Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

Shortly after the election, I wrote to the Treasurer affirming Labor's support for the Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 and, indeed, calling for its reintroduction. In my letter to the Treasurer, I wrote that this bill is an inherently sensible measure and one that will help streamline the work of our busy parliament. It would assist parliament in not getting bogged down with tweaks to existing legislation and allowing it to instead focus on the challenging tasks at hand. The principal provision of this bill is allowing a remedial power to sit with the tax commissioner that gives employees and businesses a clearer and more certain path to follow when tax and superannuation laws do not operate as intended.

My action on behalf of Labor in writing to the Treasurer to encourage the government to bring forward this bill, demonstrates Labor's ongoing, constructive role in this parliament in strengthening the integrity of our tax system, the efficacy of its operation and its enforcements. Our tax system is an integral part of the Australian social fabric. It ensures that the Australian government has the resources it needs to fund our schools, our hospitals, our teachers, our nurses and our police. It ensures, through having a remedial power, that the tax office is able to get appropriate revenue while minimising the cost to taxpayers through compliance. As the old line about taxation goes, 'It's the art of garnering the maximum number of feathers from the goose with the minimum amount of hissing.' And this does, indeed, achieve that goal.

But it must be acknowledged that this bill comes before the House at a time when the Abbott-Turnbull government has slashed over 3,000 tax office jobs. Indeed, the effect of cutbacks of so many jobs is to imperil the integrity of our tax system. We have a tax system today being enforced by a tax office that is badly under-resourced. We have recently seen another outage of the tax office website, further evidence that this government cannot keep the digital lights on. We have a Prime Minister who was much touted as a 'techxpert', in contradiction to his predecessor, the member for Warringah, who once said, 'I'm no tech head.' I am carrying no can for the member of Warringah, but I would point out that the ATO website never went down when he was Prime Minister. And yet, we have the ATO website going down and now accountants are bringing claims for damages against the government. The tax office has been under-resourced under this government, and taxpayers are suffering as a result.

Labor has been committed to being an important part of the debate over tax integrity in Australia. We brought forward a comprehensive multinational tax avoidance package, part of which was the appropriate resourcing of the tax office. We are hopeful that at some stage the government will fall into the slipstream that Labor has created and push towards a fair and functional tax system. They have occasionally done that. After attacking Labor for our moves on cigarette excise, the government belatedly fell into line. After attacking Labor on our attempts to ensure integrity in superannuation tax concessions, the government eventually fell in line with their own belated measures to close Australia's excessive superannuation tax loopholes. And we have seen some very timid measures towards making multinationals pay their fair share of tax.

When we on this side of the House see a measure that arises from those opposite that strikes us as reasonable we stand here ready to support it, as we are doing with the bill before the House today. This bill will facilitate a more timely resolution of unforeseen or unintended outcomes of tax laws, ensuring that they do not lead to lengthy delays and ensuring that we do not have uncertainty for stakeholders. There is broad community support for this measure and for its safeguards.

The remaining schedules to the bill are similarly uncontroversial. Schedule 2 amends the act to allow primary producers to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent. This was a recommendation of the very late agricultural competitiveness white paper and it was well received by stakeholders. I commend the member for Hunter for his work in finally getting the agricultural competitiveness white paper out of the government. Week after week he called for the white paper to finally be released and eventually, well beyond their schedule, the government did release the white paper. It contains this sensible recommendation and Labor is happy to support it.

Schedule 3 exempts public museums, libraries and galleries from the luxury car tax, providing these institutions purchase applicable vehicles solely for the purpose of public display, have been endorsed as deductible gift recipients and are registered for the GST. It is a measure that was announced in the 2015-16 budget and, indeed, has its origins in a virtually identical but ultimately unlegislated measure from the 2011-12 budget. Its revenue impact is small, and it enjoys bipartisan support.

Schedule 4 to the bill makes a number of miscellaneous and uncontroversial amendments to taxation, superannuation and other laws, including formatting changes, the repeal of redundant provisions, the correction of anomalous outcomes and corrections to previous acts—straightforward typographical errors, which are the business of government to fix up. The parliament should thank its lucky stars that the government is not deciding to have a typo-fixing day to pat itself on the back for schedule 4. This is just the regular work of government. The red tape repeal days, which themselves appear to have now been repealed, are completely unnecessary. Parliament should, as a regular matter, clean up these formatting errors, and this bill indeed does so. It is a result of a periodic review of tax laws. The periodic review and maintenance of tax laws was a recommendation of the Labor-commissioned Tax Design Review Panel in 2008. Labor, too, supports these measures.

When we speak about the closing of tax loopholes, it is critical that we acknowledge—as the member for Kingsford Smith did in a committee debate immediately preceding this legislative conversation—that we need to close down the excesses of negative gearing and the capital gains tax discount. These two tax rules have had the effect of blowing up the Australian housing market, making housing increasingly unaffordable for low- and middle-income Australian families. The home ownership rate in Australia today is at a 60-year low. Once the party of Menzies used to care about home ownership. They used to be a party that stood for the home owner, not for the investor. But, now, the Liberal and National parties have become the parties of property investors. They care not for the fact that the share of Australians who own their home is as low as it has been in 60 years and that the share of young families who own their own home has plummeted in recent decades.

Instead, they trot out furphies, such as suggesting that the benefits of negative gearing go overwhelmingly to those at the bottom. But put together these two benefits and you see how laughable that claim is. More than half the benefits go to the top 10th of the population. Surgeons are 16 times more likely to be negatively geared than nurses. Surgeons are 100 times more likely to be negatively geared than cleaners. This is not a policy that is expanding the supply of the housing stock—a topic about which the Treasurer has had much to say. No, it is a policy that is largely encouraging the bidding up of asset prices in the existing housing stock. Only seven per cent of negative gearing goes to new homes. So, if the aim of the policy is to increase housing supply, it is a policy with a 93 per cent failure rate.

Changes to negative gearing have been backed by those across the political spectrum—as the member for Kingsford Smith noted, Saul Eslake, among them, but also Cassandra Goldie, Chris Richardson, the Murray review, the Henry review, the Reserve Bank of Australia, Jeff Kennett, Joe Hockey, in his farewell speech in this place, and Malcolm Turnbull, the Prime Minister, in 2005. Many people across the political spectrum have acknowledged that this is a tax loophole that needs to be closed.

Labor's policy grandfathers existing assets. So it does not affect those existing investors but only new investors. It continues negative gearing for new-built homes, encouraging investors to put their money into new-built homes. Now, that is a principle the coalition supports when it comes to first homeowner grants. Over the last decade, every state and territory has changed their rules, and so first homeowner grants are either only available for new-built homes or are much more generous for new-built homes. At a state and territory level, the coalition believes that we ought to have a different policy for new-built homes as for the existing stock, but they do not take that approach with negative gearing.

When it comes to foreign investors we have a different set of rules for new-built homes as for existing homes. We say to foreign investors, 'You can buy Australian real estate, but only if you are going to add to the total stock.' Again, the coalition supports this principle that we should be encouraging an addition to housing supply. They support that when it comes to foreign investment, but they do not support it when it comes to negative gearing. This hypocritical approach to policy has led the coalition down to the dead end of opposing any changes to negative gearing, despite the fact that this is a policy change which the Prime Minister and the Treasurer themselves took to the cabinet last year. Extraordinarily, the Prime Minister and the Treasurer were rolled in their attempts to phase out the excesses of negative gearing and the capital gains tax discount.

Labor continues to lead this policy debate and others. We propose that multinationals not be allowed to use debt shifting to excess and that we use a worldwide gearing ratio rule rather than allowing multinationals to choose their favourite of three debt deduction rules. It has more economic sense behind it and it adds to the budget bottom line. Labor will be supporting this bill, but we do so with a great wish that the government would do more to close tax loopholes in Australia and provide greater integrity to our tax system.

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