Dennis Jensen (Tangney, Liberal Party) Share this | Hansard source

Today I am pleased to rise in support of the Tax and Superannuation Laws Amendment (2014 Measures No. 2) Bill 2014. This bill has been brought on to address three matters. One is to increase the Medicare levy low-income thresholds for families in line with increases in CPI. These changes ensure that Australians who did not pay the Medicare levy in 2012-13 will continue to be exempt if their incomes have risen in line with or by less than CPI. The second is to introduce measures to protect taxpayers who have self-assessed on the basis of particular announced taxation measures that the government has decided not to proceed with. The third is to improve the fairness of the taxation system by amending tax law to deny an entity the benefits of any additional franking credits that an entity receives as a result of a known process known as distribution washing.

On 13 May the Treasurer passed down the coalition's first budget. It was a tough budget but it was fair budget. At the heart of the budget was the notion to restore integrity to Australia's finances. We delivered a budget of both saving and building. It is a budget that ensures that we will get back to living within our means, just like households must do. In delivering the budget the coalition ensures that the effort to restore the mess left by six years of Labor chaos and calamity is shared amongst all Australians, while at the same time ensuring that it is done in a fair and equitable manner.

The changes under schedule 1 build on this notion by ensuring those Australians who did not pay the Medicare levy in 2012-13 are not unfairly affected by having the Medicare levy imposed on them if their income has risen in line with or by less than CPI. This measure leaves more money in the pockets of affected families, money that will make the day-to-day costs of living easier. It is an important measure because last year I and the Liberal Party campaigned on a platform of easing cost-of-living pressures for families. This is one such measure that will support that promise. The coalition is the best friend that Medicare has ever had. The Minister for Health has already spoken to the challenges Australia's health system faces and I commend Minister Dutton's recent speech to CEDA to anyone who is interested in the reasons for reform in this area. In short, the coalition is making the tough decisions to ensure the health of our system is sustainable into the future.

It is a disappointment that those opposite and their brethren in the other place would block the coalition's plan to fix Labor's mess. Their publicly stated aversion to passing around $18 billion worth of announced reforms to health, education and welfare is without foundation. Nor do those opposite respect our mandate to repeal the carbon tax and the mining tax, which would further ease pressures on the household budget. As has been restated many times in this place, scrapping the carbon tax will save households up to $550 annually. Schedule 2 of the bill, importantly, puts in place measures that bring to light the inefficiency of the dark Labor Rudd-Gillard-Rudd years.

Soon after the government was elected we were advised that 96 tax and superannuation announcements, with one dating back as far as March 2001, had not been legislated. In November the Treasurer and Assistant Treasurer announced that the coalition would finally deal with the backlog of announced but unlegislated tax and superannuation measures. This backlog created a significant operational uncertainty for businesses and consumers. Labor never did or never will appreciate the real-world consequences of stalled decisions on business. They never understood the impact of the delays and indecision and they still operate in a policy myopia bereft of any understanding of the importance on acting upon announcements.

Schedule 2 exists because of Labor's failure to deal with 96 tax and superannuation announcements before the change of government. These were measures that were announced and shelved to gather dust, because they were too busy concentrating on infighting and not on the important job of running the country—infighting and dysfunction that led to the fastest spending growth and the third largest increase in net debt in the OECD. It is a burden that those on the other side deny and are happy to wash their hands of, instead choosing to foist the responsibility for the decisions they made upon the next generation. This legacy is costing Australia $1 billion per month in interest payments or $500 annually for every man, woman and child in Australia. This is money that could be directed at hospitals, improved roads or schools. What is sad about the need to repay this money is that it is not being captured within the Australian financial sector. This is good money that is being sent overseas.

What were some of those 96 measures that were ignored or too uncomfortable for Labor to deal with? There was the famed self-education expenses cap, a proposal that would put a cap of $2,000 on the amount people could deduct for self-education expenses. At the time, the world's best Treasurer said that this was to target people who made large claims for first-class airfares, five-star accommodation and expensive courses.

Unfortunately for the member for Lilley, the reality could not be further from the truth. It does not take much to scratch the surface and discover that 80 per cent of the people who claimed this benefit are earning less than $80,000 annually. I was pleased that the coalition, sensibly, did not proceed with this measure. People on this side of the chamber will recall Labor's grand plan to close down the car-leasing industry with their proposed changes to the fringe benefits tax laws. These changes would make it harder for people to have a company or salary-sacrificed vehicle.

This $1.8 billion hit would have, according to the Australian Salary Packaging Industry Association, affected roughly 500,000 employees. Approximately 70 per cent of these people are on a salary that is less than $100,000 per annum—everyday Australians whose employers wanted to provide an additional benefit to their salary package and be more competitive in the marketplace.

Because the coalition understands business and does the hard yards to understand the real-world impact on people's hip pockets, we scrapped this misguided tax. It was a commitment we took to the election and one that we honoured.

As promised by the Treasurer, today we are honouring our commitment to the Australian people. Today we are ensuring that those people who self-assessed their taxation in good faith that Labor would stick to their word and implement the measures they announced while in government will not be penalised. The changes in this bill are retrospective acknowledgement that people made decisions on the little trust that they had left in Labor, believing they could deliver on their promise, only to be bitterly disappointed.

I am proud of our government's ability to hit the ground running and make decisive decisions that were holding business to ransom, decisions that deal with the ineffectiveness of those members opposite.

At heart, I believe in ensuring that we have a fair tax system and our amendments to schedule 3 of this bill are another step towards ensuring equity is maintained.

Those in a position to take advantage of the share market should adhere to the spirit of the rules governing the purchase and selling of stocks. Currently, sophisticated investors can undertake a practice known as 'distribution washing'. This occurs when an entity sells an interest shortly after becoming entitled to receive a fully-franked distribution in respect of that interest and then, shortly after, purchases a new and substantially identical interest that also provides a second entitlement to another fully-franked distribution.

The imputation system contains integrity rules to ensure that franking credits benefit only the true economic owners of shares and to ensure that franking credits are only available to shareholders in proportion to their shareholdings.

As was highlighted by the Parliamentary Secretary to the Treasurer, distribution washing contravenes both these principles. By closing this loophole we are ensuring that the tax system remains fairer for all. We are ensuring that those who have the capacity to take advantage of the share market are doing so in a way that does not give them an unfair advantage. This measure will raise $60 million, money that can be reinvested in health, education and building the roads of the 21st century. Already, since the announcement of the policy, there has been a significant decrease in activity that could be perceived as distribution washing.

While this affects a small portion of the market, it is important to note that trading activity has continued to grow. The coalition went to the election promising the Australian people that we would fix the budget. We promised to create jobs and we promised to break the cycle of debt and deficit that had been placed upon the Australian people. We made these promises because getting the economic fundamentals right is in the Liberal Party's DNA. Today the ABS announced that Australia's gross domestic product grew 1.1 per cent in the first three months of the year to bring Australia's annual growth rate to 3.5 per cent over the 12 months to March. This means on an annualised basis Australia's economy is now growing more quickly than the US, UK or New Zealand. In the words of the Treasurer, we can be cautiously optimistic that our plan is working.

Dr Carl Sagan once stated, 'You have to know the past to understand the present.' When the coalition left office in 2007 Australia had $20 billion in surplus and $50 billion in the bank. Australia is in the position that we are today because of the decisions Labor made over the last six years: decisions like the pink batts scheme, concocted and costed in two days with little or no consultation. Those two fateful days left a dark legacy and the stain upon the nation with the death of four good citizens and an economic cost of more than $2.8 billion. Decisions like the $16 billion BER for the construction of Gillard memorial halls that were overpriced and in some cases not even fit for purpose. Decisions like the gold-plated fibre-to-the-home NBN, which was conceived between Prime Minister Rudd and communications minister Stephen Conroy in a plane with an initial public investment of $4.7 billion. But, as was shown upon the review last year, it ballooned out to more than $73 billion and would have missed its completion date by three years. Decisions like the economic stimulus package which sent $900 cheques to around 27,000 Australians living overseas and 21,000 dead people.

The coalition is committed to ensuring sensible measures are put in place to address those failings, wrongs that left a Labor legacy of 200,000 more unemployed people, gross debt that without action was projected to rise to $667 billion, $123 billion in cumulative deficits, more than 50,000 illegal arrivals by boat, the world's biggest carbon tax and $191 billion in unfunded spending measures. It is now time for Australia to start repaying the credit card. Since coming to government we have taken practical steps to give Australia the bright future it deserves. The Tax and Superannuation Laws Amendment (2014 Measures No. 2) Bill 2014 is another step on the road to recovery. I commend the bill to the House.

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