Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Tax Laws Amendment (2011 Measures No. 4) Bill 2011 and commend the previous speaker, the member for Throsby, for his contribution and for some of the things he pointed out. I would also like to commend the Deputy Prime Minister and Treasurer for his great budget—a great Labor budget; a good, steady pair of hands. It is great to see that he is able to steer us back to a budget surplus in only about 13 months, I think it is. It is great to see. This bill implements a number of budget measures to reform the tax system. It supports small businesses and generates significant savings for the budget bottom line.

The Labor government has provided a steady hand on the nation's finances over four budget cycles. And, despite the toughest global economic conditions we have experienced for 75 years, we have ensured that Australia's fiscal position remains strong. The reality is that we are the envy of the OECD. The federal Labor government steered the Australian economy through the worst global recession in nearly 100 years. In preparing for this speech, I went back to look through a couple of newspaper articles and presentations I had made. It is so easy to forget just how bad things were—the worst in 75 years. If we look back at the early eighties and early nineties, we see that those recessions still had positive growth. I know they were tough times, but we still had positive growth, whereas in 2009 that was not the case. Obviously governments have no miracle cure for all the nation's financial woes, especially those that begin overseas, but we were able to pull the levers that we control to keep our economy strong. The bank deposit guarantee and the stimulus measures introduced by this government kept us out of recession and, more importantly, kept hundreds and thousands of Australians in jobs, as good Labor governments do. Thankfully, we avoided that dole queue schadenfreude that we so often see from those opposite. These measures helped keep 700,000 people in jobs.

The BER investments saw new and improved facilities at our schools. I know the member for Robertson, who is in the chamber, is a big advocate of education. Those investments will ensure better learning opportunities for our kids long into the future. As any education provider would know, this is a once-in-a-lifetime opportunity to provide for our children and also to set us up for an economic future—the high road of economic future rather than the low road of low wages. I see Australia as a service economy providing great service to South-East Asia and the rest of the world.

The government's investments in critical infrastructure will boost productivity not just at ports and railways; they will ensure Australians spend less time in traffic and more time with their families. I will not go into the NBN; I will leave that for later. Obviously the NBN is also a piece of critical infrastructure. I would particularly like to mention the $300 million in the budget for improvements to the Kessels Road and Mains Road intersection in my electorate. That intersection had been a weeping sore for years and years under the Howard government. I was elected on a plan to solve that problem and the early works are already underway. In fact, I saw some of the traffic lights were already complete when I went through there last week. The tender process for the main parcel of works is now in its final stages. I join thousands of motorists on the southside who will breathe a collective sigh of relief when this congestion-busting project gets underway in earnest. It will cut greenhouse gases from cars that sit idling at the intersection and get commuters home to their families earlier as well as to school and work earlier.

The budget also delivered a historic investment in better mental health services. Obviously this was well overdue—and I acknowledge that—and it was very well received in my electorate. It is remarkable that these funding initiatives were delivered on the back of a horrific summer of natural disasters. In my electorate, more than 5,200 properties had water over their floorboards, so I know how horrible the situation was and how it is continuing for many people.

Thanks to the Treasurer, Wayne Swan, we have a very responsible budget that is still on track to return to surplus in 2012-13. Meanwhile, wasn't the Leader of the Opposition's budget response an experience? My diary said it was going to be a budget reply speech, but I note he steadfastly refused to outline an alternative budget. I am not sure whether the Great Sandy Desert is in the member for Lingiari's electorate—who I note is in the chamber—but in that desert you will find the golden fur marsupial mole. That animal has more vision than the Leader of the Opposition when it comes to outlining an alternative budget! After their $11 billion savings black hole debacle during the election, I can understand why he would want to avoid economics. But the reality is that a budget reply speech, as its title suggests—and there is no mystery—involves a reply to the budget. It is not a diatribe about the fact that he did not quite manage to win the last election. He has to move on from that bitterness and get with the program. The reality is that the Gillard government are here. We have a plan and we are here to stay for as many as 900 days—as I suggested earlier to the member for Indi. She needs to get over calling for an election, because we are here to stay.

I understand from the Deputy Speaker why he would not want to go there again. The Leader of the Opposition does not get the economy and maybe that is why he made that call. But we also had the member for North Sydney responding to the budget at the Press Club and that amazing spectacle where he wrote a letter to the Financial Review. It is like being a teacher—you hear lots of excuses from people as to why they have not done their homework. But this time it was actually: 'The dogs did my homework. It was not me; it was actually someone else that did it.' Unbelievable. Instead of offering a credible economic alternative, those opposite have retreated into an economic vortex. I guess that is why the member for Wentworth is so keen to get his old job back and has been seen heading in that direction.

In stark contrast, the Gillard government have a proud record of delivering practical measures to support small business. This legislation will provide around $700 million in cash flow benefits to small business. This bill reduces the PAYG instalments for the next financial year for taxpayers who pay quarterly instalments on the basis of the GDP-adjusted notional tax method by setting the GDP adjustment at four per cent. During the global financial crisis, the government reduced the GDP adjustment factor to two per cent. This rate has applied for the past two years. Without this bill, the GDP adjustment factor would return to eight per cent. Obviously that would be too much of a shock for the many Australians who are still doing it tough—people are still not opening their wallets, though they are consolidating their debt.

We recognise that many parts of the economy are still in recovery and small business deserve a smooth transition back to an eight per cent GDP adjustment factor. It will ensure that small business have extra cash throughout the year when they need it most. This bill also allows taxpayers who expect their income to grow by more than four per cent to vary their quarterly tax instalments. This will enable small business to avoid a significant tax liability for the 2011-12 financial year when the final figures come in.

This bill also introduces measures to stop taxpayers using family trusts to avoid paying their fair share of tax. In recent years, increasingly, discretionary trusts have been directing income from adults to minors to minimise tax. I understand that this has been perfectly legal—in fact, I know people who have them. But all fair-minded Australians need to ascertain the reasoning behind this past practice and why it should not continue. When we do that, we will see that it is a historical anomaly.

The government has increased the low-income tax offset from $750 to $1,500, delivering tax relief to taxpayers earning up to $67,500. However, while this was intended to benefit low-income earners, it has been exploited by trusts. The tax office is aware that at least 200,000 distributions from trusts have increased in line with the increase in the low-income tax offset. This bill amends the eligibility for the low-income tax offset to ensure it cannot be used to minimise tax. It ensures children under the age of 18 with unearned income, such as dividends, interest, rent and royalties, will not be eligible for the low-income tax offset. These rules concerning trusts hark back to a time when only one parent worked and mothers—usually—were in full-time care of their children. Australia has modernised significantly since those days and this amendment reflects that change. Importantly, this amendment does not apply to children who work. They will still get access to the full low-income tax offset for work income. This measure will discourage families from splitting income with their children to avoid paying tax, thus making the whole system fairer. Also, it will have no impact on small business trusts operating in Australia. I understand there are more than 650,000 trusts of apparently 12 different types and all serve a purpose. It is expected that this measure will save the government at least $740 million over three years.

This bill also helps streamline the process for claiming tax deductions for the cost of total and permanent disability insurance provided through superannuation. The amendments allow the percentage of certain total and permanent disability insurance premiums that is deductible to superannuation funds to be specified in regulation. This will simplify the process and reduce the costs for super funds—good things to do. Super funds are one of the great legacies of the Hawke-Keating government.

Finally this bill amends the definition of reportable superannuation contributions to clarify that contributions that are mandated by an industrial agreement are excluded. Because these contributions are beyond the control of employees, they should not be considered income. This bill makes that clear.

This bill introduces significant savings which are good for the budget bottom line and are important reforms that make our tax system fairer. I thank the Deputy Prime Minister for introducing this bill and in doing so I commend it to the House.

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