Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

Mr Deputy Speaker, I know that you will be riveted to hear that the implications of this bill, the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018, as part of the coalition government's historic program of tax reform, are both practical and profound. People who live in my electorate of Fisher who want to invest in Australia's future will see the day-to-day benefits of the bill in the form of a level playing field, beginning on 1 July this year. But the values and beliefs that underlie this bill and our tax reform policies in general are fundamental to the weighty choice that will face all Australians at the coming federal election. It is a choice between two visions for the future of our country and between two contrasting beliefs about the success that Australians deserve.

The Liberal-National coalition want to keep tax rates as low as possible to allow people to keep more of their own money. Labor, on the other hand, want to take $200 billion more from Australians' back pockets. The coalition want to reward aspiration and ensure that hard work is not punished. Labor believe that, the harder you work, the more the government should take from you. The coalition want to encourage Australians to invest in their future and in the future of our country. Labor want to punish investment and discourage Australians from saving for their future because Labor want more Australians to be reliant on the public purse. The coalition want a tax policy which helps grow a strong economy and allows us to pay for the services that Australians need. Labor will weaken that economy with an onerous, unaffordable tax burden that will eventually drag all of us down. Our government wants a level playing field. We want to ensure that the tax rules are the same for everyone, regardless of wealth, size of corporation or geographical location. Labor want different rules for different people, unfairly targeting retirees or hardworking families who own an investment property.

That is the contrast between the coalition's historic tax reforms and Labor's shameless tax grab. That is the context of this bill and the tax reform program in which it fits. In particular, it is an encouraging domestic investment in ensuring a level playing field where this bill will have its impact. Schedule 1 of the bill will ensure that a foreign investor cannot take income they derive from trading in Australia and avoid paying the full rate of tax on it by converting it through what is known as a stapled structure into passive income from agricultural land or residential housing. Until now, these stapled structures have allowed foreign investors, and only foreign investors, to achieve effective tax rates of less than 15 per cent, far lower than what Australians would ordinarily pay. It has also allowed them to get an unfair tax advantage over Australian citizens who want to invest in our domestic, agricultural or residential property. The coalition government encourages foreign investment in Australia. However, we believe that, if you earn an income in Australia, you should pay the same tax on that income that an Australian must pay.

Schedule 2 of the bill prevents foreign investors from creating layers of trusts which can convert the active business income that investors have gained into interest payments taxed at a much lower rate. The bill would group these trusts together, apply the same so-called thin capitalisation rules to them as apply to other entities investing in Australia and thereby ensure that they cannot be used to create large debt deductions and reduce the tax owed to Treasury.

Finally, schedules 3 and 4 would reduce the tax exemptions enjoyed by foreign pension funds and sovereign wealth funds. While the government want to encourage overseas pension funds to invest in Australia, currently our tax incentives to do so are far more generous than most equivalent countries afford to Australians. We need to redress the balance and ensure that our investors are not comparatively disadvantaged by the excessive concessions that we grant to overseas funds.

Importantly, however, the government recognises that there are high areas of need in Australia where additional tax incentives for foreign investment are in fact appropriate. With a rapidly growing population, we face a considerable need for new infrastructure and more affordable housing right across this country. As such, the government has built in, for example, a pragmatic exemption to schedule 1 of this package for 15 years for nationally important infrastructure projects and has included in the bill further support for affordable rental housing. It's ensured that these measures were developed in close consultation with industry groups, businesses, investors and other tiers of government across two years of discussions. We have ensured that there are transition arrangements built in of between seven and 15 years in the case of existing arrangements to make sure that no-one is unfairly disadvantaged. These reforms are targeted and pragmatic, ensuring a level playing field without discouraging the investment that we so badly need in this country.

In total, closing these loopholes will ensure that Treasury recoups around $400 million over the next four years in taxation which foreign investors would otherwise have avoided paying. That's $400 million in unfair advantage negated, and $400 million that the government can put towards the services on which Australians rely. If left unchecked, this loss of revenue could have grown into the billions, as more foreign investors would seek to take advantage of the loopholes, to the serious detriment of Australian domestic investment.

Overall, as I've sought to describe, this bill is an essential element of the coalition's wider taxation reform package, helping to ensure a level playing field, enforce the same rules on all and encourage domestic investment. In assessing the merits of this bill in its wider context, the House should consider what the coalition's taxation reform package has already delivered for all Australians. Sixty thousand people in my electorate of Fisher, for example, are already better off because of the coalition government's tax reforms. Working Australians who live in communities like Caloundra, Beerwah, Maleny or Mooloolaba are seeing up to $530 more in their pay packets every year. Ordinary families in those communities, in towns like Kawana, Alexandra Headland, Beerburrum or Landsborough are getting up to $1,060 back from this government. We've passed further reform which ensures that 94 per cent of Australians, including residents of Fisher, will never have to pay a marginal tax rate of more than 32½c in the dollar.

We believe that if you choose to put in the effort to succeed, you deserve to enjoy the fruits of that aspiration. At a time when wage growth is low and when bills for electricity and housing are high, the coalition government has acted responsibly and pragmatically, and said to people in my electorate, 'We are not going to take any more of your money than we absolutely have to.' Small businesses in Fisher that are creating the industry and jobs of our future are already feeling the practical benefits of the coalition government's policies. Companies like Helimods at Caloundra Airport, Eniquest in Bells Creek and APAC Infrastructure in Caloundra West are already investing in new products and offering new jobs in the knowledge that the return on those investments will be greater under the government's corporate tax cuts. Day-to-day businesses on which local residents rely, like CK Whole Foods in Mooloolaba, Maleny Jewellers, and Peachester Fuel and General Store, have been given greater confidence that they can earn, employ locals and invest for the future, because this government is taking less of their income every year.

We all see the benefits in thriving shopping districts and a low unemployment rate across this country. The bill we are considering today will further encourage that sort of confidence and that investment by ensuring that overseas investors are not receiving an unfair advantage which increases their returns and makes it harder for domestic businesses to compete. The people of Fisher and its local businesses are already experiencing the positive practical impact of the coalition government in their pay packets and on their balance sheets. This bill will support them further.

Under Labor, my constituents would receive none of these practical benefits. Labor voted against our personal income tax plan. They voted to take $70 billion more from taxpayers, including from the back pockets of 60,000 working Australians in Fisher. Labor have promised to repeal the coalition government's company tax cuts and undermine the investment decisions taken by tens of thousands of businesses in my electorate. Labor have promised more than $200 billion in other new taxes on housing, electricity, small business, investment, income and even pensions. Every day, whether you're a working Australian, whether you're an Australian investor or a small business owner or a retiree—it doesn't matter—you'll better off under the coalition than you would be under Labor.

But the debates over taxes that have taken place in this parliament reveal something more fundamental about our competing visions for Australia. Members of the Liberal-National coalition believe that the success that Australians want is a success built on hard work, investment for the future, and personal responsibility. We believe that Australians want the satisfaction of knowing that they have earned what they have, that they have provided for themselves and their loved ones, and that they've helped to build Australia's future. Labor have fought tooth and nail to stop us implementing our historic tax reforms at every stage, because Labor don't believe in aspiration; some of them don't even know what it means. They don't understand it. Labor don't believe in rewarding hard work and investment for the future or celebrating the success of ordinary people. For them, the more you work, the more the government should take. Labor demonise achievement. They punish hard work and they penalise investment, because Labor believe that the only success Australians deserve is the success that the government hands out.

That is the choice that faces the people of this country: opportunity and prosperity under the coalition, or Labor's politics of envy. I know which Australians will choose. I encourage this House to do the same by supporting this bill and helping us progress the vital work of tax reform today.

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