Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Hansard source

I am pleased to speak today on the Tax Laws Amendment (Norfolk Island CGT Exemption) Bill 2016. This legislation is part of a much broader package of reforms for Norfolk Island. These reforms came about following the Joint Standing Committee on the National Capital and External Territories' report into the current situation on Norfolk Island and build on many reports over decades on the situation on Norfolk Island.

The committee, of which I am a member, produced the report 'Same country: different world—the future of Norfolk Island', which looks at the island's prospects for economic development in the wake of falling tourism figures, a budget deficit and other ongoing financial concerns. The committee recommended that, as soon as practicable, the Commonwealth government repeal the Norfolk Island Act 1979 and establish an interim administration to assist the transition to a local government-type body, determined in line with the community's needs and aspirations. The first tranche of legislations to enact these reforms was the Norfolk Island Legislation Amendment Bill 2015, which passed parliament in May 2015 with bipartisan support. This legislation brought Norfolk Island tax residents into the mainstream Australian tax system, giving residents access to social security payments, health services such as Medicare and other government programs that are available to mainland residents.

This bill we are debating today makes a relatively small change in the scheme of these reforms, but it is an important one because it amends the Income Tax (Transitional Provisions) Act 1997 to give capital gains tax-exempt status to assets held prior to 24 October 2015. This is akin to the pre-capital-gains-tax-exempt status applied to assets purchased before 20 September 1985, when capital gains tax was introduced into the Australian income tax system. This small amendment remedies concerns raised by Norfolk Island residents about the tax treatment of capital gains in the original legislation bringing the island into Australia's tax regime. This eliminates retrospectivity and makes the system fairer.

This is an important point, because it demonstrates that the government and the opposition are listening to the concerns of Norfolk Islanders and are responding accordingly. This change will not apply to assets held by Norfolk Island residents that would not have been exempt from capital gains tax before Norfolk Island was fully brought into the Australian income tax system. Assets acquired by Norfolk Island residents on or after 24 October 2015 will be subject to the normal operation of the capital gains tax rules from 1 July 2016.

In bringing Norfolk Island tax residents into the Australian income tax system, Labor supports giving clear tax guidance and certainty to investors. These changes will provide certainty on capital gains tax without retrospectively affecting investment decisions made under the previous Norfolk Island tax regime.

The amendment in the Tax Laws Amendment (Norfolk Island CGT Exemption) Bill 2016 gives further certainty and clarity to Norfolk Islander tax residents as they become part of the Australian tax system on 1 July 2016.

I am not going to speak for long on this legislation—we have another piece of legislation enacting further reforms that we will debate in coming days, and I will speak in greater detail on that. But I do want to make this point—I want to say to the people of Norfolk: we are listening to your concerns, we are responding accordingly and I think this bill is evidence of that. Just yesterday I met with the minister to discuss the reforms and I raised a number of other concerns with him—concerns that had been brought to my attention by residents of Norfolk. I will continue to make these representations. I am looking forward to speaking in more detail on the next suite of legislation to enact these important reforms in the very near future.

In closing today, I want to take the opportunity to thank the minister. I know that there was some concern when we had a change of minister that the reforms would lose momentum, but that has not been the case. I thank the minister for continuing these vitally important reforms in this area for the wellbeing of Norfolk Islanders, for their human rights. I especially want to thank the minister for having an open door policy with me when it comes to discussing these reforms and making representations on behalf of Norfolk Islanders.

Finally, I would like to put on the record my very great appreciation to the five members of the Norfolk Island Advisory Council, who have been overseeing the reform transition on the island. My sincerest thanks go to Duncan Evans; to Eve Semple; to Melissa Ward, who is the chair; to PJ Wilson and to Wally Beadman. They have a role that has not always been easy, but they have done it with great integrity and have carried it out in a way that has earned them great respect both on Norfolk Island and here in Canberra. Thank you to those members of that advisory council for the great work they have done on the transition to reform. I commend the bill to the House.

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