Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018

Tuesday, 22 May 2018

Mr HAWKE (Mitchell—Assistant Minister for Home Affairs) (12:44): The Turnbull government's seven-year personal income tax plan is going to provide that relief and encourage and reward Australians, starting with low- and middle-income workers. The member for Rankin in his presentation wanted to talk about structural budget deficits. It was him and a Labor government that put us in the position where we had a structural deficit, without doubt. One of the great achievements of the budget that we've just had and of the coalition government is the repair of the budget's finances in a way that enables us to use our revenue to pay our expenditure. Put simply—and we don't talk about this a lot, and sometimes it's hard to communicate this in this place—the Commonwealth borrows millions of dollars every single day to fund services. Under the Labor Party, we had to borrow money every day to fund the ordinary operating costs of the government for that very day. That's the state that the Labor Party, in the time of the Rudd-Gillard-Rudd government, left the budget in. We had to borrow money every day to fund the ordinary expenditure and the ordinary services of the government for that same day.

I think everybody in the community would understand that, whether it's your household budget, your mortgage, your life, your business or your family, having to borrow money to fund your expenditure on a day-to-day basis is unsustainable. It's much harder to fix than it is to destroy. The Labor Party destroyed the budget in a way that means we're borrowing every day to fund ordinary services and ordinary service delivery. It is a completely unsustainable model. Do they acknowledge it? Do they say thank you? No. The member for Rankin says that the Howard government was just some accidental cheap trick of a commodity boom and—here we are—we're having it again. He is in complete ignorance of the fact that the reality of the revenue increase that we're having in Australia right now that enables us to put the budget back on a firm footing is because we have one million new taxpayers. That's because, under the coalition government, over a million new jobs have been created in five years. That is the biggest single factor in the increase in the federal government's revenues, and it's because of the policies of this government.

Lowering the company tax rate has been opposed by the Labor Party up hill and down dale. They've opposed the company tax cuts for small Australian businesses, trying to defend the notion that if you've got above $2 million of turnover, if you get $2,000,001 of turnover—not profit—before you've turned a cent of profit for your business, you're somehow a big business. It is complete ignorance of the reality of doing business. They've opposed small Australian family businesses getting a company tax cut, when we know those company tax cuts for small Australian family businesses have meant they've been able to generate jobs. They've been able to increase their part-time and full-time workforces, which has meant one million new jobs in Australia. This, not a commodity boom, has meant an increase in government revenue.

The member for Rankin and the shadow Treasurer are deliberately misleading the House when they say this is all a big commodity surge again. Yes, there has been some modest increase in commodity prices, which has meant some increased revenue. But the bulk of the revenue increases are because more people are in work. Also, we have fewer people on welfare. There has been a substantial drop in welfare. We don't hear a lot of people from the Labor Party saying 'Hear, hear!' to that these days. In fact, they get upset. But the welfare bill is down about $5 billion. For the first time in years the number of people on the disability support pension is falling. The number is actually reducing. It's this government's approach to spending and budgeting that fixes structural deficit. We've done this work in just five short years—in budgetary terms, five years is a relatively short period—to fix and correct the failure of the six-year term where you really had a loose spending approach. Never mind that the member for Rankin was the architect of the four years of budget surpluses that were announced by the former Treasurer, the member for Lilley, which never eventuated. No surplus has been delivered by the Australian Labor Party since 1989.

So what are we to make of the claims today in the debate on this bill that the Labor Party will have bigger tax cuts than us or that somehow they'll do better at delivering tax cuts and budgetary management. I think most people will know that that is a cheap trick from the Labor Party when they bring this into the House. When the Opposition Leader stands up—and you can't trust what this person says to the public—and says, 'We'll do bigger tax cuts than they will,' I don't think it's believable. It's completely unbelievable, if you ask me. The reality is that, while we're resetting the government's finances, getting the budget under control and charting a very credible path to surplus a year earlier than predicted and expected—and we're able to achieve that surplus in a real way—the Labor Party has suddenly started to talk about debt and deficit and tax cuts. But they are not tax cuts for Australian small and medium businesses. In fact, it is still their policy to unwind the tax cuts that the government has already delivered for those Australian small and medium family businesses. They're not staking their whole moral and political fibre on the big end of town; they are attempting to unwind tax reductions to make our businesses internationally competitive, flying in the face of all of the evidence, the data, the productivity increases, the labour hire increases and all of the benefits that have flown through to our economy. They want to unwind and tax small and medium Australian businesses again at a higher rate.

And then we're supposed to believe that on personal income tax they'll deliver a bigger income tax cut. It doesn't add up. It doesn't add up with the notion that they're going to introduce—and we know now but they don't mention the cumulative effect of their tax increases; we know it's $200 billion. That is $200 billion sucked out of the economy, out of people's pockets, out of companies and corporations, out of the investment market in properties. It's $200 billion that they'll be sucking in. That's $200 billion not to be spent in the economy. And then somehow we're to believe that they'll deliver a bigger tax cut than us and that somehow people will be better off when they're sucking in $200 billion of tax. We know that, if you're a retiree, you've worked your whole life, you've funded your own retirement and you've invested and set up what for most is a modest lifestyle—you've worked hard and you've put it aside for your whole life—under the Labor Party you are enemy No. 1 of the state.

You, because you're in the retirement phase, the pension phase, at the end of your life, when, really, government ought to leave you alone and ought to say, say, 'Look, you have worked hard. You do have a bit more than some people, but it's a lifetime of accumulation'—it's not young people versus old people and it's not old people versus young people. Old people have had a lifetime of work, a lifetime of the ability to put aside money and buy property, a lifetime of getting ready for retirement. That does not mean that, just because they have more now, they are against young people who are starting out in life, which we sometimes hear from the Labor Party.

Yes, we have to do more to make it easier for young people to get ahead. Yes, we have to do more to make sure that you have a job, you can buy a house and you can get into the market. But isn't old people versus young people. It isn't retirees versus university graduates. That is the dynamic we hear from the Labor Party more often than not. When we have from the Labor Party the greedy tax grab which borders on theft from people who've earnt their way in life, I think you know that the hit list of 'anyone who has funded their own retirement' will be a reality if Labor comes to government. In these bills we see the makings of this. Self-funded retirees won't benefit from income tax cuts from the Labor Party. They will be materially worse off.

And, to the Labor Party's great shame, they do not understand the effect this will have on government. We want people to fund their own retirement. We want people to be off the state as long as possible, because the biggest single item of expenditure in the Commonwealth government is pensions. It is, of course, in the welfare budget and it is pensions, and we have to pay it. Because of the generational arrangements, we have to make sure that people are provided for in their old age, and we do. But, if we don't look at the future with compulsory superannuation, with the nexus of work and the nexus of ageing of our society, and if we say, 'Well, we're going to strip as much as possible off people who've already put aside money to retire on their own bat', it's not the Labor Party that's going to suffer; it's all of the taxpayer base that will pay for people returning to the part-pension and people returning to the pension. So it is completely counterproductive for the Labor Party to rip $200 billion out of our economy, including the retirees tax, which will mean retirees will be worse off and quicker to get back on the government part pension or pension. And, of course, the government's budget will suffer again. It is completely ill thought out from the Labor Party and a great overreach. But we know what their No. 1 target is: it is self-funded retirees. It is older people. It is people who have put aside money. It's people who have worked hard. We stand up for them in the coalition.

These are not wealthy people. These are not people that you would describe as the big end of town or fat cats, and the narrative that we hear from the Leader of the Opposition constantly—the Bernie Sanders rhetoric, the socialist rhetoric—that people who have worked their whole life, put aside and funded their own retirement are somehow rich, greedy fat cats and the big end of town is a complete nonsense of the construct of Australian society. The reality is that most people in Australia live modestly. Most people in Australia work hard and do their best. Under the government's tax plans, when we finish the Personal Income Tax Plan of the Turnbull government that the Treasurer, Scott Morrison, announced on budget night, it will mean that 94 per cent of all taxpayers in Australia will face a marginal tax rate of 32.5c or less. Talk about an egalitarian society. You don't have to look too far to understand that 94 per cent of people are not rich fat cats in this country. I defy the Labor Party to look into it that 94 per cent and tell people who are among it that they are rich, that they are fat cats, that they are greedy and that they are people to be targeted by government.

We have one of the fairest and most egalitarian countries in human history. The Turnbull government understands that 94 per cent of people in this country work hard. They don't deserve to be the target of government tax policy. They don't deserve to have their income stripped away from them. It has been a bipartisan consensus for a long time in Australia that we tax income too heavily. We are one of the nations in the world that have the highest reliance on income tax for their tax bases. We have always talked about it. We've talked about getting the reliance off people's personal income and onto goods and services taxes, broad based taxes and indirect taxes—not direct taxes through income. But the Labor Party has broken with that consensus because they think that, if you are in that 94 per cent that we think shouldn't be paying more than 32c in the dollar, you're somehow rich or a fat cat. I don't agree. The coalition doesn't agree. We understand Australia. We understand middle Australia, who work hard to get ahead. There is no better incentive and no better signal that you could send to Australians than, 'Ninety-four per cent of taxpayers won't pay more than 32.5c in the dollar.' Then those people who work harder, who get ahead further and who are fortunate enough to get a lot of wealth in their lives will pay a substantial amount of their income in tax. But the broad middle of this country—and it is a 94 per cent broad middle; it is hardworking, ordinary people getting ahead—will pay no more than 32.5c in the dollar. But this, Labor says, is unfair.

The modern Labor Party are completely out of touch with the worker of today who works, who gets ahead, who pays taxes and who funds the welfare. We now know that about half of households and individuals receive a form of government payment. The tax base is diminishing. We cannot ask that tax base for more and more of their individual hard work and their day-to-day income and suggest that, somehow, at the same time they are rich fat cats who need to be plundered more by the government. It's a fundamental lack of understanding in 2018 of the way our society is built and what really happens in the real economy. Labor do not understand small business. They do not understand medium Australian family business. They don't understand that most people in Australia work hard to get ahead and earn their way. They already pay a lot of tax. Whether it's income tax or any other sorts of taxes, state and federal, tax is hugely prevalent in all of our lives.

It's the coalition that you can trust to reduce the tax burden on income. We're going to make sure, through our Personal Income Tax Plan, that we are credibly reducing income tax over the next decade so that 94 per cent of Australians will pay no more than 32.5c in the dollar. We will, at the same time, relieve the burden on small and medium business and provide for companies in Australia to be competitive internationally at the higher level. This plan will occur at the same time as restructuring our budget, to make sure we're no longer borrowing money every day to fund the daily expenditure of government. It is the coalition you can trust on economic management. It's the coalition you can trust on budgeting and finances. It's the coalition you can trust on tax. It has never been the Labor Party and it never will be.