Tony Abbott is honing a political attack that claims only Labor governments raise taxes, confirming his own hopes of returning to budget surplus rely on further spending cuts or hidden tax increases that do not require legislation.
Defending his 2015 budget during parliamentary question time on Tuesday, Abbott said any reduction in the ultra-generous tax breaks for superannuation tax concessions would amount to a “stealthy” Labor tax grab.
The new political divide over tax policy came as the government spent the day selling its budget – especially the $5.5bn in small business tax cuts and depreciation allowances – which Labor has said it will support and which the Coalition claimed would encourage spending by people it referred to as “Tony’s tradies”.
Labor concentrated its attack on the disconnect between the 2015 budget and the economic strategy the Coalition took to the last election, and the government’s dramatic change of stance on paid parental leave. The government will no longer pay families already receiving paid leave from their employers, describing this as “double-dipping” and a “rort”.
Reforming a system that allows the top 10% of households to claim 40% of the $30bn in superannuation tax breaks each year has been backed by the head of the government’s financial system inquiry and former Commonwealth bank chief David Murray, who said it was expensive, poorly targeted and overly beneficial to the rich.
It has also been supported by the treasury secretary, John Fraser, who said retirement policy needed a “fundamental rethink”, and the former treasury secretary Martin Parkinson who said we needed to discuss whether super policy was creating a wealth creation scheme for the rich, as well as by leading think tanks and economists.
Superannuation tax reform is also under consideration by the government’s own tax white paper process, but now appears to have been ruled out – with Abbott ramping up the Coalition’s recent rhetoric that only a Labor government would raise taxes on anything.
“They all live on Planet Tax. There’s their carbon tax, their mining tax, there’s all the superannuation taxes that they inflicted in government and they want to inflict again on the retirees of Australia,” Abbott said.
“This man is the taxing expert of our country,” he said, pointing to the opposition leader, Bill Shorten.
“By contrast, last year we scrapped the carbon tax, we scrapped the mining tax, this year ... there’s a 1.5% tax cut for incorporated small business. There’s a 5% tax discount for unincorporated small business. There’s instant asset write-off for all small business.
“As far as I am concerned, every Coalition budget should be a tax-cutting budget because we think ... the more of your money that stays in your pockets the better for everyone because no one knows how to spend money wisely better than the people who made it.
“No one knows better how to spend money wisely than the people who earned it the first place. By the sweat of their brow. By the ingenuity of their minds. It belongs to the people who made it. It doesn’t belong to the stealthy tax grabbers opposite ... the tax grabbers who come in in the middle of the night.”
Last month the treasurer, Joe Hockey, indicated the tax review would look at superannuation concessions, but on Tuesday he confirmed it was now a “clear point of difference between the Coalition and Labor.”
He said “now is not the time” for change because low interest rates were already reducing the returns on retirees’ investments and when pressed said “we have no plans for a review”.
The chief executive of the Grattan Institute, John Daley, said the government was itself in effect raising billions of dollars a year in a stealthy extra tax from middle income earners, as inflation pushed them into higher income tax brackets – so-called bracket creep.
“The dominant budget strategy is to return towards surplus by raising extra taxes ... bracket creep is the tax increase you have when you don’t want to legislate a tax increase,” he said.
“There is no reason why it is better to raise more tax from middle income earners through bracket creep than it is to raise more tax from super concessions, which flow to the much better off, and which are very poorly targeted and very unfair.”
Hockey acknowledged that bracket creep was a problem.
“I’ve expressed on numerous occasions, deep concern about bracket creep. That is when people move into a higher tax bracket. I stand by that. That’s why we have to reduce expenditure. And that’s why, in this year’s budget, expenditure of 25.9% of GDP, it’s still too high. And we’re trying to reduce it,” he said.
Labor said the government’s claim that it was not raising new taxes contradicted the fact that the budget contained $3.9bn in new taxes, which were described as “integrity measures” or “charges”.
These included extending the GST to Netflix and other digital products, higher income taxes on backpackers, new taxes on foreign investment, removing zonal tax offsets for “fly in, fly out” workers and new agricultural production levels on chicken, honey and bananas.
