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Legislative Assembly for the ACT: 2012 Week 8 Hansard (23 August) . . Page.. 3379..

MR BARR: Because one-quarter, 33,700 Canberra ratepayers, receive a reduction in their rates as a result of the government's changes, because we are cutting the rate of taxation on the lowest threshold from 0.277 to 0.22. This ensures that the benefits of the taxation reform, both in terms of cuts to insurance duty and cuts to annual rates, go to those on low and middle incomes.

That is a deliberate policy choice, because the Labor Party believe in social equality. We believe in taking practical steps to narrow the gap between the rich and the poor in our society. Some people may not like that but that is a core value of this party, and these reforms deliver. What they ensure is that not only do we reduce our reliance on volatile and inefficient forms of taxation but we introduce an element of equity into our tax system so that those who have the greatest capacity to pay are asked to make a small additional contribution, $2.35 per week, on average, and those on lower incomes receive not only the benefit of lower rates but also the benefit of reduced taxation on insurance.

It might have escaped those opposite but the significant winners on the insurance tax cuts are those on high incomes who have both a greater propensity to insure and more goods to insure and, therefore, in replacing revenue through the rates system it is entirely appropriate to have an element of progressivity in the rates thresholds and marginal tax rates to ensure that the burden of taxation is shared equally. Those opposite may not like it but it is the right thing to do. (Time expired.)

MR SPEAKER: Mr Hargreaves, you have a supplementary question?

MR HARGREAVES: I do, Mr Speaker. Treasurer, are there any sectors of the community that do not have a grasp of the fundamentals of the government's tax reform, even though you have articulated it in the brochure?

MR BARR: It would appear that there are a group of individuals in the community who do not understand basic economics, who do not understand social justice, who do not understand the importance of long-term strategic economic reform. Every single commentator with any economic credibility—from Michael Pascoe in the Fairfax press through to Craig James of CommSec—the Insurance Council of Australia, the Taxation Institute of Australia and various economics editors of the major newspapers around this country have applauded the ACT government's decisions. Why? Because they implement the reforms that Ken Henry articulated in Australia's future tax system.

They are the right reforms for this territory at this time. They lead the nation. The only people who have no idea are those six people opposite. It is interesting that their counterpart in New South Wales—the New South Wales Treasurer—is in fact very interested in our reforms and rang me recently to check how they were going. He wants to collaborate with Labor jurisdictions to reform taxation because he, at least, understands economics.

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