Alex Hawke (Mitchell, Liberal Party) Share this | Hansard source

I rise to speak on the Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015. Listening to that fascinating dissertation from the member for Perth on how the Russians beat the US and the US changed themselves to become more like the Russians, you would think that no-one in human history would ever have been able to function without a government handout, but the reality of the west and of free societies is that people put together their own capital and their own enterprise without the help of the government and do it for their own innovation, profit and development of their businesses and their companies.

It is strange that the member for Perth and the Labor Party continue to talk about strategic government intervention. When you look at the record of the last government, I wonder if they would say the government's intervention into the insulation industry was a strategic government intervention. They engaged with industry as the member for Perth was talking about. They engaged heavily with the insulation industry, and the government learnt they really had no idea how to do insulation. The industry knew how to do it better than you did. That strategic intervention from the government was disastrous. It shut down the whole industry and destroyed the competitive nature of it. That strategic intervention into the insulation industry was a total disaster.

The strategic government intervention into the live export market was a complete and utter disaster. That strategic intervention did not go very well either. In fact, you might need to look at that strategy again, Member for Perth.

The strategic intervention into the green cars program—cars which were already high on the demand list of the consumer, being the new variant models of cars that were energy and fuel efficient and were already being bought by the consumer—had the government intervene to in some cases pay money to car manufacturers to provide cars at three times what the taxpayer would pay for these cars. They would pay with the green car subsidy and in the fleet acquisition of the government when actually the demand in the market was very high and the companies had already developed the innovation. Another strategic intervention into a marketplace.

This bill is so important because it also acknowledges yet another failed strategic intervention into the marketplace, as the member for Perth will tell us, and that is into employee share schemes. She mentioned the United States and how it is a great story. The United States, the freest society on the planet, constructed on the freedom and rights of the individual, as a model of success of government and government intervention in the marketplace. It is a really interesting thesis; she should put together something for the newspaper.

But actually the reason we are uncompetitive in relation to the United States is the bills and legislative measures the Labor government in the last six years brought into place, including in 2009. The Minister for Small Business made an excellent point on this when he said just one minor example—I can give dozens more if I need to—about the competitive nature of Australia and America. He mentioned that stakeholders revealed that companies offering an employee share scheme in Australia are required to have a company valuation completed. The cost of one in Australia is $50,000. The cost in the United States is $2,000 to $5,000—10 times more expensive in Australia for a start-up. That is a product of Labor's thinking, Labor's legislative red tape and other measures they have brought in over many years. There are so many more examples where the United States recognises small start-ups and venture capitalists.

The member for Perth was quite derisive about small business, quite derisive about baristas and coffee shops, but these are the backbone family businesses of the economy, and we should not be derisive about anybody's small business, whether it is a cleaning business, whether it is a gardening business, whether it is a coffee business, whether it is making toast and sandwiches. Anybody's small business, anybody's enterprise, I do not care. It does not have to be high-tech. We do have a high-tech sector and we do have an important future in technology, but the ordinary service provision of our economy every day is not something to be derided or put down even casually by members in this place.

When we consider bills like this, there is a reason why start-ups cannot get going in Australia today: it is because of laws like this that we are amending here in this bill. That is because the Labor Party felt it was a good idea when you offered options to employees up front to pay tax before you could realise a benefit from any option you had been given. In other words, you paid the tax up front. And they wonder why this was never going to succeed. At the time, of course, the opposition spoke about this. The opposition pointed out this was never going to work.

The Labor Party has been lecturing us in the last 24 hours about how they have a plan. They have a plan for a vision, they have a vision for a plan, they have a plan to have a plan to have a vision and they have a vision to have a plan to have a plan. It is so wonderful that they have this great plan and vision for the technology sector in Australia. What would the technology sector do without the plan and the vision of the Labor Party? The answer is that, if the Labor Party would get out of the way on stupid regulations such as the one they put in here saying you have to pay tax up front, venture capitalists, start-up companies and employee share schemes would already have been going for six years now. All of that innovation is much more than could have been delivered by any government five-year plan the Labor Party is so fond of—and there are many statist governments in the world who are big fans of five-year plans.

For six years Australia has suffered under this regime which was never going to work in the first place. Labor thought that, if you tax up front, people will somehow still take up employee share options. Of course, this was a complete naivety about human behaviour, a complete naivety about the functioning of the economy and a dangerous naivety about the role of government in our society. To say people should pay tax before they can realise any benefit from anything is to get no tax and to have something completely and utterly stunted.

We are six years behind in Australia because of the Australian Labor Party, and we do not have time to be behind. We do not have time to be behind our Asian neighbours. We do not have time to be behind the United States. The member for Perth talks about industry engagement and strategic intervention; if she engaged with industry more often, she would learn the No. 1 complaint of businesses large, medium and small in particular in this country is that they are overburdened with red tape and regulation—ridiculous, inefficient regulation that, as the Minister for Small Business pointed out, can cost an Australian business getting a valuation 10 times what it does in the US. If you want to get something approved by the FDA, they recognise small start-up companies and allow for smaller fees to be paid in the US. In Australia, the TGA, one of the most inefficient and bureaucratic regulators in the country, does not recognise small start-ups or Aussie manufacturing. It is the same here with the taxation treatment of employee share schemes.

The Labor Party says: 'Yes, okay, we apologise. We had an unintended consequence of this legislation.' Once again, six years of unintended consequences and Australia is the one that suffers, because all companies which wanted to do this or progress down this path were unable to and, naturally, the taxation treatment that the Labor government put in place meant that you could not even access capital gains tax concessions when you realised your options.

So the government is, again, amending this very important legislation so that those capital gains tax concessions can now be accessed in a reasonable time frame and, importantly, give flexibility to the tax commissioner in order to be realistic with people and not so brutal. We know that, under the previous government in the race for revenue, everybody was a source of revenue. The tax commissioner was sent out to get as much revenue out of the economy as possible, naively, not realising that the more you crack down on that, the less revenue you actually produce. Working with business, working with people realistically and working with the tax commissioner in a flexible way, ironically, enables the collection of more revenue, rather than this heavy-handed approach.

I think the government's amendments here are very worthwhile because they really do understand the nexus between capital gains tax, capital gains tax concessions and the viability of options, especially in the early start-up phase of any business, enterprise or any venture capital work.

While we have heard some apology from the Labor Party, it is more a case that they have been mugged by reality on this topic and so they should be! Six years of going backwards, under this particular legislation they brought in, has really hurt the venture capital market in Australia. And of course they continue to—

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