Selected speeches from Parliament. For more speeches and other work in Parliament, visit Hansard.
Throughout this debate, it is only the Labor Party that has been advocating that all working Australians receive a tax cut now because both our economy and many households are struggling. Letting this bill through in its current form, unamended, fails in our duty to all Australians. We know that Australians are struggling under mortgage stress, flat wages growth, the rising cost of living and power prices, but this bill before us today does not prioritise the needs of Australians properly. It's quite reasonable to bring forward the second stage of the tax cuts, because more money in the pockets of more Australians now gives our economy the stimulus it so desperately needs. Letting this tax bill go through in its current form does a disservice not only to the people of my great state of WA, who have put their trust in me after the recent election, but to the whole of Australia. This bill, as Labor proposes, should be split, allowing the first and second stages to go to the intended middle and lower income earners. That gives the much needed boost to the economy. But, instead, you are so ideologically driven towards wanting to do the tax cuts for high-income earners down the path, in the future, that you're not prepared to bring forward those stage 2 tax cuts in the interests of the economy now. The first and second stages would allow a much needed boost for an economy that we know is already in trouble.
You are irrational when you say that the third round of tax cuts are planned for 2024, when you have no idea of the economic climate that we will be dealing with in that time. We should be waiting to see what the economic conditions are before we revisit such an idea. You projected that there'll be a $9 billion surplus in 2022-23—that's including the $16.4 billion worth of planned tax cuts for that year—but what we know is that the Reserve Bank's forecast for the next few years, which was released only in June, looks much bleaker than in the March budget. The March budget predicted a 2.75 rate of growth in wages. The Reserve Bank's forecast, a mere two months later, predicts only 2½ per cent. All signs keep pointing to not legislating these $35 billion worth of tax cuts that are five years into the future, a future that we can't possibly predict now. At this moment, more than anything we shouldn't be making grandiose plans without knowing what kind of environment we need to work with in the future.
The economy has been growing, thanks to this government, much too slowly in recent years. The rate of growth in Commonwealth spending after inflation is estimated to fall from an average of 2.6 per cent per year from 2013-18 to 1.3 per cent in 2019-22. This is not good enough when it comes to public goods and services in our nation. So, instead of looking down the track, why not work quickly now to improve income growth and spending on goods and services across the nation by bringing stage 2 forward? If we get them going this year, it will mean we're able to directly help lower and middle Australia now. For that modest cost of $10 billion, we'd be able to directly lighten the load of struggling families, who might not feel able to comfortably spend on a new vacuum cleaner, getting the car serviced—all of the things that should be injected into our economy now with increased consumption and spending. People would be putting more money into the economy. Allowing the second stage and the first stage through, going to the intended middle- and low-income earners, gives that boost to our sluggish economy that you over there, in your heart of hearts, desperately know we need.
You can't paper over the state of the economy, as much as you might like to. The economy has slowed to a pace not seen since the global financial crisis a decade ago. The Reserve Bank has brought interest rates to a level lower than we saw during the global financial crisis. We know that the Reserve Bank has real concerns about the continuation of sustained growth in the economy. They have also said that their monetary policy is not enough. We have an opportunity, in this bill before us today, to do something more.
Interest rates through the Reserve Bank are lower than we saw during the global financial crisis. We must do something about the concerns in our economy. The one per cent rate of interest is an indictment of the economic mismanagement we have from the Liberals. It's one per cent. What are you doing in the meantime? You refuse to change the deeming rate for pensioners from 3½ per cent, where you deem that that's the income that they will earn from their savings. No, it's one per cent. One per cent is the official interest rate now. You want to give these tax cuts to higher income earners down the track but you refuse even to change the deeming rate for pensioners now. You are void of economic policy, which is clearly something that the Reserve Bank sees. We have stagnant wages growth, weak economic growth and mortgage stress—mortgage stress that's clearly being experienced in my home state of Western Australia, where mortgage defaults are the highest in the country.
What you can and should be doing with these tax cuts is injecting more cash directly into middle-income and lower-income households, who are more likely to spend it and boost the economy. Another good thing to do is to have direct investment into infrastructure and services—a critical thing to get our economy back on track—and to make sure that our dentists, cafes, local shops are thriving and vibrant. The boost that our economy needs is not going to be achieved through stage 3 of these tax cuts, which are down the track. Stage 3 is aimed at high-income earners, who have clearly been shown to save or invest at least a third of their income. What's more, they are down the track and we don't know if we can afford them. As the Reserve Bank said earlier this week:
Consumption growth has been subdued, weighed down by a protracted period of low income growth and declining housing prices.
The government, with its 'nothing to see here', does not even have a wages policy. You did not have one to take to the election and you do not have one now. Your last policy was to cut penalty rates for some 700,000 working Australians. You seem to think that penalty rates are a luxury for workers, but they're not. They put food on the table and fuel in the car and, indeed, also stimulate the economy. By the time your penalty rate cuts are fully implemented, some workers will be some $26,000 worse off. Workers will lose up to $2.9 billion. You give tax cuts on the one hand, but you take with the other hand. What kind of policy is that?
You have not properly costed the third round of cuts, for which we require some $95 billion over five years. Where, my friends on the other side of the chamber, is that money going to come from? Is it the education system, which has suffered a $14 billion cut not only from the government but from our current PM? It is the healthcare system, where rebates have been frozen for the last five years and there have been $2.6 billion in cuts to public hospitals? Is it pensions? Is it the government's lack of preparedness for Australia's ageing population? The government still needs to deal with the consequences of the aged care royal commission. Is it the government's lack of preparedness for Australia's population, when real growth in health spending will have to fall by some 0.7 per cent? In a decade's time, health, aged care and disability services alone are expected to cost $21 billion a year more. We already don't have this revenue.
In 2017 people aged 65 years and older made up some 15 per cent of the population. In 2023, some three years after the proposed introduction of these tax cuts, the lion's share of which will go to five per cent of the population, those aged 65 and over will make up 18 per cent of the population and will be seeking retirement and access to public health and aged-care services. How are you going to have enough taxpaying Australians to pay for an ageing population under these circumstances?
As I said before, the third stage of the tax cuts are skewed to the smallest and wealthiest tax bracket, giving those earning $180,000 to $200,000 around 4.54 per cent of their disposable income back. In the first stage of the tax cuts, those earning $45,000 to $90,000 a year stand to gain only 2.16 per cent of their disposable income back. Why are you giving the highest tax cuts to those who are least likely to spend them? How is that fair on all Australians? In 2024 those in the top five per cent of the tax bracket, if they're earning $200,000, will be getting an extra $224 a week in tax cuts. As Senator Siewert pointed out, that's about the same as Newstart today. Newstart payments are stagnant. They have been $245 a week, which is less than the value of the minimum full-time wage, which hasn't been increased when inflation has been taken into account, for some 25 years. That's where Newstart is today.
Senators on the other side of this place—through you, Mr President—I call on you to see the dangerous economic times we're in, and, at the same time, see our capacity to support those most vulnerable in our society, who will suffer if we don't see the light on these issues. Those who don't earn enough to be taxed, arguably the most in need, are left completely in the dark on what you're doing with these tax cuts. Households earning $30,000 or less are 30 per cent of our population. The implementation of your plan will widen this gap even more greatly. Giving half of the tax cuts to the highest tax bracket won't boost our economy; that doesn't create jobs. We're on track, in the long term, to damage essential services to our country and widen the gap between the haves and have-nots in our nation. We're in a dangerous economic climate, and you seem to be behaving as a government that won't see sense. I cannot stress enough, colleagues, the importance of the job we have to do in this place today.
It's a good thing to act now, through these tax cuts, to stimulate the economy. We do have the lowest growth in 10 years. That has a real and tangible impact on hardworking Australians and their families. It is about supporting working people to put food on the table and fuel in the car. That's our job. We should be here in this parliament to stimulate the economy by giving more money back to hardworking Australians in tax cuts. But what we should not be doing now is locking in these stage 3 tax cuts, which this nation may not be able to afford in terms of its revenue and may not be able to afford in terms of the substantial impact on the services which Australians rely on us to provide.
I implore you to work with us. We've compromised. We've changed our position to support stage 2. You don't need to sell out to the crossbench on whatever deals they might be doing—please! You can actually act responsibly now and get stages 1 and 2 through by ruling out what's unsustainable today and what's unsustainable tomorrow in terms of those long-term tax cuts. Please, let's work together in this term of parliament to give all hardworking Australians a tax cut and stimulate an economy that so desperately needs it. Let's stop playing politics and let's give the economy the boost that it needs without setting it and Australians up for a fall in the future.