It is with pleasure that I rise to support the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018, which ushers in tax relief for millions of hardworking Australians. I'll touch upon the opposition's position towards the end of my speech to the House. Suffice to say, if those opposite ever get control of the Treasury benches and the keys to the Treasury, it will be an economic shambles in this country, and I think most Australians know it. They have long memories. They remember the days of Rudd and the Rudd money and the shambolic economic management of the opposition. They have absolutely no economic credibility; it's all smoke and mirrors over there on the opposition benches. They are essentially economic charlatans.
It is with pleasure that I rise to support this government bill, the measures of which have been very well received not only in central western New South Wales but right across Australia. They are all about helping Australians get their hard-earned money by giving it back to them and putting it back in their pockets, rather than penalising them, stifling their effort and stifling their enterprise, which is what those opposite benches specialise in. With personal income tax accounting for over half the Commonwealth government's tax revenue, it's important to get this issue right and make sure that our hardworking Australians are not overtaxed and not prevented from getting ahead through unduly high taxes or by seeing the gains that they are able to make eroded through issues like bracket creep, which is a constant issue facing Australians. As we've heard, the government's plan is a three-step plan, and I'll briefly touch upon those three steps. After that, we'll focus our attention on the opposition.
Step 1 of the tax plan is to provide immediate relief to low- and middle-income earners. The government is providing relief to earners of up to $530 in 2018-19, 2019-20, 2020-21 and 2021-22 through these targeted tax offsets. Those earning up to $37,000 who face a 19 per cent tax rate will have their tax reduced by $200. This will increase incrementally for those earning between $37,000 and $48,000. The maximum offset of $530 will be available to taxpayers earning between $48,000 and $90,000. Then this benefit gradually reduces at a taxable income of just over $125,000. This is going to assist over 10 million Australians, including those on average full-time earnings receiving the $530 benefit. The benefit of the offset will be received as a lump sum on assessment after individuals lodge their tax returns. This offset is in addition to the low income tax offset. This targeted approach will ensure tax relief goes to middle- and low-income earners, where it's needed.
In terms of protecting against bracket creep, from 1 July the government will provide a tax cut 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. This will prevent around 200,000 Australians from paying tax at the 37 per cent marginal tax rate. And then from 1 July 2022 the government will lock in the tax relief from the new offset by increasing the top threshold of the 19 per cent bracket from $37,000 to $41,000, providing tax relief of up to $540 per year, and increase the low income tax offset from $445 to $645. This change to the 19 per cent bracket will prevent around half a million Australians from paying tax at the 32.5 per cent marginal tax rate in 2022-23. In addition, the government will provide tax relief of up to $1,350 year by increasing the top threshold of the 32.5 per cent bracket from $90,000 to $120,000 from 1 July 2022. This measure is projected to prevent around 1.8 million taxpayers from facing the 37 per cent tax rate in 2022-23 due to wages growth and bracket creep.
How do those tax measures affect folks on the ground in electorates across Australia? Those measures will help over 61,000 taxpayers in the central west of New South Wales, in the Calare electorate, benefit from low- and-middle-income tax relief in 2018-19. For example, if you're a worker on $50,000, you'll get an extra $530 in your pocket from the budget year onwards and an extra $3,700-odd in your pocket over the first seven years of the tax plan. If you're on, say, $88,000, you'll immediately get $575 and you'll get an extra $4,000 over the course of seven years. These are substantial savings which will make a real difference to the lives of everyday Australians. A person on $75,000 a year will get a $530 tax offset straightaway and then over $3,700 in their pocket over the first seven years of the plan—and so it goes on. These are real tax relief measures that are going to help put money back into the pockets of everyday Australians.
The third phase of the plan is basically about making personal taxes simpler and flatter. In 2024-25 the government will simplify and flatten the personal tax system by abolishing the 37 per cent tax bracket entirely—this is substantial reform—and Australians earning more than $41,000 will only pay 32.5 cents in the dollar all the way up to the top marginal tax threshold, which will be adjusted to $200,000. As a result of these measures, around 94 per cent of taxpayers are projected to face a marginal tax rate of 32.5 per cent, or less, in 2024-25 compared to 63 per cent of taxpayers in 2024-25 under the current settings. These are very substantial reforms and they will make a real difference on the ground. Australia already has relatively high rates of tax, cutting in at relatively low levels of income compared with other countries. So it is important that we undertake this tax reform. Australia's top marginal tax rate cuts in at around 2.2 times average full-time earnings compared with four times average full-time earnings in Canada and the UK and 8.8 times average full-time earnings in the US. Without change, Australia's ratio is projected to drop to around 1.7, reducing our international competitiveness and our ability to attract and retain talent. Under the government's plan, the ratio will fall more modestly to around 1.9. This is a very substantial tax relief package. It is aimed to help folks on the ground in Australia, including low- and middle-income earners. You've got to compare those tax relief measures to what is being proposed by the opposition. I mean, they come into this House and, honestly, on one level you have to admire the front—folks, it is all smoke and mirrors. They are aiming to grab $200 billion from some of Australia's most vulnerable people.
Let's take a look at Labor's retiree tax. That's $10.7 billion over the four-year budget forward estimates but it's going to be a lot more over the decade. What they're aiming to do is snatch money back from retirees. That's what they're doing. These retirees are people who've worked their whole lives, who've given to Australia, who've made their plans and now, in their most vulnerable time, these older Australians are going to be hit very hard.
It's starting to bite, I think. The opposition, they've got some by-elections coming up, and you can see in question time that their heads are a little bit down because they know that they've got some real problems in this area. The cat was belled recently in a very good article in The Australian on 13 March which reported on the Self Managed Super Fund Association chief, John Maroney's, comments. It makes for salutary reading for folks on the opposition benches. He says:
It is our contention that this proposal will affect more than one million Australians saving for their retirement and other purposes. Our calculations show it will cut about $5000 of income from the median SMSF retiree earning about $50,000 a year in pension income. To be saying these people won’t be paying any more tax is just semantics.
The article goes on to say:
Mr Maroney said the hit on retirement incomes was clearly "not just affecting the very wealthy and can substantially damage the lifestyles of retirees who have prudently saved and are carefully drawing down on their retirement savings."
He also stated:
Viewing all SMSFs as belonging to the mega-rich is an over simplification.
I think he's got it dead right. Those pensioners and retirees will be affected by this tax grab from their income. You know, the chickens are going to come home to roost and they may come home sooner than the opposition expect.
On top of that, you have Labor's housing tax, a $20 billion tax on mum-and-dad investors through Labor's plan to abolish negative gearing for established homes. Again, this is not something that just affects wealthy people. One-in-five police officers negatively gear as do 50,000 teachers. Small businesses negatively gear. As the Treasurer said recently, more than 60 per cent of people on incomes less than the average wage negatively gear so a lot of these measures have not been thought out. You've got Labor's investment tax—that's $13 billion. That's the tax increase in capital gains tax for all assets by 50 per cent by halving the CGT amount. This is on all assets. It hits every investment and will hurt productivity and the living standards of all Australians.
The taxes, they just keep on rolling in. Labor's tax return tax is a $1.5 billion tax, courtesy of Labor's proposal to slap a $3,000 cap on the amount individuals can deduct for managing their tax. Then you have Labor's higher income tax—a $22 billion tax on wages, courtesy of Labor's plan to re-impose the deficit levy The taxes keep coming thick and fast. Don't be fooled by the economic charlatans on the opposition benches. Taxes are coming if the opposition ever regain the Treasury benches in this country and they're going to hurt some of the most vulnerable Australians.
You look at Labor's family business tax—a $22 billion tax on family businesses, with Labor planning to impose a 30 per cent tax rate on distributions from discretionary trusts. This will hurt family businesses, particularly those in regional areas, where the variables of the weather year to year can impact on cash flow and income—and it's not just on farms. These families use trusts legitimately to spread income between beneficiaries to assist in flexibly managing their affairs. Then, of course, you've got Labor's savings tax. This is $25 billion worth of new taxes on your superannuation savings, lowering the annual non-concessional contributions cap to $75,000, lowering the high-income super contribution threshold to $200,000, reversing the introduction of catch-up concessional contributions and reversing changes to tax deductibility for personal contributions.
The taxes just keep on coming. Who can forget the Labor tradie tax? This is Labor's change to tax deductibility for the 800,000 people who are self-employed. Finally, you've got Labor's growth tax, imposing higher taxes on business earnings. This is a $59 billion tax on Australian businesses, courtesy of Labor's plan to reverse the Australian government's enterprise tax plan. They continue to deceive Australians about reversing the tax cuts that have already been legislated for 3.2 million businesses with a turnover of less than $50 million.
The new taxes are coming, and I warn all Australians that those opposite can't be trusted. You look at their economic management—their management, full stop, has a long and sorry record, from the pink batts fiasco to the Building the Education Revolution fiasco, where overpriced school buildings were constructed by out-of-town builders. You look at the Rudd money fiasco, where money was literally shovelled out of the backs of trucks. They are an economic shambles over there, but I commend the fiscal responsibility of the government. (Time expired)