Australia Votes 2007: Labor releases tax plan

October 19, 2007

Labor has released its tax plan, following the announcement from the Liberal/National coalition that they would provide tax cuts costing AU$34 billion if re-elected. The government has placed pressure on Labor since their announcement on Monday, urging Mr Rudd to release the opposition's tax plan.

Under Labor's system, the government's planned tax cuts for Australians earning more than $180,000 per year would be scrapped, saving $3 billion. The savings would be spent on health and education for working families.

Speaking in Canberra today, Mr Rudd announced that if elected he would spend $2.3 billion on tax rebates for parents with children in primary and secondary schools. The refunds would be available to those who are eligible for Family Tax Benefit A. Mr Rudd claims the plan would be available to around two million children.

A Rudd government would offer a 50 percent education rebate to parents, up to $750 per child for primary school aged children and up to $1500 for children in secondary school. The rebate could be used for a variety of purchases but not for school fees. Mr Rudd said the rebate would help to equip children for the digital age.

"If mum and dad are spending money on buying a laptop, spending money on buying a home computer, spending money on ... purchasing internet connection, education software printers and books, those expenditures, (they) will be eligible to claim the 50 per cent education tax refund that we are putting forward," Mr Rudd said.

"We need to equip our young people with the skills necessary to participate in the digital economy of the 21st century."

Mr Rudd vigorously denied that he rushed the plan out after the government's announcement. "We have been working on this education tax refund for the better part of four, five months," Mr Rudd told reporters.

Labor would spend $400 million of the savings on Labor's national health reform plan, while the remaining $200 million would go to the budget surplus.

Under the health reform plan, an elective surgery strategy would be implemented with the aim of reducing waiting times. Mr Rudd said the waiting times experienced by some Australians were unacceptable.

"We intend ... to establish through the use of other funds as well a plan which would create a national elective-surgery strategy to reduce waiting times across the nation," Mr Rudd said.

About 25,000 Australians are on waiting lists for elective surgery despite having passed the clinically acceptable waiting period, he said.

"That's unacceptable," he said.

Mr Rudd also said that Labor would embrace tax reform by flattening the number of tax rates from four to three, at 15, 30 and 40 percent by 2012-13. This contrasts to the government's planned tax cuts bringing rates to 15, 30, 25 and 40 percent.

If Labor is elected, those paying the highest tax rate would pay around $10 a week more than they would under a Howard government. Mr Rudd said that he was not waging a class war and believed those paying the top tax rate wouldn't mind investing in the country.

"If you're on $180 grand and more, as people like myself are, I don't think you really need it just now," said Mr Rudd.

"What I say instead is that most people in that bracket wouldn't mind an investment going into bridging the digital divide for the whole country."

"If we were waging some sort of class warfare, we wouldn't be in the business of outlining the long term goals that we've put forward – a flattening, prospectively, of the tax system down to three rates rather than four with a top marginal tax rate of 40."

The government has criticised the plan, with Treasurer Peter Costello claiming that Mr Rudd copied "91.5 percent" of their tax policy. He accused the opposition of never having a tax plan.

"Mr Rudd talks about education - if he'd have brought his exam paper in after copying 91.5 per cent of the answers from the student sitting next to him, he would have got an F for fail."

The Treasurer said that it would be unlikely that a Rudd government could deliver tax cuts as it could not manage the economy well enough to deliver them.

"Unless you can manage the Australian economy, these tax cuts will not be deliverable," he said.

"Mr Rudd and Mr Swan do not understand the Australian economy. This is entirely clear from the fact they have spent four days copying 91.5 per cent of our tax plan."

Mr Costello said that a Rudd government would have a dilemma if elected, in that he could not follow the coalition's policies.

"He never had a tax policy," Mr Costello said.

"He hadn't done the work, five days after our tax policy, his great contribution to the tax debate in this country is to say 'me too, but'."

"The trouble with 'me too, but' is, it's OK for Mr Rudd to say 'me too, I'll be like Howard and Costello and adopt their policies', but if he gets in Howard and Costello won't be there writing the policies."

Mr Costello said that when Kevin Rudd runs out of ideas, the union movement would step in to provide guidance. "So who is going to say 'me to, but' to them? I think the union movement will be giving him a few ideas," said Mr Costello.