Sharon Grierson (Newcastle, Australian Labor Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (2010 Measures No. 1) Bill 2010, which amends various taxation and superannuation laws to implement a range of improvements to Australian tax laws. Those improvements will give more clarity and more certainty around tax law, something the Rudd government have committed to. It is also an incredibly important bill for the thousands of small investors, mum and dad investors throughout Australia, who certainly saw some link between taxation law and their readiness to invest. This bill seeks to renew stability for managed investment trusts following the collapse of Great Southern and Timbercorp early last year, and therefore to pare down and modernise the tax system and to deliver on our government’s election promises. It attempts to rebalance the scales of business investment and manage risk.

This is a bill I have had some connection with as a voting member on the Joint Parliamentary Committee on Corporations and Financial Services. I was involved in the inquiry into agribusiness managed investment schemes which was the basis for some of these amendments. The corporations and financial services inquiry and this subsequent legislation have been a rapid and, hopefully, effective response to what was a very real problem. It is estimated that Great Southern and Timbercorp had 43 per cent of all managed investment scheme businesses in Australia within their portfolios and MISs accounted for 100 per cent of their business. The schemes collapsed in April and May last year taking with them over $3 billion from 60,000-plus investors. The investors were attracted by the offer of an immediate tax deduction on their investment combined with the possibility of a long-term return. However, a number of intervening factors that were out of their control, such as drought, the global financial crisis et cetera, meant that many high risk factors that investors had not anticipated resulted in a devastating financial blow to individuals who had no other means nor in some cases the business acumen to deal with them. This legislation amendment, taking into account the findings of the inquiry, aims to prevent such an event happening again.

The bill’s amendments are divided into six schedules. Schedule 1 of the bill delivers on our 2007 election commitment to introduce an optional superannuation clearing house service free for eligible small businesses. Last year the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, announced that the superannuation clearing house service would be implemented through Medicare Australia. It will become available in July 2010 and businesses will be able to register for the scheme from May 2010 onwards. The clearing house will cut the red tape for small businesses and it will remove the time and paperwork burdens arising from the need to pay contributions into numerous superannuation funds. I remember that in the last parliament the House of Representatives Standing Committee on Economics, Finance and Public Administration, chaired by Bruce Baird, looked at maximising participation in superannuation. This was one of the areas it did suggest and recommend, so it is great to see that it has been taken up.

Schedule 2 amends the existing tax regime to protect the deductions of around 19,000 investors in forestry managed investment schemes from unintended and adverse tax outcomes. It strikes a balance between protecting certain investors’ deductions and discouraging the kind of excessively risky behaviour that led to the collapse of Great Southern and Timbercorp in April and May last year. As I have said, that collapse cost over 60,000 investors in the order of $3 billion. It also ensures that taxpayers are not unfairly affected as a result of those events outside their control.

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