Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

I support the second reading amendment moved by the opposition. The Tax Laws Amendment (2005 Measures No. 6) Bill 2005 before us reflects, in my opinion, some habitual problems experienced by this government, particularly with respect to delays, mismanagement, recognising problems caused by clumsy drafting and failing to meet and recognise international obligations. This bill is the government’s attempt to clean up a few things. It is a bill that is necessary, because the government over the last 10 years in office has been getting tired and lazy. It is particularly timely that today we are debating a bill about the cleaning up aspects of the Australian tax system, certainly hot on the heels of the Treasurer’s announcement yesterday that he has decided it is time to internationally benchmark the Australian taxation system.

After 10 years of looking after the Australian tax system, the Treasurer has now decided it is time to have a look at what the rest of the world is doing. What I find most interesting about this review are the two people the Treasurer has chosen who will put together and examine the international position. I am particularly interested in what Mr Peter Hendy, Chief Executive Officer of the ACCI, will bring to this matter. Mr Hendy, quite frankly, is not known for being absolutely independent. In fact, I recall him making comments at the time the WorkChoices legislation was being debated in the Senate that there should be absolutely no amendments made to that piece of legislation.

I will be particularly interested to see the product of the review as it seems to me that, once again, the government has come up with relatively short-sighted terms of reference, coupled with an absolute lack of representation from groups such as small business, who have probably become the largest group of tax collectors, thanks to this government, and groups consisting of ordinary taxpayers. Those people are just not represented in this review. So it will be interesting to see what Mr Hendy and others come up with as they focus on prioritising our tax system to meet the competing needs of various groups. It remains to be seen, but that is not what this bill is about.

Probably the most single important aspect of this bill is the section that deals with the restoration of mutuality or the principles of mutuality. The restoration of this principle is significant to the ongoing financial viability of clubs and other organisations. People fulfil very responsible community positions which are so important to communities in our respective electorates. This bill clarifies, for instance, the tax-free status of clubs that has technically been claimed illegally since the Federal Court decision on the Coleambally case. Taxation, as we all know, is based on income received from external sources. This has been a longstanding and long established principle, certainly in common law. But for 120 years, under the principle of mutuality, revenue derived from members was exempt from corporate income tax, while revenue from nonmembers was fully taxable under the corporate tax system. When it came to clubs, members’ income was not classed as external and, accordingly, under the principle was tax exempt. However, this principle has now been deemed to apply only when members’ funds are distributed upon the winding up of the entity. In most cases, it is not provided for in the articles of association of clubs; therefore, for some time clubs have been illegally claiming tax-free status.

Actually reversing the tax-free status when it comes to members’ income places most, if not all, clubs in a rather precarious financial position. The value of the mutuality principle is difficult to quantify precisely but there is no doubt that, given the concerns raised by the clubs’ industry about the Coleambally case, it is significant enough to place a number of clubs in financial distress should the principle not be restored. It is for this reason that I support these provisions of the bill so that clubs in my electorate are not placed in financial jeopardy.

There are a number of fantastic clubs and community assets operating in my electorate, including the Liverpool Catholic Club, the Ingleburn RSL Club, the Ingleburn Bowling and Recreation Club and the Western Suburbs Leagues Club. Just outside my electorate but just as significant as community organisations are the Campbelltown Catholic club and the Campbelltown RSL club—and the Mounties Club; let’s not forget them.

All these fine organisations make a significant contribution to the community and are certainly very strong supporters of events and activities. You only need to visit a local club in my electorate to get a good understanding of the character of the area and the diverse nature of the people who live there. While these clubs provide excellent facilities and play an important role as a social outlet for local residents, they also give back to the communities they belong to. That is why the retrospective aspects of the changes contained in this bill are so important.

The significance of one club in my electorate was brought home to me when I was discussing the tax issue recently with one of the club’s chief executive officers. The Western Suburbs Leagues Club in Leumeah has a long history of involvement in the community in the south-west of Sydney. In one form or another it has been involved in just about every community event that I can remember. It was certainly the focal point of our community last year when the Wests Tigers, as everyone will remember, took out the National Rugby League premiership. While it is often a focal point for social activity, it is also contributes directly back into the local community. Last year Wests contributed $1.1 million to local sporting groups in my area. Some of this was as a requirement of New South Wales legislation that provides for a proportion of poker machine revenue to be donated back to the local community, but the contribution that Wests made was $800,000 more than the statutory requirement. When it comes to community sport, $800,000 certainly goes a heck of a long way and is deeply appreciated by those groups in my electorate that receive it.

However, as a result of the Federal Court decision that this bill seeks to correct, Wests has incurred a tax liability of half a million dollars. Next year, their liability is estimated to be $1.5 million. So the club faces a $2 million tax liability unless this bill is implemented. Naturally, a tax liability of that magnitude would prompt a review of all the local involvement by a club the size of Wests, and that would have an absolutely deleterious effect on local sporting and community organisations. That would hardly be a great outcome for anyone involved. I am pleased to see that, as a result of this bill, levels of support by clubs like Wests and others in my electorate can continue—of course, subject to the other financial constraints placed on clubs. The passage of this bill will mean that Wests will continue to support the various groups within the area.

You can see that I am a one-eyed Wests supporter, but, since I was at the annual general meeting yesterday, I would like to mention that the efforts of Mike Semchyshyn were recognised and life membership was awarded to him by the club. Originally, Mike worked on the Snowy Mountains Scheme at Jindabyne. He went to Campbelltown in 1971, where he became involved with the local Rugby League club, which at the time was known as the Kangaroos Football Club and subsequently became Wests Campbelltown. Over a long period he has served the club in many capacities and has always had the club’s interests at heart. He has been on the board for all but approximately two years since 1971. Mike has also been instrumental in expanding Wests’ assistance to local sporting organisations. When he took on the role of sports secretary, 12 associated bodies came under the banner of Wests in my electorate. This has now grown to 39, which shows the extent of growth in local clubs and the important role played by a major club such as Wests.

This is yet another reason why the amendment to support the clubs industry needs to be supported. Earlier I referred to this legislation being the result of lazy and clumsy drafting by the government which, in my opinion, has come to characterise various aspects of the Howard government of late. In driving through its ideological agenda last year there was some very clumsy drafting, and it seems the prevailing view is almost to get it through and sort the mess out of later. We saw it with the WorkChoices legislation, to which more than 300 amendments had to be made to tidy it up before it was passed into law.

In my view the WorkChoices legislation should never have been introduced—but, then again, my views are pretty well documented in that regard. That legislation, like the bill before us, was put forward with incomplete drafting and, as a consequence, contained serious flaws which had to be amended, not to satisfy my position or that of Labor but simply to satisfy the government itself. That is only one example. It seems that now the government has worked out that Labor got it right when it pointed out problems with the new activity test. It has worked out that Labor correctly identified that there were problems between the interaction of the activity test for the child-care benefit and the child-care tax offset.

Under changes to the activity test, eligibility for child-care benefit is now based on a test of 15 hours per week of work, study or training. When the new test was introduced Labor pointed out that the change would restrict eligibility for the child-care tax offsets. While I am pleased to see that this bill corrects the problem, it is a problem that, quite frankly, should have been avoided in the first place.

The bill before us also includes changes to the Medicare safety net. I cannot in good conscience stand in this place and comment on more changes to the Medicare safety net without pointing out the fact that under this government one million Australians miss out under the extended Medicare safety net despite all the ironclad guarantees that we were given leading up to the last election. Access to high quality health services is absolutely essential to modern life.

My electorate of Werriwa is one of the fastest growing areas in Western Sydney, and its residents are struggling to access GP services in a number of the new and expanding suburbs. Under these changes, cosmetic, medical and dental services are being removed from the safety net. I agree that paying for purely cosmetic procedures is not necessarily the most effective use of taxpayers’ money, but it is not the first set of reductions in the types of services paid for under this government’s changes to the health system either. Although it has not received a great deal of publicity through the media, one of the biggest problems with our health system people are facing today is as a direct result of the changes to the PBS that were introduced in October last year. Under those changes the safety net threshold increased and a new 20-day rule was introduced which excluded the resupply of medications within a 20-day period from the calculation of the safety net entitlement.

The purpose of the bill before us today is not to change these arrangements further—and I am sure that sick people and their families are breathing a collective sigh of relief about that—but they do point to a gradual erosion by this government of the coverage under Medicare. While the Minister for Health and Ageing is more than willing to get his rubber stamp out and approve more increases in private health insurance premiums, as we saw on Friday, he remains absolutely unwilling to tackle the fundamental problems of our health system. He is unwilling to consider the value for money aspects of private health insurance and he is certainly unwilling to take on the $3 billion a year Australian taxpayer subsidy of the private health insurance industry.

I read that, in an effort to smooth the path for Friday’s further premium increases, a number of health funds are going to offer cheap consumer goods as a benefit of membership. One such fund that I looked at last week offered the consumer benefit to its members of a kid’s Barbie suitcase, amongst other things. I do not know about you, Mr Deputy Speaker, but this tells me one thing: that the private health insurance industry has absolutely no desire in the short or medium term to address the problems of value for money. I do not know if the demand among people with private health insurance is for Barbie suitcases for their kids, but I would have thought that consumers would have preferred getting more value for their dollar than cheap, gimmicky, consumer items.

The government has to act, and it has to act now, so that value for money in this industry can be restored. It seems to me that the Minister for Health and Ageing has two rubber stamps when it comes to our health care system: one is to give the go-ahead to price increases for the private sector and the other is to deny public benefits to those who most need it. This government has failed to deliver the most affordable and attractive health scheme that it promised during the course of the last election. It has delivered a massive subsidy to the private health insurance industry, it has delivered increases in the cost of health care to the taxpayer, but it has not delivered for health consumers.

It is about time this government set about focusing on the health system and health consumers. Despite the fact that for the rest of this week we will hear from members opposite singing the praises of a decade of the Howard government, some should stop and consider why we are debating a bill like this today. This bill is the manifestation of the arrogance of this government. It is a bill that has only been introduced to clean up a mess that the government has created and to overcome problems that it has created for itself by not acting earlier on things like mutuality, industry compliance with tax rules—(Time expired)

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