Hi Allegra,

I know how many people in Wentworth are struggling with the cost-of-living, whether because of rent and mortgage costs, childcare fees, or energy bills.

Tackling this has been one of my top priorities since I was elected.

I am proud that together we have wiped $3 billion in student debt for over 3 million Australians, we've helped deliver 80,000 new rental homes across the country by improving Build to Rent legislation, and got financial support to help 110,000 households lower their energy bills through home energy upgrades.

But we need to do more. That doesn’t mean short-term band-aid solutions that sound good but don’t make much difference. It means putting in place measures that keep a lid on inflation today and permanently reduce price pressures in future.

Read more about my 6-point plan to lower living costs below, including a policy I announced last week to get rid of bracket creep for good.

1. Lower income taxes and end bracket creep.
2. Increase housing supply to reduce the costs of renting and home ownership.
3. Deliver my Permanent Energy Bill Relief Plan.
4. Lower childcare costs.
5. Reinstate fiscal discipline.
6. Keep a lid on student debt.

Read about these policies in full on my website.

1. Lower income taxes – and end bracket creep.

Australia is too reliant on income tax as a source of revenue compared to our peers. The share of total revenue collected from income tax is at one of the highest levels it has ever been.

As our population ages, the tax burden is going to fall even more on a shrinking pool of younger working people. These are the same young people who are finding it harder to reach the same milestones that their parents did because of housing costs and student debt.

We urgently need tax reform to help young people out, but the major parties don’t want to act. That’s why I’m suggesting, at a minimum, we should index income tax brackets, which would protect workers’ wages and force the major parties to consider broader tax reform rather than relying on bracket creep to raise revenue.

What is bracket creep?

Australia has a progressive tax system with a series of marginal tax brackets. Every dollar earned over each bracket is taxed at the higher marginal rate, so we all pay no tax on the first $18,200 of income, 16% on the income earned between $18,200 and $45,000 and so on.

This is where the average tax rate comes in. Your average tax rate is just the percentage of your total income you pay in tax across ALL marginal tax rates.

Bracket creep affects some people’s marginal tax rate, but it affects EVERYONE’s average tax rate – you’re gradually paying more tax at the higher rate even though the purchasing power of your income isn’t necessarily changing.

For example:

• If you earn $60k, and your pay increases by 2.5% and inflation is 2.5%, your purchasing power goes backwards by $450 because of bracket creep.
• If you earn $90k, and your pay increases by 2.5% and inflation is 2.5%, your purchasing power goes backwards by $675 because of bracket creep.
• If you earn $140k, and your pay increases by 2.5% and inflation is 2.5%, your purchasing power goes backwards by $1295 because of bracket creep.

This is why it’s often referred to as a ‘tax by stealth’ and why 17 other OECD countries index their tax brackets to prevent this.

Last week I coordinated a push from eight independents in writing to the treasurer to call on the Government to commit to fiscal responsibility and remove the stealth tax on working Australians by indexing income tax brackets.

Lowering income taxes is the first of six reform priorities that I identified in my recent Tax Green Paper. The paper sets out the challenges that tax reform should address, how experts and stakeholders suggest these goals can be achieved, and the process we need for reform in the next Parliament. It is a resource there to promote discussion adn input, please share your thoughts.

You can read more about my views on Australia’s broken tax system at www.AllegraSpender.com.au/Tax.

2. Increase housing supply to reduce the costs of renting and home ownership.

Decades of failed policy from both major parties have led to our current housing crisis, with Sydney now having the 2^nd most unaffordable housing in the world.

My priorities to help address the housing crisis are to:

• Provide more security for renters by giving them longer-term leases.
• Coordinate planning approval processes and sharpen the incentives for states and local governments to speed up planning processes and deliver the critical infrastructure that enables housing.
• Crackdown on corruption in the CFMEU in the construction sector by creating a new construction industry regulator.
• Build the construction workforce through better accreditation processes, apprenticeship programs and migration pathways for construction workers.
• Double the size of the Housing Australia Future Fund to increase investment in social and community housing.

More than anything, the Parliament needs to stop fighting and start collaborating. Both of the major parties have good ideas on housing, so it’s time to stop blocking action just to score political points.

3. A Permanent Energy Bill Relief Plan for households.

Last month I announced my plan to reduce power bills for over 800,000 households through financial support for rooftop solar, home batteries, and energy-saving upgrades.

My 5-year plan will help over 800,000 households permanently lower their power bills and emissions through three types of support:

• Homeowners: Permanently lower power bills for homeowners by providing 10-year, zero-interest loans worth up to $25,000 each to help more than 456,000 homeowners overcome the up-front costs of home energy upgrades.
• Rentals: Permanently lower power bills for renters by providing a new tax incentive to encourage the installation of solar panels, batteries, and energy performance improvements for 276,000 rental properties.
• Social and Community Housing: Permanently lower power bills for social and community housing tenants by providing direct funding to support energy upgrades to more than 70,000 properties by expanding the Social Housing Energy Performance Initiative.

4. Lower childcare costs for working families.

High-quality early education and care should be available and affordable to all families.

We have made some progress in this Parliament, and I am proud to have helped deliver an increased subsidy to reduce costs for about 1.2 million families last year, the removal of the ineffective activity test and a well-deserved wage increase for childcare workers.

But Australia still has the second-highest cost of care in the OECD and many families in Wentworth pay $200 a day or more for a single child.

We need a combination of supply and demand supports to bring down the cost for families, which is why I’ll continue pushing for:

• An increase in the maximum subsidy rate for everyone in line with the Productivity Commission’s Review.
• Simplification of the application process for the Childcare Care Susidy to remove the headache of accessing the funding you’re entitled to.
• A review of mandatory compliance and administration requirements on educators so that they can spend more time teaching and less time on paperwork.
• Accelerated qualification pathways for educators to ensure the sustainability of the childcare workforce.
• A longer-term plan to deliver more public childcare services, particularly in underserved areas, as recommended in the ACCC review.

5. Reinstate fiscal discipline.

Government spending as a share of Australia’s GDP is at its highest level outside of the COVID-19 pandemic, fuelling inflation at a time when the Reserve Bank is trying to moderate it.

I am calling for two key changes that could make a difference:

• Improve infrastructure spending through my Better Value for Taxpayers Bill. This would put proper guardrails around government infrastructure spending, ensuring that your taxes deliver value for money.
• Get back to honest and responsible budgeting with spending decisions that comply with The Charter of Budget Honesty, and keeping spending growth at or below GDP growth over the economic cycle.

6. Keep a lid on student debt.

Despite the $3 billion worth of student debt relief secured by the crossbench, I know young people are still struggling. We need to support the young Australians who are studying for their future and ours – and who cannot afford to be lumped with crippling debts.

That includes through:

• A smarter system for indexation that considers pay-as-you-go contributions people make, by changing the date of indexation to after the date of individual tax returns.
• Fairer treatment of student debt by financial institutions, so it has less impact on young people’s ability to get a mortgage.
• Getting rid of the ‘job ready graduates’ program, which penalises people who choose to do arts degrees.

Read about these policies in full on my website.

I know families are doing it tough right now. Please continue to reach out and let me know if there is anything my office can do.

Best,

Allegra Spender MP