Senate debates

Wednesday, 7 September 2022

Matters of Urgency


4:30 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | Hansard source

It is nice to see you, Mr Acting Deputy President O'Sullivan. It is always good to know when the clock starts ticking because that is the opportunity to make some remarks about this very important matter. When it comes to the philosophy here, it is very clear that there are different views about the role of the state and the role of money within our society and economy. Personally, my view has always been that the state has no money of its own. It must go and levy that from its citizens. That is what we do to provide services and the like, and we have done it over the last few years on a scale that has not been seen for some decades, as a result of this economic shock and health crisis.

Philosophically, we are committed to the idea that people's money is their own and we should only seek to levy their incomes, salaries and wages to pay for services that are required and nothing more. The stage 3 tax cuts, as they are called—in hindsight I think it was a mistake to have broken them down into three stages; it should have been done in one go—are effectively saying, 'Look, we are going to simplify the five brackets down to four and ensure that middle-income earners in particular are able to work an extra shift or do some extra work and not be penalised.'

By being placed into a higher income bracket, people might be paying 32.5 cents in the dollar rather than 30 cents in the dollar if these tax cuts were repealed. That's what we're talking about here. We're talking about a proposition to repeal tax cuts, which would result in a tax increase. It would result in a tax increase to, yes, higher income earners and it would also result in a significant tax increase to middle-income earners. People who are earning $60,000 to $70,000 would pay additional taxation because they would be pushed into a higher tax bracket. We would be going back five tax brackets, which would not be in their interest. We want to have an economy where people want to work additional shifts and take on more hours if they want to.

I know it's not fashionable to look at the issues facing the higher end of the tax spectrum, but the reality is that the people who were here last week at the Jobs and Skills Summit were talking about the issues facing Australian business. Legitimately they have raised the issue of access to skills. We are at a point in our history where we are competing for capital and we are competing for skilled labour. If you look at our closest competitors, their top tax rate cuts in, in the case of Singapore, at $335,000 and in the case of Japan at $417,000—so, almost double our threshold, which is quite low compared with those of our competitors. If we are serious about his nation's competitive position and serious about attracting skilled people to take on roles in this country, when Australian businesses are saying they can't get access to these skilled people, then why would we want to put lead and our own saddlebags and have an even more uncompetitive situation in relation to taxation?

Sure, I know that that part of the argument may not be particularly fashionable, but it is the truth—that $200,000 is a relatively low threshold relative to the thresholds of our competitors. We can imagine ourselves as some locked-away, protected, subsidised economy, as we were in the 1970s and 1980s—and you can look at the history books and see how that went—or we can be realistic and honest about the challenges the nation faces in relation to skilled workers. That is the truth. The middle-income earners would face a tax increase by being dragged into a higher bracket and it would be harder to attract higher-income earners, which are needed to fill the skills gaps that we heard about last week at the talkfest. We heard the Treasurer today talk about his 36 concrete recommendations. Well, if you go and listen to the business people, they will say that access to skills is one of the most important things.

It is true that the government cannot be held responsible for every single problem in the economy. Given that they have been in office for a relatively short period of time, it would be ridiculous to claim that all the ills should be put at their feet. But over the medium to long term you have to try to get the fundamental position right, and that is that we need to be a dynamic economy whereby we have a competitive tax system and a flexible labour market which allows our businesses to be competitive.

The RBA has just decided that it will raise interest rates. That will make it difficult for people who have large mortgages, and, representing New South Wales, I am very aware that there are people with large Sydney mortgages who will be finding this recent uptick in interest rates very difficult. I'm pleased the government is reviewing the RBA. I would say, whilst not making any personal criticism of him, that the RBA governor has made statements in the past that didn't need to be made, that set market expectations in a way that I think has made things more difficult than they should have been. Sometimes it's better to say fewer things. Sometimes fewer words are better. And I do think there are a lot of people now who will struggle to make their mortgage repayments. Commonwealth Bank data shows that 30 to 35 per cent of people in the capital cities have a very threadbare position when it comes to paying back their mortgages. So, ultimately, we don't want to make things any harder than they will be.

One thing that would make it harder for people would be to increase taxation, because by increasing taxation we'll be saying to the rest of the world, 'We're not interested in new investment; we're not interested in having a dynamic and competitive economy,' and therefore there will be fewer jobs; there will be fewer high-paying jobs. And of course one of the things that's within the government's preserve is tax policy, and there is no case to remove the tax cuts that are designed to improve the investment profile of the country. Any removal of those tax cuts will be a tax increase.


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