Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I recall this issue was taken on notice at estimates, and an answer will be provided; I haven't seen that come back through our processes. But 13.6 million Australian taxpayers will be getting a tax cut from 1 July, and 84 per cent of those will be getting a bigger tax cut. We'll be answering your question on notice.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, do you agree bracket creep is a problem for taxpayers in Australia?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I think all governments recognise bracket creep is an issue. That's why governments of both major parties return bracket creep when it's affordable and sustainable to do so. You'll notice that, in the reforms to the tax proposal that was outlined by the former government, this does that by lowering the two thresholds and dropping the two tax rates; sorry, I'm getting back into tax land! That's how we're dealing with bracket creep. It provides relief, and 84 per cent of taxpayers will be getting a bigger income tax cut than they would have under the former government and paying less tax. By 2034-35, someone earning an average income will pay $21,635 less tax than they otherwise would have without these tax cuts.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, you said you return bracket creep when it suits you and when you can afford it. Doesn't that mean that you're taking money off taxpayers, and that it's really a stealth tax because taxpayers don't know they're moving into a higher tax bracket? Bracket creep is when the brackets stay the same but people's wages inflate and they move into a higher tax bracket—so they automatically pay a far higher rate of tax in the next bracket and they don't even know it. Isn't that tax by stealth?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

No, I don't agree with that. I think Australians understand marginal tax rates and the interaction between their earnings and those tax rates. I would say again that's why, regularly, tax cuts are provided to taxpayers—to deal with bracket creep and provide other assistance where that's possible, where it's affordable and sustainable to do so. I say that not to say 'when we choose to' or 'when we feel like it' but because we have to manage a budget responsibly as well. People expect that because taxes pay for all the services that people consume and expect to receive from their government.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, I remind you, before asking my next question, that former deputy commissioner of taxation Jim Killaly, who was in charge of large companies and also international matters for the Australian Taxation Office, said back in 1996 and 2010 that 90 per cent of Australia's large companies are foreign owned and have paid little or no tax since 1953, due to Liberal legislation that was passed in 1953 letting major foreign owned corporations off the hook. Bob Hawke made sure that the Labor Party was also giving gifts to major foreign corporations by letting the world's largest avoider of tax, Chevron, off the hook for tax in the North West Shelf. Surely the fix to bracket creep is to index brackets. If we'd done that 10 years ago we would have saved the people $44 billion in tax. You say, 'Where can we get the tax from?' I get that tax is the cost of government, that tax is the price of government and that tax has to be paid, but foreign corporations in this country are paying little or no company tax.

That means they're using our services that every mum and dad and family and small business is paying for in this country, and they're doing it for free. We used to be the world's largest exporters of gas, we get very little for it, and these foreign companies are sending it overseas. Japan gets $3 billion a year off import duty for our gas going into their country, and we get very little for it. So what I say to you is that we can't afford it because you're not taxing foreign multinationals adequately. You're letting them off the hook.

Because you didn't index brackets in this attempt, over the next four years Australians will pay $38 billion more tax than if you indexed brackets. Surely, you can look at the spending and cut some of that back. Surely, you can look at the taxation of foreign multinationals and make sure they start paying their fair share. Then let Australian families off the bracket-creep hook. Why can't you do that proper budget for the Australians?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

There was a lot in that, Senator Roberts. I think your final question was around budget management, and the work we have done in the last or two budgets and MYEFO has been to repair the budget. The deficits are a lot less, going forward. We've had a surplus budget, we've lowered our debt, we've contained spending despite the pressures the budget is under, and where we've had revenue windfalls we have returned the vast majority of it—over 80 per cent, 88 per cent I think—to the budget to repair it. We do have to manage the budget responsibly and we've been able to do that and provide bigger tax cuts to more Australians.

On your point about multinational tax reform, I don't necessarily agree with all of it because I haven't been able to verify some of the things you've said. We agree that we should be making multinationals pay their fair share of tax—we've got a bill before the parliament on that, we've got a bill on PRRT and we've got a bill on high-balance super, and that is about making sure we are putting the budget on a sustainable footing, that we're able to pay for defence, aged care, hospitals, the interest on our debt and the NDIS, and that we are able to pay for those services that people expect. But this plan does deal with bracket creep, so I don't accept the position that you put saying we don't. That's part of the reason why we're doing it. The Treasury advice there is very clear. Our plan provides better protection against bracket creep for 70 per cent of all taxpayers over the decade, including the average taxpayer and those on low and middle incomes.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, how can you say it fixes bracket creep when over the next four years Australians—families and individuals—will be paying an extra $38 billion due to bracket creep? You are not indexing the brackets themselves; you're just making a one-off adjustment. As soon as that happens, with inflation continuing, you will continue to increase revenues. Inflation hits families in two ways: first of all, goods and services cost more; second of all, they move into a higher tax bracket and they pay more tax. They actually end up with less take-home pay. So I don't buy your argument. Why doesn't Labor want to fix bracket creep?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I think we're just agreeing to disagree, Senator Roberts. This plan does deal with bracket creep by reducing two tax rates and increasing two tax thresholds. It does deal with bracket creep. In particular, as I said in my previous answer, for average taxpayers—those on the average wage, and low- and middle-income earners—this substantially improves the money they get back in their pockets, and returns that bracket creep. But you disagree with me—I will keep making that point and, presumably, you will keep making yours.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, you cannot argue with the fact that someone who is just below the next tax threshold will soon be paying higher tax because of inflation. That is a fact. The only way to beat that is to index the tax thresholds. As to supporting my amendment, it shows you do not want to stop rampant increases in tax or you want to keep bracket creep to exploit taxpayers. Why don't you want to fix bracket creep properly by indexing it so that brackets rise as inflation rises and wages rise, so people stay within the same bracket and there is no creep? Why don't you want to fix bracket creep?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

The tax rates haven't been indexed, that's right. I understand your amendment seeks to do that. I don't think you've moved your amendment, but I may as well cover off. We are not supporting your amendment. The approach in this bill is preferable to your amendment because it provides governments—I'm talking about not our government but all governments; this is the way it's been done—with greater flexibility to respond to fluctuations in the economic cycle. This proposal does deal with bracket creep. It does return money to taxpayers.

I don't know where you get your $38 billion figure from over the forward estimates, but I think your point there is that there will be—that's assuming, wherever that number comes from, that there will be no change to tax rates in that. History will show that governments have made decisions to implement tax cuts where it's affordable and sustainable to do so on the budget, and I expect governments of both political persuasions will continue to take that approach.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, in my view, I don't think you're being honest with the people of Australia, because bracket creep is a stealth tax. Inflation helps your tax revenue. How many pages are in our tax act?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

We might have to take that on notice. I'm just seeing if we can provide you with an accurate answer, but it's quite detailed and there are obviously pages that underpin the tax act as well. I'm not sure we'll be able to do that accurately tonight, but we'll see what we can do.

Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

To the nearest ten thousand!

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I was going to say: it's a lot!

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

To the nearest thousand would be fine, thanks, Minister. The point I'm trying to make is that we already have a very complex tax system, which is confusing for small businesses and confusing for people who don't have access to lawyers and deep pockets. It's confusing for individuals and families. We always support returning more money to taxpayers, and $15 a week is a lot of money to many people. In the overall scheme of things, it's not very much. In a few years, you'll be recovering far more. Is there any plan to actually reform taxation properly, to do a comprehensive reform so that the tax system becomes simple, clear, effective, efficient, fair and honest? Is there any stomach within the Labor Party to be honest with the people of Australia and really reform taxation comprehensively?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I think the government's been clear about what our tax changes are. They are the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024, the bills I referred to before on high-balance super accounts, multinational tax reform, PRRT—they are the government's tax plans. Am I missing one?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I don't accept that interjection. That is the government's tax agenda going forward.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

I move Pauline Hanson's One Nation amendment (1) on sheet 2342:

That the House of Representatives be requested to make the following amendment.

(1) Page 4 (after line 6), at the end of the Bill, add:

Schedule 2 — Indexation of income tax thresholds

Income Tax Rates Act 1986

1 Subsection 3(1)

Insert:

income tax threshold means the following amounts (subject to indexation under section 20A):

(a) the dollar amount mentioned in the definition of tax-free threshold in this subsection;

(b) each dollar amount mentioned in the table in clause 1 of Part I of Schedule 7 (table dealing with tax rates for resident taxpayers);

(c) each dollar amount mentioned in the table in clause 1 of Part II of Schedule 7 (table dealing with tax rates for non-resident taxpayers);

(d) each dollar amount mentioned in the table in clause 1 of Part III of Schedule 7 (table dealing with tax rates for working holiday makers).

2 At the end of Part II

Add:

Division 5 — Indexation of income tax thresholds

20A Indexation of income tax thresholds

Indexation

(1) On 1 July 2025 and each later 1 July (the indexation day), each income tax threshold is replaced by the amount worked out using the following formula:

(2) However, subsection (1) does not apply for an indexation day if the indexation factor for the indexation day is 1 or less.

(3) The amount worked out under subsection (1) is to be rounded to the nearest whole dollar (rounding 50 cents upwards).

Indexation factor

(4) The indexation factor for an indexation day is the number worked out using the following formula:

Note: For index number, reference quarter and base quarter see subsection (8).

(5) The indexation factor is to be worked out to 3 decimal places (rounding up if the fourth decimal place is 5 or more).

Changes to CPI index reference period and publication of substituted index numbers

(6) Amounts are to be worked out under this section:

(a) using only the index numbers published in terms of the most recently published index reference period for the Consumer Price Index; and

(b) disregarding index numbers published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the index reference period).

Publication of income tax thresholds

(7) The Commissioner must, by notifiable instrument, publish the amounts worked out under subsection (1) for an indexation day as soon as practicable before the indexation day.

Definitions

(8) In this section:

base quarter means the last March quarter before the reference quarter.

index number, for a quarter, means the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) published by the Australian Statistician for that quarter.

March quarter means a period of 3 months starting on 1 January.

reference quarter means the last March quarter before the indexation day.

_____

Statement pursuant to the order of the Senate of 26 June 2000

Amendment (1)

Amendment (1) is framed as a request because it amends a bill which imposes taxation within the meaning of section 53 of the Constitution. The Senate may not amend a bill imposing taxation.

The amendment should therefore be moved as a request.

Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000

Amendment (1)

As this is a bill imposing taxation within the meaning of section 53 of the Constitution, any Senate amendment to the bill must be moved as a request. This is in accordance with the precedents of the Senate.

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I made some comments previously, but we will also be opposing this amendment. The bill before the chamber does deal with bracket creep. It delivers tax cuts for 13.6 million Australians. It's carefully calibrated to provide more cost-of-living relief. I know that Senator Roberts said that it was $15. I think that figure he is using is the extra that people will get. Those people will get $15 extra on top of the tax cuts they otherwise would have got, and, for many people, that is a substantial amount of money.

We recognise there are other things to do on the cost of living. That's why our other measures are being put in place. But in terms of your amendment, we oppose it. We think the way we're approaching it in this bill is preferable, and it's the way it has been done in the past. It gives government the flexibility to make those decisions when it's affordable to return bracket creep in a way that can maximise those returns.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Minister, I want to take you back briefly to a previous answer you gave when you implied the surplus—which is correct in the budget. The surplus has only been around for two years because of the strength of our agricultural production and our coal and iron ore exports. That's the only reason. What we're seeing is a country that is at the mercy of international prices for its major primary products. If something happens, then we have to rely upon bracket creep to pull us out of the mess, and that's not fair to Australian families and individuals.

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I accept that our export industry and our resources certainly contribute to our tax revenue through company tax receipts and others, but the strength of the revenue upgrades has also been improved and strengthened by the strength of our labour market. We've had many more people in jobs earning money and therefore paying tax than we have previously. Unemployment is at a record low; participation is at a record high. It's kicking up a bit now, but that has contributed significantly to the improved position of the budget. Yes, we acknowledge that. Part of that has allowed us to pay debt down so that we're not paying as much into the future and generations of the future are not paying those interest costs—the fastest-growing cost on the budget is managing the interest costs on our debt—and it's allowing us to deal with all of those areas of pressure that we talk about all the time in here: the NDIS, aged care, hospitals and defence. They are all big costs coming at the budget, and we do have to manage it in a responsible way.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

I'm not pretending to say it's easy. It's complex, but it's excessively complex. You're addressing the need for increasing tax revenues for the extra expenditure, including interest payments, but what you're not saying is that a lot of that money is coming from individuals through immigration, which is putting enormous pressure on house prices and inflation. That's a real impediment to people looking for houses right now. We've got people in Queensland sleeping in tents in showgrounds in Gladstone, in parks in Bundaberg, in parks and on the banks of the river in Brisbane and in Ipswich, Logan and Townsville. I think we're making a rod for our own back. When are we going to see comprehensive tax reform to take the load off individuals and put it onto large corporations so they start paying their fair share?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Well, I've outlined that we do have a bill around multinational tax reform to ensure that those big multinational companies are paying their fair share of tax. I think if you talk to many domestic companies they'll say they're paying their fair share of tax right now. People have a view about that, I guess. Individuals do contribute substantially to the Commonwealth budget through income tax. We need to generate revenue in order to pay for services.

On your point around population and housing, obviously you can't do everything through tax cuts, and that's why all those initiatives we've got in housing are so important and why we want the chamber to support the latest part of our housing initiatives, which is Build to Rent. We've got a full suite of programs. We acknowledge that supply is the problem, and the Commonwealth is right in there with our sleeves rolled up, working with states and territories, to do whatever we can to generate more supply. Also, as you know, some of the changes we've made to the migration system have ensured that those net overseas migration numbers that we've seen rise post-COVID are coming back down to our more traditional rates.

James McGrath (Queensland, Liberal National Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

The question before the chair is that the request for amendment (1) on sheet 2342, as moved by Senator Roberts, be agreed to.

Question negatived.

Quorum formed.

Ralph Babet (Victoria, United Australia Party) Share this | Link to this | Hansard source

by leave—I move United Australia Party amendments (1) to (5) on sheet 2347 together. I move:

That the House of Representatives be requested to make the following amendments:

(1) Clause 2, page 2 (table item 1), omit the table item, substitute:

(2) Schedule 1, item 2, page 3 (table), omit the table, substitute:

Note: The above table will be repealed on 1 July 2026 by Schedule 2 to the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024.

(3) Schedule 1, item 3, page 4 (table), omit the table, substitute:

Note: The above table will be repealed on 1 July 2026 by Schedule 2 to the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024.

(4) Schedule 1, item 4, page 4 (table), omit the table, substitute:

Note: The above table will be repealed on 1 July 2026 by Schedule 2 to the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024.

(5) Page 4 (after line 6), at the end of the Bill, add:

Schedule 2 — Repeals on 1 July 2026

Income Tax Rates Act 1986

1 Subsection 3(1) (definition of third resident personal tax rate )

Repeal the definition.

2 Clause 1 of Part I of Schedule 7 (table dealing with tax rates for resident taxpayers for the 2024-25 or 2025-26 year of income)

Repeal the table (including the note).

3 Clause 1 of Part II of Schedule 7 (table dealing with tax rates for non-resident taxpayers for the 2024-25 or 2025-26 year of income)

Repeal the table (including the note).

4 Clause 1 of Part III of Schedule 7 (table dealing with tax rates for working holiday makers for the 2024-25 or 2025-26 year of income)

Repeal the table (including the note).

5 Repealed law continues for relevant years of income

(1) Despite the repeal of a table by this Schedule, that table continues to apply, in relation to assessments for a year of income mentioned in the table's heading, as if that repeal had not happened.

(2) Despite the repeal of the definition of third resident personal tax rate in subsection 3(1) of the Income Tax Rates Act 1986 made by this Schedule, that definition continues to apply, in relation to assessments for the 2024-25 and 2025-26 years of income, as if that repeal had not happened.

______

Statement pursuant to the order of the Senate of 26 June 2000

Amendments (1) to (5)

Amendments (1) to (5) are framed as requests because they are to a bill which imposes taxation within the meaning of section 53 of the Constitution. The Senate may not amend a bill imposing taxation.

These amendments should therefore be moved as requests.

Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000

Amendments (1) to (5)

As this is a bill imposing taxation within the meaning of section 53 of the Constitution, any Senate amendment to the bill must be moved as a request. This is in accordance with the precedents of the Senate.

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Labor will be opposing this. The government will be opposing these amendments. These amendments would remove the 37 per cent tax rate from 1 July 2026, and the legislation would be repealed. By removing the 37 per cent tax rate, this amendment would make Australia's personal income tax system less progressive. It's also fiscally irresponsible. It would significantly increase costs over the medium term and place upward pressure on inflation. This amendment reduces the scope for future governments to respond appropriately to economic circumstances.