27 and to remain in surplus all the way through—and that is after we have factored in the cost of this important reform which allows working families around Australia to keep more of their own money.

I just close on this point. I'm very interested to see that Senator Wong is moving an amendment effectively to excise the third stage out of our three-stage, seven-year long-term plan. I guess that means that the Labor Party have already given up on actually doing what they said they would do, which is to oppose everything other than the first stage of our seven-year plan. It's very interesting. Normally in this chamber the way this process is managed is that you start off with getting all you want and then you progressively work your way backwards to being forced into the position where, if you can't get everything you want, you aim to get an amendment up that gives you 70 or 60 per cent of what you want.

It's interesting that Senator Wong in her first amendment hasn't even tried to implement the policy of the Leader of the Opposition. It must mean that the Labor Party's split. It must mean that Senator Wong has stabbed Bill Shorten in the back and turned on Bill Shorten, because she's not in here promoting Bill Shorten's policy to actually excise stages 2 and 3. Maybe Senator Wong is a secret supporter of stage 2 of our three-stage, seven-year plan to provide income tax relief to working families around Australia. I'm very intrigued that the first move that Senator Wong makes in this chamber would not be a move to implement the policy that was articulated by the Leader of the Opposition. Is it now the Labor Party position that you support stages 1 and 2 of our seven-year plan to provide income tax relief to working families around Australia? I would be very interested. Is that now your position? It's a very interesting move by Senator Wong here which is in sharp contrast to what Bill Shorten, as leader of the Labor Party, has signalled into the community would be the Labor Party position.

In fact, as the Labor caucus finished and the Leader of the Opposition and the shadow Treasurer gave a press conference yesterday, the indication that the Australian people were given was that Labor would move to remove both phase 2 and phase 3 from this income tax bill. That is not what Senator Wong is doing in her move now. Senator Wong, essentially, has now accepted stages 1 and 2. I congratulate the Labor Party that you've moved along from one to two. There's only one more step to go! Now that you support the first two phases of our income tax relief plan, which is in three parts, I encourage you strongly to reflect on the fact it is very much in our national interests and in the interests of working families around Australia for us to, yes, provide cost-of-living-pressure relief for low- and middle-income earners but also to address bracket creep so that all working families around Australia have the right incentive, the right encouragement and the right reward for effort so the Australian economy can continue to grow as strongly as possible and as many jobs as possible can be created.