07 February 2024


The emails that I've got from my constituents have given a really good reflection and appreciation of how they are feeling and what their response is to our decision to make changes to the stage 3 tax cuts so that the Labor tax cuts are more equitable. This is what Ross says: 'I wish to thank the government for adjusting the tax cuts in order to help those less well-off. In a society where there is so much inequality, any move to address this situation is to be applauded.' Jane writes: 'Recent governments have taken decisions which advance their own political ends. It is so refreshing to see a government consider the needs of the Australian people and the challenges they are facing in current economic circumstances. The changes reflect great integrity and bravery, particularly given the strong opposition the government would be aware it would face.' And, finally, David says: 'As a higher income earner missing out, I nonetheless agree that the changes to stage 3 are more equitable than the Morrison attempt to bribe me. Keep up the good work'—and we will.

That sums up the response from the majority of people who've spoken to me about these changes and our decision to give every taxpayer a tax cut in a bit over four months time. For me, this bill is a demonstration of something that I certainly didn't see in the previous government, and that is an ability to really listen, to hear what communities are saying and to then respond in a way that might not have been considered a few short years ago. I was one of many MPs who listened to their community as they shared the experience of being squeezed by the rise in interest rates that started before we came to government and continued fiercely for many months, by the rising prices and—even though wages had started rising and unemployment was historically low—by too little being stretched too far. These were parts of the community who may have missed out on some or much of the cost-of-living relief that we delivered: cheaper child care, expanded paid parental leave, electricity bill relief, cheaper medicines and more Medicare bulk billing, fee-free TAFE, increased rent assistance and boosted income support payments.

The key conversation, the absolute key conversation I had with so many people was the need to provide relief if possible, but not to send their mortgage repayments skyrocketing any further. So this decision, our decision, our tax cuts which deliver more relief to more people in a way that is fiscally responsible and doesn't add to inflationary pressures, is something I'm very proud to be standing here and speaking to. The Labor tax plan means every Australian taxpayer will receive a tax cut this year from 1 July. These new tax cuts provide bigger cuts for middle Australia to help with cost of living, and at the same time they make our tax system fairer. This is a plan for both tax relief and tax reform.

Let's look at some of the ways there will be benefits from these tax cuts. They are good for middle Australia; they are good for women; they are good for young people; they are good for helping with cost-of-living pressures; they are good for labour supply; and they are also good for the economy. When I look at Macquarie, my electorate, every single one of the 67,000 taxpayers in the Blue Mountains and Hawkesbury will receive a tax cut under Labor's tax plan, with 85 per cent—that's 57,000 people—receiving a bigger tax cut from 1 July than under the old stage 3. The average tax cut is $1,624. That's around $90 million back into the pockets of taxpayers, the pockets of workers, just in my community alone in the Blue Mountains and Hawkesbury. That's just for the first year.

Here are some of the examples: nurses, teachers and truckies are some of the most likely to benefit, with more than 95 per cent of those taxpayers getting a bigger tax cut. Parents, particularly women with young children, will have even more meaningful support to return to work under our changes because of the increase in their take-home pay. Someone on the average wage in Australia—that's around $73,000—will now get a tax cut of more than $1,500 a year. That's around $29 a week, more than double what they were going to get under the old coalition plan. Someone earning $100,000 a year gets a tax cut of around $42 a week, or $2,179 a year. For a family on the average household income, which is around $130,000, with one partner earning $80,000 and the other $50,000, their combined tax cut will be over $2,600, with is about $50 a week and $1,600 more than they would have got under the old plan.

How we achieve it is by a number of steps. From 1 July this year we will reduce the 19 per cent tax rate to 16 per cent. We will reduce the 32.5 per cent tax rate to 30 per cent. We will increase the threshold above which the 37 per cent tax rate applies from $120,000 to $135,000. And we will increase the threshold above which the 45 per cent tax rate applies from $180,000 to $190,000. The 45 per cent threshold is being lifted on 1 July for the first time since Labor was last in office. It didn't go up, it didn't get changed, it wasn't made better. There was no relief in the last nearly 10 years. It's taken Labor to be in government for there to be a change to that top tax rate.

All 13.6 million Australian taxpayers will receive a tax cut from 2024-25 onwards. The tax cuts will also help tackle bracket creep and lower average tax rates for all taxpayers. So our changes deliver a better, more progressive tax system and they address bracket creep more evenly. This whole program is broadly revenue neutral, so it won't be adding inflationary pressure. All of these things mean that there are many, many winners from the changes that we've brought in.

I've mentioned women. All 6.5 million female taxpayers will receive a tax cut. Ninety per cent, or 5.8 million,
of female taxpayers will receive a bigger tax cut than under the Morrison plan, an average increase of $707.

I'm really pleased that our tax cuts extend the relief to a group that was probably likely to miss out under the old stage 3 tax cuts. All 1.5 million young Australian taxpayers aged between 18 and 24 will receive a tax cut. The average tax cut will be a bit over $1,000. All 1.6 million taxpayers aged 25 to 29 will receive a tax cut and their average tax cut will be just over $1,500 a year. I also note that students who have been able to take advantage of fee-free TAFE and are studying at TAFE are also workers, many of them, and they will not only get the benefit of fee-free TAFE but these thousands students who are working part-time will also get a tax cut. They are working hard to do better, they are aspiring to do better, and we're supporting them, not just through fee-free TAFE but also through tax cuts.

Now, older Australians don't miss out on this. Older Australians who are paying tax, all 500,000 taxpayers aged between 65 and 69, will receive a tax cut. All 250,000 taxpayers between 70 and 74 will receive a tax cut and all 344,000 taxpayers aged over 75 will receive a tax cut, so these benefits will be felt right across the board.

When I look at some of the professions that I know are heavily represented in the seat of Macquarie, I can see these benefits. Ninety-eight per cent of nursing support and personal care workers will be better off under our tax cuts than under the previous model from the coalition. Ninety-eight per cent primary school teachers are going to be better off, get a greater tax cut. Ninety-seven per cent of secondary school teachers are going to get a bigger tax cut than under the previous government. Ninety-seven per cent of registered nurses, 97 per cent of chefs, 90 per cent of childcare workers, 90 per cent of aged and disability carers, 97 per cent of truck drivers and welfare support workers, all of these groups are going to benefit enormously. It is the sort of thing that is going to go right across my electorate. There will not be a town or village or suburb where the benefit isn't felt and that is great for our local economy.

So, let's get really clear. A person on an average income of around $73,000 is going to see a tax cut of $1,504, $804 more than they were going to receive under Morrison's plan. A person earning $40,000 will get a tax cut of $654 compared to nothing under the previous government's plan. A person earning $100,000 will get a tax cut of $2,179, $804 more than they would have under the Morrison plan. And a person earning $200,000 will still get a tax cut, which will be $4,529.

The Treasury estimates, when looking at these results, show that one of the consequences will be increased labour supply by around 930,000 hours a week. Now, that's more than double the labour supply benefit from the former coalition government's plan. That means more people in the workforce doing more work. It's driven by increases in hours worked and by the participation of women with taxable income between $20,000 and $75,000. These are things that we are very proud to be able to achieve.

The other change that we're making is around the Medicare levy. This bill sits alongside the Treasury Laws
Amendment (Cost of Living Tax Cuts) Bill. I think what a lot of people have missed is we want to further support low-income households, because households with taxable incomes below the relevant statutory low-income thresholds will not be liable for the Medicare levy. The change is that we're going to increase the income threshold for the partial Medicare levy to $26,000 a year and for the full Medicare levy to $32,500 a year. For a single person earning $30,000 a year, it means they're going to keep an extra $170 in their pocket. That's another small part of the change which is going to yield widespread benefit.

We're introducing these changes because they recognise the economic realities of 2024. Australians are under pressure right now, and they deserve a tax plan that actually responds to the challenges that they're facing right now. We couldn't have predicted this situation five years ago; we didn't know exactly what was coming. But we are a mature government that can look at a situation and assess it.

I did have someone say to me, 'Oh, I'm really disappointed you've done this, because you've been in small business; you should know that this is a bad thing to do,' and I said, 'To the contrary—I'm doing exactly what I would have done in small business when presented with information that showed me a better way forward than the way I'd planned to go five years ago; I absolutely would've seized that new information, taken into account the new conditions that I was trading in and made changes.' And that's what we've done. We've been responsive.

When the coalition's plan was legislated five years ago, the world was a different place. It was before the once-in-a hundred-years pandemic. It was before this persistent inflation and the higher interest rates and the two big conflicts and global uncertainty which have placed so much pressure on us. When the circumstances change, changing policy is the responsible thing to do.

The Albanese government is providing meaningful cost-of-living relief in a responsible way. We are not adding to inflationary pressures, and we're laying the foundations for a stronger and more resilient economy. As Richard Denniss from the Australia Institute said, Anthony Albanese's decision to recast Scott Morrison's 2018 tax cuts to suit the economy of 2024 is 'the biggest and most honest piece of tax reform' in Australia for decades. I am so proud to be supporting this bill.