Dunne Peter: Taxation (Budget Measures) Bill — In Committee 
Text is incorporated into the Bound Volume 
Dunne Peter: Taxation (Budget Measures) Bill — In Committee 
[Sitting date: 20 May 2010. Volume:663;Page:11162. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am very happy to follow the member who has just resumed his seat David Clendon because today I am announcing the establishment of a special GST advisory panel precisely to deal with the interests of retailers and the small business sector in terms of the technical adjustments that they will need to make through to the introduction of the changed rate on 1 October. That panel will be in place until the end of this year. It has a 6-month lifespan and it will be out there consulting with those who are most affected to make sure that the very things that the member was talking about are able to be addressed in time for 1 October. I simply say to him that the reason that we did not make that announcement earlier was that quite obviously until yesterday there was no announcement of a decision to increase the rate of GST. So we are getting the cart behind the horse rather than in front of it. 
I come back to the comments that Mr Nash made regarding the abatement rate for Working for Families. I point out to him that he has the wrong part of the bill; the clause that gives effect to that change is actually clause 94 which is in Part 3 of the bill which we are yet to debate. But since he has jumped the gun I am happy to address at this stage some of the points that he raised. Clause 94 in Part 3—which we will debate when we get to it—holds the abatement at the current threshold of $36827. The reason for this is quite simple. A person earning $36827—or above but we will stick just with the bottom rate at the moment—as a result of the tax changes we passed in Part 1 of the bill will be $1078 a year better off. So the issue about whether the automatic indexation that was provided for previously needs to continue is somewhat overtaken by events. 
I ask members to bear in mind that people earning that rate of income and below will now be paying a marginal rate of 17.5 percent. That is a big drop on the current 21 percent rate and it is a virtual halving of the rate that only a couple of years ago was as high as 33 percent for that bracket of taxpayers. In fact around 73 percent of taxpayers will be paying no more than 17.5 percent as a marginal rate. So against that background the notion of a periodic indexation for the Working for Families abatement rate becomes somewhat irrelevant. The provision will be there as set out in clause 94 for it to be adjusted by Order in Council from time to time as circumstances dictate. But the real point of the change and why we felt it was unnecessary to continue with the automatic indexation—which was in effect a form of compensation for a lack of movement in tax rates—was the fact that we are making not only a change in that marginal rate but proportionately the biggest change in any of the measures in the bill. The drop-down from 21c as it currently stands to 17.5c is being made for the very group affected by that provision. 
Dr Cam Calder 
: Eminently sensible. 
Hon PETER DUNNE 
: I take the member’s point; it was eminently sensible. It delivers a far bigger benefit to those households than would have been possible under the regime that was in place. As I said even for someone at that threshold level their tax gain is over $1000 a year—around $20.75 per week. That is a good advantage and far better than anything an adjustment in the abatement rate would have delivered. So although the member jumped the gun I am happy to respond to him at this point and indicate the reasons why that change was made.