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representatives vote 2018-05-23#1
Edited by
mackay staff
on
2018-05-24 15:25:32
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Title
Bills — Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018; Second Reading- Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 - Second Reading
Description
<p class="speaker">Andrew Giles</p><p>I rise to make a contribution to the debate on this bill, the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, allegedly the centrepiece and possibly the only substantive element in the budget. I was here before question time for the contribution of the assistant minister, who spoke in a manner that was true to his sense of Australia's priorities. But at the end of his contribution he spoke of this bill representing competing visions for the Australian economy. I can't agree with that. I think there is a stark division between Labor's vision for Australia and for Australians and what is being offered by the present government—but only one side has a vision. It's only Labor that has a vision for Australia's future.</p><p>The member for Bruce spoke, effectively, in the MPI debate about the excess of hubris which causes the government to describe this bill as being part of an economic plan. There is no such plan. All we have in place of evidence, in place of a well-reasoned pathway to a destination, are some very well-thumbed, highlighted and tabbed-up copies of <i>The Fountainhead</i>. That's what this is all about. It is an absolute triumph of ideology—and a pretty bleak ideology for those Australians who rely on government to give them a chance of a decent life. The ideology is seen perhaps at its rawest in some of the discussions around this bill. We saw it again in question time today, the notion from government members that taxation is theft. This is crazy stuff. I think it is important that I put on the record my view, that of the great American jurist, Justice Holmes, that taxes are the price of civilisation. In fact, I think they're a bit more than that, because they shape civilisation; they point to the values we have, the things that we value and the things that we would like to change, as well as securing the sort of revenue that a society needs to function and that businesses need to prosper through.</p>- The majority voted against a motion introduced by Labor MP [Chris Bowen](https://theyvoteforyou.org.au/people/representatives/mcmahon/chris_bowen) (McMahon), which means it failed.
- ### Motion text
- > *That all words after "That" be omitted with a view to substituting the following words:*
- > *"whilst not declining to give [the bill](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r6111) a [second reading](https://www.peo.gov.au/learning/fact-sheets/making-a-law.html), the House calls on the Government to:*
- > *(1) amend the bill to separate the measures which implement personal income tax relief from 1 July 2018, so that these measures can be passed by the Parliament without delay;*
- > *(2) introduce new legislation implementing the remainder of the measures in the bill only when further financial information, including year-on-year costs of each step of the Government’s full seven-year personal income tax scheme, is made available to the Parliament; and*
- > *(3) support the Opposition’s personal income tax plan to deliver bigger, better and fairer tax relief to Australians.*
<p>It's striking again to see, as we thumb through the budget, the absence of a meaningful investment in infrastructure. If we really are serious about meeting our productivity challenge, that's something that should be at the core of any responsible government and the core of any economic plan that is about securing economic growth which is inclusive. It's not evidenced anywhere in the budget and it's certainly not evidenced in this bill, the alleged centrepiece. Of course, we see government members describe this bill, with its three tranches, as being a long-term policy, but, of course, we are asked to support, in toto, a long-term policy in the absence of long-term costings. It's quite extraordinary. I was pleased to hear that a government senator seems to think that we will be provided with some further information as to the cost to revenue. I hope that she is right and that the parliament and the Australian people get to see the revenue impact of this reckless piece of legislation, because it is just that: it is reckless in so many senses.</p><p>Many speakers on this side have highlighted their concern that, to get to the promised land at the end of these personal income tax cut arrangements, people will have to vote for this government not once, not twice, but three times, possibly more depending upon how many elections we're dragged into at the whim of the Prime Minister or as the Prime Minister seeks to secure his position from within his party room. What we don't have is any meaningful basis to work through the revenue impact. For government members to talk about our recklessness when it comes to fiscal matters in this context is nothing less than shocking. What is at the core of this proposition is an attack on the progressivity of Australia's income taxation system, and with that I think an attack on Australian egalitarianism. Some government members are honest to say so; others I've heard try to claim that the arrangements here are in fact progressive. I find that absolutely extraordinary.</p><p>Leaving aside the philosophical debate, when you go to the empirical, it's all very, very clear. Whether you look at the work of Grattan, NATSEM or The Australia Institute, what we see here is a plan to bake in income inequality, and not just income inequality at large. The Australia Institute makes very clear that the proposals contained in this legislation would very significantly increase the income inequality that currently and unfairly separates men and women. Two-thirds of the benefit of these cuts will go to men and, of course, when we look at the whole of the government's so-called economic plan, the cuts contained within the rest of the budget overwhelmingly impact on women. Whatever else this personal income tax proposal is, it's bad news for Australian women.</p><p>It's also very bad news for Australians who believe in a more equal society at large, and any perusal of these analyses will make that abundantly clear. The description of the Grattan Institute, which is not always a friend of the Labor Party on economic matters, says:</p><p class="italic">… modelling … highlights costly cuts to taxes for high-income earners … Most of the revenue reductions … are the result of lower taxes on high-income earners.</p><p>Interestingly, given the constant recourse of government members to reference to dealing with bracket creep, Grattan go on to say:</p><p class="italic">The plan … will do little to unwind bracket creep's gradual reduction of the progressivity of the tax system.</p><p>I think that's a really interesting thing, because that seems to be the main justification that's offered up, other than the Ayn Rand mantras that are recited.</p> <p class="speaker">Ed Husic</p><p>The <i>Fountainhead </i>faction!</p> <p class="speaker">Andrew Giles</p><p>It is interesting. The <i>Fountainhead</i> faction is the dominant faction. There's probably an <i>Atlas Shrugged</i> one as well, but I haven't seen those minutes yet! Perhaps we can have an investigation later into that. It's interesting, of course, to be talking about bracket creep as a particular problem now, when wage growth isn't a huge thing. It isn't as huge a thing as the budget predicts, I venture to add, or as the government's wages policy suggests in terms of dealing with its own direct employees.</p> <p class="speaker">Ed Husic</p><p>At least they're optimistic!</p> <p class="speaker">Andrew Giles</p><p>They are optimistic, not for Australians and not for Australian workers but for their prospects. But they are wrong to be optimistic. This reference to bracket creep is something that deserves very close consideration because, on this side of the House, we obviously are concerned that bracket creep not eat into the progressivity of our income tax system, but this is far from the answer, particularly in economic circumstances like the ones we are in today.</p><p>For these reasons, and for many more, I'm pleased to join my Labor colleagues in supporting the member for McMahon's amendment, which shows a pathway through which recognises that there are things we can be doing through the income tax system to better support working-class and middle-class Australians and their families. There are things we can do. We could do them right now but for this government's blind, wilful insistence on pushing through with this attack on progressivity in the income tax system, on our sustainable revenue and, indeed, on our sense of egalitarianism in the Australian community and the Australian economy.</p><p>I was interested when rereading the second reading contribution of the Treasurer. Obviously his contributions are much easier to read than to listen to. The absence of shouting allows one to reflect on the words. But reading it is troubling.</p> <p class="speaker">Ed Husic</p><p>Because he writes it in coal?</p> <p class="speaker">Andrew Giles</p><p>It isn't written in coal, but it may well have been in the first draft, Member for Chifley. I was struck by him saying:</p><p class="italic">…the personal income tax burden is carried by the few, not the many.</p><p>I really hadn't picked the Treasurer as a big Jeremy Corbyn fan, but this was a particularly unconvincing homage. It shows the smoke and mirrors, the cheap tricks, which characterise this government's approach to economic management: pretending to be on the side of those who are doing it hard while, in fact, putting the boot in yet again to Australians and their families who are doing it tough, who deserve a government which is on their side and a real plan to secure sustainable growth that is inclusive and is a bulwark against excessive inequality. I make the point here, as I try to in every contribution, that on this side of the House we think inequality of income, inequality of wealth more so and especially of power especially are bad in and of themselves, but we also recognise, as does just about every reputable economic body internationally, that excessive inequality is a brake on growth. It's about time this government looked at that if they are serious about doing something to kick-start our economy.</p><p>It is dangerous nonsense to suggest that the very wealthy, those at the top, people who earn incomes like those of us who sit in this place, are overburdened by the income tax system. It is a nonsense and it needs to be repudiated. It's also a nonsense to talk of the 'speed limit' of 23.9 per cent of tax to GDP. As a number of observers from pretty much right across the political spectrum outside of the <i>Fountainhead</i> faction have said, firstly, this is an arbitrary number. There's no science or modelling behind it. It doesn't really meaning anything other than a commitment to a desire to shrink the state and, in shrinking the state, to shrink those things which bind us together: our sense of what it means to be Australian, our sense of what it can mean to be Australian. We need a tax-to-GDP ratio that isn't expressed in a number. We need a number that is just right to support the services and make the necessary productivity-enhancing investments to drive our economy forwards and ensure that that growth is shared equally and appropriately. That's what we need. We need to be clear and hit on the head the misleading cant that somehow there is a magical relationship between a particular number in terms of tax to GDP and economic growth.</p><p>You don't have to go very far in looking around the world to find that there is a very poor correlation between these numbers. A number of developed economies similar to ours have a significantly larger tax-to-GDP ratio and have had comparable or better records of economic growth in recent years.</p><p>What we need in place of the measures in this bill other than those to give relief to people affected in the first tranche and people on middle incomes is a different conversation when it comes to tax, when it comes to tax and inequality and when it comes to tax and productivity. What we need to do is discard the deeply ideologically blinkered thinking that underpins this bill and replace it with a serious conversation, because we do need to have a serious conversation about income tax, but we can only approach that if the government are willing to enter into a debate, and that seems highly unlikely. The refusal to split the bill is quite striking and quite shocking to me.</p><p>This proposal to flatten the tax structure can't be allowed to pass for an argument for simplifying our income tax arrangements. We're all in favour of building a system that is easier to understand for ordinary Australians who don't have access to the sort of legal and accounting advice that enabled 50 or 60 people last year to turn an earned income of over $1 million to turn a taxable income into zero, for example. That's one of the challenges in creating a simpler and fairer taxation system. We don't need changes to our tax system in which the benefits flow so overwhelmingly to those who are doing reasonably well at the moment—people like members of this place. Sixty-two per cent of the benefits go to the highest-income earners. These are the wrong priorities just like the rest of the budget.</p><p>To return to where the member for Bruce was making his contribution: this isn't an economic plan. This does not amount to a vision for Australia that competes with that which has been articulated by the Leader of the Opposition and the shadow Treasurer. There's a void here on the government's side. They can't articulate a fairer and better future. They can't talk about the country they want to build and how they want to take Australians with them on that journey. They talk about optimism, but they have no optimism. If they did, they would be following Labor's example and investing in the best driver of productivity growth, which is Australians, and educating them, appropriately building them with skills for the future. Instead they are abandoning them and relying on tired, disproven and deeply unfair ideological prejudices in place of an economic plan.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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