Ms SPENDER (Wentworth) (12:47): I have been fiercely advocating for tax reform since getting into this parliament. I believe strongly in reforms that ensure younger Australians get a fair go and the energy transition is as cheap as possible and that restore productivity. On personal income, my advocacy has always started with lowering income taxes, funded by reducing concessions. It has always been my firm view that tax reform should be budget neutral. Reforms to CGT and negative gearing might give younger people an edge back at the auction. I support that. I support reductions to the CGT rate and I support changes to negative gearing, but I've always believed that the best way to support younger working Australians is to let them keep more of what they earn. This budget fails at this task.

Of the $100 billion it raises over the medium term, it keeps about $77 billion. It provides a $250 working tax offset for Australians annually from 2027-28 and rested justification on previous tax cuts already given under this government or tax cuts which may be given in the future. Those are welcome. But, after a period of high inflation, those tax cuts are shown by the average Australian marginal tax rate to be eaten up by bracket creep. The government has introduced a WATO. This is positive, but it doesn't do anything for our comparatively higher rates that kick in at relatively modest incomes. Cutting marginal tax rates would protect workers, drive aspiration and increase the trust in the community that the government's measures to increase taxes in certain areas or reduce tax concessions are about supporting younger people and not just about supporting government spending.

That is why I am moving an additional amendment that would, in addition to the WATO, cut the marginal tax rates in line with the $77 billion raised over the medium term. This would, in the estimates we have done, involve cutting the 45 per cent rate to 44 per cent in 2029-30, cutting the 37 per cent rate to 36 per cent in 2030-31 and cutting the 30 per cent rate to 29 per cent in 2031-32. The lowest marginal tax rate has already been lowered under previous cuts, which I support, and will still substantially benefit from the WATO.

An alternative proposal would be to introduce some form of indexing, as members of the crossbench suggested prior to the election, and the coalition has suggested this year. But I believe that this change represents an opportunity to lower rates before locking them in. Indexing is something that needs to be funded, particularly by spending restraint. This package would represent the sort of budget-neutral reforms that help all Australians by lowering marginal rates while also reducing concessions on asset income. This is, I think, the best way for the government to get support for what it is trying to do, which is I think reducing concessions on assets by reducing marginal tax rates. I think this is, economically, the right thing, and it's the right thing for the community. It is not inflationary, because it is put up in future years. I think this would be the right thing for the government to do, and I think they should support it.