Thursday, 8 October 2020
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020; Second Reading
I'm absolutely delighted to rise and speak in this chamber in relation to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020. I'm absolutely delighted because the budget that was delivered on Tuesday night delivered for all Australians. The budget handed down on Tuesday night delivered for all Australians—every single Australian, including in my home state of Queensland and including people living where my office is located, in the Ipswich region of Queensland. It delivered for those Australians.
Senator Gallagher referred to there being no business investment strategy. That is simply incorrect. There are a whole range of matters which were brought down in the budget on Tuesday night which will promote business investment. The one thing you have to realise, Madam Acting Deputy President, is you don't have to dictate to private enterprise, to the entrepreneurs in our society and to the people who want to get ahead in this country what they should do with their capital and with their income; you simply need to get out of the way. You simply need to get out of the way and you need to structure the tax system so that it incentivises people and doesn't penalise people. That's what you have to do. You don't have to dictate to them that you should invest in this or invest in that. Government should get out of the way and structure a tax system that provides incentive for investment in this country, not disincentive.
That is exactly what the budget delivered on Tuesday night. There were a number of initiatives in the budget that fall into that category, including the immediate write-off of eligible assets, which will be an absolute boon for 99 per cent of businesses across this country. There will be investments made in this country that we can't even dream of coming out of this budget. It also includes promoting the use of gas and more supply of gas—increase the supply of gas, bring down gas prices, promote manufacturing. It's quite simple: increase the supply of gas, bring down gas prices, promote manufacturing. That's what this budget will also do. There is $2 billion for research and development. There is the sovereign manufacturing initiative, which will provide specific incentives for our manufacturers to develop those industries and provide jobs. And there are the tax cuts themselves that were brought down on Tuesday night. They will also deliver jobs, because when Australians are allowed to keep more of their money in their own pockets they'll go out and spend that money or they'll invest that in companies which invest that money and generate wealth and create jobs. That's what happens. That's what happens when you let private citizens keep more of what they earn.
One of the matters which really attracts me to the tax relief that is being provided through the budget is that it is proportionate and it is targeted. The people who receive the greatest proportion of the tax relief are low-income earners. For someone with a taxable income of $30,000 a year, their total change in tax compared with the 2017-18 year will be 21.3 per cent less. We know that people in those lower income brackets are more likely to spend each dollar that they are allowed to keep after tax. For someone earning $35,000 a year, their tax saving compared to 2017-18 year will be 14.8 per cent. By the time you get to someone who's earning $200,000 a year, the total change in tax falls to 3.8 per cent, and that's the way it should be. The tax cuts should be targeted at the low- and middle-income earners—and they are, as those percentages show in stark relief.
One of the other aspects of the tax changes that were brought down on Tuesday night that I fully support is the fact that you can carry back losses. A company that generated profits in the year ending 30 June 2019 can carry back the losses which they incur or have incurred in the year ending 30 June 2020 and offset those losses against tax paid in the year ending 30 June 2019. I think that's an absolutely tremendous initiative. It recognises the fact the companies, the owners of those companies, have been paying taxes to the Commonwealth over a period of time. Those taxes are used to pay for health and services. Then, when the company has generated a loss, not only can it carry that loss forward but it can actually carry it back so it can get a tax refund and use that money to either reinvest in the business or help it get through this period. I think that's an absolutely tremendous initiative.
Some of the other initiatives in terms of the tax relief have been targeted to make sure that the low- and middle-income earners are the ones who are actually going to receive those tax cuts. And they'll spend that money. They will spend that money that they're being allowed to keep through these tax cuts. Treasury estimates—and these aren't my estimates; these are treasury's estimates—that reducing the personal income tax burden on hardworking Australians through this measure will boost GDP by around $3.5 billion—billion with a 'B'—in 2020-21 and $9 billion in 2021-22, and will create an additional 50,000 jobs by the end of 2021-22. Those are Treasury's estimates—not my estimates, Treasury's estimates.
In the current economic situation, we need every single job we can get. These tax cuts will help generate those jobs. How? By putting more money in the pockets of the hardworking Australians who have earned that money, by allowing families to keep more of what they earn, and by allowing families to spend more on what their personal circumstances need. They will be the ones who make that choice, not government. The hardworking Australians who have earned that money will be the ones who make that choice. I would remind the chamber again that the income tax cuts are proportionate; they are weighed in favour of low-income earners and middle-income earners. As I said at the start of my speech, for someone earning a taxable income of $30,000, the percentage change in tax saved is 21.3 per cent. For someone earning $200,000, it goes down to 3.8 per cent. For someone earning $60,000, the tax saving is going to be 17.8 per cent. Compare that to someone who earns $160,000; their tax saving is only going to be 5.1 per cent. That is exactly how it should be—to make sure those tax cuts are targeted to help those Australians in the low- to middle-income tax bracket.
We should remember that eight in every 10 Australians are employed in the private sector. In order to rebuild our economy and create more jobs, we need to kickstart that part of the economy, the private sector. It is expected that the tax relief given to businesses, the instant asset tax write-off, will also be a boost to GDP and job creation. It will provide opportunities for everyone in our society—in our cities, in the country and in our regional centres. My office is in the Ipswich region in Queensland, where I know many businesses are going to take advantage of these opportunities. I have visited TAE Aerospace in the Ipswich region. It is based in the industrial centre in Bundamba. As this budget was brought down on Tuesday, I was reflecting on how they will be able to use the tax relief that will be given to their business to invest in more capital—updating machinery, expanding their product range and providing opportunities to young people in the Ipswich region. And they are already doing great work in terms of providing those opportunities to young people in our regions.
The $2 billion for research and development is also desperately needed in the economy at this stage. It will be exciting to see what Australian initiative, Australian enterprise, Australian knowledge and Australian know-how can generate with that R&D incentive. I'm looking forward to visiting businesses to hear about how they are applying that R&D incentive to generate jobs, create wealth and provide opportunities for all Queenslanders, for all Australians, to fulfil their true potential, whatever their background and wherever they come from.