Senator FIFIELD (Victoria) (1.22 p.m.)-It gives me great pleasure to speak on the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2005. This bill is all about what coalition governments love to do-to cut tax. On this side of the chamber we believe that the government should be as limited as possible, consistent with a compassionate society. On this side of the chamber we believe that, where government intervention in the lives of individuals can be reduced, it should be. The coalition have the strong conviction that Australians know better how to spend their money than the government. This bill is a demonstration of that belief. We seek to return to the Australian public what is theirs, what is above and beyond what the government needs to do its job. Several budgets back the Treasurer established a new fiscal principle, the principle that essentially, once the government has paid for schools, hospitals, social services, security and defence and paid down debt, any money left over should be given back to the Australian people in the form of tax cuts. That is what this budget does, and the Treasurer again honoured that principle on budget night.
This government has cut taxes many times before-in 2000, 2003 and 2004-and, Senate willing, will do so again in 2005 and 2006. It is worth reminding the Senate that, in addition to the income tax cuts already delivered, the government has done a tremendous amount in cutting tax. It has cut company tax twice, halved the capital gains tax rate, funded the abolition of FID and BAD, undertaken a range of measures to crack down on tax avoiders and forced the states to honour their agreement as part of the intergovernmental agreement of the new tax system-something which they should have done beforehand.
This bill seeks to reduce personal income taxes even further-providing for a fourth and fifth round of personal income tax cuts. It will reduce the 17 per cent rate to 15 per cent. It will kick out the threshold for the 42 per cent rate in two stages: from $58,000 to $63,000 from 1 July this year and to $70,000 from 1 July 2006. It will kick out the threshold for the top rate of 47 per cent in two stages: from $70,000 to $95,000 on 1 July this year and to $125,000 on 1 July 2006. As a result of this bill, taxpayers will not reach the highest marginal tax rate until they earn around three times average weekly earnings, with the top rate applying to only three per cent of taxpayers from 2006-07. These tax cuts also maintain the principle that 80 per cent of taxpayers will be on a top rate of 30 per cent or less. The personal income tax cuts delivered by this government have more than returned the proceeds of bracket creep. If all this government had done was to index the thresholds, people would be paying more tax today and into the future.
The way the government has been able to cut taxes is remarkable given the Australian Labor Party bequeathed it a $96 billion deficit. It is all the more remarkable given the Labor Party opposed every single measure designed to bring the budget back into surplus. It is all the more remarkable given the Labor Party opposed the tax cuts as part of the new tax system.
I cannot talk about the tax cuts of 2000 without acknowledging the contribution of the Australian Democrats. The Australian Democrats from time to time know how to be a responsible non-government party. We should never forget the contribution of their then leader Senator Lees, Senator Murray and Senator Cherry in his former capacity as an adviser to the Democrats. They were a responsible party on the other side of this chamber.
But the Labor Party are at it yet again; they are back in support of higher taxes. I think Australians were stunned-senators on this side of the chamber certainly were-when on budget night the shadow Treasurer, Mr Swan, declared on the 7.30 Report that the Australian Labor Party would oppose these tax cuts. That soon turned to disbelief when the Australian Labor Party declared that they would vote to disallow the 2005 schedules-that was one of their options; that was their thermonuclear option. I have a copy of the schedules here from another place, which are yet to be tabled. These are like cloves of garlic or a silver cross to a vampire. When you hold them up to Labor you should see them reel back. They want to stay as far away from these schedules as they possibly can.
We on this side of the chamber want to hold Labor to account. It was farcical watching Senator Conroy plead with the tax commissioner at estimates to provide him with an exit, to provide Labor with an escape clause. He tried to blame somehow the tax commissioner for this situation because he was obeying the law. The tax commissioner is not in a position to provide an exit strategy for the Labor Party. This is a situation of their own making. The Australian Labor Party have got it wrong, and they know it. Senators opposite should do the decent thing. They should convince their leader to abandon this bloody-minded farce, allow the schedules, vote for the bill and get out of the way. I commend this bill to the Senate.