Robert Oakeshott (Lyne, Independent) Share this | Hansard source

I rise tonight to talk about tax reform and progress on various aspects of tax reform in Australia. Several years ago Australia's future tax system was put under review, led by former head of Treasury and Taree-born-and-bred man, Ken Henry, someone I hope remains highly regarded across this chamber for his work with governments of all persuasions. There were 125 taxes identified in that report, four of which do 90 per cent of the work in the Australian tax system. There were therefore question marks raised about the role of the other 121 and whether there was a better way to model our tax system for the future. Unfortunately, certain aspects of that review were not implemented. Agreement could not be reached in the parliament on certain taxes. Agreement could not be reached between the Commonwealth and the states on a path through to deliver on a range of recommendations from that review.

When the 43rd Parliament was formed, as part of a supply and confidence agreement, tax reform was put on the agenda, as a reflection of frustration that the very good Henry work had not been picked up in the spirit in which it was intended—which was to look at reform in globo and to set a path to deliver a range of reform to Australia's tax system. As part of the agreement, a tax forum was agreed to between government and crossbenchers such as me. In October last year, that tax forum occurred and it had many successful elements. The one example I will use tonight is the formation of the Business Tax Working Group, under Chris Jordan. As everyone who follows tax would have seen in this year's budget, a new small business option in taxation, known as loss carry-back, was introduced to the suite of options for small business, as a direct result of the good work from the Business Tax Working Group, as a direct result of the tax forum that occurred in October last year.

Having said that, when the minerals resource rent tax negotiations were going on towards the end of last year, again on the back of the Henry recommendations, at my end, for support for that legislation, three issues were negotiated. One was action by government with regard to coal seam gas and large-scale mining, and I am pleased to see that legislation has now made its way through the House of Representatives and hopefully will make a significant difference in land use planning, particularly in productive areas. Another was the formation of a food, soil and water cabinet committee. The work of that committee has been ongoing, and more than likely the committee will be reporting to the Prime Minister over the coming month on a works program looking at issues in regard to, particularly, soil security, which was an issue at the Rio+20 international conference, which I am pleased that the Prime Minister went to. There has been a rapid loss of topsoil globally and nationally, and how we get the issue of soil security, and the production of food and the protection of biodiversity in light of the rapid loss of topsoil, onto the agenda of all governments is an important part of that work, as well as the linking horizontally of issues such as the whole new climate change package to the rebirth of the agriculture sector, to food, soil and water. So that work is progressing.

What seems stuck in the mud is the third commitment, and that is this issue of state tax reform and this deafness in the relationship between the Commonwealth and the state on the minerals resource rent tax and its relationship to royalties. If we go back to Ken Henry's report, it clearly stated that it would only work if there was a negotiated agreement between the Commonwealth and the states. His words were explicit. The review was explicit in stating that the introduction of a national resource rent tax is sensible but it is not to be done without negotiated agreement with the states. There has to be this agreement reached as to the relationship between a new and valuable and welcome resource rent tax—an agreement reached with the states on how to retire royalties and have the states working in with this new tax that has been introduced and, preferably, with the reduction or removal of those state based royalties. Unfortunately, we remain stuck in the mud on this issue. Even after an agreement to have this issue referred to the GST distribution panel, we are looking like not progressing, on this issue of conflict rather than agreement, on getting a better tax system for all.

The arguments for a national resource rent tax are there in Henry, so this is not a whinge about the rights and wrongs of the introduction of a national MRRT. What this is a whinge about is the inability of the Commonwealth and the states to negotiate agreement. I am concerned that it is the first of potentially many state taxes that are not put under the spotlight because of the inability of the Commonwealth and the states to communicate in a sensible way and in the national interest.

We have spent the day on another topic talking about people being in their trenches and not being willing to negotiate in the national interest. That is across party lines in this place. I raise this issue as another example, but one that is of the dysfunction between the Commonwealth and the states to reach an agreement in the national interest. We must find a way to do it.

The GST distribution committee accepted the states' position, in its recent documents, that there is not an argument to somehow dock GST payments to the states or penalise the states for doing what they have done in regard to royalties. The second interim report recently released emphasises that the best way forward is for the Commonwealth and the states to sit down and talk about it and work it out in a negotiated way. So I urge for that to occur.

I also highlight, from this GST distribution review, that anyone in this place, including the Treasurer, who thinks you can decouple GST from broader tax reform is kidding themselves, and that is what this distribution review emphasises again. We need to have governments, at all levels, recognise that, because the GST mix is affected by any state tax reform—any tax reform at all. They are combined. They are linked. We have got to get over the campaigns of the past and start to deal with them as a group of taxes that will contribute overall to tax reform. And they do have impacts, good and bad, across states, if tax reform at a state level is genuinely on the cards.

So whether it is gaming reform and its impacts for states, the MRRT and its impacts on the states or the GST and its impact on the states, I urge this conversation to take place between the Commonwealth and the states if we are serious about tax reform in Australia today for a better standard of living for all.

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