Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

I am pleased to rise in the consideration in detail stage of this bill to seek some further clarification from the Assistant Treasurer as to precisely what the government is doing here. As all in this House would be aware, at this stage of the process the opportunity is presented for ministers at the table to explain to the chamber the details of the merits of the particular amendments that are being moved by the government.

It tends to raise eyebrows when the government is moving amendments to its own legislation at this late stage. It tends to suggest that it is a government that is making things up on the run. It tends to suggest that it is a government that is not certain that it is able to deliver what it is seeking to deliver, because of the need to engage in constant negotiation with the Independents.

Unfortunately, what goes on in this chamber has enormous implications for the economy of Australia, for the financial services sector of Australia and for international investors who are considering investing in our country. It is an uncontentious proposition—it is shared by all here in the chamber—that the rate of withholding tax is a question of the highest importance in determining the incentives for foreign investors to invest in Australia. That was the basis on which the government announced changes to its policy some years ago. That has been the basis on which questions have been raised about the policy change announced with not very much fanfare during the budget recently.

We now find ourselves, here in the House of Representatives—the people's house—weighing up, as we are charged to do, the merits of legislation put before the House by the government, particularly the merits of a specific amendment put before the House now by the government. We find ourselves charged with assessing the merits of a particular amendment, when it is very difficult to understand the full intent of what is proposed.

Let us remind ourselves that the government in its budget announced that there would be a change in the withholding tax for these kinds of vehicles—managed investment trusts—which are, as we all know, of the first importance as a vehicle for foreign investment into Australia. The Treasurer announced on budget night that this withholding tax would increase from 7½ per cent to 15 per cent. As we all know, that was consistent with a budgetary strategy of seeking to return the budget to surplus.

That is an aspiration with which we can all agree, even if, on this side of the House, we entertain very serious doubts as to the government's capacity to deliver on that stated aspiration. We now find that an element of the strategy laid out by the Treasurer only a few weeks ago which was going to be used by the government to achieve its stated objective of a surplus of approximately $1.5 billion is, by virtue of the amendment put before the House this afternoon by the Assistant Treasurer, going to be removed. That is to say, the measure which the Treasurer announced only a few weeks ago, under which the withholding tax rate will increase with a view to securing additional revenue for the Commonwealth, is now to be removed. Yet we have no clear explanation as to why that is happening. We have no clear explanation as to what the implications are for the budget and the achievement of that promised $1.5 billion surplus. We have no clear indication as to whether the government is now abandoning its policy of increasing the withholding tax rate and we have no clear demonstration of a government calmly and consistently implementing a strategy.

On the contrary, we have all the indicators of a government making it up in a panicked rush as it goes along, apparently impervious to the disastrous implications that that has for confidence in the Australian economy on the part of foreign investors. So I repeat the question to the Assistant Treasurer which has been put by colleagues on this side of the House: what on earth is going on here? Please give us an explanation.

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