Steven Ciobo (Moncrieff, Liberal Party) Share this | Hansard source

I am pleased to speak on the Tax Laws Amendment (2006 Measures No. 1) Bill 2006. In particular, I would like to make some remarks following on from the member for Hunter, who spent the first 15 or 20 minutes of debate on this bill talking about every other thing that he could think of besides the substance of the bill at hand. An issue that the member for Hunter touched upon in his concluding remarks also reflected a great deal of the substance of the beginning of his remarks in this debate, and that was the GST and the complexity of the GST. I was a little amused, not at what he had to say but by virtue of the fact that it was the Australian Labor Party who were saying it.

What is particularly amusing is that the Australian Labor Party come into this chamber and lecture the government on the complexity of the GST. The Australian Labor Party refused to get behind a broad based, low rate GST tax by blocking it in the Senate. They forced the government to negotiate with the Australian Democrats on a whole range of different exemptions in order to get the kind of structural tax reform through that the government had sought and received a mandate from the Australian people to do.

It was the Australian Labor Party who led to this mish-mash of complexity that is the GST that Australia has today. That is not even to begin with the fact that the Australian Labor Party, for a great while under the leadership of the current Leader of the Opposition, consistently spoke about how they would roll back the GST if they won government. Now all those plans have gone out the window. We do not hear the member for Hunter saying anything about roll-back, because the roll-back policy was slightly just left to one side after the last election. No-one talks about it any more. If the member for Hunter were serious about complexity, then he would perhaps explain to the House why it is that the Australian Labor Party sought to be politically opportunistic and forever burden small businesses with compliance costs associated with myriad exemptions that apply under the GST today.

If the Labor Party were seriously concerned about the issue of compliance, they would not have done what they did back in 1999-2000. If the Labor Party were seriously concerned about small business and general household compliance with the GST and the costs associated with that compliance, they would not have forced the government to negotiate with the Australian Democrats in order to get the GST structural tax reform through.

This government believes in the GST. I also highlight that so did the Australian Labor Party, under the former Treasurer and subsequent Prime Minister Paul Keating, for a great number of years until they needed to differentiate themselves in the Australian political marketplace, so to speak. They suddenly jettisoned that idea and said that they did not support the GST. But they know, as indeed we know, that the GST is the structural tax reform that this country needs.

If there is any greater need for proof, Mr Speaker, then simply put your eyes on the Queensland Premier, Peter Beattie, and all of his state and territory Labor mates who rapidly ran up to sign the GST agreement knowing full well it delivers billions of dollars of GST funds to Labor state and territory governments. Despite the rhetoric, the Australian Labor Party have caused the greatest amount of complexity that Australian small businesses have to deal with. The Australian Labor Party have forced a great deal of the complexity that now takes up so many hours of time for small businesses. For example, there is the national franchise of independent businesses, of whom the president is based in my electorate on the Gold Coast and who, incidentally, runs a sandwich shop. This is exactly the kind of small business owner-operator that we are talking about—the kind who is forced to separate the items in his store that have GST levied upon them from those that do not. This is a consequence of the Australian Labor Party. If the Howard government’s original proposal had gone through, there would not be any need to undertake such complex actions.

Another point I would like to touch upon is the amendment that the member for Hunter foreshadowed—in particular, amendments that he seeks to include in section 50A, subsection 26-52(4). I notice that, as part of the foreshadowed amendment, the member for Hunter has included:

(4)

An amount is not a bribe to a foreign public official if

(a)

it is incurred for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature, and

(b)

the value of the benefit was of a minor nature, and

(c)

as soon as practicable after the loss or outgoing was incurred, the person made a record of the loss or outgoing and the record complies with section 70.4(3) of the Criminal Code Act 1995.

It would simply appear to me that the Australian Labor Party, with this amendment, is seeking to exclude bribes provided they are considered to be of a minor nature. I notice it says nothing about frequency in there. So the question is: is the Australian Labor Party coming before this House and effectively saying that it is okay to bribe foreign officials for the purposes of the Income Tax Assessment Act provided that you make lots of little payments? Is that the point of the Australian Labor Party? Perhaps it is simply through sloppy drafting by the ALP—I am not sure—but there is no reference at all to the frequency of payments, only this notion of ‘a minor nature’ and ‘a minor amount’. Of course, that is without definition in the amendment that the member for Hunter is putting forward. (Quorum formed)

We start to see the form of the Australian Labor Party. When I highlight that this amendment that they are seeking to introduce is an opportunity for the Australian Labor Party to go soft on bribes, they call a quorum. The Australian Labor Party cannot handle hearing the truth about how this amendment effectively makes the Australian Labor Party soft on bribes. As I said, there is no reference in this amendment to the frequency of payments; it simply says that the payment must be minor. It is incredible that the shadow minister would put forward this kind of drafting and say that he would like the government to support this amendment. It is poorly drafted, and I would suggest respectfully to the Minister for Revenue and Assistant Treasurer—a good friend of mine—that we not support this amendment.

Having made those remarks, I would now like to turn to the focus of the bill that is before the chamber today. The Tax Laws Amendment (2006 Measures No. 1) Bill 2006 effectively embraces four key principles: changes under schedule 1 to foreign income exemptions for temporary residents; schedule 2, for business related costs, or what are referred to as black hole expenditures; schedule 3, to promoters of tax exploitation schemes; and schedule 4, which is effectively little more than a technical amendment to GST and vouchers dealing with, for example, prepaid phone products. Dealing with the first schedule, it is very clear that Australia must remain globally competitive if we are going to continue to attract the very best that the world has to offer with regard to human capital, or what we might call skilled workers. It is very clear that Australia, like so many countries around the world, is unfortunately a victim of its own success in a number of regards—that success being the fact that our nation, with its high standard of living and high values, has seen a decline in the birthrate over the last several decades, which has resulted in our country having an ageing population.

A consequence of this of course is the fact that our labour force is diminishing in relative terms. On that basis, as our country continues to grow—and it has been growing very strongly under the Howard government—it is necessary for our companies and employers to turn their minds to other possible opportunities to employ people from offshore. Historically, it has been the case that, when Australian companies have gone abroad seeking to attract people—and seeking to attract the very best that the world has to offer—to come and live in Australia, despite our wonderful climate and our wonderful standard of living, many choose not to come simply because of how our income tax laws operated previously. Historically, and prior to the introduction of this bill—should it receive assent—it was the case that those foreign workers who came as temporary residents would have offshore income subject to taxation. Schedule 1 of the bill will operate so that it attracts internationally mobile skilled labour to Australia by exempting their foreign investment income from Australian tax, thereby reducing the cost to all Australian business of bringing skilled persons to work in Australia.

This measure was introduced twice in 2002 but, unfortunately, it failed to pass the Senate—a consequence, again, of the Australian Labor Party. I welcome the fact that the member for Hunter has indicated that the opposition will be supporting this particular schedule. I understand that it is subject to the caveat of further scrutiny in the Senate committee stage. Nonetheless, at least we have progressed further than we did previously. As was announced in the 2005-06 budget, this measure would originally have provided a four-year exemption on most foreign-source income. However, for the purposes of this bill the time limit has now been removed, as the government was of the view that it creates unnecessary disincentives and distortions for individuals wishing to remain working in Australia.

In addition, of course, temporary residents will be treated in the same way as nonresidents for the purposes of capital gains tax. This will remove an existing problem with the functioning of the CGT rules for those who are departing residents. This measure also does not disadvantage Australian employees when compared to temporary residents. Employment income and Australian-source income of temporary residents remains taxable. So those who may claim that, as a result of the operation of this bill—and in particular schedule 1—Australian employees will in some way be disadvantaged or in some way, relative to temporary residents, will not be in a situation where they can secure employment are incorrect. The reality is that earnings of Australian residents are taxed in the same way as they are for temporary residents.

The second schedule, as I mentioned, deals with black hole expenditures. This particular act provides a new five-year write-off to business capital expenditures not taken into account and not denied a deduction elsewhere in income tax law. Capital expenditure incurred in relation to a past, present or prospective business will be deductible to the extent that the business is, was or is proposed to be carried on for a taxable purpose. As part of a systematic treatment, more expenses can be included in the cost base and reduced cost base of capital gains tax assets and the elements of cost for depreciating assets. Additionally, there is a new five-year write-off for lease and licence surrender payments incurred in carrying on or in ceasing a business. Some of these payments were previously not recognised by income tax law.

This measure gives effect to the systematic treatment for business black hole expenditures that was announced in the 2005-06 budget. I certainly welcome this change. I notice that the member for Lilley is in the chamber, and I know how pleased he was when I announced previously that I humbly had received an award of being the small business and franchise politician of the year.

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