Taxing The Battlers, Pension Debts Wayne Swan - Shadow Minister for Family and Community Services,

Doorstop Interview

Transcript - Parliament House, Canberra - 18 September 2003

SWAN: Hard-working Australian families don't go to work to have Peter Costello and John Howard take sixty cents in every additional dollar they earn. They don't sacrifice their family time to have John Howard take sixty cents in every dollar of overtime they earn.

This research from the Prime Minister's department confirms the Howard Government doesn't defend the battling families of this country; it creates them. And there are 860,000 families caught in this tax slug. Three-quarters of those families earn between $30,000 and $60,000 a year and now Mr Howard's department has confirmed this unprecedented financial squeeze on Australian families – people working hard to get ahead and John Howard comes along and says, "Oh look I'll have sixty cents in every dollar you earn."

And for some it's worse than that. Some families are paying eighty and ninety cents in every additional dollar of overtime they earn; some families moving from welfare to work are paying eighty and ninety cents of every dollar they earn; and some families with teenage children are losing $1.10 for every additional dollar they earn. So you can see this Government doesn't defend battling families, it creates them. And that's what this report from Mr Howard's department proves.

JOURNALIST: What's the simple solution to this problem?

SWAN: The solution to this problem is reform. This problem is brought about by the tax system and the withdrawal of social security benefits. That is what causes this problem. That is what I was talking about here on Monday morning. We said, Simon Crean has said, our highest priority must be to give relief to these families who are paying the top marginal rate of tax when they work some overtime or when they go back to work following the birth of a child. This is a system that really punishes hardworking low- and middle-income families who are bearing the tax burden in this country.

JOURNALIST: Can you give an example of a family who might be affected by this?

SWAN: Well a typical family may have a breadwinner who could be earning say $40,000 a year and their spouse may return to work and be earning something like $20,000 or $30,000. That's but one example. It can also happen to single-income families where the main breadwinner earns overtime. Whenever they work harder or earn additional income, the withdrawal of social security benefits stacked on top of their marginal tax rate produces a high effective marginal tax rate of sixty cents in the dollar. And for many Australian families it is much higher and that is a tragedy.

Earlier this year, Tony Abbott came out swinging at a Liberal Party conference and said this was not good enough, it needed to be changed. We agreed with him. He was slapped down immediately by Treasurer Costello and slapped down immediately by Senator Vanstone. Senator Vanstone and Mr Costello are out there saying this system must stay - no reform and the same with Mr Howard.

You might recall some time ago Mr Howard said one of his priorities would be to reform the family payments system and he has walked away from it just as he said reform in the area of work and family was going to be a priority – he's walked away from that too. You see there is only one third term agenda for the Howard Government - it is to put the financial squeeze on low and middle income earning families.

JOURNALIST: So you don't expect the Howard Government will react to this report?

SWAN: No I don't expect that they'll react to this at all. The Government has had this research in its hands since last year. What is significant about this report this morning is that the Prime Minister's own department agrees with the critique that the Labor Party has been making since the end of last year – that is, hardworking families who work overtime are being slugged sixty cents in every dollar. They don't go out and work harder to give sixty cents back to John Howard and Peter Costello.

Now I just wanted to say one more thing about the issue that was raised in the Parliament yesterday where Senator Amanda Vanstone has said she will sell the homes of families who are caught up in her debt trap which is affecting those pensioners. Last night on television and on radio it was confirmed by Senator Vanstone that her department is saying to pensioners caught in this debt trap that they expect them to take out mortgages on their homes to pay off these debts. This is simply obscene and it confirms the case we have been making about Senator Vanstone not only being a bully, but also going out there and taking a sledgehammer to people who've worked hard all their life to make this country what it is today.

End. E & OE - PROOF ONLY