Speech on Income Tax Relief
15 Sep 2016
Dr CHALMERS (Rankin) (10:59): We support the Treasury Laws Amendment (Income Tax Relief) Bill 2016 and, of course, I support the amendment proposed by my colleague, the member for Fenner. We support the intentions of the bill because it increases the personal income tax threshold for middle-income Australians, and that does a little bit to help combat some of the effects of bracket creep. We on this side of the House are always prepared to consider and support measures that offer fair tax relief for those who need it.
Of course, those opportunities are pretty hard to come by under this current government. We have this absurd situation right now where the government cannot confirm whether it is going ahead with the centrepiece of its so-called economic plan, this $50 billion gift to big multinational corporations, which is the typically shambolic way that they have gone about tax policy not only over the last year under Malcolm Turnbull but over the three years of the coalition government. We also have a government that is offering, at the same time, tax cuts to the top three per cent of earners from 1 July next year while the bottom 75 per cent of people—people that I am proud to represent—miss out.
We have a government which is hopelessly divided over super. As I was coming in here to address the chamber, I walked past the press conference being given by the member for Dawson, who is obviously taking a big victory lap, having shredded the policy that the Prime Minister, the Treasurer and the Minister for Revenue and Financial Services said was ironclad. They said that the policy was ironclad and would not change, and there is George out there, the member for Dawson, claiming credit for shredding the policy and humiliating the Prime Minister, the Treasurer and the Minister for Revenue and Financial Services. It is not that difficult to humiliate those three when it comes to economic policy, and particularly tax policy, but it is very interesting to see this big backdown today, after crisis meeting after crisis meeting and the member for Warringah leaking to The Australian that he had shirtfronted the Treasurer about these changes. There is all of this sort of absurdity, which has become, unfortunately and disappointingly, the norm under this government rather than the exception.
This is a bill which both sides support—this modest relief for people on middle incomes to give them some relief from bracket creep. Even on something as simple as that, with bipartisan support, the implementation has been stuffed up in a way that we have become all too familiar with when it comes to this government. The tax cuts contained in this bill were promised to take effect from 1 July, but those affected will have to wait another three months thanks to the government's incompetence.
We have led the conversation on tax reform and budget repair. We will continue to take the initiative, because there is an absence of leadership when it comes to economic policy in this country. We will continue to fill that vacuum left by the absence of that leadership that was promised one year and one day ago. We will be constructive, of course, as we always are. We are supporting the changes in this bill. It seeks to increase the 32½ per cent personal income tax threshold from $80,001 to $87,000. The measure will stop about 500,000 taxpayers from hitting the 37 per cent marginal tax rate this financial year. Without the change, the average full-time worker would move into that 37 per cent bracket, the second highest one, in 2016-17. The measure will provide a maximum tax cut—a modest tax cut, but worthy—of $315 a year for people on incomes of $87,000 and higher. The changes are expected to benefit around 3.1 million taxpayers this financial year.
But it speaks volumes about this government that it could not even manage to implement a tax cut that both sides agree on without stuffing it up. As I said, it was promised to come into effect on 1 July this year. The Treasurer said that on budget night. A day later—it did not even last a full day—the Prime Minister said the change would be 'covered administratively' after the election. But the 2016 Pre-election Economic and Fiscal Outlook showed the tax commissioner had indicated the measure would require relevant legislation to be passed before it could take effect, and that is why we are here today, and that is why we are in a hurry, frankly. It means the start date for middle-income tax relief has been pushed out by three months. That means that people will be effectively overtaxed in the interim, as they fall under the old rate. They will have to wait until after they lodge their tax return to recoup that hard-earned income that they were told they would not have to cough up in the first place.
This delay comes despite the government still planning to end the temporary budget repair levy on time, in 2017, for those earning over $180,000—this tax cut for the top three per cent of earners. So I think it speaks volumes that they can ensure that they give that tax cut to people earning more than 180 grand a year. That will be on time; do not worry about that. That will definitely be delivered on time.
But, when it comes to a bit of a modest tax relief for those in the middle, they are forced to wait. We are disappointed about that, but we are not entirely surprised. It is, as other members have noted this week, on the one-year anniversary of the Prime Minister taking over from the member for Warringah, this is a government that stumbles from one stuff-up to another.
Take superannuation, which I touched on briefly before. We have had this infighting and a backbench uprising that has left the policy in tatters. The Prime Minister said it was an ironclad policy. It has proven to be anything but, and they have had this humiliating backdown after the backbench shredded the policy. As recently as yesterday, they were unable to confirm even what the superannuation policy was, because the member for Dawson and the member for Warringah had not finished rewriting it yet. It appears that they have finished rewriting it now—
Mr Craig Kelly interjecting—
Dr CHALMERS: Yes, we do—I take that interjection from the member opposite. We announced our policy at the Press Club straight after the election. We gave them a way out of this humiliating mess, which they have partially agreed with now.
Mr Craig Kelly interjecting—
Dr CHALMERS: The member might want to check what the Treasurer said this morning. He might want to catch up or get someone to explain it to him. He would understand that the sorts of things we were worried about are the sorts of things that have been addressed now. We will take our time to go through our usual processes, of course. But it is really quite entertaining to get interjections from those opposite, following this humiliating backflip. We have had a policy on the table longer than they have. The member needs to keep up. He really needs to keep up. He is embarrassing himself again.
Beyond superannuation, there is this obsession with favouring the big end of town. At the same time, we get these lectures about the moral responsibility of budget repair, when the centrepiece of the policy—really, the only element of their policy—is this $50 billion tax cut. We read in the paper today, under the cover of the superannuation changes, that maybe that is not going ahead. We will wait and see. It is certainly their intention to take $50 billion out of hospitals and schools and give it to big multinational corporations. But it is typical, disappointingly, of this government that we have this shambolic half-measure and we do not know whether the government will continue with it or not. It is a total shambles. It reminds us of the 15 per cent GST that was on the table and then off the table.
Announced in the member for Lindsay's electorate is this other one, the double income-taxing of people, by the state and federally. The electorate now represented by the outstanding new member for Lindsay was unfortunately let down by the former member for Lindsay. She was not a bad person, but she was a pretty bad representative to let the Prime Minister come to her seat and say, 'Hey, I've got a great idea; why don't we get everyone to pay double income tax,' and poor old Fiona had to stand behind him and nod like she agreed with it. I am sure she would not have. The people of Lindsay have traded up in really quite a spectacular way to someone who would never let a leader go to her seat and say, 'We should jack up the GST on people,' hurting the most vulnerable people in our community.
The way that the government have mangled the implementation of this measure is symptomatic. We will do what we can. We will do our best to continue to be constructive. We do want to see fair and responsible tax reform. We have proven we are serious. We have put a whole bunch of suggestions on the table about super in this space, right across the economic policy front. We will continue to do that. We are always in the cart for a conversation about fairer taxes, especially ones that do not exacerbate some of the challenges we have in our economy, and this measure in our economy that we are talking about today really is the best of a bad lot.
We will continue, whenever there is choice between people on modest or middle incomes and people at the top end of town, to always stand up for the people on modest and middle incomes. That is what this bill is about. As I said, it is not the worst tax measure on the government's agenda—if they could implement it properly. But saying that is not giving it much of a rap, really. It is not much of a claim when so many of their other measures in tax have been so shambolic, so unfair and so much designed to exacerbate inequality and division in our society.