Tax reform is for delivery of the things we share

Published on Mon 22 July 2019 4:49pm

In other countries, we’ve seen the same old two-step: a regressive drop in income tax followed by a regressive jump in consumption tax. Who gets hurt? Low-income households. If people want to talk about class warfare, that is class warfare.

Mr Wilson (4:49pm) — I’m glad to speak to the motion, which I guess is a kind of trumpet-blowing exercise. It’s the first motion brought by the member for Bass; I offer my congratulations on her election. If it were me, I wouldn’t be drawing attention to the fact that the government only has one piece of economic policy, and they’ve already bungled it. On this side, we have been clear in saying that tax cuts focused on lower-income households are very welcome. We went to the election with larger tax cuts for lower- and middle- income households. We supported the government’s less generous and less timely tax cuts because at least they had a similar focus and because they deliver at least some broader economic benefit. But if it were me, I wouldn’t be drawing attention to legislating the stage 3 tax cuts, which, on any reasonable analysis, are unnecessary, ineffective as an economic measure and reckless, considering they don’t start for five years.

It really shouldn’t be the case that the economic debate in this place, or outside this place, gets so dumbed down that we can’t get beyond a neolithic ‘Tax cuts are good’ form of debate. What defines this country is the things we share. Our access to education and healthcare; our access to welfare support and aged care when we need it; our access to parks, libraries, roads and public transport; the protection we get from the Defence Force and our emergency services—all of these things we share irrespective of whether we happen to have a lot or whether we happen to have not very much at all. What makes that possible? The taxes we contribute and the taxes that companies contribute. Let’s recognise that any debate about tax or tax reform is not about less or more tax per se; it is about our shared social and economic wellbeing and how that is properly delivered and fairly paid for.

With stage 3, what those opposite have bestowed on the Australian community is a revenue time bomb with a five-year fuse. They have decided that it’s okay to punch a $90 billion hole in our capacity to pay for the things we all share and the things we all need, with no benefit in terms of stimulus, and at a time when the economy is weak and fragile. They have punched a hole in the capacity of government to respond to economic shocks and to deliver critical services, especially in areas like health and aged care. The assumptions in their budget are based on rapid growth in net migration yet they’ve said—and the Prime Minister has promised—that they are going to reduce permanent migration by 120,000 over the next four years. Their budget assumes that the proportion of working-age people in the population as a whole will stay the same, when all the indicators show that ratio peaked in 2009, is falling and will continue to fall. That means lower growth and less revenue. It means rising costs in health and aged care. But you don’t have to take my word for it; that’s what the Parliamentary Budget Office said at the time of the last budget:

Over the next decade, the ageing population is projected to subtract 0.4 percentage points from the annual real growth in revenue and add 0.3 percentage points to the annual real growth in spending.

In real dollar terms, this equates to an annual cost to the budget of around $36 billion by 2028–29. This is larger than the projected cost of Medicare in that same year.

Yet those opposite have kissed goodbye to $90 billion over the next 10 years. They’ve all been sent through the internal mail the ‘Tax cuts are good’ finger painting, and that’s good enough for them.

Can I say, in relation to the part of the motion that refers to the plan for lower taxes, that Australians should watch this space. They should watch very carefully because, if you read the ideological tea leaves, you will notice that the Liberal Party’s regressive economic agenda goes beyond income tax cuts. They want to flatten out income tax because it suits their aggressive agenda, but this government is full of people who like the idea of increasing the GST. I reckon that is going to be part 2 of the equation. In other countries, we’ve seen the same old two-step: a regressive drop in income tax followed by a regressive jump in consumption tax. Who gets hurt? Low-income households. If people want to talk about class warfare, that is class warfare.

The most important thing to note in this debate, when we put the trumpet-blowing and back-patting aside, is the enormous gap between self-congratulation and achievement. This is a third-term government. They’ve doubled the debt, they’ve presided over weakening growth and record underemployment, they’ve done nothing about stagnant real wages, they’ve supported cuts to penalty rates, at the same time they’ve given us rising electricity costs and rising carbon emissions, they’ve chopped the Public Service and cut the ABC, and they’ve landed us with an NBN that is more or less obsolete on delivery. That is the record of the Abbott-Turnbull-Morrison government, six years and counting.

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