James Bidgood (Dawson, Australian Labor Party) Share this | Hansard source

I rise to speak to the Tax Laws Amendment (2008 Measures No. 5) Bill 2008. The Tax Laws Amendment (2008 Measures No. 5) Bill 2008 will extend eligibility for exemption from interest withholding tax to bonds issued in Australia by state and territory central borrowing authorities. This measure in the bill is part of a broader suite of government initiatives aimed at bolstering Australia’s financial markets. This measure was part of a broader package of measures announced by the government to strengthen Australia’s financial markets in the face of current pressures. Industry expects this measure will be in effect before the end of 2008. The bill will insert new subsection 128F(5B) into the Income Tax Assessment Act 1936 to enable bonds issued in Australia by state and territory central borrowing authorities to be eligible for exemption from interest withholding tax, providing the bond issue satisfies the requirements of the public offer test.

For the purposes of the new subsection 128F(5B), ‘bond’ is defined as including debenture stock and notes. Defining bond in this way will provide greater certainty to market participants and ensure that it is not interpreted in a manner that would hamper the effective operation of this measure. Removing IWT is expected to result in the states unifying their bond issuances into one pool of funds, thereby improving depth and liquidity in the market and broadening the potential investor base. Ultimately, this should lead to a lower cost of capital and hence financing cost for state infrastructure projects.

Further, it is anticipated that by making state government bonds more attractive to foreign investors some of the pressures facing the Commonwealth government securities—otherwise known as CGS—in this market will be eased. The bill also amends the eligible investment business rules and division 6C of the Income Tax Assessment Act 1936. It is a government priority to make Australia a funds management hub in the Asia-Pacific region by streamlining and simplifying the operation of the eligible investment business rules in division 6C. This is a key part of the government’s plan to bolster the Australian economy.

Labor is about building the economy, building infrastructure and creating jobs. We are making the decisions now to keep the economy strong. The Rudd Labor government is tackling the global financial crisis. Through this bill and others, we are providing leadership while those opposite seek only to oppose for the sake of it and to take the focus away from a leader who has vision. They are taking cheap shots during a time of economic priority for the nation. We on this side are taking leadership. We are managing the economy to see us through difficult economic times.

We have shown leadership by releasing an economic security package worth $10.4 billion, money that will be invested into the economy. We will, on 8 December, issue $1,400 to every single aged pensioner and $2,100 to every aged pensioner couple. This money is much needed by our aged citizens and this money is being released direct as a lump sum so as to avoid the complications for those who are in aged care homes where certain contracts provide that up to a maximum of 85 per cent could be withheld by the business running those homes. By giving it directly to the individuals and to the couples, we empower our aged citizens to have 100 per cent of that money, thereby enabling them to spend all of that money as and how they choose. What more appropriate time than just before Christmas?

I am sure it is going to bring much cheer to our elderly folk in this country and to their families that our aged citizens will be able to afford to buy Christmas presents for their loved ones and that they will be able to fix those little things around the house which perhaps up until recently it has been impossible to find the money for. This empowerment by this government gives to the people who really need the money, and what more appropriate time than at Christmas time?

In this $10.4 billion economic package we have also addressed our younger citizens—those who are leaving home, leaving university and, for the first time, wish to enter the housing market. We are enabling first-time home buyers who are buying an already constructed home an increased incentive from $7,000 to $14,000 to encourage our young people and first home buyers to enter into the great Australian dream of owning their own home. This is something which we on this side see as a priority, empowering young people to purchase a home and to have control and ownership over their own destiny in terms of accommodation, and we are doing our bit to help facilitate that.

We also wish to stimulate new construction in the housing market. With this in mind, this government has again shown leadership. We have decided to give an incentive of $21,000 to each person buying a newly constructed home or a home under construction as an incentive to buy new homes. This in itself helps add to the housing stock of the nation. People going into a newly constructed home free up other accommodation, whether it be rented or whether it be something that has already been owned. In effect this helps stimulate new homes being constructed and frees up current stock. The sum of $21,000 is certainly a big incentive to get started on a new home construction.

As part of this $10.4 billion economic stimulus package is a package designed to create an extra 56,000 training places. That is 56,000 on top of the 50,000 training places already allocated in the budget of May 2008. It is one thing to want to build new homes, it is one thing to stimulate the economy, but we also need a well-skilled, well-trained, well-educated workforce in the trades and in the professions in order to help construct the new homes and the new economy we are building. To double the number of training places is indeed an investment in the future not only of the nation’s economy but also in the capital asset base of people’s skills in this nation. What greater way to do that than to teach someone a trade or a profession and to move them in a new direction?

As part of our $10.4 billion package we know that it is important that people take hold of these stimuli and actually go into the marketplace to take action: to invest in homes; to take up the new training places; and for the elderly to use that money wisely to do whatever they wish, and that in itself will keep business rolling. This all comes with the backdrop of a two per cent drop in interest rates due to the global financial circumstances, which in itself will help people who are paying their mortgages. This is a substantial saving for the people of this nation. When you put this against the backdrop of the tax cuts that were brought forward on 1 July from the budget in May 2008, you will see that someone on a very minimum average wage of $50,000 a year has $20 a week cash in their hand to spend however they wish. That is an extra $20 note in the hand to put food on the table, petrol in the car, help with the kids clothing or whatever it is they choose to do with it. Twenty dollars a week cash in the hand to someone on $50,000 a year is a helping hand. The role of a Labor government is to help those in greatest need. It has always been my philosophy in politics that we should bring about the greatest benefit to the greatest number of people, especially those with the greatest need. Our tax measures and our stimulus to the economy have helped do that.

I know that bringing forward infrastructure spending is going to be a major stimulus to our local governments in providing basic, much-needed road infrastructure, particularly in my seat of Dawson, where this government has committed, I am proud to say, $150 million on the Bruce Highway from Mackay through to Townsville. That is something that the people of Dawson have been crying out about for years and years and years. And yet their cries were not answered—or perhaps it was chosen that they not be heard. But this government has said. ‘Yes, we will deliver basic road infrastructure for the people of Dawson, particularly on the Bruce Highway.’ Not only that but this government has committed to a major infrastructure project in southern Townsville on the port access road. I was very pleased to accompany the Prime Minister, Kevin Rudd; the Minister for Infrastructure, Transport, Regional Development and Local Government, Anthony Albanese; the state minister for infrastructure, Warren Pitt; and local representatives from the Townsville City Council in turning the first sod a couple of months ago in this $95 million project.

That project has been on the table for over 30 years. For over 30 years, the Townsville enterprise committee had been calling for action to build this port access road to streamline the movements of goods and services from out west to the port and thereby bypass the urban area and improve everybody’s quality of life, as well as improving efficiency in delivery of those goods and services to the port of Townsville. It was this government that delivered for the people of Dawson in southern Townsville. It was this government that said: ‘Yes, we can see the long-term benefit not only to the locality but to the bottom line of the nation’s economy, because we have a big vision that is not short-termism. We have a vision that looks down the corridor of time and sees the benefit of investing massively in major infrastructure now so that future generations can benefit from the long-lasting roads, rail, ports and services.’ This all comes through a political determination to invest, and we are investing in the future economy and future infrastructure and helping to stimulate the economy through these difficult global financial times.

It is pleasing to know that this nation can stand proud amongst our global leaders and competitors in saying that we have the fourth best regulated banking system in the world. No. 1 is Canada. I find it quite interesting from a demographic point of view that the demographics of Canada, with 30 million people and a large geographic landmass with a diverse mix, are just like those of Australia, with 20 million people, a large geographic mass, huge distances to travel from one community to another, different communities and an indigenous population, and that they, like us, have a banking system among the best regulated in the world, because we know that that is the way forward. I think we can take great pride in that.

I commend the way that this Treasurer, Wayne Swan, and this Prime Minister, Kevin Rudd, have handled the global economic crisis. It is with such leadership and such vision that we will walk with our heads held high saying that we did what was needed and what was right for these times. This taxation amendment brings forward very important measures which will enable, stimulate and encourage people to invest here in Australia, because there is a safe and sound banking system where they know their money will be safe in this country. So, without any further ado, I commend this bill to the House.

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