Speech on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and 14 other bills

28 May 2014

Dr CHALMERS (Rankin) (09:46):  It is my privilege to follow a very good speech by the member for Shortland about the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and the 14 other bills required to implement the tax increases proposed in the government's budget of broken promises and messed-up priorities. This bill implements the temporary two per cent tax increase on workers earning more than $180,000 a year over the next three years. Right off the bat, let us call this for what it is. It is a token attempt to pretend that the budget is fair and that the burden of the broken promises and cost-of-living increases has been somehow fairly shared. Give us a break.

There is a very good reason why Australians reject that notion and why the government is falling apart after this budget. That is because, like so many measures being proposed, it is based on a con. To pretend that a temporary levy that a lot of wealthy people can afford to avoid makes up for the brutal assault on low- and middle-income earners is offensive in the extreme. It takes for mugs a lot of good people who are just trying to make ends meet in the face of this attack from a government that promised, hand on heart, to be part of the cost-of-living solution—until the ballots were in, and then they turned into a big part of the cost-of-living problem.

We have already said publicly that we will not stand in the way of this specific measure in the parliament, only because we have so many more important battles on our hands in this budget, like the fight to save Medicare. I want to acknowledge the member for Ballarat and the member for Throsby here in our health team, who are doing such a good job defending Medicare from the attacks of those opposite. We also have other big fights in defending the safety net for Australians and the fight for an affordable higher education system that will fuel social mobility and economic growth.

Other speakers have mentioned that this tax increase is one of the many broken promises that are at the core of this budget. Australians who are affected by the levy will feel let down by the government, which promised one thing before the election and did the exact opposite after the election. It is worth recapping some of the things that the coalition took to the Australian people at the election. For example, on 14 March 2012, the now Prime Minister said:

What you'll get under us are tax cuts without new taxes.

That is a broken promise. On 20 November 2012, the now Prime Minister again said:

We are about reducing taxes, not increasing taxes.

That is another broken promise. On 22 May 2013, at the National Press Club, the now Treasurer said:

We have to end the wild ride of new taxes, undelivered tax cuts, on again/off again payments, and knee jerk reactive decision making.

That is another broken promise.

Now, to hear speaker after speaker on their side on this bill and other bills pretend that they have kept their commitments just rubs salt in the wound for a lot of people in our community and in our country. This tax increase on high-income workers is designed to provide political cover for the Treasurer as he introduces the most unfair, most divisive budget in memory, targeted at low-income families, the sick, the frail and the disabled. Analysis done by NATSEM—not by the ALP, not by a political player, but by one of the most credible economic modellers in the country—proves that the budget burden will fall most heavily on the poorest families, regardless of this tax increase for high-income earners that we are talking about now.

The poorest 20 per cent of families earning less than 35 grand a year after tax will lose almost five per cent of their disposable income as a direct result of this budget. At the same time the top 20 per cent of households earning $88,000 or more after tax see a decline of only 0.2 per cent of their incomes. There is no way that this budget can be described as equitable or fair. People in my community and in lots of communities cannot afford the cruelty and the nastiness in the budget. There was some other analysis released the week before last that showed that, unfortunately, when it comes to the impact of this budget my electorate of Rankin is the hardest hit in Queensland. People do not need economic modelling or studies like that to tell them that they are in the gun when it comes to the measures in this budget.

The fact of the matter is that this is not a budget striving to be fair, as the Prime Minister has claimed. Instead, the heavy lifting is being done by the pensioners, who stop me in the street worried they will not be able to pay their bills; it is on the parents who are already fighting to make ends meet and fear they will not be able to afford the kids' uniforms when they grow out of the old ones; is on the sick and the vulnerable, who are being forced to cough up an extra $7 for every trip to the doctor and an extra $5 for every script when they just cannot afford these sorts of cost-of-living hikes. This budget is an extreme and ideological attack on low income and working Australians and this temporary increase of tax on the wealthy does nothing to change or camouflage that very simple fact. It is the most divisive budget in memory from the most divisive Prime Minister in memory. It pits Australian against Australian in a harsh and unnecessary way.

The government justifies this cruel, unfair and deceitful budget by manufacturing a budget emergency. Let me make this very clear: that budget emergency is a con. This government inherited a budget, as the member for Shortland said, with a Triple-A credit rating from all three major ratings agencies, one of the few major economies in the world to hold this title and something that neither Peter Costello nor any Liberal government has achieved before. They inherited a budget in a responsible condition after the last government made more than $180 billion of savings over that term in office. If the budget were replete with wasteful spending that could be cut, as the Prime Minister claimed before the election, they would be relying on cuts rather than tax hikes like the one we are describing now. In actual fact, when this government got into office they did all they could to double the budget deficit and make the figures look far worse than they inherited. Before the midyear update they took a $13.7 billion hit to the budget bottom line to give, among other concessions, tax breaks to large multinational companies, big tax breaks to people with super balances over $2 million and tax breaks for those who borrow to invest overseas. They paid the Reserve Bank reserve fund almost $9 billion that was not asked for. And the Treasurer chose the most pessimistic economic forecast available to him for the midyear update to make the budget look like it was in a worse position than it actually was.

This budget emergency has been confected in an attempt to justify a budget of broken promises and twisted priorities based on extreme ideology. Even the government from time to time show that they do not really believe their own spin about a budget emergency. If they did, there is no way they would have reintroduced that huge suite of tax concessions for companies and for the ultra-wealthy before the midyear update. There is no way they would have cut the Clean Energy Finance Corporation, which is not just good for the environment and the economy but was also doing a good job for the budget bottom line. Absolutely critically, there is no way they would be proceeding with a $21 billion Paid Parental Leave scheme if they truly believed there was a budget emergency. We sit here in question time each day and hear the Prime Minister and the Treasurer puff themselves up about this budget emergency but there is one question they cannot answer: if there is a budget emergency, why are they slinging $50,000 to millionaire parents just to have a baby?

The paid parental leave system is not only a huge hit to the budget bottom line but also clear demonstration of the unfairness of their approach to budget reform. While the poor are being forced to pay a GP tax for the doctor and while the young and vulnerable are being cut off from government assistance for six months, millionaires will be paid up to $50,000 just to have a baby. There is nothing that more starkly demonstrates this government's twisted priorities than that. To be clear, Labor believes in a reasonable and affordable system of support for new parents and we introduced Australia's first-ever Paid Parental Leave scheme. But we do not support it being done in this inequitable and unfair way, especially when it has to be paid for by cuts to the pension, cuts to schools and hospitals and the increase in income tax that we are debating today.

We also do not support these cruel cuts to average Australians being used to finance the huge superannuation tax breaks, and multinational tax breaks, which were introduced by the government. As I said before, the government backed down on something like $300 billion worth of tax reform measures that had been announced but not enacted. That includes concessions for the wealthiest 16,000 people in Australia—those with super balances over $2 million. The government also caved into multinationals by ditching the thin capitalisation reforms and other measures designed to combat multinational profit shifting—and there is even more about that in the papers today. After this budget, low income workers, the sick, the frail and the disabled are being forced to pay for this government's backdown on some of the responsible tax reforms that were made by the previous government. As the shadow treasurer said at the National Press Club last week, in a very good speech, even with what we are opposing in this budget in terms of savings and tax hikes, decisions elsewhere in the budget would make the bottom line stronger under Labor. When you look at the whole package of the coalition's fiscal position versus Labor's, the coalition is spending those billions of dollars on paid parental leave and tax concessions for the wealthy, which we would not do—and at the same time, we would retain the revenue streams from the carbon price and the minerals resource rent tax.

Mr Deputy Speaker, when you strip away the con that is the budget emergency, you are left with a budget that is driven by cruelty, brutality and ideology—but not by the need for budget repair. This government lied their way into office by promising to lower taxes and to lower public spending and now, nine months later, we are standing here in the chamber debating 14 bills to raise taxes. Despite the coalition's rhetoric, their own forward estimates show that Australia's tax-to-GDP ratio will be higher every year under the Abbott government than it was any year under the former Labor government. They will collect billions of dollars more in extra tax—more every single year than Labor collected in their six years. The 2014-15 tax-to-GDP ratio, which is the most credible measure, will be the highest since the days of Howard and Costello—the time identified by the IMF as the period of greatest government waste in Australia's history.

Now, after raising taxes in this budget, the government appears to be paving the way for further increases in taxes as well, including the GST. And the not-so-secret motive for the government's 80-billion-dollar cut to schools and hospitals—the one that the Prime Minister denied yesterday despite it being in his own budget documents—is a campaign to get the states to call for an increase to the GST. The Prime Minister is trying to distance himself from that discussion by claiming it is a tax which belongs to states, when he knows full well the GST is governed by Commonwealth legislation and collected by the Commonwealth. Try as the Prime Minister might, any change to the GST would be a reflection on his government. It would be yet another broken promise. And when those opposite deny they have a plan to jack up the GST, just remember: that is the same thing that they said before the last election about all of these other taxes, and about the cost-of-living hikes that they said would not happen.

Despite our concerns with the gross unfairness of this budget in its totality—a budget founded on broken promises and twisted priorities—the opposition will not be standing in the way of this particular piece of legislation. As I said before, we have much bigger battles to fight defending Medicare, higher education, and pensions. But the opposition does have serious concerns with the shabby and rushed way this tax measure has been together. As has been discussed widely in the media, the treatment of fringe benefits tax in this bill creates a loophole that wealthier taxpayers can exploit with some crafty accounting. The fact that this has been rushed and that this was a surprise decision that was obviously made late the budget process means that we have concerns that these tax loopholes have not been closed with better design of the legislation and a bit more thought.

We will not be standing in the way of this legislation today but we also will not be distracted from the main game—as I said, defending Medicare, and standing up for people who are just trying to make ends meet and who rely on family payments, who rely on pensions, and who cannot afford, every time they go to the doctor, to spend seven dollars and then even more on the script on the way home. We will fight against the measures that hit average Australians—like so many people who live in my electorate that cannot afford the cruel cuts and the cost-of-living hikes being inflicted by the Abbott government in this budget. On these issues, I will be standing up on behalf of my community against the government's broken promises, against their lies, and against their twisted priorities which have such dire consequences for good people who are just trying to make ends meet and to raise their kids.