Belinda Neal (Robertson, Australian Labor Party) Share this | Hansard source

I rise in the House today to speak in support of the bill before us, the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008. This bill amends three pieces of legislation, namely A New Tax System (Goods and Services Tax) Act 1999, the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. The amendments contained in the current bill will remove from individual taxpayers the right to claim a tax deduction in respect of political party membership fees paid on or after 1 July 2008. This bill also denies—and this has been the main focus of debate—a tax deduction to both individual and corporate taxpayers in respect of contributions or gifts made on or after 1 July 2008 to political parties; members of parliament, including state, territory and federal members; members of local governing bodies, such as councils; and candidates, both party nominated and Independent, for political office. Employees or office holders may continue to claim tax deductions for those amounts incurred in earning tax assessable income—that is, the expenses of the candidates themselves are part of their normal tax deductions.

At the moment, a tax deduction is available in respect of contributions and gifts made to political parties registered under part XI of the Commonwealth Electoral Act 1918 or registered under relevant state or territory legislation, under subdivision 30-DA of ITAA97, the Income Tax Assessment Act 1997. The maximum deduction for both individuals and companies is $1,500 per annum.

Before 22 June 2006, tax deductions in respect of these amounts were limited to $100 per annum for contributions and gifts. Before this date, the deduction was only available in respect of gifts and contributions made to parties registered under the above Commonwealth act. This meant that contributions made to Independent candidates, state and territory political parties, members of state and territory parliaments, and all state and territory political candidates made before 22 June 2006 did not qualify for any tax deduction.

The policy of removing the tax deductibility of political gifts and contributions was first announced by the then Leader of the Opposition, the Hon. Kim Beazley, on 3 October 2006. On 2 March 2007, the then shadow minister for finance, the Hon. Lindsay Tanner, announced the denial of tax deductions for political gifts and contributions in relation to the views of this government. Identical provisions to those contained in the bill before the House today were included in schedule 1 of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. The measure was originally introduced into the parliament by this government on 13 February 2008. On 19 March this year the Senate resolved to refer these provisions to the Joint Standing Committee on Electoral Matters for inquiry and report by June 2009. The committee tabled its report on 16 June this year. Although the committee recommended that the measure be passed by the Senate unamended, the measure was negatived in the Senate on 26 June with the opposition of the coalition—which was quite shameful in my view.

It is clear from the brief history outlined above that the coalition has consistently opposed reform of the provisions governing tax deductibility for political contributions and gifts. It should be kept in mind by honourable members that the coalition parties have attempted three times, in fact, to increase the threshold on tax deductibility. They tried to increase it before the 1998 election but the matter lapsed. They tried to increase it after the 1998 election but were defeated in the Senate. But when the Senate was under Liberal control in 2006 they ultimately succeeded.

The Labor Party has a long history of trying to reform the tax deductibility threshold for political donations. It went to the last election with a clear policy and clear commitment to remove the tax deductibility of election donations. The Rudd Labor government is formally of the view, as am I, that the Australian public should not be compelled to subsidise political parties and candidates. Taxpayers across Australia already provide money for this purpose via the electoral funding provisions. They should not be burdened further by having to pay for tax deductions for those same political parties and candidates.

By stark contrast, when the coalition was in government in 2006, it was quick to use its Senate majority to increase deductions claimable from $100 to $1,500 for both individuals and companies. At the same time the coalition, when in government, expanded the scope of those political entities and parties to which tax deductibility for contributions to political parties could be made by individuals and companies. Thereafter, in addition to parties registered under the Commonwealth Electoral Act, tax-deductible contributions could also be made to a host of other political entities. These included Independent candidates, state and territory candidates, parties and members of parliament. This blatant attempt to bolster coalition coffers by appealing to big business saw those opposite abandon any semblance of responsible fiscal policy.

The coalition seems determined, in its pursuit of donation dollars, to make it as easy as possible for its business backers to maximise contributions to the coalition and to use the public purse to do so. The Liberal-National Party coalition has been concerned with one issue alone in this drawn-out debate over political donations, and that issue is the protection of its fundraising base. So determined was the coalition in 2006 to increase both the threshold and the scope of tax-deductible contributions that it abandoned many of the responsible safeguards that had been in place in this area. This has continued since 2006. It continues into the present sitting year and is in evidence again in regard to their stance on this bill.

The coalition’s refusal to pass the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 in the Senate on 26 June this year was in direct contradiction to, and in defiance of, the recommendations of the Joint Standing Committee on Electoral Matters, published earlier in June 2008. The committee recommended that the bill should be passed unamended by the Senate. It should be remembered that it was the Senate that insisted on referring the measures to committee. So for the Liberal and National parties to then ignore the advice and guidance the Senate was so eager to receive from the committee on this matter seems not only irresponsible but a complete waste of the committee’s time, and, frankly, shows a disregard for proper parliamentary process. These actions, which ultimately caused the defeat of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, also show a level of contempt, as I have said, for the proper processes of parliament that should be of great concern to all members and senators.

What is also clear from this historical overview is that the coalition parties appear far more interested in the dollar value of donations than in maintaining a responsible approach to fiscal management or regard for the parliamentary process. Their 2006 changes to this area of policy illustrate clearly that the coalition has shown and continues to show scant regard for the responsible safeguards that once protected this area of legislation.

It must be admitted that fundraising for campaigning purposes has been a necessary and more or less accepted part of the political process in Australia for many years. Many people, both individuals and corporations, choose to donate to the political process generally with a preference for the party that they think will provide better leadership for the nation or the state. I am not suggesting, and the bill before us today does not contain, any unreasonable curbs or restrictions in this area. Donations to political parties, members and candidates can continue to be made. But a reasonable and equitable system of allowance for tax deductibility for political donations must contain sensible safeguards. These safeguards were provided in the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 but, as we have seen, that bill was scuttled in the Senate by the Liberal and National parties. While this was a disappointing outcome for good governance and good policy, I am pleased to say that very similar safeguards are provided in the bill before the House today.

This commitment was originally made as part of Labor’s $3 billion savings plan, which was announced on 2 March 2007. The Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 forms part of the Rudd Labor government’s response to inflationary pressures in the economy and is a contribution to our savings plan. Everyone in the community needs to share in the pain of that savings plan, including those in this chamber and in the other place who may need to provide further funds for their own campaigning.

This measure and other savings measures are an important component of our effort to put downward pressure on inflation and interest rates. The changes foreshadowed in the bill at hand will have a positive financial impact, delivering savings of just over $10 million per annum. Maintaining a high-tax deductibility threshold for political donations and contributions—as those members opposite want to do—concentrates political influence in the wealthier sectors of Australian society. Tax deductibility also has the potential to grant to those with the greatest capacity to donate a proportionally higher level of taxpayer funded subsidies.

By abolishing tax deductibility for political contributions, the Rudd Labor government removes any potential advantage that high-income donors may receive in making a tax-deductible contribution compared with the average man or woman on the street. If this government can achieve the goals of removing such inequities from our political system, while at the same time delivering a fiscally responsible package that will bring a positive return of more than $10 million per annum or more than $30 million over the next three years, then this is a truly creative initiative.

It may be noted that the bill also ensures that political parties, Independent members and Independent candidates will not lose access to certain goods and services tax concessions to which they may be entitled as a consequence of the removal of income tax deductibility for gifts or contributions. It is disappointing in the extreme that the Liberal and National parties have opposed this measure so vehemently in their own personal self-interest.

I note that the Greens supported the original bill in the Senate in June this year, with Senator Brown clearly stating that the party favoured ‘the abolition of tax deductibility for donations for political purposes’. The Family First Party too has signalled its support of a similar position. I hope that the Liberal and National parties will take note of the benefits that this measure brings to the system of political contributions and gifts, and reconsider their opposition to this bill. The coalition members of this House should remember that the Joint Standing Committee on Electoral Matters has already recommended that measures virtually identical to those presented to the House today be adopted without amendment by the Senate. The time has come for those members to heed that sensible advice and pass this measure. The Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 will strengthen democracy, enhance equity and simplify the system of political donations. I commend the bill to the House.

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