Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

This is a debate on two pieces of government legislation—the Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014 and the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014. I will deal with No. 5 first. There are some schedules here which the Labor Party support and some schedules which we will oppose in the other place. I will outline our approach on each of the schedules.

Firstly, this bill seeks to abolish the mature age tax offset, which the Labor Party will support. This was a process started by us in government. It is a sensible saving. The government have their own measures that they have put in place to replace this measure, and we will not stand in the way of the passage of this particular schedule. It represents a considerable saving, and the Labor Party are always prepared to support sensible savings put forward by the government. We see too few of those, but we will support this sensible saving.

We will also support the schedule which relates to the introduction of new deductible gift recipients. In the tradition of both Labor and Liberal governments, this is the normal process. These are worthy organisations. That schedule will attract our support.

We will not support the schedule which goes to the changes to research and development, and we will not support the schedule that goes to the seafarer tax offset. The amendments moved by the Labor Party in the other place will reflect that. I flag the Labor Party's position in the House and the approach we will take in the other place.

In relation to research and development, we see a pattern here from the government. It is a government which is prejudiced against science, research and development, and important measures to encourage innovation in the Australian economy. Almost everybody knows that innovation, science and technology are important key drivers for future economic growth. I say 'almost everybody' because it seems that everybody except the government knows that. We have a government that does not have a minister for science. It is a government which in its recent budget—the late and often lamented budget—cut research and development spending and cut science research spending quite considerably. We have seen the CSIRO cut by $115 million. We have seen the Defence Science and Technology Organisation cut. We have seen the Australian Nuclear Science and Technology Organisation, the Australian Institute of Marine Science and Geoscience Australia suffering cuts of $51.4 million. We have seen cooperative research centres, which have been so important over many years now for the Australian innovation task, have their funding slashed. We have seen important government programs when it comes to commercialisation and innovation abolished and replaced by a new program which has roughly half the amount of funding that was previously in place and has a vague and ill-defined mandate. I think it is just simply the government playing catch-up and trying to cover the fact that it is making cuts in this important area.

Why do I say this is so important? It is because these are the drivers of future economic growth. We condemn the government for their budget because it is unfair. We condemn the government for their budget because it represents prejudice against working Australians. We condemn the government for their budget because it represents fundamental breaches of promise and a web of deceit that the Liberal and National parties engaged in at the last federal election. But we also condemn this budget because it represents an attack on future sources of economic growth. It represents backward-looking policy. It represents an approach to policy which does not recognise the importance of innovation in Australia.

The fact is that high-growth technology companies currently generate less than 0.2 per cent of our GDP. But PricewaterhouseCoopers have estimated that, with the right policy environment, this sector could contribute four per cent of our GDP, generating more than half a million jobs by as early as 2033. So we need a government which embraces innovation, commercialisation, research and development, start-ups and the spirit of entrepreneurialism. The government are happy to talk about those things, but their policies, as in so many areas, go in exactly the opposite direction. We have a Prime Minister and a Treasurer who think if they say something it makes it so. But it is actually their policies that make it so—and their policies do not reflect their rhetoric.

A measure before the House here is a $620 million cut to the research and development tax concession. I will say a number of things about this. Firstly, the support given to research and development through the incentive in the tax system has been very important in Australia's research and development efforts. What the government is doing here is relinking the concession to the corporate tax rate. The previous Labor government explicitly delinked the corporate tax rate and the research and development incentive. We did that to provide certainty so that Australian companies investing in risky research and development ventures knew the sort of support they would receive from the government when they were undertaking the difficult decision about how much to invest. Some of these ventures will not pay off for the company and most of them, if they do pay off for the company, will have spillover effects for the entire economy. So that was the approach taken by the previous government.

This government has taken the approach of relinking the corporate tax rate with research and development incentives. I accept that there is a legitimate debate to be had about that and that there could be good arguments put on both sides. But the approach taken by the Labor Party in office that we continue to defend, protect and promote is that it is important that firms have certainty when it comes to investing in research and development.

But the government are so incompetent that, even if you accept their arguments, they have actually been quite tricky with the Australian business community. Firstly, this bill seeks to reduce the R&D tax incentive because the government wants to relink it with the corporate tax. The government is proposing to cut the corporate tax rate to 28.5 per cent from 1 July next year. But this change applies not from 1 July next year; it applies before then. If there is to be any justification for the government to implement this measure it should apply from the same date as the corporate tax rate which the government intends to introduce comes into effect.

Secondly, the government has forgotten about its little policy—I am sure many on the government benches would like to forget about the policy—of paid parental leave and the levy that will be applied to pay for it. The Prime Minister does not want to forget it but I think almost everybody else on that side of the parliament would like to forget it, because it is a terrible policy. It is an unfair policy. It is an extravagant entitlement scheme. The Treasurer, with his normal bluff and bluster, his chest beating and his lecturing of the Australian people about the age of entitlement, is introducing a massive entitlement scheme which will send cheques of up to $50,000 to Australians, regardless of their income, upon the birth of a baby. This will have no impact on productivity or participation in the workforce. That is what the Productivity Commission say. 'What would the Productivity Commission know about productivity?' says the government.

Mr Ewen Jones interjecting—

They would know more than you. They say that this will have no impact on productivity or participation. Why would it? It is not linked to participation in the workforce. You just get a cheque. Of course we oppose the government's Paid Parental Leave scheme. It is being paid for by a levy on Australia's large businesses, large businesses which undertake research and development. The government is proposing to reduce the R&D tax incentive because, it says, it is reducing the corporate tax rate, but at the same time it is introducing a levy. This is one of those old pea-and-thimble tricks that the government is engaging in. It is saying, 'Isn't it wonderful! We're cutting the corporate tax rate by 1½ per cent. Oh, but we're also introducing a new levy of 1½ per cent.' So the tax burden on those large businesses will be reduced by not one cent. The government is proposing to reduce the R&D tax incentive to reflect the new corporate tax rate, ignoring the fact that it is putting a levy on Australia's largest businesses to pay for its ridiculous, extravagant and unfair Paid Parental Leave scheme at the same time that it is attacking ordinary working Australians with its cuts elsewhere. We will oppose this schedule in the other place.

The other measure that we will oppose is the government's proposed abolition of the seafarer tax offset. Maybe the government does not understand the impact of its policy here or maybe it has thought it through and it does understand the negative impact of its policy. Either way it has got it wrong. The shipping trade is important for Australia. One-tenth of the world's sea trade goes to or from Australia, and Australia has the fourth-largest shipping task in the world. It stands to reason, as we are a maritime trading nation. It is in our national and security interests to revitalise Australian shipping.

The previous government did considerable work in this regard. The former Deputy Prime Minister and Minister for Infrastructure and Transport, the member for Grayndler, has very passionate views about this and was the key reformer in this place. Part of those reforms was the introduction of this tax offset in 2012 following lengthy industry consultation. The object of the offset is to stimulate opportunities for Australian seafarers to be employed or engaged on overseas voyages and to acquire maritime skills.

There is a pretty basic principle here. Under our tax system, if you are an Australian citizen and you are working elsewhere in the world you are covered by the tax system of that country. We are not like America, under whose system an American working anywhere in the world is regarded as being subject to the revenue task of the United States government; we have a different approach. But we say that if you are working on a ship which is not in Australian waters that should apply as well. This was an offset introduced by the previous government, designed by the Treasury—not by others—to achieve that policy aim. I dare say that honourable members opposite will somehow bring into play the claim that this was some sort of sop to the union movement or something to do with the Maritime Union of Australia. That is what the government will allege, I suspect.

Mr Ewen Jones interjecting—

What it will not tell you and what the member for Herbert in his contribution, if he makes one, will not tell you is the view of the Australian Shipowners Association, that well-known socialist organisation. The last time I checked they were not affiliated to the Australian Labor Party. I will have to check but I am pretty sure that it is the case that they are not an affiliated organisation to the Australian Labor Party. They said:

The Seafarers Tax Offset was a key element of the 2012 reforms which helped to reduce the operating costs of Australian vessels, increased the competitiveness of Australian shipping and provided significant opportunity for employment of Australians in international trades …    the impact [of abolition] is severe with regard to future opportunity.

I do not think we are going to hear that quoted by members opposite. The Australian Shipowners Association have called you out. Here is a measure which will reduce the competitiveness of Australian industry—called out by the Australian Shipowners Association, who know that you have got it wrong. You have got it wrong. This measure has got it wrong. The Labor Party will defend the seafarer tax offset in the other house, because you have got it plain wrong. This is not for a large saving; we are not talking about billions of dollars. It is quite a modest measure but it is an important one. I ask the government to reflect on this measure, maybe to consider the views of the Australian Shipowners Association, and to acknowledge that it has got it wrong. If it acknowledges it has got it wrong then it will have our bipartisan support on its back down.

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