Geoff Prosser (Forrest, Liberal Party) Share this | Hansard source

I speak today in support of the Appropriation Bill (No. 1) 2006-2007 and cognate bills. Another year, another budget, and yet another budget in surplus. Responsible economic management by this government has produced higher living standards, created more jobs and kept pressure off home loans and interest rates, allowing families to plan for the future with confidence. Our strong budget position allows us to provide incentives and assistance to the wider sector.

The Liberal government is committed to helping all Australians get a job. Under Labor, the unemployment rate rose to nearly 11 per cent during the 1990s. At five per cent today, it is now the lowest it has been since November 1976—and it is even lower in my home state of Western Australia. Responsible economic management and continued growth are the best ways to create new jobs. The government is assisting further by expanding training opportunities and programs that help get people into the workforce.

It is also assisting small business with measures that allow more tax benefits to encourage jobs growth. Small business remains the backbone of our economy and a vital source of Australian jobs. By strengthening small business, we strengthen the Australian economy, now and into the future. This budget builds on the government’s commitment to support small business. The government will deliver a range of reforms to simplify the tax system for small businesses, such as reducing taxes on small business by some $435 million over four years to reduce compliance costs and delivering $40 million worth of changes to simplify the fringe benefits tax, including increasing the simplified tax system average annual turnover threshold from $1 million to $2 million. Over 650,000 small businesses will now become eligible for the simplified tax system. The changes will also improve access to the small business capital gains tax concession by replacing the current controlling individual test with a 20 per cent significant individual test and by increasing the net asset threshold from the concession of $5 million to $6 million. The government will also reduce the Australian Securities and Investments Commission’s one-off incorporation fee from $800 to $400 from 1 July 2006. This will benefit businesses that wish to incorporate.

The government will enhance the wine equalisation tax, or WET, producer rebate scheme with effect from 1 July 2006. Currently the WET producer rebate scheme provides a WET rebate of up to $290,000 to each wine producer or group of producers each financial year. From 1 July 2006, each wine producer or group of producers will be able to claim an increased maximum rebate amount of $500,000 each financial year. The enhanced assistance will effectively exempt up to around $1.7 million of domestic wholesale wine sales from the WET each year per wine producer or group of producers, compared to $1 million a year under the current scheme. This is a tangible benefit for struggling wine producers in my electorate of Forrest in the south-west of Western Australia. Growers are currently struggling with the global oversupply of grapes and falling margins. The wine industry in the south-west is a significant rural industry which provides employment for a lot of people and of course plays a significant role promoting and being a drawcard for regional tourism.

I am sure the region’s farmers will also welcome capital gains tax relief outlined in this budget. Under the new guidelines, farmers and other small businesses with a turnover of less than $2 million can sell or hand their business to a family member without paying capital gains tax. This has been a bone of contention for farmers for some time. Until now, they have faced the prospect of a hefty capital gains tax bill if they wanted to hand their property down to their children.

Investment in new plant equipment is essential for Australian businesses to keep pace with new technology and remain internationally competitive. The government will increase the incentive for Australian businesses to invest in new plant equipment by increasing the diminishing value rate for depreciation from 150 per cent to 200 per cent of all eligible assets acquired on or after 10 May 2006. This will allow business to write off the cost of new plant and equipment more rapidly for tax purposes, reducing the cost of investing in eligible assets over their effective life. This measure more closely aligns depreciation deductions for tax purposes with the actual decline in the economic value of the asset. Ensuring depreciation for tax purposes aligns with the economic depreciation will also assist business to keep pace with new technology, enhance productivity and sustain economic growth.

Again, due to the government’s previous economic management and our current strong budget position, the government is now able to provide even more support for Australian families. On the subject of personal income tax, the government will provide tax cuts worth $36.7 billion, including the reduction in the fringe benefits tax over four years. This is in addition to the $21.7 billion worth of tax cuts announced last year’s budget.

I support the changes to personal tax rates and thresholds from 1 July 2006, and I am personally pleased that the Treasurer resisted calls to increase the tax-free threshold, as decreasing the tax rates was the best incentive for continuing employment. The tax cuts will increase disposable income for all Australian taxpayers, provide further incentives to participate in the workforce and improve the international competitiveness of Australia. Over 80 per cent of taxpayers will face a top marginal rate of no more than 30 per cent over the forward estimate period. Reducing the top marginal tax rate and significantly increasing the top threshold will improve our competitiveness compared with other OECD countries. In 2006-07, the top marginal tax rate will apply to around two per cent of taxpayers.

Since 1996 the government has doubled assistance to families through the family tax benefit system. The maximum payment per child under part A has increased from around $2,400 to $4,200 a year. From 1 July 2006 more families will receive the maximum rate. They will now be able to earn $40,000 a year, up from $33,361 in 2005-06, without having their entitlements reduced. People on carer payments who look after others with a disability will receive a $1,000 bonus payment. Those on carers allowance will receive a $600 bonus payment.

Senior Australians eligible for the senior Australians tax offset will pay no tax up to an annual income of $24,867 for singles and $41,360 for couples. Senior Australians, including eligible self-funded retirees, will receive a one-off payment equal to the annual amount of the utilities allowance of $102.80 to be paid by 30 June. People in rural areas will be better able to access the pension from 1 January 2007, as the value of their home on their rural property and the property will be exempt from the pension assets test where they have a 20-year connection with the land. Also, the pension assets test taper rate will be halved from $3 to $1.50 per fortnight for every $1,000 of assets above the free area, with effect from 20 September 2007.

The government proposes a fairer and simpler superannuation plan from 1 July 2007. Those aged 60 and over will not pay tax on their superannuation pension. The self-employed will be able to claim a full deduction for their personal superannuation contributions and eligible self-employed people will have access to the government’s co-contribution scheme.

The budget contains specific increases in AusLink funding, with particular relevance to my electorate of the first progress claim towards the construction of the Perth-Bunbury highway of $15 million, construction of which should commence later this year. At a local level, the government has boosted Australia’s Roads to Recovery program funding to local councils to upgrade local roads in towns and shires. The program over five years averages around $300 million per year. The Australian government will invest $126.1 million in Western Australia’s local roads during 2006-07. This comprises $45 million from the AusLink Roads to Recovery program, $2.3 million under AusLink’s Strategic Regional Program and $78.8 million in untied financial assistance grants for local roads.

The extra one-off payment of $45 million represents an extra one-off payment in 2005-06 to councils for local road improvements, equivalent to an additional one year of Roads to Recovery funding. The 11 local authorities in my electorate of Forrest in the south-west of Western Australia, stretching from Harvey through Bunbury and Busselton to Margaret River on the coast and inland through Collie, Bridgetown and Nannup to Manjimup will receive a road funding windfall of $4.2 million as a result of this year’s federal budget. All 11 authorities in the south-west are very happy with the extra one-off payment which will bring forward a number of road projects in regional areas.

I applaud the federal government in its commitment to extend the AusLink black spots program to 2007-08. The aim is to prevent an estimated 500 casualty crashes on Australian roads in 2006-07. The program is unique among a suite of government land transport investments in that it targets funding to the worst crash sites, usually for remedial treatment such as traffic signals, vehicle turning lanes, roundabouts and improved lighting. Western Australia will receive $5 million from the program between 2005 and 2007 which will be directed to fixing approximately 51 priority crash locations. For every dollar outlaid on black spot solutions, the community reaps a benefit of $14.

In conclusion, I congratulate the Treasurer on presenting this budget, which again is in surplus, for the ninth time in 10 years, and which for 2006-07 provides an underlying cash surplus of some $10.8 billion. Having now eliminated the $96 billion of Labor’s debt that we were left with when we came to office, we have now had 10 years of sound economic management, which has seen this debt eliminated in net terms, providing ongoing interest savings of around $8 billion a year which can be invested in physical and intellectual infrastructure. Only with no debt repayment and no debt servicing costs can we build on the incentives and assistance for the community and build opportunities for the future. I commend the bills.

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