Senator FIFIELD (Victoria) (4.29 p.m.)-Cutting tax is a topic very dear to my heart, to Senator Ronaldson’s heart, to Senator Colbeck’s heart and to Senator Egglestone’s heart-indeed, to the hearts of all coalition senators on this side of the chamber. Under the economic stewardship of the Treasurer, this government has developed a firm reputation for cutting tax and reforming the tax system. To paraphrase Jane Austen, it is a truth universally acknowledged that a coalition government in possession of a sound budget must be in want of a tax reform proposal. Debate about tax reform-
Senator Sherry-Jane Austen! Is that because you’re too embarrassed to quote Malcolm Turnbull?
Senator FIFIELD-I realise Jane Austen is probably someone senators opposite have not actually read. Debate about tax reform is first and foremost something that serves to highlight this government’s reputation in relation to tax. There is a bit of a tax debate happening at the moment. It is a debate that would not happen under a Labor government because no-one would seriously consider that a Labor government would be in the business of cutting taxes. This debate is happening because people think: ‘Coalition government-tax cuts; coalition government-tax reform’. We have done it; people think it. That reputation is built on a very strong record of achievement. The coalition government will be recognised as one of the great tax-reforming governments in Australian history.
What is that record? In 2000, there was major structural reform to the tax system under the banner of A New Tax System. This government has more than returned the proceeds of bracket creep since its election in 1996. The proposal is sometimes put forward that thresholds should be indexed for income tax. If that is all that this government had done then Australian taxpayers would be paying more in tax today than they are paying as a result of the tax cuts we have introduced. I think indexing thresholds might in a way actually take pressure off governments, because governments would think: ‘The thresholds have been indexed; that is all we have to do.’ In the current situation, the pressure is always on governments to further cut tax, and I think that is a good thing. This government has also, despite what Senator Sherry said, reduced the tax-to-GDP ratio since we were elected in 1996.
Senator Sherry-Excluding the GST.
Senator FIFIELD-Excluding the GST-absolutely, excluding the GST, because every single cent of the GST goes to state governments. It is pretty obvious why it is not included. This government has also introduced four rounds of personal income tax cuts, with a fifth to be introduced from 1 July next year. We have cut company tax twice, from 36 per cent to 33 per cent and then to 30 per cent. This government has also halved capital gains tax, funded the abolition of FID and BAD, and undertaken a range of measures to crack down on tax avoidance. This government has also forced the state and territory Labor governments to honour their agreement, as part of A New Tax System, to further reduce their indirect taxes. They had to be dragged kicking and screaming to do it, but they have done that. No government can match this government’s record on personal income tax. We cut it in 2000, 2003, 2004 and 2005, and we will cut it again on 1 July 2006.
Those achievements in cutting tax are all the more remarkable given that this government inherited a $96 billion debt from the ALP. The tax cutting record is all the more remarkable again when you consider that Labor opposed every single savings measure designed to bring the budget into balance. It is even more remarkable again when you consider that Labor opposed the tax cuts in the A New Tax System and the bulk of the tax cuts that have been introduced since then. Labor argued for cutting taxes and their plan for cutting taxes is: ‘Firstly, we will give you a $96 billion bill. Secondly, we will oppose every measure to bring the budget into balance. Thirdly, we will oppose the tax cuts that you propose.’ It is a strange old way to go about supporting tax cuts.
As this is a motion from the Australian Democrats, it would be remiss of me not to acknowledge the contribution to tax reform of the Australian Democrats, particularly that of Senator Murray. There are two types of non-government parties in this chamber. Let us take the ALP as an example of one of those types-one party in this chamber which is mindlessly opportunistic, carping and negative and which always puts partisan politics ahead of the national interest. There is another sort of non-government party in this chamber, and let us take the Australian Democrats as an example of that type of non-government party. They do not always agree with the government but they are prepared to take a constructive approach, a positive approach, and they are prepared to sit down and negotiate. I pay tribute to Senator Murray for his role in negotiating the package of A New Tax System through this chamber. It would not have happened without him. Senator Murray, it might not go well with you in all quarters, but you must be acknowledged as a genuine tax cutter, so we are very pleased that you are here to make a constructive contribution in this chamber.
I turn now to Labor’s record. Recently, we have witnessed the truly bizarre spectacle of Labor members and senators tripping over each other at doorstops and elbowing each other out of the way to submit opinion pieces about cutting tax and about how the top marginal rate should be reduced. It is bizarre because, rewinding to budget night 2005-10 May, less than four months ago-the shadow Treasurer, Mr Swan, declared that the ALP would oppose the tax cuts. So on budget night the ALP were against tax cuts; today, they are for tax cuts.
To the utter disbelief of senators on this side of the chamber, the ALP also declared that they would disallow the 2005 tax schedules, which, as we recall, threw the tax commissioner and business groups into confusion. I well remember the tax commissioner’s response. He was subjected to questioning by Senator Conroy in a Senate estimates committee, and Senator Conroy was endeavouring to assert that it was actually the tax office’s and the tax commissioner’s fault that there was uncertainty over the 2005 tax cuts. The tax commissioner responded to Senator Conroy at some stage by saying, ‘I think I am in a parallel universe.’ It was not the tax commissioner who was in a parallel universe-it was the Australian Labor Party. That parallel universe is one in which the Labor Party before the budget were saying that this is a high taxing, high spending government and taxes should be cut, but when budget night came they were against tax cuts. Today, they are for tax cuts. Labor will support any tax cut, as long as it is one that is not actually before this parliament. They support every tax cut in theory. When it actually comes to putting a tax cut proposal to this chamber, the ALP will oppose it every time. That is the parallel universe in which the Australian Labor Party live.
This government has established a number of budget tax principles. The first, which was established as part of the A New Tax System, is that 80 per cent of taxpayers should be on a top rate of 30 per cent or less. That was established in the 2000 tax system and it is something that was maintained in the most recent budget. Another principle is that only three per cent of taxpayers should be on the top marginal rate. But the overarching principle that this government has established is that, once a government has paid for health, paid for schools, paid for national security and paid down debt, if there is money left over then that will go to tax cuts. It is what this government has done. It is what this government will continue to do.