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I acknowledge the traditional owners of this land, I pay my respects to elders past and present.
The CEDA conference has become a fixture in the parliamentary year.
It is a chance for both sides of politics and indeed, all levels of government to come together and talk about the big challenges facing our country.
It illustrates in its own modest way, one of the great things – one of the unique things we don't celebrate enough about our democracy is that we tend to go our own way in this country.
Our parties, our leaders, our people have always rejected extremism, on both sides from the far-left and the far-right.
Ours is an adversarial system of politics – you just have to watch five minutes of Question Time to understand that.
But we are in the business of the clash of ideas – not ideologies.
Of competing priorities and policies – not prejudices.
The positions we take in the community, the votes we cast in this parliament are based on our values – and our view of what’s in the best interests of our nation.
When we disagree, when we oppose, we do so because each believes there is a better way – and in Labor's case, a fairer alternative.
This morning, I want to discuss to my priorities for Australia.
In the short term, the medium term and the long term.
Because I believe it’s the job of government to give equal time to all three.
If you’re only focused on the next day or the next poll, then the bigger problems keep mounting.
And if you only take the birds' eye, aerial view of Australia in 2030, then you fly the obstacles and daily hardships our citizens are facing right now.
The short-term problems are clear to everyone in this room – we have a lack of balance in the economy.
- Confidence and demand are simply too low
- Productivity isn’t growing fast enough – and its dividends aren’t being shared with the workforce.
Put simply, economic growth is still too low and over reliant on global terms-of-trade.
- Under-employment and casualisation at record highs
- But wages growth is at an historic low.
Some of the problem with wages is cyclical – a legacy of the winding-down of the mining investment boom.
But there’s also a problem with bargaining in this country.
There are too many excuses for employers not to negotiate.
- Especially if they simply view staff as a unit cost
- Or they see their competitors unilaterally terminating existing industrial agreements.
It is a disincentive for the good employers to keep bargaining.
And we see this problem at the heart of the cut to penalty rates too.
Workers in retail, hospitality, pharmacy and fast food didn’t trade their Sunday rates for a better base rate of pay, or a better set of conditions.
They were just cut, rewarding the employers who opted not to bargain.
None of this, this wage cutting and failures of enterprise bargaining, which has driven years of productivity growth, helps us improve our competitiveness, our productivity or our economy.
Instead, all we have is stagnating living standards for working and middle class Australians.
The final short-term challenge is also the perpetual responsibility of every government – how do we maintain the great Australian safety net.
- Lifting people out of poverty
- Supporting people into work
- Empowering people with disability and their carers
- Delivering security and dignity in retirement
- And of course, ensures a strong Medicare if you get sick.
They're the short-term challenges.
In the medium term, this morning I want to submit to you that our challenges are structural:
- loopholes and concessions in our tax system, utilised by the fortunate few.
- putting a heavier burden on ordinary pay-as-you-go taxpayers
- distorting the housing market
- and making budget repair more difficult.
We’re also not making the right investments in human capital – in schools, in skills, in the early years of a child's education, at universities and TAFE.
Every dollar we put into education and training is an investment in our ability to compete, collaborate and co-operate with the amazing nations to our near north.
It’s an investment in a better-skilled, more productive workforce for employers and business.
Let me be clear: We've been very fortunate with the mineral resources and the investment that's gone into it.
And what happens is our terms-of-trade are very good but that is the luck the world gives us because they demand our commodities.
Our challenge is what is the luck we make ourselves, how do we benefit from the Asian Century?
How do we make sure we don't fall behind, to stay at the front of the pack?
It's the investment in people; in education, skills and training – that is how Australia makes its own luck, to be a clever country.
In addition to this human capital challenge, we need a new approach to infrastructure, clearing the way for super funds and others to invest in good projects:
- cutting congestion
- connecting the regions
- and creating jobs and apprenticeships.
The money is there - we just need to create the deal flows so our deep liquid capital markets can invest in the productivity building infrastructure that this nation so desperately needs.
And after a decade of toxic politics around climate change, we’re still stuck:
- with an energy market unsuited for the 21st Century
- investment uncertainty caused by national policy paralysis holding back jobs and forcing energy prices up
- and infrastructure operating beyond its design life
For the sake of our environment, and our economy, we need to put an end to the climate change wars.
In the long-term, we’ve got the big questions of population.
Starting with half the population - the gender pay gap has barely moved in 30 years – and until we get serious about equality for women in Australian life, we’re putting a handbrake on our economic future.
Australians are living longer and we need quality preventative health, Medicare, hospitals and aged care that can increase quality of life – not just length.
We need to maintain and improve our superannuation system, to take pressure off the cost of the pension – and to take pressure off retirees.
All these challenges – the short, the medium and the long term – require a government’s time, energy and resources.
And if we want to fund our investments in the future and repair the budget, if we want to guarantee we can build to last – and pay for it –
Then we need to address some of the structural problems in our tax system – beginning with an examination of unaffordable concessions.
Some tax concessions reward a social good, like donating to charity.
Others recognise that no matter how good a farmer you are, you’re always at the mercy of the elements and you may well need help smoothing your income over the good and the bad years.
And some are just common-sense – like a modest deduction for people who have to purchase a uniform for work or safety gear.
But there are other tax concessions which have mutated far beyond their original purpose - they’ve become vehicles for aggressive tax minimisation, at the expense of the vast majority of Australians.
We should not confuse the longevity of a deduction with its legitimacy.
The fact that a loophole has been open for a long time isn’t an argument against closing it – and neither is the political difficulty of doing so.
The fact that change has been ruled out before, in more prosperous times, is no argument for inaction now.
Delivering a fairer tax system is a short-term priority, for lifting living standards.
It’s also a medium term challenge, making the structural changes for a stronger budget.
At the moment, we’ve got a bell-shaped tax system in this country, a two-class system.
At one end – if you earn no income, if you have no money, then you pay no tax. There's a clear disadvantage in that.
As you go up the bell, the more you earn, the more you pay in tax.
That, in the bulging middle of the bell are the vast majority of Australians.
You know them. They're the Pay-As-You-Go taxpayers who go to work, make their contribution, file their returns but have limited opportunities to minimise their tax.
These Australians don’t have multiple investment properties to negatively gear, they can’t park their wealth in offshore tax havens.
Then you come down on the other side of the bell, where you earn a great deal.
And you have the opportunity to minimise your income - where high net-worth individuals who legally and effectively can afford to opt-out of paying tax.
We put fairness back into the mix.
It’s why we’re taking action on negative gearing and the capital gains discount - two unsustainably generous tax concessions which are distorting the housing market in favour of wealthy investors.
Our plan puts first-home buyers on a level playing field – and saves the budget over the next 10 years $37 billion.
And consistent with David Murray’s review of the financial system, we’ll also take some heat out of the market by preventing Self-Managed Superannuation Funds from borrowing.
Superannuation is already tax-advantaged, and I don’t think we should give one section of the super system access to further investment opportunities, at the expense of Australians who are locked out of the housing market.
But this is only one example.
In 2014-15, forty-eight people earned more than one million dollars and paid no tax at all – not even the Medicare levy.
Using appropriately priced tax lawyers, they deducted an average income of $2.5 million to get them below the tax-free threshold.
This kind of manoeuvring obviously doesn’t come cheap – most paid their accountant more than a million dollars, and then of course they can deduct it.
I actually think loopholes like this weaken the national budget – and leave ordinary taxpayers to carry a heavier burden.
That’s why Labor is going to cap the amount individuals can deduct for the management of their tax affairs at $3000.
This will affect only 1 in 100 taxpayers – but it saves the budget $1.3 billion over the medium-term.
If you’re not prepared to make the tough calls for a fairer tax system – then you end up simply raising taxes on people who can’t afford to opt-out.
That’s what we saw a few weeks ago – another budget built upon the back of an increase in income tax.
As the proud architects of the great Australian safety net, Labor understands every element of the safety net has to be securely funded – from a fair pension to a strong Medicare and National Disability Insurance Scheme.
In 2013 when we introduced the NDIS, we increased the Medicare levy to 2 per cent as part of our plan to guarantee the future of the NDIS.
Back then:
- Wages growth was over 3 per cent.
- We’d just tripled the tax-free threshold, giving low and middle income Australians a very sizeable tax cut.
- And our approach was paired with progressive revenue measures like reforms to Private Health Insurance.
But things have changed substantially in the past 4 years.
- Wages growth is at 1.9 per cent – that is a historic low.
- Under-employment is at a record high. Part-time work becoming the norm, not full-time work.
- Ask any middle class working Australian family - living standards have stagnated.
- Housing affordability is harder in our big cities and it's harder for young Australians, leaving parents to wonder how their kids will ever afford a house.
- Apprenticeship numbers have crashed in the last four years, down by over 130,000.
- And one month from today, 700,000 people in retail, hospitality, pharmacy and fast food will see their penalty rates cut.
Now, in 2014 the Government banged the drum of ‘Budget Emergency’ to try and justify its massive cuts to family support and services.
Now they’re at it again.
Except this time, they're yelling about an ‘NDIS emergency’.
Trying to spread anxiety among people who rely on the NDIS, as an excuse to increase the taxes working people pay.
We have every right to be sceptical of the Government and their intent.
And we have every right to stand up for the people who count on us – people with disability, their carers and middle class working Australians.
We will support the 0.5 per cent increase in the Medicare levy for the top two tax brackets – Australians earning over $87,000.
And we don’t say people earning that are wealthy. But what we do believe is that when the bulk of the Australian people haven't had a wage rise, when their energy bills are going up, when their kids are struggling to get a deposit, we do not believe this is the right time to increase the income taxes of millions of Australians.
It is effectively a cut in their income.
And we don't believe it is the right time to make battlers pay more when the Government is getting rid of the budget repair levy, which will see millionaires get a tax cut of $16,400.
The Liberals can call their tactics whatever they like – but a tax is a tax is a tax.
Labor will not ask people who already spend every dollar they earn – and then some more – to make another sacrifice, while the very wealthy get a cut in the top-marginal tax rate at a time when this nation needs to make ends meet.
No government worth its salt should decrease the burden on the top 2 per cent of wealthy Australians and then ask millions of other Australians to pay more – no Labor Party could support it.
This is a values decision for us.
We thought about this – and we’ve come up with a fairer, more calibrated, more progressive plan: which keeps the Budget Repair Levy in place and applies the Medicare Levy increase only to those earning over $87,000.
It’s fairer, it's better and it raises $4.5 billion more in revenue without delivering another hit to the family budgets of people who can’t afford it.
There’s no economic logic to whacking demand and confidence again by hitting millions of Australians who earn less than $87,000 with a tax increase.
Yesterday morning, you were the recipients of the Prime Minister’s doomsday warnings about not cutting tax for the highest income earners.
A couple of things about that.
For a start, the current rate today – including the Medicare and Budget Repair levy – is 49 per cent.
So in the last 3 years under the Liberals it hasn't been a tax on success, but when we propose keeping the levy, somehow this is the Armageddon of economic initiative.
And before we hear another dishonest lecture about ‘every second dollar going to the government’ – let’s deal in the facts.
Firstly, because of Australia’s progressive tax system, no-one pays the top rate of tax on all their income.
For example, the decisions taken in this budget would mean from 1 July 2019, an Australian who earns $200,000 – will pay an average tax rate of 34.1 per cent.
Under Labor’s plan, the same person on $200,000, would be paying an average tax rate of 34.3 per cent.
I find it hard to believe the difference between 34.1 per cent and 34.3 per cent heralds the end of Western civilisation as we know it, and people will just stop working.
And there’s another important point here.
There are a lot of meaningful, valuable jobs – held by people I deem to be successful – who will never be in any danger of earning over $180,000.
The Prime Minister and some conservative critics say our plan is against aspiration, effort, determination, you name it.
He thinks it’s a tax on success.
I actually think this speaks volumes for the way that our current Prime Minister looks at the world – measuring success by the amount of money you earn.
What about the success of a teacher on $60,000, educating our kids?
Why does she have to pay another $300 in tax?
What about the success of a nurse caring for the sick?
What about the success of a retail worker, working on a Sunday - why does she have to pay more tax when she is successfully raising her family, educating her kids and paying the bills?
What about the child care workers who went to work this morning right around Australia, most of whom will never get to triple figures?
Because they don't earn as much as someone in the top tax bracket, does not mean they are not a success.
And why is it that it is illegitimate to keep a budget repair levy for the top 2 per cent wealthiest Australians and not acknowledge the success of 8 million Australians who earn less than $87,000?
Where is the Government's plan for their success?
New research published today by the Australian National University shows that twice as many households would be worse off under the Coalition’s plan, compared to ours.
And the heavy lifting, as it has been in a number for conservative Budgets, will be left to the working and middle class.
Our plan raises more revenue – and it’s twice as fair.
You also have to look at the punitive effect of the Budget’s increase on the cost of university and lowering the repayment threshold for student fees.
Analysis quoted by Mr Peter Martin in the Sydney Morning Herald shows that for a couple renting, where one partner has left uni and the other is studying, the effective marginal tax rate is over 97 per cent once they clear an income of $37,000.
And it stays in the high nineties until $50,000.
This year’s Budget didn’t contain any specific analysis of its impact on women – and we soon learned why.
The National Foundation for Australian Women has found that women on around $50,000 could face an effective marginal tax rate of more than 100 per cent.
A woman graduate, working and relying on child care, earning $51,000 and receiving family payments will actually have less disposable income than a man earning $32,000.
This is the Liberals’ tax on young people and on women.
This is not just punishing aspiration, but education and family.
Giving a tax cut to millionaires – while increasing income tax for every working Australian – is the exact opposite of the fair go.
It is an insult to hard working people whose efforts drive our economy.
And it will hurt ordinary Australians a lot more than it affects the wealthiest in our society.
What is the economic sense of reducing the disposable income of people who spend every dollar when we need confidence in our economy.
It goes counter intuitive to where this nation's direction needs to lead us.
But in the end, it’s all about priorities and choices.
The Prime Minister’s made his choice – and I’ve made mine.
Malcolm Turnbull wants to be the Prime Minister for multinationals and millionaires – I want to be Prime Minister for middle class working Australians.
In politics, there are the things you'd like to do – and things you have to do.
Chris Bowen, myself, our whole team – we’d like to lower income tax rates – not just for the top 2 per cent like the Liberals, but for everyone.
Indeed, the last time low income earners received a tax cut was under the previous Labor Government.
We would like to do these things.
But there are things that we have to do.
We have to get the deficit down – up ten times under the current government.
We have to pay off debt – projected to hit three quarters of a trillion under Turnbull and Morrison.
We have to invest in Australia’s future – in education and infrastructure – and we have to keep the safety net strong.
And – as the Labor party – we have to, we choose to, to put working and middle class people first.
In conclusion, your days of deliberation and ideas, you come and represent all parts of our massive nation; from big cities, small towns and regional centres.
You know the scale, depth and diversity of the challenges facing Australia – short, medium and long-term.
But you also understand the capacity of Australians to adapt to change – and make it work for them.
You understand the common aspirations our people share.
This country isn’t built on the idea of accumulation of wealth, or property solely – our story is bigger and broader than that.
As parents, as citizens – Australians expect us in the privileged position of Parliament to uphold and honour the contract we have with the next generation.
Yes, our fellow Australians legitimately aspire to a good job for themselves, a job with a sense of security, worth and reasonable pay.
But every parent, every aunt and uncle, every member of this current generation of Australians, we are empowered to want a better job for our kids – through great education and world-class skills and training.
We want our children to be able to find a home where they can start a family.
And our future generations expect us to take action on climate change, securing our energy future and locking-in cheaper, cleaner more reliable power.
This is what matters – the contract we have with the future, the duty we owe to who comes next.
The obligation that every generation of Australians to hand on a better deal for those who come after than the one which we received.
That’s my and Labor's focus – not just for next year, or the next election – but for the decades ahead.
Thank you very much and thank you for being here.
