Andrew Leigh

Matter of Public Importance 

Wednesday 31 May, 2017

Last week we saw an orgy of self-congratulation as the Liberal Party of Australia recognised the 75th anniversary of Robert Menzies's 'The forgotten people' speech. But, sadly, those opposite appear to have forgotten to read the speech, because in that speech the founder of their party says: 'The rich can look after themselves.' Those that Sir Robert Menzies was concerned about were 'salary-earners, shopkeepers, skilled artisans, professional men and women, farmers and so on.' They have forgotten the forgotten people speech.

I do not have time today to refer to issues such as the fact that the party that once talked about homeownership is now the party of housing investors or that the party of schools and universities is now the party that brings down a budget cutting them. Let us just look at how Robert Menzies's forgotten people are being treated under the tax plans of those opposite. A member of parliament, who, according to the tax office's most recent statistics, earns an average of $215,000, will receive a $700 tax cut, but a flower-grower on $32,540 will receive a $162 tax rise. A cardiologist on $408,000 receives a $4,571 tax cut, but a fitness centre manager on $50,500 receives a $252 tax rise. A gastroenterologist on $380,000 receives a $4,000 tax cut, but a kindergarten teacher on $47,000 gets a $230 tax rise. A surgeon on $330,000 receives a $3,000 tax cut, but a nurse on $44,000 gets a $220 tax rise. While a magistrate on $250,000 receives a $1,400 tax cut, a hospital pharmacist on $68,000 gets a $344 tax rise.

And there are those who claim that this is progressive. It is anything but. The Medicare levy is a flat tax. When you ask a hairdresser and a surgeon to each pay 0.5 per cent of their income, that is a flat tax. And Senator Scott Ryan—who has, in the past, thundered that this measure is 'highly progressive'—is dead wrong.

Labor wants to retain the deficit levy because the deficit has increased tenfold and debt has increased by nearly $4,000 per person since the coalition came to office. More than nine-tenths of this—the maintained deficit levy—will be paid by the top one per cent of adults, a group that has seen a doubling in their share of national income over the last generation. With inequality at a 75 year high, it just is not fair to be raising taxes on average workers and cutting them on millionaires. Over the medium term, Labor's proposals raise more than that of the coalition.

We heard this morning from the Prime Minister at CEDA that he is concerned about work disincentives. Well, if he was, he would not be concerned primarily about the work disincentives for the top two per cent, a group primarily comprised of men. He would be worried about the 10 million people that Labor is shielding from paying his increased Medicare levy. And he would be worried, too, about effective marginal tax rates.

Helpfully, a report from the Australian National University prepared by David Ingles and David Plunkett goes through some of these effective marginal tax rates. For someone on a single disability support pension earning between $10,000 and $50,000, they are paying effective marginal tax rates of up to 80 per cent. For a couple with children in child care earning between $5,000 and $50,000, they are paying effective marginal tax rates between 60 per cent and 120 per cent. For an age pensioner couple earning between $20,000 and $80,000, they have effective marginal tax rates from 70 to 90 per cent. For a single person on the Newstart allowance earning between $10,000 and $25,000, they have effective marginal tax rates from 50 per cent to 100 per cent. The work disincentives are real. There are many Australians paying effective marginal tax rates of between 50 per cent and 120 per cent. Because this coalition government axed the women's budget statement, we do not have the sort of analysis that we had for 30 years. Women are going to pay higher taxes under the coalition. The women's budget statement, if it still existed, would have clearly demonstrated that.