It’s always a great pleasure to follow the member for Wakefield. He asked that I listen to his contribution to this debate. I really haven’t listened much to the member for Wakefield since he told the people in his electorate that he was going to save Holden. Ever since those dismal days a lot of what the member for Wakefield says unfortunately doesn’t really make a lot of sense, including his comments in relation to wages growth. I just wanted to remind the member for Wakefield that when Reserve Bank governor Philip Lowe appeared before the Standing Committee on Economics, which I proudly chair, he made it very clear that the RBA has been particularly impressed with Australia’s labour market, which has been particularly strong, with over 400,000 new jobs being created in 2017, three-quarters of which were full-time. Labour force participation is close to a record high. Australia has experienced a record consecutive number of months of employment growth, which is the first time that’s happened in the history of the labour force survey. I want to make this very clear—and this just goes to show it’s very difficult to believe a lot of what the member for Wakefield says—the RBA expects continued growth in employment to further reduce spare capacity in labour markets and generate a gradual increase in wages and inflation. That comes from the independent Reserve Bank of Australia, and it really does illustrate the problems that we have when we hear from members opposite their ridiculous rhetoric which doesn’t match the facts.
It is my great pleasure to rise in the House today to speak in support of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. The Turnbull government’s tax relief plan announced in the 2018 budget is all about encouraging and rewarding hardworking Australians by making income tax lower, fairer and simpler. While those opposite call it a cash handout, most people, including many people in my electorate of Corangamite, have looked beyond the political games and seen it for what it is: a measure to ensure Australians keep more of their hard-earned income.
Why should anyone be punished for taking on extra shifts, earning overtime or being promoted if the end result will push them into a higher tax bracket? These measures make sense. They will put an end to bracket creep so working Australians keep more of their money to help pay the bills, save for the future or spend locally. In my electorate of Corangamite, a region with many wonderful and diverse small businesses, service industries, food processors, farmers and, of course, hardworking families, more than 64,000 taxpayers will stand to benefit from the low- and middle-income tax relief in the 2018-19 financial year. As an example, a schoolteacher on $75,000 will have an extra $530 in his or her pocket from budget year onwards, with an extra $3,740 in their pocket over the first seven years of this tax plan; a workshop manager on $88,000 will have an extra $575 in his or her pocket; an accountant earning $87,000 will have an extra $530; and a fast food operator on $42,000 will be better off by $350. The coalition government’s plan is affordable. It will provide tax relief now for lower and middle income earners and over time provide a simpler and fairer tax system for all taxpayers. We need a system that keeps taxes under control so we remain internationally competitive. We don’t want a system that puts a greater burden on hardworking Australians. The more the tax burden hurts individuals and businesses—small, medium and large businesses—the more it hurts our economy and job-creating opportunities.
The coalition government’s tax relief measures will be implemented over seven years in three steps, and all three steps are vitally important. The first stage will deliver tax relief to low- and middle-income earners now, to help ease the rising cost-of-living pressures. In 2018-19 alone, 4.4 million Australians will get tax relief of up to $530, which will be delivered at the end of each year as part of completing their tax return. Over the next four years, more than 10 million Australians will benefit.
The second stage of this bill will lift the tax brackets to protect taxpayers from bracket creep. This second step will ensure that, as inflation and incomes rise, workers won’t get pushed into higher tax brackets and pay a higher percentage of their income in tax. Australians who work hard, who take extra shifts or earn pay rises or promotions, will be encouraged and rewarded under this plan instead of punished for trying to get ahead.
From 1 July 2018, the government will provide tax relief of up to $135 per year to around three million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. When the low- and middle-income tax offset concludes in 2021-22, the benefits will be locked in by increasing the top threshold of the 19 per cent tax bracket from $37,000 to $41,000 and increasing the low-income tax offset from $445 to $645 from 1 July 2022. From 1 July 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing tax relief of up to $1,350 per year.
The third stage is about making personal taxes simpler and flatter by finalising the government’s plan for more Australians to pay less tax by simplifying the system. This means that workers will be able to plan ahead, knowing that they will pay one consistent rate of income tax regardless of the overtime they’re paid, the extra shifts they take on or the promotion they’re awarded. From 1 July 2024, the government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000, removing the 37 per cent tax bracket completely. The plan means that around 94 per cent of all taxpayers, including the majority of workers in my electorate of Corangamite, will be projected to face a marginal tax rate of 32.5 per cent or less in 2024-25. This compares with a projected 63 per cent of taxpayers in 2024-25 without change to current settings.
Under our plan, Australia’s tax system will become internationally competitive. It will be a system that rewards effort and helps to grow a stronger economy. And, while this three-step plan has been heavily criticised by those opposite, rest assured that we will fight tooth and nail against Labor’s plan to increase taxes. That’s what we’ve heard again today in this chamber. Of course, this is the very reason that Labor will not commit to all three steps and stages of this package—because Labor’s plan is to hit Australians with higher taxes.
When we watched the Leader of the Opposition in his budget reply speech, I have to say that it did look a bit like the Leader of the Opposition was selling steak knives. It was like watching Tim Shaw on one of those Demtel ads, because it was very, very difficult to believe what he was saying. Between budget night and budget reply night, suddenly out of nowhere he’d come up with this so-called miracle tax plan. But, as we know, when it comes to Labor running the economy, it’s very hard to believe anything that the Labor Party says.
The Turnbull government is delivering a plan to provide tax relief and ease cost-of-living pressures. But what the opposition has done is concocted a plan to increase taxes on electricity, on small and family businesses, on incomes, on housing, on investment and—really sadly, frankly—on retirees. Those opposite want to increase taxes on Australians by more than $200 billion, and the biggest single hit is on some pensioners and self-funded retirees, a $10.7 billion hit in this budget and in the forwards, and senior Australians will pay the biggest price under Labor.
Higher taxes are Labor’s plan—higher taxes that will hit hardworking families, higher taxes that will hurt family businesses that employ more than six million Australians. It is a plan that is absolutely deliberately calculated to hurt retirees, to hurt pensioners who have worked very hard all their lives to save for their retirement. Labor has absolutely no interest in senior Australians. This is a shocking, disgraceful, terrible plan—a $10.7 billion plan designed to hurt some of the most vulnerable people in our community and across our nation.
So Labor’s plan is about hurting the Australian economy and hurting the chance for future generations to secure a job. As I mentioned before, there is no doubt that under a Labor government and it’s untrustworthy leader Australians will pay more and more jobs will be at risk. How can anyone trust Labor? They talk about tax cuts, but we know what that really means. We have seen and had a great insight into the plan. There will be higher taxes and higher deficits to pay for their out-of-control and irresponsible spending spree.
Our government has worked hard to deliver for all Australians. We were elected to clean up Labor’s deficit mess, grow the economy, create more jobs and deliver the vital services on which we so rely. Labor, despite all the promises and the four magic surpluses that never arrived, has not delivered a surplus since 1989. On the other hand, we have delivered, and all of this could be taken away if Labor gets its chance. Labor is a risk that Australia cannot afford.
Only the coalition government is delivering a responsible, affordable and well-thought-out plan for tax relief. Only the coalition government has delivered record jobs growth and a stronger economy. Only the coalition government will deliver a surplus. I’m very pleased to speak in support of the coalition government’s responsible income tax relief plan and I commend this bill to the House.