Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

I commend you, Madam Deputy Speaker, on your choice. It has been two weeks of chaos and confusion since the budget—two weeks of utter debilitation for employee share ownership schemes across Australia. Two weeks ago, on budget night, the Assistant Treasurer made an announcement that snap-froze every employee share scheme around Australia, and for two weeks the government have ducked, weaved and done everything possible except take responsibility for the chaos they have caused.

This debacle is a window into this Labor government through which we see many things. We see the true Labor Party hatred of workers having shares in the companies they work in. We see the lack of attention to detail and we see the ducking and the covering up whenever something goes wrong. This Assistant Treasurer presided first over Fuelwatch. Then he presided over GroceryWatch. Now he is presiding over this employee share scheme fiasco. This Assistant Treasurer—the fool of Fuelwatch and the goose of GroceryWatch—is now the shocker of employee share ownership schemes. And for two weeks he has done nothing.

On budget night the Treasurer and the Assistant Treasurer announced that they were ending deferral on tax for employee share ownership schemes and limiting the existing concession. Within two days it was obvious that this announcement had had a catastrophic effect right across the business world in Australia. By Thursday of budget week it was obvious to the Assistant Treasurer—share plans frozen after tax changes. And, as day after day went by, the Assistant Treasurer stopped and did nothing.

The Minister for Finance and Deregulation, Lindsay Tanner, said everyone participating in the share schemes was somehow rorting their tax. But in the budget announcement and in the budget papers themselves there was precious little detail. All that was announced was that the deferral was being abolished and the concession limited to $60,000 of income. The effect this announcement had, as I said, was the suspension of share schemes across many businesses. The effect was that those on every level of income had their share scheme suspended. The effect was, with suspended share schemes, no-one was getting access to employee shares.

Knowing that this chaos had been caused, the reaction from ministers, up to the Prime Minister, was, first of all, to do nothing. Let’s go through some of the exact advice the Assistant Treasurer got in the days following the budget. The Managing Director of Computershare, Geoff Price, said:

All the share plans we operate are likely to be suspended until there’s some clarity …

He also said:

They—

the government—

just don’t seem to get it …

…            …            …

How can the Government say they support share schemes when their proposed changes will tax the legitimate tax-qualifying plans out of existence?

                  …              …              …

The proposed changes simply render the vast majority of plans uneconomic …

The Woolworths finance director echoed these concerns when he said:

… the government hasn’t thought through the changes to employee share ownership. It has effectively frozen employee share schemes. Many small and medium-sized businesses depend on equity ownership because they simply don’t have the cash.

In the face of this, the response was bluff and bluster, as we have seen so much with these ministers opposite. For two weeks we have had nothing but bluff and bluster. It is as if they are provided with their lines. It is almost like they are tape-recorded, like the tape is inserted into the minister like some sort of automated telephone answering service. We had the same thing from the finance minister and the Prime Minister in the week after budget week, with the headline: ‘PM stonewalls on employee shares’. We had day after day of chaos, and the government’s response was to do absolutely nothing.

It is amazing that the government and the minister opposite could make this announcement in the first place without seeing what damage would be done. This is the big question for the Assistant Treasurer: did the Assistant Treasurer intend to shut down share schemes across Australia? Was that the intention of the budget announcement—we know that has been the effect, but we do not know if it was the intention, because he has not said anything in the last two weeks—or was it simply a rolled gold stuff-up?

They might have asked themselves why the deferral existed in the first place. That would be a reasonable question for an Assistant Treasurer to ask. The deferral exists so that, if you are on $50,000 and you are provided with some shares which you cannot touch for a number of years, you pay the tax when the shares are in a position where you can actually sell them or use them. Without a deferral, you would have to pay that tax upfront. That is the effect of the budget announcement. So the Assistant Treasurer’s decision is now that workers on every level of income—and let’s leave aside this class rhetoric they resort to at every opportunity, whenever they are in trouble—have no deferral, and the minute they are provided with shares in name that they cannot access for a number of years they are required to pay the tax upfront. You can just imagine it in the workplace: ‘We’re issuing you with some shares that you can’t touch for a number of years but you need to pay the tax now. I hope you’re happy. Go down to the bank and get a loan to pay the tax.’

Another question they might have asked is, ‘Why does no other country in the world do this?’ That might have been a good question. Apart from, ‘Why does the deferral exist in the first place,’ they could have asked, ‘Why don’t other countries do this?’ But these were questions that absolutely eluded the Assistant Treasurer—and the Treasurer, of course, who presided over this with him. It may well be the case that I am being terribly unfair to the Assistant Treasurer. I like to consider all possibilities. It may well be that this was the Treasurer’s decision and the Assistant Treasurer found out about it very late in the piece, after the budget papers were printed. He might say so in his response. It is quite possible that is the case, but we have not heard that.

In two weeks we have seen companies right across Australia criticising this announcement. With chaos all around, with share schemes suspended all over the country, the government’s response was to pretend it was not happening. Then, finally, after some in the union movement joined the chorus of complaint, pointing out that the changes were a disaster—when the Assistant Treasurer, the Treasurer, the Prime Minister and the finance minister were the only four people living in this country who thought this was a good decision—they decided to start to consult. Their first instinct was to cover it up, to use class war rhetoric. Only after being dragged kicking and screaming did they finally decide to consult.

So on Sunday afternoon we had an announcement from the Assistant Treasurer that there would be, in his words, a consultation which put everything on the table. There was some language at the start of his announcement saying that concerns had been raised but, when you read the announcement, it says everything is on the table. Then, on Monday morning, we had the Treasurer conceding on the AM program that mistakes had been made.

Mistakes have been made by the Treasurer and the Assistant Treasurer. Share schemes across Australia are frozen. Those on the other side know this. Those on the backbench on the other side know this too. They know that this is wide ranging. They know that this affects every employee at every income level. They know that, if share schemes stay frozen, there will not be much to tax. And they know, because they are hearing it from their union members, that this is an absolute disaster. What we are now seeing, two weeks after the budget, is a U-turn taking place in slow motion. There is still some way to go, but this U-turn is taking place in slow motion.

The government have said it has tax avoidance concerns. Budget Paper No. 2, which outlines the measure in less than a page, at about five paragraphs, does not give any detail on those. As companies have said, if there is a problem with collection of tax, by all means deal with that. If the problem is that employees four and five years down the track are neglecting to pay tax, deal with that. Companies are also telling anyone who will listen that they happily provide all details of all employees to the tax office. Many companies have been doing that for some years. But, no, what we had was a decision by the government that there were some termites, and the solution was to bulldoze the entire house. That was the government’s solution. And they did it on budget night. They knew about it the day after the budget. The Financial Review put it on its front page two days after the budget and had it on its front page for six of the next seven days—but, still, absolutely no response.

As I said at the outset, this debacle is a window into the Labor government on so many levels. It exposes their lack of understanding and their economic incompetence. It exposes their lack of focus on the detail. It exposes their salivating attitude to doing anything they can to trample on aspiration in Australia without thinking about the consequences. And the very people they have hurt the most are the people least able to pay tax upfront. Hello! They are low-income earners. They are the least able to pay tax upfront. You do not have to listen to me, and I know you will not listen to the business community, but you can listen to some unionists. I know you have a separate phone in your office, but everyone is saying it—apart from you. It is the red phone; pick it up! Everyone is saying it: you have created a coalition of business and unions against your catastrophic announcement.

This is a window onto not only the absolute lack of focus on detail but also the preoccupation with stunts of this government. As the Prime Minister stood there in his fluorescent yellow vest on the Monday after the budget, decrying employee share schemes as tax rorts, it was pretty obvious, as we left Canberra on budget week, that the Prime Minister’s office packed up his papers ready for him to go on his budget tour and made sure they had the priorities for him: the florescent vest, the hard hat—don’t forget the hairdryer, but don’t worry about the budget papers! That is what is quite obvious. All right, the Prime Minister has discovered his hard hat. If he goes to Bunnings he will discover you can buy one with a torch on it, so you will be able to have night-time doorstops. This is the sort of focus you get from those opposite.

Two weeks later, the minister was finally dragged kicking and screaming. Perhaps he was arguing behind the scenes; I don’t know. It would be a good democratic duty if he shared it with the House. Perhaps he was arguing behind the scenes. Perhaps he had that fixed looked on his face saying, ‘Swannie, this is a disaster; what have you done?’ Perhaps he did. I don’t know. If he did he could share it with us and we would not tell a soul! But these last two weeks have shown the incompetence of those opposite. And there is a way to go yet. The U-turn has a way to go and the Assistant Treasurer is still slowly on the move.

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