I rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. There are two tax plans that are before the Australian people today. There's the Turnbull government's plan to provide an $80 billion tax cut to big businesses and then there is Labor's plan to oppose this because we believe that this money could be better used to pay down debt, and to invest in apprentices, hospitals and Medicare. There is the government's plan to give $17 billion to the disgraced and ashamed big banks in this country—a $17 billion tax cut—and then there is Labor's plan which sees the obscenity in giving the same amount of money to the big banks as this government has cut from school funding in its first two budgets.
We believe that this money can be better spent on schools and teachers than on paying bonuses to bank managers. We think the money, $17 billion, would be better spent on the education system than it would be on paying more bonuses to bank managers.
The member for Goldstein, in a display of tedium and repetition, asked the question rhetorically to this chamber: 'What will Labor spend the money on?' Well, I can tell him, in my electorate today, there are schools where there are over 115 temporary classrooms, where kids are being crammed into spaces that are not fit for purpose. There are schools that cannot afford to pay for the additional resources to educate those students, particularly in struggling areas. So when the member for Goldstein and other members opposite say, 'What would Labor do with the money?' I would point to those schools. I would point to the TAFEs and the universities, where students are prohibited from joining up because they cannot afford to pay the prohibitive upfront costs.
There are two plans for tax in this country. There is a plan to change our progressive income tax system so a person on $40,000 a year would pay the same rate of tax as a person on $190,000 a year. This would be achieved by this bill by lifting the 37 per cent threshold from $90,000 to $120,000 a year from 1 July 2020, and by removing the 30 per cent bracket and lifting the top threshold from $180,000 to $200,000 a year on 1 July 2024. We don't think it's fair to introduce a tax system which has a person earning $40,000 a year on exactly the same tax rate as somebody who is earning $190,000 a year.
We also oppose it because the plan is unfunded. Its inner workings are so secret that the Treasurer has refused time and time and time again to provide any costings or any modellings to the people who are today being asked to vote upon this legislation. We estimate that the cost of this proposal could be as much as $80 billion over the six years from 2022-23 out to 2027-28. But the vast majority of workers will receive no benefit from these topend tax cuts. Overall, the government's plan sees 62 per cent of the benefits flowing to the top 20 per cent of income earners over that seven-year period. It's worth repeating: 62 per cent of the benefits flow to the top 20 per cent of income earners over that seven-year period.
I can understand why the member for Goldstein is so enthusiastic about this proposition, but I could not see why the member for New England, who is in the chamber today, or any of those other National Party members would stick their hand up and vote for such a proposition. When you look at the geographic distribution of taxpayers, it is true that there are many of those income earners on salaries of over $200,000 a year, and the majority of them are clustered in electorates such as those represented by the Prime Minister, the member for Goldstein, the foreign minister and the Treasurer, but they aren't represented so well in those regional electorates such that I represent or such that the National Party traditionally represents. So I can understand why some members of the government would be voting in favour of those propositions, because they will advantage some of the electors within their electorates. But in the place I come from and, indeed, the place you come from, Deputy Speaker Mitchell, these taxpayers will not see the benefit.
If you care about inequality, and if you care about the growing inequality in this country, Deputy Speaker, then you'll have grave concerns about the propositions contained within this bill, and you will vote in favour of the member for McMahon's second reading amendment. Very high income earners are taking a larger share of the income earned. In fact, over the last 30 years, the top one per cent of income earners' share of income has more than doubled, from 4½ per cent to nine per cent, and the top 0.1 per cent has seen an almost fourfold increase in their share of total income. Wealth inequality—the gap is growing even further. The wealthiest 10 families in Australia own approximately as much as the poorest four million Australians. The wealthiest 10 families own as much as the poorest four million Australians. The top 20 per cent own 62.5 per cent of all net worth of all households. The top 20 per cent own 97.7 per cent of net financial assets. So if you care about the fact that inequality is growing in this country, one of the most effective levers that a government has to address growing inequality is to ensure that we have some capacity to redistribute and to reinvest in the things that are going to help us address growing inequality: investing in education, investing in health and investing in economic infrastructure.
Labor has a plan to deliver lower taxes for the majority of working Australians. In fact, our plan will ensure that 10 million working Australians will receive a decent tax cut. Those who earn up to $125,000 a year will pay, on average, less tax under the Labor tax plan than under that proposed in this bill by the Turnbull government. More than four million people will get a tax cut of nearly $930 a year. A teacher, for example, earning $65,000 a year would receive a tax cut of nearly $930 a year. A couple earning $90,000 and $50,000 a year respectively would receive a tax cut combined of $1,855 a year. So there are two tax plans put before the Australian people: one which enables us to invest in the services that Australians expect and which enables us to give nearly 10 million ordinary working Australians a fair tax cut; and the other, which delivers the overwhelmingly majority of benefits to the big end of town.
Of course, we're not just talking about income tax. There are two plans. There is the government's plan to continue subsidising property speculation and investment while turning its back on the growing number of people who are homeless and locked out of the rental market, let alone able to dream about owning their own home. Then, in contrast to that, there is Labor's plan, which says that we should not give preference to a person who is buying their second, third, fourth or fifth property over somebody who is struggling to rent a home or to buy their first property. Our plan to remove negative gearing from houses which don't add to the stock of available rental properties will save the budget $2 billion over the forward estimates and $37 billion over 10 years and will put downward pressure on property prices, enabling more Australian families to realise their dream of home ownership.
Then there is a plan around the abuse of discretionary trusts. Discretionary trusts are used by individuals and businesses to reduce their tax liability, because income from a trust can be apportioned to beneficiaries on a discretionary basis. This practice of income splitting through discretionary trusts is used most frequently by wealthy Australians to minimise their tax. In fact, if you look at what has happened with the use of discretionary trusts since the early 1990s, there has been an increase to over 642,000 discretionary trusts in Australia today. Income splitting through the use of these discretionary trusts allows high-income Australians to avoid paying the marginal tax rate that applies to every other one of us. We believe that we can no longer afford this. Access to discretionary trusts and income splitting is generally only available to wealthier Australians that have been able to accumulate a passive investment such as shares and properties. In contrast, low- and middle-income earners who go to work and struggle to pay their weekly bills typically do not have large passive investments outside their superannuation accounts, nor do they have the resources to pay boutique tax advisers to enable them to set up such elaborate structures. Our plan to remove the abuse of discretionary trusts will save the budget over $4.1 billion over the forward estimates. That is more money, which will enable us to invest in schools, universities, apprentices, hospitals and education.
There are also two plans when it comes to dividend imputation. There's the government's plan to continue the absurd practice of providing an income tax return through dividend imputation credits, even though a person pays no income tax. This would cost the budget approximately $8 billion a year over the next 10 years. In contrast to that, there's Labor's plan that says that we are the only country in the world that does this, that this is unaffordable and that money saved could be better used to provide better services for aged care and to improve schooling for the young. So, when you compare Labor's fair plan, which will provide a better tax cut for over 10 million working Australians, to the propositions put forward in this bill around income tax, when you compare Labor's plan to the unaffordable, un-costed, unfunded $80 billion worth of corporate tax cuts, including $17 billion to the disgraced and ashamed big banks, when you compare our plans around dividend imputation, capital gains tax discounts and negative gearing in the property market to those on offer, you have a contrast between a party which wants to govern for the majority and for the public interest and a party which is governing for the big end of town and making short-term decisions to get it from here to the next election but which has no plan to deal with the fiscal problems it has created and no plan to deal with the big challenges around aged care, health care, the future of our education system and how to invest in training the next generation of apprentices so that we don't have to import skilled trades people into this country year on year instead of training our own.
So this bill is not just about tax. This bill is about how we address inequality, how we create the revenue stream which is going to enable us to provide the services and the infrastructure that Australians expect a reasonably performing federal government to deliver on. That is why we must support the amendment which has been moved by the member for McMahon to split the bill and enable us to give fair tax relief from 1 July to low- and middle-income earners while ensuring that we are not forced to vote on a bill or part of a bill which is unfunded and, on its face, provides unfair tax relief to wealthy Australians which we cannot afford. With those comments, I commend the second reading amendment moved by the member for McMahon and I call on all members opposite to do the same.