I rise this evening in support of the cost-of-living tax cut bill, a decision I’ve reached after close assessment of how these changes will affect the people in my electorate of Indi. As an independent member of this place, I make every decision on every vote. I try very hard to look at what is best for the people I represent, to look at the evidence, to look at the ethics and to do what I believe is right.
The evidence from my electorate is clear. People are doing it tough at the moment. The cost of living is increasing, every trip to the supermarket seems to get more expensive and energy bills are sky high. As I have said in many times in this place, the cost and availability of housing is a major issue and more work is needed to address this and other things, especially in regional Australia.
The cost of living tax cuts bill when compared to the arrangements for this financial year will amend the threshold amounts of three of the five personal income tax brackets and reduce the tax rate for one of the five brackets. The first bracket, known as the income-free threshold, will remain unchanged. The second bracket for incomes between $18,200 and $45,000 will be taxed at a reduced rate of 16 percent instead of 19 percent. The third bracket for incomes between $45,000 and $135,000 will be taxed at a rate of 30 percent. The fourth bracket for incomes between $135,000 and $190,000 will be taxed at a rate of 37 percent, and the highest tax bracket from incomes above $190,000 will be taxed at a rate of 45 percent.
So, in Indi, the 43,000 people earning between $18,200 and $45,000 who received zero tax cut under the previous plan will now will receive a tax cut of up to $800 per year. Their tax rate will be lowered from 19 percent to 16 percent. For the more than 45,000 residents in Indi earning between $45,000 and $135,000, they will receive $804 more under this bill than under the previous plan, with a total tax cut of $3,050. For the 6,000 people in Indi earning more than $135,000, they will receive a tax cut of up to $4,500.
The second bill before us, the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024, will increase the Medicare levy exemption thresholds. The Medicare Levy Act states that people earning below a certain limit are exempt from paying the Medicare levy, and this bill will ensure that these amounts are increased by 7.1 per cent to match the inflation we’ve seen in the last few years. This means that 1.2 million lower income earners, including individuals, families, and pensioners, will remain exempt from the Medicare levy.
What this all means is that 112,000 Indi residents earning between $18,200 and $135,000 will have more money in their pockets from July as a result of these changes. So, yes, I do support them. I support these changes because the previous deal was a shocker for the people of Indi, and I’ve long said so in this place. Under the previous plan, more than 60 per cent of taxpayers in Indi would have received zero benefit, zero tax cut. That’s 68,000 people in my electorate who would have watched more than $300 billion in tax cuts go to higher income earners over the next decade without seeing a single cent themselves. At a time when the cost of living is affecting everyone, this would have been completely unacceptable. It wasn’t fair in 2019 and it isn’t fair now.
On average, Australian households are experiencing a nine per cent drop in real disposable income compared to 2020. This means less money for food, less money for health care, less money for petrol and less money to save for the future. If the previous plan, legislated in 2019, made no sense when economic circumstances were radically different, then in 2024 it was frankly absurd. The previous plan was a dud deal for Indi, a dud deal for rural and regional Australia more broadly and actually a dud deal for Australia. I have consistently supported changes to these tax cuts so that they provide relief where relief is needed most. The previous plan provided tax cuts to the cities at the expense of the bush, with Indi being one of the worst-off electorates in the country. The new plan is better, with rural electorates like Indi seeing significantly higher tax cuts. That’s why I am supporting it.
This is a plan that increases workforce participation across the economy, particularly so for women. Workforce participation is expected to increase by a staggering 920,000 hours every single week because of these tax cuts. This means more women, students and low-income earners taking on an extra day of work knowing that the tax system won’t disadvantage them as a result. Think about where these people mostly work. They mostly work in the care economy, and we are desperate for them to take on an extra day or two of work. The evidence both across regional Australia and in Indi is clear. That’s why as an Independent I’m happy to support these bills that will make things a little easier.
But this cannot be the end of cost-of-living relief from the government. These measures will not make any difference to the 25,000 people in my electorate whose income is below the tax-free threshold. These are the people on the lowest incomes or with no income at all, and they can’t be left behind. Many of these people, whether retirees or people unable to work, are struggling just as much if not more in this cost-of-living crisis. They deserve our support, and these tax cuts do nothing to help them.
Yesterday, I asked the Prime Minister what new actions the government will take to address cost-of-living pressures for these people, because these bills give no benefit to almost one-quarter of my constituents. That’s right—one-quarter. While I support the bills, I call on the government to provide immediate cost-of-living relief to these people. The budget’s too late when people are struggling with the cost of groceries, child care and housing right now. A tax cut in July is too late if you might not have a roof over your head by March. The government needs to provide more immediate cost-of-living relief to those doing it toughest right now. For those in my electorate who rely on government payments, such as JobSeeker, the disability support pension, student payments and the age pension, I know that the decisions they make as costs go up are just so much harder.
As Australians, we can be very proud that we have such a safety net, but too often I hear that the level of support offered through these payments is not enough to keep a roof over people’s heads and food on the table. It’s why people are couch-surfing and living in tents by rivers. It’s why people are very, very desperate. To be clear, the rate of JobSeeker is just not enough. The government must increase the rates of JobSeeker, youth allowance and the disability support pension to provide cost-of-living relief to more Australians. This is an issue on which I will continue to speak because it is so important for so many of my constituents.
While I support this bill, I would also like to address the way in which this policy shift was announced. I am disappointed that the government waited so long before clearly signalling its intention to change course. I could see the tax cuts were a bad deal when first legislated in 2019, and I’ve supported change every day since. If the government became aware of the need for a change before Christmas, as they’ve said, they could have and should have taken Australians into their confidence then by indicating that they were considering designing a better approach to the tax cuts, an approach that would be more inclusive and deliver relief to more Australians.
Integrity is important, and it’s really clear that Australians get this. When the PM did explain to the nation his change of tack, Australians were willing to listen. In my mind, a broken promise can be justified if the outcome that it delivers is better than the initial promise. I think the Prime Minister was justified in his decision, but I would say I think he could have trusted us with that a little earlier. However, these bills—the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill and the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill—are important steps in supporting Australians who are doing it tough in this cost-of-living crisis. The cost-of-living tax cuts bill will ensure that tax cuts benefit more taxpayers in my electorate of Indi, not just the very small number of high-income earners there. As the Independent member for Indi, I am proud to vote in the interests of the majority of my constituents.
The government still has much more work to do in providing cost-of-living relief, particularly for the 25,000 people in Indi receiving no benefits from these tax cuts. Yesterday, in response to my question, the Prime Minister said that the government was looking at further measures for these people, and I can tell you I will be keeping the pressure on to make sure that that happens. The government must bring forward immediate cost-of-living relief because, for so many Australians, the May budget is simply way too far off. I commend this bill to the House.