Stephen Jones (Throsby, Australian Labor Party) Share this | Hansard source

In December 2009 the then head of Treasury provided to the Treasurer a copy of what is colloquially known as the Henry tax review and formally known as Australia's Future Tax System report, a comprehensive review of our tax system and its sustainability into the future. At page 11 of that report the review committee made this observation:

Australia has too many taxes and too many complicated ways of delivering multiple policy objectives through the tax system. The capacity of the legislative and operating platforms of these systems and their human users to deal with the resulting complexity has been overreached. To a large extent, this is a reflection of a compartmentalised and incremental approach to tax policy that has been weighted towards achieving finely calibrated equity and efficiency outcomes at the expense of simplicity.

It is observations such as this which have driven the Gillard Labor government to ensure tax reform is at the top of its economic reform agenda. It is what underscored the desire to hold a summit in Canberra last week, in which we brought some of the leading thinkers in the area of economic and tax reform to Canberra to discuss what we needed to do over the next decade to reform the tax system to ensure it was fit for use for the remainder of the century.

I observed in a debate yesterday that taxation has a number of objectives, including raising revenue and regulating behaviour in the public interest. We have had both of these things in mind as we have set about the task of reforming the Australian tax system to ensure it is fairer and more equitable and that we will have revenue streams to provide the essential government services that Australians expect now and into the future. We understand—and I think there is bipartisan understanding of this fact—that by the time my children, who are now very young, enter the workforce the ratio of people of working age in the workforce to those who are outside the workforce and not of working age will move from 1:5 to 1:2.7. This will place an increasing burden on those who are in the workforce and those who are paying tax to deliver the services that Australians expect. So it is incumbent on all sides of politics to ensure that we are spreading the taxation base, that it is administered in the most effective way, that it drives and incentivises the right sort of behaviour and that it creates the revenue needed to deliver much-needed services.

The amendments put forward by this bill are in part driven by those objectives. Schedule 1 to the bill is important. This morning many of us from all parties attended in this place a parliamentary breakfast for the National Disability Insurance Scheme. At the breakfast we heard from carers and people living with disabilities about the importance of government doing everything in its power to ensure that we are providing financial sustenance and other service arrangements to meet the growing needs of people in that position. Schedule 1 is not the whole game but it does some work in this area. It extends the capital gains tax main resident exemptions to special disability trusts. Removing these barriers makes it more attractive for families to provide for the long-term care of a family member through the trust system to enable them to make financial arrangements for loved ones, for a family member who has a severe disability. I commend this particular schedule to the House. Schedule 2 of the bill reduces the lowest marginal tax rate that applies to non-resident workers employed under the government's Pacific Seasonal Worker Pilot Scheme. It reduces this from 29 per cent to 15 per cent. Not only is this of benefit to those working under the government's Pacific Seasonal Worker Pilot Scheme but it also provides an indirect benefit to the agricultural sector, that has been crying out for many years for arrangements and assistance from the government to provide much-needed workers during the picking seasons—the peak work seasons. It provides an indirect benefit to employers at the same time as providing a direct tax benefit for those in our near region who wish to come to Australia and work under the scheme, so everyone benefits from this.

Schedule 3 amends the pay-as-you-go instalment provisions to ensure that the concept of instalment income interacts appropriately with the concepts of gain and loss in the taxation and financial arrangements provisions. In essence, the amendments ensure that the interaction does not impose a significant administrative or compliance cost whilst maintaining the objective of ensuring that the pay-as-you-go instalment provisions are made.

Schedule 5 amends the tax law and the Banking Act 1959 to make four changes to the farm management deposits, or FMD, scheme. Essentially these amendments are to the benefit of our farming community to ensure that there is more flexibility at their disposal in the case of natural disasters to access their farm management deposits within 12 months of making a deposit while still retaining concessional tax treatment for those arrangements. Again, this is an important arrangement for the benefit of our farming community.

Schedule 6 is concerned with the superannuation and taxation arrangements for superannuation schemes that are in the process of merging. This fulfils a number of objectives. It is a policy objective of this government to ensure that our superannuation schemes are of a sufficient scale and size to enable them to gain the benefits of scale and have access to a capital base that will enable them to make the right sorts of investments at the right cost and be involved in the right deals to provide a profit to the fund and a benefit to the members. The specific provision here will provide additional time for those funds when they do merge to take the benefits of loss relief. It extends that by three months. The fund is the immediate beneficiary, but obviously the account holders, the superannuation beneficiaries, are the indirect and ultimate beneficiaries of this schedule.

Schedule 7 is essentially a remedial provision that addresses the consequences of a recent court of appeal decision. In essence, it ensures that if directors, when they receive notices advising directors, do not cause their company to take certain actions with respect to debt then they will become personally liable. As I said, this is a remedial provision which clarifies the law as a consequence of a recent court of appeal decision.

Schedule 8 is the fulfilment of the Gillard government's 2010 budget commitment to provide a regulatory framework to improve the integrity of public ancillary funds similar to that which has applied to private ancillary funds since October 2009. This framework will provide the trustees of such funds with greater certainty as to their philanthropic obligations. Schedule 9 is aimed at ensuring that we are providing greater incentives to our domestic film industry. It goes to changes to the film tax offsets, and these changes affect producer offsets and the location and post-digital and visual effects offsets. They will apply from 1 July 2011 and are estimated to increase expenditure on the film tax offsets by around $8 million over the forward estimates—that is a tax expenditure, of course. These amendments to the film tax offsets are aimed at reforming and strengthening the Australian film production industry, something that I know is very dear to the hearts of all members in this place.

The schedules in this bill are an important part of the government's taxation reform agenda. The reform agenda does not end with this bill; it is far-reaching to ensure that we have a sustainable and equitable taxation system which creates the right sorts of incentives for economic activity, is administratively efficient and generates the revenue necessary now and into the future to ensure that the Australian government, whoever occupies the Treasury bench, has the revenue necessary to deliver the services that all Australians expect. I commend this bill to the House.

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