Thursday, 8 October 2020
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020; Second Reading
I welcome the opportunity to rise to speak on the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020—perhaps a little earlier than we had expected to be having this debate! This debate brings together a number of tax measures announced in the 2020 budget—in total, five of them—which I will speak to separately.
I would like to start my contribution by acknowledging the very difficult economic times the country is in, the very significant economic challenges facing the country, the millions of Australians who have had their lives uprooted, their jobs lost, their businesses shut over the last seven months as the coronavirus pandemic has brought in changes which have had not only significant health consequences on our community but very significant economic consequences as well. This budget was the government's opportunity to address, both in the short and long term, some of those significant challenges.
The budget in itself is the third economic package that the government has introduced in response to the pandemic. It comes at a time when we are in a deep recession—the first recession in this country in almost 30 years—where we have 3½ million Australian workers being supported by a wage subsidy scheme, JobKeeper, that Labor called for and the government adopted. We have over 1.6 million Australians on the JobSeeker payment, the old Newstart. I think there are over two million Australians who have been receiving the coronavirus supplement to assist them to get through the very, very difficult times and put money back into the economy at a time when it is desperately needed. So we are in a very unusual and challenging time for so many Australians. The budget was the opportunity for the government to respond to some of those challenges, not just in the short term but in the long term and, in many ways, it was a missed opportunity.
The budget outlined a debt-and-deficit trajectory that this country has not seen before. We have combined deficits of $480 billion and a deficit this year of $213 billion. We have net debt increasing to just under $1 trillion and gross debt exceeding $1 trillion—in fact, based on this budget and not any subsequent economic responses that might be needed, the Minister for Finance confirmed that it will peak in 2029 at $1.7 trillion.
I can't not take the opportunity to remind the government of the hypocritical and damaging campaign they have run to demonise debt and deficit over the last decade. In many ways, the challenges faced by the Australian community and the responses required have been a complete rejection of the approach that the government took over the last decade or so, where they used their so-called 'debt-and-deficit disaster' language to weaponise any sensible narrative about the use of a government's budget and the levers available to support people, the community and society. The contradiction and the hypocrisy and all of the dangerous language about a 'disaster' that they used at a time when they faced inheriting gross debt in the order of $280 billion—compared to releasing budget papers which have now outlined gross debt reaching $1.7 trillion—is not lost on the opposition.
I would hope, out of all of the learnings from these last seven months, that there has been some in that regard: that the budget does exist to serve a purpose. It is not the same as a household budget. It has a very different purpose. It is to be used in a way that delivers outcomes for people. So when you introduced a budget like you did in 2014—in pursuit, at any expense, of your fiscal strategy at the time—that slashed a whole range of supports for vulnerable Australians, you left a whole load of people behind and that had impacts and it caused damage. Again, the complete rejection of that fiscal strategy, and the adoption of one which acknowledges the role and the need for government to invest in people and in our community when it's needed, is important. We've heard in recent days the government trying to pretend that debt under Labor is terrible and a disaster, while debt under them is manageable and fine—'no issue here'. So I do make that point.
The bills that we see before us today form a large component of the government's stimulus response, in a sense, to the problems that we are seeing in the economy. There is a bring-forward of the stage 2 tax cuts to 2021 at a total cost of $18 billion. Labor has been calling for these tax cuts to be fast-tracked, I think, since August last year. We think they play a key role in part of the response. They shouldn't at any time have been considered the entire response, and so our support is contingent on that. They have a role to play, and we are not going to stand in the way of millions of families and working people across this country getting some extra dollars in their wallet every fortnight. We think that does have a role to play, and it is a change that we support.
We would have preferred to deal with that bill on its own and separate out some of the other measures that perhaps aren't as time critical and could have been dealt with in a more orderly way, allowing the Senate to use its scrutiny powers to inquire into those. However, the government have made it clear, and they've played this game before where they package up a whole range of initiatives into an omnibus bill and serve it up on a plate and claim that if you're not for all of it then you're clearly standing in the way of getting the tax cuts out the door. This is this government's style: push through, barrage through, blame everybody else, point the finger and take the attention off itself.
We would prefer—and I want to make this point very clear—having more than 48 hours, essentially, to work through the detail of the other measures, including the small business turnover, the amendments to the R&D tax incentive and particularly the large measure of temporary full expensing of depreciation assets at $27 billion. I should make it clear that we do support the increase to that small business turnover threshold and the loss carry-back against previous profits. There is a price tag of $5 billion attached to that loss carry-back, not an insignificant amount of money at all, but we do think those are sensible measures. In fact, I think we had proposals very similar to those before, and they should be supported.
Our concerns relate largely to the amendments to the R&D tax incentive cuts and the full expensing of depreciating assets or the instant asset write-off of 100 per cent. That is at a cost of $27 billion. It is a massive measure that I think the Senate should have had the opportunity to inquire into for a bit longer than 48 hours. The member for Rankin in the other place has raised a number of issues around that. One is the fact that there is no long-term solution to business investment in this country. This is a very short-term measure, and it will create a very significant cliff at the end of it, which I'm sure the government acknowledge but which they haven't dealt with in this budget. It doesn't deal with a long-term business investment strategy. We know business investment was tanking in this country long before the pandemic. It was a problem. If you talk to anyone in the business community, the major issue they raise around the lack of appetite for business investment is the lack of an energy policy. I think everyone on that side of the chamber knows that too, but it is a tricky one for them to resolve. But that is the solution in many ways: to provide confidence and certainty to the business community if there were energy policy certainty at the same time.
In terms of the time that the Senate has available to it today on those two measures that I've drawn out, including the R&D—and I know Senator Carr has a much better knowledge of the issues and the disagreements around the research and development tax incentive, including the cuts of $1.8 billion that were being proposed, how they relate to this new program that's been put in and whether the money is real—I think we need to understand that a bit more. We will have the opportunity in estimates to explore that a bit further. In the interests of the government wanting to pursue their strategy of pushing this through the chamber so quickly, any problems relating to these two measures are really worn on their head. They have to be responsible. If there are changes that need to be made as the detail of these programs is rolled out, then they need to make them. I don't think the government should accept that our support for this bill, the omnibus bill—and we have had no choice around how these measures are separated out—gives them a blank cheque endorsement of these programs. I say to the government: these are your programs. You've had the opportunity of months to design them. You are telling the Australian people they will work and they will deliver the outcomes and the jobs that we need to see across this country. It really is on your head. You need to address any problems. It is on your head if these policies don't do what we need them to do, which is to make sure that unemployment in this country gets as low as it can be, as quickly as it can be. We have very significant concerns around that.
We think the other issues that are related to the budget and not in these bills are interlinked in the sense that the government are putting all of their effort behind these measures to drive the economic recovery at a time when they are cutting JobSeeker and cutting JobKeeper. I think the failure to address the permanent increase in JobSeeker in this budget is just mean. It's simply mean. There is absolutely no reason why, in the first weeks of October, the government is not in a position to give an answer about what it's doing for the 1.6 million people surviving on that payment in the long term. It's just wrong. They're trying to give certainty in a whole range of areas for the next 18 months to two years, but people who are surviving on the lowest of incomes don't deserve that kind of certainty? They cut JobKeeper. They restrict JobMaker to those under the age of 35—we have to explore some of the thinking behind that because it leaves almost a million people on that payment who aren't eligible. They have no plan for aged care. I think it's well understood that 51 per cent of the population seems to be ignored in this budget, and there's a lot of concern around that. They do not address issues around child care, women's homelessness or social housing.
I'm sure we will continue to debate this budget in the months ahead and through estimates. Whilst we support the passage of these omnibus bills, we do lay down some markers that we do have concerns with a couple of the measures. It's firmly in the government's court to change those, but it's also firmly the government's position that these be passed today. The opposition will be supporting that, but we have raised some concerns which we hope the government is listening to and will take on board.