Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

Labor supports the Tax Laws Amendment (2005 Measures No. 6) Bill 2005 but does so while moving a second reading amendment relating to the disgraceful actions of the Australian Wheat Board in paying kickbacks to Saddam Hussein and the willing conscription of an unwitting Australian public to subsidise those payments to the tune of 30 per cent, which works out at around $90 million. I am sure the Australian people would have been both astonished and appalled if they had known that through the tax system they had been called upon without their knowledge to subsidise those payments to Saddam Hussein’s regime at the very time that the Howard government had taken Australia to war against Iraq. More of those sorts of details are coming out every day. The last thing that the Australian people would have expected is that without their knowledge they too were participants in this sordid exercise. It is par for the course for the Howard government to behave in such a way.

My colleague the member for Hunter has wisely moved a second reading amendment to ensure that such facilitation payments are not tax deductible in the future, in accordance with OECD recommendations that have been rejected by the Howard government. The Howard government, in rejecting those recommendations, is condoning the paying of facilitation payments to foreign governments, officials and non-officials. This cannot be in the Australian national interest; yet that is what the government is doing. It cannot be condoned; it cannot be supported.

That is why the member for Hunter has put forward this second reading amendment. We hope that upon reflection the government will see the wisdom of that second reading amendment and that it will in the final analysis be shamed—although it is very difficult to shame this government—into agreeing that it is beyond the pale for the Australian public to have subsidised payments to Saddam Hussein and his regime for the conduct of military operations and possibly for the funding of suicide bombers in the Middle East.

I want to speak very briefly about a number of the provisions of the bill and I want to expand on a couple of the others. The first schedule will mean that losses will be carried forward in a merger where the merging entity is very small compared with the market value of the group as a whole. This is a sensible measure. As you know, Mr Deputy Speaker, Labor supports sensible measures and we are supporting this one.

The second schedule is a good one. It ensures that clubs which have enjoyed tax-free status continue to enjoy that following recent court decisions. It clarifies the law in relation to clubs. Clubs play a vital role in our community. Generally, they are not-for-profit organisations, and on that basis they should not be expected to pay tax. Greenbank RSL is a large club in my own electorate which provides a focal point where the community can come together to enjoy a whole range of entertaining activities. On top of that, Greenbank RSL performs a very socially valuable function in supporting local charities and sporting teams. Any move in this parliament that supports Greenbank RSL is a move that I warmly welcome, and this is one of those.

I take the opportunity to pay tribute to the executive of Greenbank RSL and Mr John Limbrick, who does such a fantastic job. In addition, I pay tribute to the executive of the Greenbank RSL subbranch. A lot of hardworking veterans provide great service to the community and great service to other veterans and their families. It is a great opportunity and honour for me in the Australian parliament to be able to pay tribute to them during this debate.

Schedule 3 relates to the child tax offset work test. That sounds pretty much like techo talk to me. It really is the child-care rebate that was announced by the Howard government in the 2004 election and that has been introduced into this parliament. It ensures that the new activity test for the child-care benefit does not restrict eligibility for the new child-care tax offset. I want to speak about the child-care rebate. It is a measure that, on the whole, is not a fair piece of tax policy for this country. Let me explain what I mean. In the year 2000 the Howard government introduced the child-care benefit. It did radically overhaul the child-care services in Australia.

We know that the member for Lindsay has been very critical of the child-care system in this country, and I share in that criticism, but at least the child-care rebate was progressive in its intent, its design and its effect. Basically it provided a benefit, the child-care benefit, which was bigger for lower income earners and smaller—in fact, phasing out—for higher income earners. Overall, that was pretty sensible policy. Indeed, the OECD has pointed out that Australia’s child-care subsidies are very low in relation to the OECD average and to leading countries, such as Denmark. The OECD has said that, if child-care subsidies were larger, we could expect a bigger workforce participation from mothers who are considering returning to work after having a baby and also from those mothers who perhaps have to make decisions about how much work they do. Importantly, the OECD found that the responsiveness of lower income families to subsidies was greater. This is commonsense, but plenty of modelling and testing has been done to verify that assertion.

The wise policy response would be to provide the greatest benefits to lower income earners, and that is what the child-care benefit does. However, there is a good case for increasing the size of the child-care benefit for lower income earners. Did the Howard government do that in the 2004 election campaign? No, because it wanted to give benefits to higher income earners. It would have done its polling of so-called doctors’ wives who were considering voting Labor in seats such as Kingsford Smith and Wentworth in Sydney. They were considering voting Labor on other grounds: Australia’s folly in attacking Iraq and the ‘children overboard’ scandal. They were pretty disillusioned with the Howard government, which obviously did its polling and said: ‘How do we get them back? We’ll give them a child-care rebate.’ So it specifically targeted higher income earners. The way it works is that it provides a rebate of 30 per cent of the out-of-pocket expenses paid on child care after taking account of the child-care benefit. Given that the child-care benefit provides the greatest benefit for lower income earners, the child-care rebate by definition must provide the greatest benefit for higher income earners. So here we are yet again with the Howard government providing benefits for some of the higher income earners of Australia to secure its re-election—not on the basis of good policy, not on the basis of equity, but just on a straight calculation that this is a group—the so-called doctors’ wives—that it needed to get onside to win the election. So we have a botched child-care rebate, now called the child tax offset.

We know that the member for Sydney has been telling everyone, quite correctly, that the whole system is flawed and that payments can be delayed for up to two years. It is a complete dog’s breakfast, but at least this piece of legislation clarifies something that Labor has called upon the government to clarify. That gives me the opportunity to expand on the government’s program of providing great benefits for the wealthiest people in Australia. For example, family tax benefit part B is a payment to stay-at-home mothers that is income tested only on the income of the mother. So the mother can be in a millionaire family—an absolutely fabulously wealthy family—and receive government welfare payments. The Prime Minister designed family tax benefit part B because it is his view that mothers, and particularly very wealthy mothers, should stay home. And, if they agree to stay home, he will give them somewhere in the vicinity of $3,000 a year from the Australian taxpayer. This is welfare for the wealthy.

Of course Labor does not object to providing family payments for lower and middle income earners; indeed, Labor introduced the system of family payments for lower and middle income earners. Professor Ann Harding of NATSEM found, unsurprisingly, that overall the system of government payments and the tax system is progressive. It should be. If you are going to collect $100 billion in income tax and soon pay out $100 billion in social security and welfare payments, which is what it will be in the next couple of years, you would want to be assured that overall it is progressive. What the government does not say is that that is the system that it inherited from the previous Labor government: a needs based or means tested system of income support payments. But, since the election of the Howard government, it has extended welfare payments right through middle Australia and on to the very wealthy. For example, it is giving welfare payments to many families in suburbs like Bellevue Hill, Double Bay, Killara, Vaucluse, Northbridge, Mosman and The Spit in Sydney and Kooyong, Kew, Toorak and Camberwell in Melbourne.

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