Tax Laws Amendment (2014 Measures No.1) Bill 2014

Yesterday I spoke in the Parliament on the most recent amendments to tax law.

Labor will not be opposing the measures in this bill, which go to farm management deposit accounts and the repayment of overpaid GST. But it is vital that we see this bill in the context of the broader picture of taxation reform, or lack thereof, and last night's budget.

I want to do this by commencing with a few stories.

Patrick Cerato is a young man who lives in a supported residential home after suffering the effects of a brain tumour discovered at the age of 21. His parents have said:

There is no guarantee there's going to be a disability pension when our guys grow up. It was a constant worry about how we were going to finance their future.

Paul Midson is a 48-year-old builder's labourer. He has worked for 20 years as a builder's labourer, at least 60 hours a week and often longer. He has developed crook knees and shoulders from the manual labour and he has had numerous operations on his knees. Paul says:

I reckon I will be lucky to last [in work] to 60.

Imagine how Paul feels being told that he might not get the pension until age 70.

Alan Blevin, a 47-year-old crane operator, says:

My left knee is already giving in because I'm bending down, loading gear from trucks and guiding cranes all day. But I can't afford to just stop. I have to keep paying the rent and bills.

Asked about working till age 70, he says:

It's unthinkable … There is no chance I will be able to work till I am 70.

Dr Soo Koan, who has a three-year-old daughter and a 19-month-old daughter, says, 'I think that everyone should be entitled to health care, and not have to worry about choosing between a doctor's visit and dinner for the kids.' Asked about a GP co-payment, Dr Koan says, 'I would stop and think about it'—that is, going to a doctor—'a lot more.'

I should mention that when I was at university, GP co-payments were something I thought were worth considering. But I have changed my view on this since university—in fact, I would be surprised if there is a member of the House who has not changed their mind on a matter since university—and I have done so by looking at the evidence: by speaking to GPs, to people with chronic disease and to bodies like the Australian Medical Association and the Royal Australian College of General Practitioners, who have today come out opposing GP co-payments because of the concern that we will end up with more people in emergency rooms, and add to total health spending rather than reduce it.

I mentioned yesterday the broad context in which this budget is being delivered: that of a rise in inequality unprecedented in Australia for over 75 years. We have seen an increase in the top one per cent share, which has doubled; and the top 0.1 per cent share, which has tripled. CEOs' salaries have gone up twice as fast as average wages, and three times as fast as the minimum wage—and yet the CEO-dominated Commission of Audit thinks the wages problem in Australia is with the minimum wage. That, after a generation when the wages of the top 10 per cent have grown three times as fast as the wages of the bottom 10 per cent; a situation where the combined wealth of the richest three people in Australia is now more than that of the bottom one million people. Deputy Speaker, this is a budget which hits the unemployed—which takes away supports from unemployed people, including those with disabilities.

The budget will hit people in developing countries—some of the world's poorest people, and it will benefit mining billionaires—some of the world's richest people. When this government came to office, it doubled the deficit. The four-year deficit between PEFO and MYEFO literally doubled—it increased by $68 billion. And so you would expect that, having doubled the deficit, the Treasurer might at least have come in here last night and halved it—taken it back to where it was when he took over, as judged by the Charter of Budget Honesty. But he did not do that. Last night's budget failed to halve the four-year deficit, and left it higher than it was when the coalition took over. If last night's budget had been honest, it would have shown the return-to-surplus trajectory under PEFO and compared that under this budget. That would have shown that—according to the secretaries of Treasury and Finance—we were going to be back in surplus in 2016-17 when the government took over, but now that is projected for 2017-18.

This is a budget where Australians are not saying, 'Which promise has been broken?' but, ;Which promise has been kept?' What is it that this Prime Minister thinks that he needs to keep faith with the Australian people on? 'No changes to pensions'—that pledge from 6 September last year does not seem to have been kept. The pledge by the Prime Minister that 'we are about reducing taxes, not increasing taxes,' from a doorstop on 20 November 2012—well, that has not been kept. What about, 'no cuts to health,' from an interview with the Prime Minister on 6 September last year? No, that promise has not been kept. 'No cuts to education,' from an interview with the Prime Minister on 6 September last year—no, that promise clearly has not been kept. And we can see the results from the budget papers last night, which show a distinct flattening of the education spending line outside the four-year period: the end of the Gonski reforms and the end of the National Plan for School Improvement that was put in place. The pledge, 'no cuts to the ABC or SBS'—well, that has been broken. That was a pledge again made by the Prime Minister on 6 September 2013. Again the pledge made by the Prime Minister on 4 May 2011, 'A dumb way to cut spending would be to threaten family benefits or to means test them further,' has been broken. The pledge by the Minister for Education on 26 August 2012, 'The coalition has no plans to increase university fees,' has been broken. That promise has been broken.

We see a litany of cuts across the board: the destruction of cultural programs—the Creative Australia programs; cuts to legal aid, which will see many vulnerable Australians unable to access legal assistance; and cuts to foreign aid, which will see some of the most vulnerable people in the world unable to access sanitation programs and vaccinations. Australian foreign aid saves lives and it will save fewer lives as a result of the decision made in this budget.

The fact is that when this government took over it inherited an economy where unemployment was among the lowest in the developed world. That was thanks to the stimulus that Labor put in place during the global financial crisis that saved 200,000 jobs and tens of thousands of small businesses. No-one at that stage thought we should have adhered to a two per cent spending cap. No country in the world did that. Of course, we did not either, but following the global financial crisis we put on a two per cent spending cap and, better than stick to it, we kept spending growth to 1.35 per cent. So when the coalition talk about reckless spending they are talking about the fiscal stimulus that they in part voted for and, let us face it, when we had the debate over the global financial crisis response those opposite were in many cases saying that what we needed was permanent tax cuts rather than temporary stimulus. Just imagine what state the books would be in if we had listened to that advice.

I spoke earlier about the decisions made by this government in the MYEFO statement, which included scrapping the $700 million measure on multinational profit shifting, a measure that would have seen a crackdown on companies using offshore banking units and debt shifting as a way of avoiding taxation. Australians are pleased to have the investment and the opportunities that come from multinationals in Australia. All we ask is that those multinationals pay a fair share of tax, but the government scrapped that $700 million measure and is instead pursuing cuts to some of the most vulnerable Australians. Yet last night there were still further decisions that will benefit those multinationals: not proceeding with changes to multiple entry consolidated groups, costing $140 million; deferral of offshore banking unit changes, costing the budget $180 million; deferral of the start date of legislative elements of the measure to improve tax compliance through third-party reporting and data matching, costing the budget $113 million.

The total effect of these decisions on last night's budget, an effect that will resonate through the economy and impact on jobs and growth, is to lose $430 million over the forward estimates. That is a cost that has to be paid by some of the most vulnerable. The impact on jobs and growth is going to be manifest because when you ask multinational firms to pay their fair share of tax that does not have an adverse effect on Australia's economic growth, but when you cut back on supports for pensioners and when you cut the pension that does because those who are at the bottom of the income distribution spend everything they have got and that goes back into boosting demand and boosting jobs. If you cut back on supports, then you are going to be hurting the most vulnerable Australians.

The Prime Minister said before the election: 'We will be a no surprises, no excuses government.' He said:

We are about reducing taxes, not increasing taxes. We are about getting rid of taxes, not imposing new taxes.

Yet the budget last night did precisely the opposite: it is cutting back on supports for vulnerable Australians today and cutting back on investment for tomorrow. We on this side of the House are all for infrastructure investments. We are proud that we took Australia from 20th in the OECD to first in the OECD for infrastructure investment.

But good infrastructure investment requires cost-benefit analyses and requires investment in urban rail, if it passed a cost-benefit analysis, not simply investing in the favourite boondoggle project of the National Party. We are going back to the days of the Roads to Recovery rorts and the like with the government clearly picking favourite projects, rather than allowing expert cost-benefit analyses to guide it.

We are seeing a lack of investment in another critical form of infrastructure, the National Broadband Network. Fibre-to-the home is fundamental to productivity of businesses and individuals, and to jobs and growth in the future. If we cut back on that form of infrastructure, future Australians will be the poorer for it.

Future Australians will be the poorer too for the budget's inability to tackle climate change. The Treasurer talked a lot last night about the importance of intergenerational equity and thinking about the future. Yet the budget is going to be a risk to the future growth prospects of Australians, because it utterly fails to deal with the single challenge of climate change—trashing an effective, efficient, cheap means of dealing with carbon pollution, an emissions trading scheme, in favour instead of command and control direct action, which no serious economist believes can do the job.

The cost to jobs and growth of not dealing with climate change down the track will be significantly higher as a result of this government's decision to not address climate change. As the developed country with the highest carbon emissions per head, we cannot simply put our heads in the sand on this one.

This really is a budget for the cigar-chomping plutocrats, rather than for the battlers. If you are a mining billionaire, you have done well out of the budget. If you are a millionaire family expecting a child, congratulations to you: your new age of entitlement is just beginning.

If you are a person like 42-year-old Genise, who has tunnel vision and learning problems, including dyslexia, and receives a part-disability support pension and rent assistance, this is a budget that is not doing much for you. Genise works sorting mail and used to work in a childcare job. She is a great Australian. She won three gold medals for swimming in the 2007 Special Olympics, but cuts to pensions will affect Genise directly.

Meanwhile somebody with a name close to Genise, Gina, will do very well out of this budget, thanks to the cut to the mining tax which is projected, according to the Treasurer, to raise $1.8 billion in just 2016-17 alone—a larger amount than the special levy on high-income earners is expected to raise in that year.

I am deeply concerned that, after a generation of rising inequality where the billionaires have done much better than the battlers, this budget will only serve to widen the gap. Australians need serious tax reform, not the piecemeal reforms being put forward by this government. They expect fair tax reform in which everyone will play their part, rather than slugging the poorest and the most vulnerable in order to not even manage to get the budget into the situation it was in when this government took over.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.