MPI - Taxation

Thursday, 11 February 2016

Mr HAWKE (Mitchell—Assistant Minister to the Treasurer) (15:37): While I am sure that all of us in this House would love to hear the words of Senator Heffernan, I am not sure that unparliamentary language can be aired in this chamber in the words of Senator Heffernan.

If I were an aspiring Treasurer, shadow Treasurer or Assistant Treasurer—if I were a person who wanted to get into high office in the Treasury space in Australia today—I am not certain that I would start my contribution to a tax debate by attacking the record of Peter Costello. I have to say to the shadow Assistant Treasurer: I wouldn't go there. If I were thinking about building a bank of credibility on economic management, on tax, on the delivery into this economy, I would not start by trashing Peter Costello's record—when you are not Peter Costello's bootlaces, shadow Assistant Treasurer. He is the longest-serving Treasurer in our nation's history. He set up a Future Fund to fund the unfunded liabilities of the Commonwealth into the future—all of the Public Service liabilities, which you had no way of funding and no plan to ever fund. He left the Commonwealth with zero net debt. So I would say to the shadow Assistant Treasurer: don't go there. Don't attack this nation's best and longest-serving Treasurer, because you have no credibility to do so. You have no credibility when you look at the Labor Party's record on tax and no credibility when you look at the Labor Party's record on spending. To get a tax lecture from a shadow Assistant Treasurer trashing the record of the longest- and greatest-serving Treasurer in this nation's history is, I think, an appalling way to start. I think it is an appalling way to start your contribution by forgetting that this government, when elected to office, did some important things. It did what it said it was going to do. It abolished the biggest tax on ordinary Australians delivered by any government in Australian history, the carbon tax. It abolished the mining tax.

Here we have the shadow Assistant Treasurer bringing a matter of public importance today on tax design and structure, bemoaning white papers and green papers, telling this government that we have got a terrible record of axing taxes. Cast your mind back just two years ago. We abolished the carbon tax, we abolished the mining tax—perhaps the single greatest exercise in tax design stupidity in world history. We have got the former Treasurer here to agree with it. We have the former Treasurer here on the front bench, making his return to the front bench. I would say to the member for Swan: he should get up and make a personal explanation about what a great design it was to introduce a mining tax that brought in no revenue. Give us a personal explanation about it.

Not only did they bring in a tax that brought in no revenue; not only did they bring in a mining tax that was supposed to tax superprofits—the superprofitable mining sector—that brought in no revenue; they also had an expert on tax, Ken Henry, give them many, many recommendations about tax. Of course, we know the previous Labor government ignored every single one of Ken Henry's recommendations about our tax system, except for a mining tax which brought in no revenue. That is really a great start to your tax debate, I would say to the shadow Assistant Treasurer.

I would also say to the shadow Assistant Treasurer: it is not a tax plan simply to spend and spend more money, when every single day everybody here who is listening, everybody out there who is listening, everybody who understands the Commonwealth budget, understands that the government borrows money every single day to fund the ordinary services of government. It is not a plan to continue to spend and spend with no way to fund it. What do we know about the Labor Party's plans if they are elected to office in a few years time? What are their plans? Let us have a look at them right now. We know that so far they have promised to raise $7.6 billion over the forward estimates—just in new taxes and charges. Of course, if you missed it, David Speers conducted an amazing interview with the shadow Assistant Treasurer just recently about the mix of taxes and spending that the Labor Party's plan comprises. We know that, whilst they are bringing in $7.6 billion in new taxes, over the same period of the forward estimates they are planning to spend $44 billion in new expenditure. So we have over $7 billion in new taxes and charges and $44 billion in new expenditure plans.

Dr Leigh: You're making it up.

Mr HAWKE: No, that does not add up; I concur with the shadow Assistant Treasurer.

Dr Leigh: Making it up.

Mr HAWKE: Oh, making it up. You are right. You are doing both. David Speers asked some important questions of the shadow Assistant Treasurer about the mix of your new taxes and spending cuts. He said:

… you won't go ahead with the emissions reduction fund, and the baby bonus element—but the lion's share, the bulk of what you're talking about here, is higher taxation.

The shadow Assistant Treasurer said:

We've got a mix of taxes and spending cuts. That's as it should be.

David Speers responded:

What's the mix? 80/20? The bulk of it is higher taxes.

The shadow Assistant Treasurer said:

You're right to say the majority comes from tax.

A majority, of course, is 50 per cent plus one, so we are already over 50. What is it? Of course, the interview went on, and the shadow Assistant Treasurer refused to answer what the tax mix was. That is because we know it is not just a majority; it is $7 billion in new taxes on the Australian people, with $44 billion of expenditure. It does not add up; it is not a tax plan when you are increasing expenditure at four times the rate that you are bringing it in, when we are already saddled with one of the strongest Commonwealth gross and net debts we have ever had and we have a deficit. It is not a tax plan to spend four times what you are bringing in over the forward estimates. It is not a tax plan. To bring this MPI to us today and say, 'Labor has a tax plan,' when it is a tax plan that relies on increased taxation of cigarettes at its core, really does not do it and will not provide for the budget. Let us have a little look at this, because the Labor Party is saying to the Australian people: 'Elect us to office and we will increase the taxation of cigarettes to fund our new promises.' Let us just see what a few people had to say about the taxation treatment of cigarettes. It really does not matter what side of the economic equation you fall on; economists all over the country universally came out to condemn the Labor Party's plan to increase the taxation of cigarettes to fund hugely increased amounts of education spending. Even economists such as Stephen Koukoulas, a former adviser to the former Prime Minister, Julia Gillard—

Mr Fletcher: The Kouk!

Mr HAWKE: @TheKouk, if you want to find him on Twitter—

Mr Fletcher: What did The Kouk say?

Mr HAWKE: 'What did The Kouk say?' I am asked. He said:

If the number of packets sold falls at a faster rate than the price increases, you won't quite get the revenue effect you were hoping for.

I think, being a fellow traveller of yours, that is very polite language for, 'Your plan won't work,' Shadow Assistant Treasurer. He is being very polite. He is mincing his words. He is watching his p's and q's. But he has got a very subtle message hidden in that: your plan to fund increased education expenditure simply will not work. It does not stack up.

It was not just The Kouk who had that to say about it. Of course we know: any single economist you look at, on whatever side of the fence they fall, says that. I will quote budget expert Stephen Anthony at Industry Super Australia. Let us go to Industry Super Australia. Industry Super even came out to condemn the shadow Treasurer's plans:

"We want to tax tobacco so heavily that its consumption in this country will fall," he said. "Therefore this revenue should not then be relied upon to fund longer-term spending commitments."

That is Industry Super.

Do not give us the mock outrage that this is a public health measure. This cannot be a revenue measure and a public health measure at the same time. If you want people to stop smoking, and they do and the revenue falls, you cannot rely on the revenue to fund future education expenditure. Everybody knows it. Every economist on every side of the fence knows it. So, as to the mock indignation over there, you have got a big problem with your plans. You cannot rely on a falling source of revenue to fund increasing expenditure. You cannot do it, I would say to the shadow assistant Treasurer.

It is of course this government that is having a conversation about tax with the Australian people. And we are having a good discussion about it and it is worth discussing. The government of course takes the view that there should be a lower tax burden on ordinary Australians, particularly those on average incomes paying more in income tax—it is a topic that the opposition has been completely and utterly silent about. They do not see it as a problem that average income earners are now in the second-highest tax bracket. We do. We see it as a critical concern—something that has to be addressed to ensure this nation's prosperity, and it is something we will address in the future.

I would say to the shadow assistant Treasurer: if you are going to come in here with a matter of public importance, you need to outline your plans. Do not start by attacking the longest-serving and greatest Treasurer this country has had; do not do it, because it really exposes the weakness of your plans and exposes your record on tax, which is a record of failure, and it exposes that you are simply out of touch with the ordinary concerns of Australians. Average income earners who are now in the second-highest tax bracket need tax relief; they need to be sure they have a government that understands that burden, and this is the government that will act on those challenges.