Luke Howarth (Petrie, Liberal Party) Share this | Hansard source

I'm very happy to rise and speak on the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill. As the previous speaker said, what we want to see as a government is foreign investors and Australians pay their fair share but—particularly for Australians—that they don't pay more than they need to. We're just asking that everyone pay a fair amount so we can continue to deliver those essential services. We've seen massive economic growth over the last 5½ years of the coalition government, with some 1.2 million jobs created and a target to create another 1.2 million over the next five years. We've seen unemployment at five per cent.

As the economy continues to grow and strengthen we're able to reduce taxes for many Australians, which is really important as well. We want to make sure, and I want to make sure as the federal member of parliament representing the seat of Petrie, that foreign investors pay the right amount of tax. It's a privilege for them as non-Australians to be able to invest in Australia, but it's important to make sure they pay their fair share. This bill addresses unintended loopholes and tightens some of the broad tax concessions that allow foreign investors to get a very low tax rate and a competitive advantage, in some cases. Current concessions and loopholes are leaking millions in revenue that could turn into billions, if left unchecked. That's why the government is putting this amendment in place now.

The legislation stops double gearing, so foreign investors can't shift profits to avoid tax. It stops foreign investors getting tax concessions on stapled structures to achieve tax rates of 15 per cent or less or, in some cases, almost tax free on business income. As you know, we've had a debate in this place, over the last term, about company tax and lowering the company tax rate to 25 per cent, which we've been able to do for SMEs, small and medium enterprises, with a turnover of up to $50 million. For companies above that, their tax rate is 30 per cent. But what we're seeing with this loophole is that some are able to pay a lot less, so this step will tighten that up. I say to everyone in my electorate of Petrie that this is an important step. Stapled structures were historically used to facilitate complementary, but separate, trading business being carried out in a company and in a trust. They've been able to basically split it so the tax rate is only 15 per cent, rather than 30 per cent, which is what we want to see them pay.

This bill also taxes foreign investors' income from Australian agricultural land and Australian residential property in managed investment trusts at the top corporate tax rate. It does provide transitional periods for existing investments. We know that foreign investment is important, and we want to make sure that Australians can also invest overseas, so it's important to have a reciprocal arrangement. Some foreign investment is important, but I also know that not everyone in my electorate likes foreign investment, so they'll be pleased to know that we are acting on this.

As part of the government, as a member of parliament and as a member that represents the seat of Petrie, I want to see lower taxes for the people I represent. I really want to see lower taxes. At the moment everyone in my electorate, whether it's myself, a doctor, someone who works on the council, someone who works at the local cafe or someone who is 68 and has a part-time job—whoever it is—gets $18,200 tax free. You get the first $18,200 tax free. After $18,201, up to $37,000, people pay 19c in the dollar. That means they get to keep 81c of everything they earn, which I think is fair. It's good. We then have a 32½ per cent tax rate—a third of what you earn, you pay in tax—for $37,000 and above. It used to cut out at $80,000; the federal coalition government this year has raised that up to $90,000. The benefit to the people in my electorate earning up to $90,000 over the last few years is that, on the $10,000 worth of money that they're earning, they're paying a 32½ per cent tax rate rather than a 37 per cent tax rate. That means that they're saving, effectively, 4½c in every dollar on $10,000, which is important if they're saving for a home loan, they're putting kids through school and they have school expenses, they just want to save for a family holiday or they're a young couple who are about to get married and are trying to get a deposit together—they can both save that extra money.

We have gone further. Because the economy is growing and because we believe in lower taxes, we've now legislated right up to $200,000 that you can only pay 32½c in the dollar, so you'd actually keep 67½c. I think that's really fair. It provides incentive for people to work harder and not be taxed at 37 per cent or 45 per cent, plus the Medicare levy. That's a great incentive, and, with a strong economy, we can continue to do that. We can continue to lower taxes. We can come back to surplus—which is what we'll see when we deliver a budget on 2 April of this year—for the first time since way back when John Howard and Peter Costello delivered the last budget surplus. That's very important. We can continue to invest in social services, roads, infrastructure, sporting facilities and all the things that are important to the people in my electorate.

We know that foreign residents pay 32½c in the dollar from the first dollar they earn, and I think that's fair. As Australians, we get a benefit of $18,200 tax free and then the lowest rate of 19c, but if you're a foreign resident you'll pay up to 32½c this financial year for up to $90,000.

This is in stark contrast, of course, to those opposed to what we're trying to do here: the federal opposition. They want to see higher taxes for people in my electorate. They want to see higher income taxes. I say to those living in my electorate that this is the wrong time to do that. We've got a strong economy; the economy's growing. I want to see lower taxes; the opposition want to see higher taxes. They don't want to see 32½c right up to $200,000; they want to tax people living in my electorate at 45 per cent and 37 per cent, killing incentive. Considering, as I said a moment ago, that this will be the first time that we've come back to surplus in a long, long time, this is absolutely the wrong time to do it.

Labor actually have a policy that they're going to take to the election this year of not just increasing income taxes which have been legislated and reduced but increasing taxes right across the board—some $200 billion over the next 10 years. I say to people that that will be bad for the people of Brisbane and Moreton Bay. That will be bad because it's not just about income tax rates; the opposition want to see higher taxes on businesses. They voted so many times, over and over again in the last term of this parliament, to keep taxes on small and medium-sized enterprises in my electorate at the higher rate of 30 per cent. As I said, we've managed to get it through at 25 per cent, but they voted to keep it at 30 per cent for places in my electorate, whether it's a local cafe or a local restaurant, or perhaps East Coast Bullbars in my electorate, or all the businesses in the Narangba business district and the Clontarf business district, which employ a lot of people. They voted for higher taxes. They just don't understand that business actually employs so many local people in my electorate. That's why I want to see lower taxes: so that there are more jobs and there is more investment locally.

I'm also terribly concerned about a part of the new taxes that the opposition want to bring in and the effect that they will have on retirees who have saved for their retirement. Effectively, Labor's retiree tax will mean that retirees will no longer receive an $18,200 tax-free threshold, because, if they're receiving their income through shares that they bought to save for their retirement and they're not on the pension—or they might be part-pensioners in the future—they will actually pay a rate of 30 per cent, which I think is really the wrong way to go. I stand for lower taxes. The government stand for lower taxes. We have a plan to continue to create jobs, which will mean that we can continue to offer those lower taxes, whereas those opposite don't.

I quickly want to talk about superannuation too. People in my electorate can put money into super and only be taxed at a rate of 15 per cent, which is really important. The government have introduced the First Home Super Saver Scheme, so I say to anyone reading this in my electorate: basically, you can put $10,000 worth of gross income in the bank and you'll only end up with $6,750 because you're taxed at a rate of 32½ per cent—whereas, if you salary sacrifice that money into your super fund, you'll end up with $8,500 because you're taxed at 15 per cent. That's an important change. As I said before, if a young couple is saving for their retirement, then they will end up some $6,000 better off, which they can put towards their first home. That certainly is an important change.

I'll continue to support people in my electorate, and I will continue to vote for lower taxes because I want people to keep more of their own money and get ahead. The amendment in relation to foreign investors is an important amendment which I support, and I know that my electorate will support it as well.

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