Jason Falinski (Mackellar, Liberal Party) Share this | Hansard source

May I say, Mr Deputy Speaker Buchholz, that chair suits you very well. You, sir, make the chair; the chair does not make you. May I also congratulate the member for Hughes on such a fantastic speech, in which he explained to all of us here the importance of incentives in the tax system, because that's what this bill is about. The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 is about ensuring that we incentivise people to do what is right, not what is wrong.

Australia has a population of 24 million people, and we very well know that those 24 million people love their caffeine. However, if we assume that each Australian consumes only one cup of coffee a day, so as to balance those who excessively drink against those who do not drink at all, we find that a total of $200 million is spent on barista-made coffee per year. Obviously, these calculations form an extremely rough estimate, yet even an error margin of 10,000 per cent would not be enough to justify the myth that Australia's cash economy is principally derived in coffee expenditure or daily purchases of a similar sort made in cash.

Our cash economy—or, better put, our black economy—could be as large as three per cent of GDP. In 2016, this was the equivalent of $50 billion of underreported income, money laundering, criminal activity and fraud, not merely unreported cash based coffee income. As a result of these evasive illegalities, government has lost approximately $10 billion of taxation revenue per annum. To put that into perspective, total revenue in 2016 was only $370 billion, meaning lost tax amounted to roughly three per cent of existing revenue. Further direct costs of the black economy include abuse of the welfare system resulting from claims for benefits that would not otherwise be claimed. On the other hand, indirect costs include an uneven playing field among competing businesses and lack of community trust in the tax system.

In response to this pressing issue, the Turnbull government consequently established the Black Economy Taskforce in December 2016 to develop a whole-of-government response for tackling the underground market. The task force has made 80 recommendations to government, many of which were addressed in the 2018-19 budget. These include an economy-wide limit of $10,000 for cash payments made to businesses for goods and services; a range of measures aimed at combating the sale and production of illicit tobacco and to improve the collection of excise and customs duty on tobacco; providing the ATO with $3.4 million over four years to lead a multi-agency black-economy standing task force; removing certain deductions for those taxpayers who fail to comply with their pay-as-you-go withholding obligations; and designing a new regulatory framework for the Australian business number system. Based on figures in the budget papers, these measures will produce a net gain of $4.6 billion.

I pause here to say that it is not about just getting more money for government to spend. This is about creating a fair system of taxation where all people, regardless of where they come from and regardless of what they do, have faith that the people in this place, those administering our tax system, are doing all that they can to ensure that our tax system is fair and equitable to those people who interact with it. The most important thing in a society is a fair society—one in which people, no matter where they're from, believe that what they put in they get out, not one where they believe that their next-door neighbour is somehow not doing all that they could to provide for themselves and provide for the community in which they live. That is the definite cancer which we find ourselves arguing against very strongly in this tax bill. If you allow people to believe, regardless of where they are, that they can get away with not making their fair contribution and not doing all they can for the tax system, then their neighbours and others in the community will believe that too. I believe in the economic textbooks it's called 'the tragedy of the commons'. Labor would never be able to achieve something like this. They are too focused on some sort of archaic class warfare wherein they snatch hard-earned money and reallocate it in a Marxist fashion. They redistribute income without valid justification.

Australia's top 10 per cent already contribute almost half the total net tax paid. Moreover, the top one per cent, about 90,000 individuals, are liable for approximately 17 per cent of the government's income tax revenue. There is absolutely no need to propagate this existing inequality. Instead of targeting the compliant wealthy, government should be knuckling down on those who rort the system and those who manipulate the cash economy, launder money, phoenix, commit fraud and underreport income. That is exactly what we on the right side of the chamber are trying to do here today. In addition to measures provided in our 2018-19 budget, we seek to legislate a number of other bills concerning the black economy.

The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill, for instance, aims to criminalise the production, supply, use or possession of sale-suppression technology. It also extends the taxable payments reporting system to cleaning and courier businesses which have an ABN. The first part of the bill, creating new offences regarding sale-suppression tools, will ensure that our tax system is equitable, unbiased and efficient for all stakeholders and all Australians. The aforementioned technology removes transactions from electronic record-keeping systems, falsifies transactions to reduce sales revenue, and modifies GST-taxable sales to non-taxable sales—all of this while leaving no audit trail. There is no legitimate reason for these tools—well, there is actually, and that is precisely what they're not meant to be used for. The new strict liability offences will target each stage of the supply chain, potentially imposing heavy penalties so as to deter the production, supply, use and possession of this technology.

The latter part of the bill introduces compulsory reporting to the ATO for businesses operating in the courier and cleaning industries. The Black Economy Taskforce identified that contractor payments in such industries are areas of high risk for the non-reporting of income. The Turnbull government is therefore extending the taxable payments reporting system to the courier and cleaning professions. The taxable payment reporting system applies to entities holding an Australian Business Number that provide services in identified industries. These industries have to report annually to the ATO about payments they have made to contractors undertaking profit-driven services for them. Reporting these payments will improve transparency for the ATO, and will align the payments with compliance obligations of employers, who must report the wages they pay. The taxable payments reporting system has been successful. Its implementation in the building and construction industry led to significant improvements in contractor compliance with GST and income disclosure. Consequently, I believe that the introduction of mandatory reporting of business-to-business payments within the courier and cleaning industries will encourage correct disclosure of income. The payments received by the subcontractors will have been reported to the ATO by the businesses that acquired their services. This additional reporting will allow the ATO to target compliance activity.

As I said earlier, government should be sealing loopholes instead of increasing taxes on the compliant. The Turnbull government has listened to the needs of taxpayers. We are providing relief where relief is needed, and stricter policy where severity is due. Through legislation, both niche and expansive, our government is creating a prosperous economic environment. We are fulfilling our purpose as the great enabler—not the great enforcer—of the Australian society. Whilst Labor in opposition has already announced over $200 billion of taxes, we as a government have successfully sought to reduce our taxpayers' burden. At the same time, we have put an end to the debt-creating machine initiated by the Rudd government and the then Treasurer, Wayne Swan. We have established the Personal Income Tax Plan, a threefold, fiscally responsible strategy to alleviate household budget pressures and provide certainty for most working Australians. It is a long-term, sustainable scheme to reduce income tax payable for nearly every Australian. It puts an end to bracket creep and provides long-lasting certainty in our tax system. Through this plan, the 37 per cent tax bracket will be completely removed, and the top marginal tax rate of 45 per cent will remain only for those with incomes exceeding $200,000.

In addition to amending personal income tax policy, the government has proposed a number of more niche changes to legislation, such as the Primary Industries Research and Development Amendment Bill. This incoming statute aims to combat the ghastly cost of a statutory marketing levy by allowing R and D through voluntary contributions. For rural industries, this reduced regulatory burden results in more time spent on productivity-enhancing innovation. For individual Australians, the removal of the levy, and thus lower costs, engenders lower prices. And for the government, as always, reduced regulation results in more resources being devoted to higher priority and more productive areas.

It is absolutely imperative that Australia expands its research and development capabilities, as this is our future economic path. Following the mining boom, our economy has lacked impetus and direction. We were global economic leaders with our iron ore and minerals, but what do we have now? What makes the Australian economy special today and, more importantly, will make it special in the future? Where, in short, is our source of competitive advantage? It is about time that we consider the path of innovation, just like Israel, South Korea and the US. We should look to avant-garde creativity and development for economic progress. However, at the core of becoming a more innovative, efficient and equitable economy, is lower and fairer taxes, because decreased taxes, not higher taxes, represent lower costs for individuals and businesses, engendering significant increases in consumption, savings and, thus, investment. In a time where our economy is at a lag, where our confidence could be much, much higher and where progress is always at the forefront of our mind, lower taxes and a budget surplus are the way to go. This is what this bill is doing. This is why I rise to support it. This is why I commend it to the House.

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