HON. WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
APPROPRIATION BILL (NO. 1) 2018-2019
FEDERATION CHAMBER, CANBERRA
TUESDAY, 29 MAY 2018
***CHECK AGAINST DELIVERY***
In this debate on Appropriation Bill (No. 1) 2018-2019, I wish to make a few remarks about the budget, and, in particular, I want to talk about tax. At the heart of this budget is what I'd call the Turnbull trickle-down trifecta—that is, massive tax cuts for the wealthy, very large tax cuts for large corporates and, of course, wage suppression for everybody else. At a time when global growth is closing in on four per cent—at least according to the latest OECD figures—in Australia, GDP growth is struggling to reach 2½ per cent. We've got the best global conditions in more than a decade, and this government is out there celebrating its enduring mediocrity. Over the last five years of Mr Abbott and Mr Turnbull, real wages have flatlined.
The cost of living has risen steeply, driven chiefly by health insurance, housing and energy prices, and Australians are suffering from precarious and insecure forms of work. We've got record high labour underutilisation and record levels of wage theft in our workforce. All of these things should be within the government's power to change, but not this government.
The Prime Minister gives the least to those who need it the most and the most to those who need it the least. The budget holds low- and middle-income Australians hostage to tax cuts for the top end of town while delivering $80 billion to big business, including a $17 billion gift to big banks, whose rank malpractice has been on disgusting display at the royal commission. Having been involved in a few budgets myself, I can attest that preparing budget documents means that you need to keep both eyes open: one eye on the global conditions and one on the great majority of Australians that you represent. But, looking over this year's budget, it's plain to see that the Prime Minister has kept one eye on the top end of town—high-income individuals and big companies—and the other eye entirely closed, meanwhile winking at the wealthy, who are the Liberal Party's natural constituency.
The personal income tax cuts in this budget are set to drive a steamroller right through Australia's progressive tax system. If the Turnbull government gets its way and if it's re-elected twice more, the tax cuts proposed in this budget will see someone on $41,000 a year and someone on $200,000 a year paying exactly the same marginal tax rate. Mr Turnbull, the Prime Minister, and Mr Morrison, the Treasurer, have a plan to impose regressive income tax cuts. Of course, it follows the same script that we've seen with the company tax cuts farce: throw a few crumbs to the many whilst hosting a feast for the few. This government is pitching personal income tax cuts in three stages but is refusing to split the bill. It's true that Labor supports the first stage of the personal income tax cuts because it delivers tax relief for true low- and middle-income earners. Australians on low and modest incomes are struggling. Labor will always deliver whatever tax relief it can to working Australians. The only group that doesn't seem to think that low- and middle-income earners need a hand are the Australian Greens.
Relative to the rest of the Turnbull government tax heist, Labor's bigger, better and fairer tax cut would deliver faster and deeper relief to 10 million Australians because our plan doesn't hold low- and middle-income earners hostage to the top end of town. We take a much harsher view of the second and third stages of the Turnbull government's income tax cuts, which are undiluted, vintage Turnbull trickle-down economics, as I said before. The Australian National University has concluded that these measures are targeted at lower and middle-income individuals, but, by the middle of the next decade, the measures are weighted towards higher income individuals. The government are still refusing to provide year-on-year costs of their tax plan. We know that the first two stages cost $102 billion and the third stage costs $40 billion, but all of the talk and analysis about their 10-year package only serves to obscure the fact that it's the second and third stages where the big year-on-year costs come into play.
In the later stages, the income tax steamroller really clicks into gear. The 37 per cent tax bracket—currently a pillar of our progressive tax system—applying to those on $80,000 through to $180,000 is bulldozed while the 32.5 per cent threshold is lifted to $200,000, helping an earner on this salary pay the same marginal rate of tax on $200,000 while earning five times what a low-income earner would receive. According to analysis by the Australia Institute, the top 20 per cent of income earners will get 80 per cent of the benefit of this income tax demolition job and the top 10 per cent will get half of the benefit. Meanwhile, 60 per cent of taxpayers—Australians on low and modest incomes—will see no change to their situation whatsoever, apart from reading ever more blatant misreporting from the government and its Murdoch allies that people on up to $200,000 are somehow middle-income earners. This is deeply, deeply misleading.
The average full-time worker in Australia is on $84,600. An ever-increasing number of Australians aren't even getting this much, nor are they in full-time work. A report from the Centre for Future Work released today reveals that, for the first time in recorded history, fewer than half of Australian workers are in permanent, full-time paid jobs with leave entitlements. While the Turnbull government might want to pretend that the average Australian household consists of a couple earning $120,000 per year per person, the stark reality for most Australian households is that most are struggling to accumulate $120,000 between them. On top of this, we've got gross misrepresentation of wage growth. The budget forecasts wage growth of 3½ per cent a year returning immediately and continuing for 10 years. It's bizarre! It goes without saying that the government has no plan to increase workers' wages or to improve conditions to vindicate such an optimistic forecast. Future wage rises are just supposed to appear out of nowhere while the government is out there actively working to suppress wages and conditions for workers across the country. The government is saying that wages are going to grow by 14 per cent over the next four years. Given that record, I can only see it getting up to argue against itself in the Fair Work Commission.
So let's be clear: wage growth is plummeting to record depths under this government. A worker starting a job today in the Prime Minister's Australia will, if they're lucky, be on exactly the same real wage as a worker who started a job on the same day that Mr Abbott became Prime Minister. During Labor's period of government, in which we created close to one million jobs—despite the worst global recession in 80 years—wages grew faster than inflation by a considerable margin. Someone who got a job on the first day of our government would, by the time Labor left office, be enjoying a wage that outstripped inflation by 3½ per cent. For the last five years of the Abbott and Turnbull governments, real wages have been just 0.15 per cent higher than inflation. Wage growth has been 23 times slower under the Abbott-Turnbull governments than under Labor. That is a terrible record.
Of course, that's before you get to what the government are doing with their company tax cuts. What started out as a $50 billion gift to some of the largest multinationals in the world is now costed at an estimated $80 billion. Now, $80 billion is a very big big-business tax cut, one-third of which goes to just 15 companies, $17 billion of which goes to the big banks. That is what I mean when I talk about the trickle-down trifecta: tax cuts for high-income earners; tax cuts for some of the very biggest companies in the world; wage suppression for everybody else. That's the Turnbull trifecta in this budget, at the very core of this budget.
Today in the House, in the context of tax, we had some discussion about tax avoidance and tax evasion. And it is true that, courtesy of legislation put forward by Labor, we now know the extent to which many large companies are avoiding their tax responsibilities. Indeed, a third pay no tax in any one year. We also know that big, respectable companies such as BHP and Rio have been aggressively avoiding and evading their tax responsibilities in our country.
Last week in the House, I said that BHP has hit new lows of corporate behaviour. In the Queensland Supreme Court, it has sought to suppress further evidence of tax evasion on royalties payable to the Queensland government. Last week, it was revealed that BHP received an updated $320 million assessment from the Queensland government for royalties evaded. BHP's evasion of state royalty payments through its transfer-pricing activities has robbed the governments of both Queensland and Western Australia. This matter has now been settled in the Queensland Supreme Court, and there is a confidential legal agreement as to the nature of the settlement.
Fortunately, this confidential agreement can't cover up the essential facts. Firstly, the Queensland government has included a provision in its budget for a successful outcome in this case to the tune of several hundreds of millions of dollars. Secondly, the confidential agreement signed yesterday between BHP and the Queensland government leaves the Queensland budget no worse off. So we can conclude that BHP has now conceded that its transfer-pricing activity is illegal. Today's settlement has significant implications, as BHP has been for some time in dispute with the Australian tax office for more than $1 billion for the use of its Singapore marketing hub to facilitate transfer pricing.
So, along with Rio, BHP is one of Australia's biggest tax dodgers, and there are now significant questions that must be answered by the BHP board. Firstly, who is going to accept responsibility for this unethical behaviour? Secondly, what action does the board intend to take to reassure the public that this behaviour will not be repeated? Thirdly, when is BHP going to come clean and say how much it owes the Western Australian government? Fourthly, when will it settle with the Australian tax office for its outstanding billion-dollar tax bill? Directors of big Australian companies are the first to put up their hands for Australia Day honours, but, if the directors of BHP continue to hide their behaviour behind a veil of legal secrecy, the public will be entitled to conclude that our 'Big Australian' is the dishonest Australian and that they should be the last in line for public recognition.
Ensuring that tax evasion and aggressive tax minimisation are eliminated is absolutely essential to making sure that our budget and our economy are healthy, because, when people evade their tax, what they do is force up tax rates for other people—for small business, for working people—and money is ripped away from hospitals and schools. The opportunity cost of tax evasion is significant in the community. When some of Australia's most reputable and respected companies aggressively engage in the use of transfer pricing through, effectively, tax havens, they are dudding the country that has nourished them and nurtured them through their growth. This should not be tolerated any longer. It is time that corporate Australia put their hands up. When they have been responsible for such actions of profit-shifting and debt-dumping and successfully litigated and dealt with through the tax office and the courts, they should have the decency to say to the Australian people that this will not happen again. They should have the decency to put up their hand and say they got it wrong, and they should move on so that we can all work together to make our country bigger and better.