I rise to make my contribution to the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 and the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024.
In the last five years, we've seen events that have changed the world and Australia, and which have significantly affected our economy. Australians are feeling this in their hip pockets, with the cost of living rising and household budgets under strain. When circumstances change, Australians, rightly, expect that their government should act to ensure that it has their best interests front of mind. Events like the Black Summer bushfires, the COVID pandemic, the illegal invasion of Ukraine and other global conflicts, from the Middle East to Asia, have put further strain on our supply chains and economy. Australians expect their government to act in their best interests, especially in a time of uncertainty. This government recognises the challenges Australians are facing. It's acting to address the cost of living, and providing downward pressure on inflation is just one of the things it's doing.
The privilege of government means that we can act in the best interests of Australia. The Albanese government has capped the price of coal and gas; introduced energy bill relief; made medicines cheaper; made child care cheaper; increased rent assistance and social security payments; and strengthened Medicare. And today, with these bills, we add to those measures when this legislation is passed. From 1 July, every Australian will receive a tax cut. Every single working Australian will be better off. The stage 3 tax cuts, as designed in 2019, introduced a flat tax from $45,000 to $200,000, with the largest benefits skewed towards higher-income earners. They did nothing for those Australians earning less than $45,000 a year, and did little for the majority of Australian taxpayers. In the current environment, where low- and middle-income earners and all Australians are under pressure, it would be unconscionable for the government not to act.
Unfortunately, history will show that so much in the last 10 years was taken for granted by the previous government, and opportunities were squandered. Labor's new tax cuts will benefit the overwhelming majority of Australian taxpayers, compared to the tax cuts that were previously legislated. In Werriwa, about 80,000 taxpayers will benefit from the measures contained in this bill and 89 per cent will receive a larger tax cut than they would have under the previous plan. Every taxpayer, not just in my community but across the country, will receive a tax cut under Labor's plan. That's 13.6 million Australians. Without the changes in this bill, 2.9 million Australians would not have received anything and 11.5 million would have received a smaller tax cut.
From 1 July 2024, the 19 per cent tax rate will be reduced to 16 per cent for incomes between $18,200 and $45,000. This is a key difference between the new Labor tax cuts and the current legislated cuts. Those earning less than $45,000 will now get a tax cut of $804, compared to nothing under the previous plan. This will make a significant difference and deliver further cost-of-living relief for those Australians. The 32.5 per cent tax rate will also be reduced to 30 per cent for incomes between $45,000 and the new threshold of $135,000. The 37 per cent tax rate will be retained but apply to incomes from $135,000, an increase from the current $120,000 threshold. The 45 per cent tax rate will now apply for incomes over $190,000, up from the current $180,000 threshold. These changes deliver a fairer, more responsible tax cut compared to the Morrison-era plan, all whilst maintaining Australia's progressive tax system.
No-one loses as a result of these changes. Of women taxpayers, 6.5 million will receive an average tax cut of $1,649, 90 per cent of whom will be better off under our changes by an average of $707. Of younger Australians, all 1.5 million taxpayers aged between 18 and 24 will receive an average tax cut of $1,007, while all 1.6 million Australians between 25 and 29 will receive an average tax cut of $1,573. Older Australians also will benefit: 500,000 taxpayers aged between 65 and 69 will receive an average tax cut of $1,731; 250,000 taxpayers aged between 70 and 74 receive an average tax cut of $1,685; and the 344,000 taxpayers over 75 will receive an average of $1,726. Families in Werriwa on an average household income of $130,000 will receive $2,600, or $50 a week—significantly more than what they would have got under the old plan, which would have seen them receive a combined tax cut of around $1,000.
These changes will also benefit the labour market, in which we see persistent shortages over every sector. Treasury's estimate of an additional 930,000 hours of extra work per week will help close some of those gaps in these markets. Further relief to ease the pressures faced by low-income earners is also included in these bills, with an increase of the Medicare levy low-income threshold for singles, families, seniors and pensioners. These changes will benefit an estimated 1.2 million low-income earners. It means more lower-income Australians will be exempt from paying all or part of the Medicare levy, letting them keep more of what they earn. For example, a single person earning $30,000 a year will keep an extra $170.
I am really proud to be debating these bills today. I am proud to be part of an Albanese Labor government that puts people before politics; a government that learns and adapts to the changing global circumstances and those of the people that it represents; and a government that recognises that Australians are struggling and takes action to provide responsible cost-of-living relief without adding to inflation. We are the party of workers, and we will stand by those who are feeling the worst of the current cost-of-living crisis. I commend the bills to the House.
Link to Hansard: Full Speech
