Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

I rise to talk about the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. If this is an indication of how the government are going to move forward then it shows that, as opposed to improving transparency—and they are making all these noises about improving the operations of this House—they have been pretty tricky in this bill. It is their first tax bill. They put five very sensible measures into the bill and then one measure that they knew the Liberal Party would oppose because it is an attack on participation in our democracy. They then rolled it all up into one bill and presented it to the House. This foreshadows the way that the government will operate.

I thought I might initially address the five of the six schedules of this bill that the opposition will be supporting. We are supporting them for very good reason: four of the five are measures that were introduced by the opposition when we were in government and the fifth of those measures was part of our policy when we were in government.

The first of these is the exemption for superannuation payments to the terminally ill. This is schedule 2 of the bill. It concerns the taxation treatment of lump sum superannuation payments to people who have a terminal illness. This measure was announced by the Howard government in September 2007, by my good friend the shadow minister for finance. When he announced the measure, he outlined that we were doing it because we believe that we need to remove as many of the stresses as possible for people who find themselves in this terrible situation. I could not have said it better myself, and I completely agree with the intent of this measure. It will make superannuation payments tax free in the case of a superannuation lump sum payment made to somebody who suffers from a terminal medical condition. The exemption will apply whether the payment is made from a taxed or an untaxed source. The definition of a terminal medical condition is to be set out in the regulations that will be prescribed. We the opposition would expect that the government would consult widely with the medical profession and support groups when they draft these regulations.

Schedule 3 of this bill establishes a deduction for the capital costs of establishing trees in certain carbon sink forests. Again, this is a measure that was introduced by the coalition parties when we were in government. It was part of the Tax Laws Amendment (2007 Measures No. 6) Bill, which, sadly, lapsed on the calling of the election. The measure in this bill does not differ in any material respects from the measures that we introduced—with, I think, the slight exception of some changes in the names of portfolios and departments. We strongly support this measure. Encouraging the early establishment of carbon sink forests through providing immediate deductability for costs incurred in establishing a qualifying carbon sink forest during a five-year period is a very much needed measure. It was raised just yesterday with me by some businessmen in Western Australia, and they are very keen to see it passed. Significantly, the measure in the bill will not allow deductions to carbon sink forests established through managed investment schemes.

Schedule 4 of the bill provides for the extension of the beneficiary tax offset to equine workers who are suffering hardship as a result of the equine influenza outbreak. Again, this was part of a package of measures that was announced by the Howard government in September 2007 in response to the equine influenza outbreak. This measure will mean that low-paid workers and sole traders who have lost their jobs or have lost substantial income will be eligible for a wage supplement. This supplement will be received in the 2007-08 income year. Following years will also be eligible for the beneficiary tax offset. The intent of this measure is to extend the tax offset to the supplement to ensure the taxation treatment is consistent with that which we already give to recipients of Newstart allowance.

Schedule 5 of the bill provides that grants received under the Tobacco Growers Adjustment Assistance Program will be tax free where the tobacco grower undertakes to exit all agricultural enterprises for five years. Eligible grants will be up to $150,000. Again, this is a measure that was introduced by the former government, but it lapsed on the calling of an election.

The final schedule, schedule 6, amends the Farm Management Deposits Scheme to align tax law with the guidelines for declaring either all primary producers in a geographical area or specified classes of primary producers within a geographical area to be in exceptional circumstances. This measure is exactly the same as that which was introduced by the Howard government. The opposition supports schedules 2 through to 6 of this bill.

I return now to why we so vehemently oppose schedule 1 of this bill. It is an example of the trickiness of the way this new government intend to conduct business in this chamber. For them to take what is obviously a controversial measure that relates to our electoral system and put it in with these benign and much-needed taxation measures shows the hollowness of the government and the hollowness of their promises to increase transparency and improve the operations of parliament. Schedule 1 of the bill winds back tax deductability for political donations from the current level of $1,500 to nil. What it fails to do, of course, is to wind back the tax deductability for many of the things that traditionally fund the political campaigning of the Australian Labor Party. This is really nothing more than a naked political device to attack the funding base of the coalition parties whilst leaving Labor’s funding base intact.

I will give you an example of what will happen if this measure is to actually pass. A small business man wants to donate to the Liberal Party because he is worried about the return of unfair dismissal laws, for instance. That donation would lose its tax-deductable status. Yet union memberships, money that will directly fund ALP election campaigning, will still be tax deductable. Levies paid by parliamentary members of the Australian Labor Party to the Labor Party—and this is something that I understand Labor Party members are still encouraged to do—will still be tax deductable.

We have had the Special Minister of State rather sanctimoniously dressing up this measure as something to improve accountability within our democracy. But of course we all know what this is actually about. It is about maximising the power now at the disposal of the new government to unfairly disadvantage their political opponents and to advantage themselves. This is a measure that will directly affect participation in our democracy. It deals with the deductability of donations made to political parties as well as to candidates for election to any Australian legislature, local government body or members of such bodies. This is a measure that is intrinsically connected to our electoral process. So it is worthy that this House ask why the government sees the need to address this measure within a tax bill. I note that the Deputy Leader of the Government in the Senate has already put this question to the other place. Speaking yesterday in the other place he stated that the issue of tax deductability of political contributions is not a policy matter for the Treasurer but instead falls within the portfolio responsibilities of the Special Minister of State. So why would the new government then include this measure within a tax bill? There is only one answer to that question, and that is that they are being tricky and that they are doing it as a device to try and get the opposition to pass this measure along with the other needed measures that the opposition does support.

I observe at this point that the new government have made a real song and dance about claims that they would like to increase transparency and accountability, but of course within this tax bill we see that all they really want to do is play politics. What I would like to do and what the opposition would like to do is amend this bill to refer schedule 1 to the Joint Standing Committee on Electoral Matters, which is the appropriate place where, after every election, changes to our electoral system should be scrutinised. This has always been the practice in the past: changes to the electoral system after any given election will be referred to the Joint Standing Committee on Electoral Matters. The history of that committee is that the ALP have repeatedly supported tax deductability of political donations. Indeed, the initial bill that granted tax deductability to political donations was introduced during the time of the Hawke government. In submissions to the Joint Standing Committee on Electoral Matters in both 1987 and 1989 the Australian Labor Party claimed that the additional funds raised by political parties with tax deductability advantage would alleviate any pressure for increased levels of public funding, would encourage political parties to continue to seek direct support from the public and—very importantly, because this is the Australian Labor Party talking—would help them more adequately fulfil their social functions.

On 19 December 1991, under the Hawke government, the House of Representatives voted along party lines to introduce tax deductability for political donations. In 1991 that level was set at $100. The Political Broadcasts and Political Disclosures Bill 1991, assented to on 19 December, gave effect to the introduction of this tax deductability. That bill was introduced by the then Minister for Transport and Communications, Kim Beazley. So when the Australian Labor Party were in government—and this is a time when they obviously made up the majority within the Joint Standing Committee on Electoral Matters—they had nothing to say about the tax deductability of contributions to political parties. In reports after the 1990 election and the 1993 election, they were completely silent on their apparent beliefs about tax deductability for contributions to political parties.

The 1996 report of the joint standing committee included a recommendation to make donations of up to $1,500 annually to a political party tax deductable, which, of course, is what was introduced by the Howard government and what the current government is now trying to wind back. In the committee’s report on the conduct of the 1996 election, it was the Australian Labor Party that nominated $1,500 as the maximum level for tax deductability. This report was unanimously supported by members of that committee and it said specifically that donations to a political party of up to $1,500 annually, whether from an individual or a corporation, would be tax deductable. Membership of the 1997 joint standing committee again unanimously recommended tax deductability for donations from both individuals and corporations up to the threshold of $1,500.

On that committee were—and this is quite extraordinary—the now Deputy Leader of the Government in the Senate, the current Attorney-General and the now Parliamentary Secretary for Multicultural Affairs and Settlement Services. So those three members of the Labor Party have apparently had a substantial change of heart on this issue—two cabinet ministers and one parliamentary secretary of the current government.

The party system is an integral part of our democracy. It is a dangerous act to attack the role that political parties play within our system. The ALP is trying to entrench its incumbency, and that is obvious to everyone who takes a look at this measure. It is the act of a very conceited government. It is the act of a government that is putting its narrow interests ahead of the interests of our great Australian democracy. The savings from this bill will be about $10 million. Quite frankly, I believe that that is a price worth paying to enhance our democratic processes, of which political parties are an integral part.

There can be no doubting that this measure will entrench funding for the Australian Labor Party and will entrench funding of the Australian Labor Party from the union movement. That is the clear intent of it. This measure will keep tax deductability for the things that fund Labor’s election campaigns—which is funding from the union movement, by and large—but it comprehensively attacks the funding base of the Liberal and National parties, who are supported by donations from small business, from large business and from individuals within the community who would like to see a continuation of good governance in Australia. This is really nothing short of absolute egregious hypocrisy from the government. The coalition parties demand a level playing field when it comes to the funding of the two major political parties in Australia.

As I have stated, the opposition support schedules 2 to 6 of this bill but we will be moving to amend it to defend the integrity of our electoral system. It is completely appropriate that, at the conclusion of any election, changes to the electoral system be scrutinised by the Joint Standing Committee on Electoral Matters. There is absolutely no reason why the measures contained in schedule 1 of this bill are included with the other urgent matters that are included in this bill; as we know, the only reason for it is political trickery. I therefore move:

That all words after “That” be omitted with a view to substituting the following words:

“the House is of the opinion that the provisions of Schedule 1 of this bill should be referred to the Joint Standing Committee on Electoral Matters for consideration and report”.

I urge all members of the House to support this amendment in the interests of Australian democracy.

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