Tim Storer (SA, Independent) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. As the minister will remember, Treasury secretary John Fraser acknowledged in budget estimates that Treasury's estimates for the performance of the economy are subject to heightened uncertainty and to large error bands three or more years ahead. How, then, is it economically responsible to now lock in more than $120 billion worth of tax cuts, in stages 2 and 3 of your package, when they come into effect four and six years from now?

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

Not only is it responsible but it is necessary, because it is part of a plan for stronger growth and more jobs. This is part of a long-term plan for stronger growth, more jobs and better opportunities for working families around Australia to get ahead. What the Treasury secretary, Mr Fraser, indicated during Senate estimates was that the government's economic forecasts reflected in the 2018-19 budget are prudent, cautious and in line with those economic forecasts of independent institutions like the Reserve Bank of Australia—in fact, in some areas, they're somewhat more prudent than those of the Reserve Bank or, indeed, the International Monetary Fund.

What Mr Fraser did indicate—and it's, of course, all spelled out in the budget papers—is that there is always risk. If we walk out of this building and cross the road, there's risk. We manage that risk by looking right and left to make sure we don't get hit by a car. What the government is doing is managing the risk. There are some things that are outside of our immediate control but what happens in the global economy or with world prices for our key commodity exports or in certain geopolitical matters is not something that is in our direct control. Because of that, and because we are an open trading economy, and because we compete with other countries around the world, we need to ensure that at all times we are in the best possible position to be competitive internationally and that we provide the right incentives, the right encouragement and the right reward for effort to Australian families to get ahead. That is how we generate stronger growth.

If individual Australians have the best possible incentive to get ahead, that leads to stronger growth across the economy in aggregate. As we have stronger growth across the economy in aggregate, because we are addressing bracket creep, what happens is that low-income earners in particular have better opportunities to get into the jobs market, have better opportunities to work more hours and get more pay and have better opportunities to get ahead. That is the whole point of our plan for jobs and growth. We want to ensure that our agenda— (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Storer, a supplementary question.

Tim Storer (SA, Independent) Share this | Link to this | Hansard source

If the economy undershoots Treasury's optimistic projections, the government has three options: delay the introduction of stages 2 and 3 of the package; reduce spending on services like health and education, which South Australians expect; or slow down overall debt repayment, which already costs $18 billion a year in interest. Don't Australians deserve to know the fate of stages 2 and 3 now if economic circumstances don't turn out the way that the government hopes?

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

Indeed, Australian working families do deserve to know the fate of stages 2 and 3. The fate of stages 2 and 3 of our long-term plan for income tax relief is that they were legislated in full by the Senate today. The Senate passed a judgement that it was in the best interests of working families across Australia to pass our long-term plan for income tax relief in full. It is, of course, a central part of our plan to provide cost-of-living-pressure relief to low- and middle-income earners but also to address bracket creep, because addressing bracket creep, which is a drag on growth—

Scott Ryan (President) Share this | Link to this | Hansard source

Order, Senator Cormann! Senator Wong, on a point of order?

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The point of order is on direct relevance. The question went to what is the government's plan in circumstances where the growth assumptions in the budget are not met. That is the question, and there were three options provided.

Scott Ryan (President) Share this | Link to this | Hansard source

There was a preface to the question in the question. I'm listening carefully, and I do consider the minister to be relevant. I'll continue to listen carefully.

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

To assist Senator Wong, let me say directly that I don't accept the premise of the question, which is that the assumptions are overly optimistic. They're not. The Treasury secretary has clearly confirmed that they're prudent economic forecasts that are in line with other relevant independent institutions like the RBA and the IMF. Of course, everybody knows that the Labor Party will go to the next election with a promise for higher taxes. We'll go to the election entrenching lower taxes. (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Storer, a final supplementary question.

Tim Storer (SA, Independent) Share this | Link to this | Hansard source

Minister, are you suggesting that stages 2 and 3 are now locked in whatever the state of the economy four and six years from now?

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

The long-term plan for income tax relief for all working families across Australia has been legislated by the Senate today, and this is part of our plan to deliver a stronger economy into the future. This is a central part of our economic mission, which is to deliver stronger growth, more jobs and higher wages. If we want to have stronger growth, more jobs and higher wages, one important part of that is to ensure that hardworking Australians can keep more of their own money. If you take more and more money out of the pockets of Australians just because of inflation—

Scott Ryan (President) Share this | Link to this | Hansard source

Order! Senator Cameron on a point of order?

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

The point of order is on relevance. I think Senator Storer asked, 'Were the tax cuts locked in regardless of the state of the economy?' He hasn't answered that. It's regardless of the state of the economy.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Cameron, as you know, I cannot instruct the minister how to answer a question. He is being directly relevant to the question, however. Senator Cormann.

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

The economy will be stronger as a result of these tax cuts that the Senate has legislated today. The economy would be weaker if Labor got to impose more than $200 billion in higher taxes on families, businesses and retirees.