Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House:

(1)

notes that while technically operative the following provisions are unnecessary and should be repealed:

(a)

in Income Tax Assessment Act 1936: s 26(b), s 26(e), s 94, s 102, s 108, s 109, Part II Subdivision 3D, Part II Division 6A, Part II Division 9C, and Part II Subdivision 11B; and

(b)

in Income Tax Assessment Act 1997:  s 15-10, s 15-15, s 15-20, s 15-30, s 25-10, s 25-35, s 25-40, s 25-45, s 26-30, s 26-35, s 26-40, Part 2-5 Division 32, Part 3-1 Subdivision 110-B, Part 3-1 Division 149, and Part 2-42;

(2)

notes that the following provisions of the Income Tax Assessment Act 1936 are rarely used or enforced: s 44(1)(b), s 95A(2), s 99B, and  Division 6D of Part II; and

(3)

calls on the Government to present to the Joint Committee of Public Accounts and Audit, within six months, proposals for the redrafting or repeal of these provisions to further simplify the operation of income tax law”.

Harry Quick (Franklin, Independent) Share this | Link to this | Hansard source

Is the amendment seconded?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I have just made a very broad-ranging debate much broader. This debate on the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 is now a very broad-ranging one that goes to just about any issue that members of this parliament want to raise. With this amendment, members should now feel free to speak on just about any issue they wish. We are repealing 4,100 pages of the Income Tax Assessment Act and measures that go to wholesale sales tax and FBT. My second reading amendment makes it even broader. I invite members on both sides of the parliament to be as broad ranging in their contributions on this bill as they wish.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

As long as they mention the word ‘tax’.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

The member for Rankin is absolutely correct: as long as they mention the word ‘tax’. Tax on the people can come in many forms. I probably should have restricted my invitation to only members on my side, because there are not too many speakers on the other side.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Ciobo interjecting

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

There’s one!

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Sorry, the member for Moncrieff is here. I also invite the member for Moncrieff to make a broad-ranging contribution to this debate and if, like the Special Minister of State, he wants to contradict the Prime Minister’s energy statement, he should feel free to do so. I know he is not happy because, in the member for Moncrieff’s electorate, less than three per cent of his constituents will have the opportunity to take up the only initiative—that is, the LPG initiative—in John Howard’s energy statement that may have brought his constituents some fuel cost relief. So I can understand why the member for Moncrieff would be disappointed in the energy statement. This is his opportunity to get up in the people’s house, to properly represent his constituents and say so, as did the Special Minister of State yesterday when he belled the cat on the Prime Minister’s energy statement.

I hope the Prime Minister was reflecting, as he drove in this morning, in his chauffeur-driven, taxpayer funded, petrol-driven limousine, on his ‘Let them eat cake’ approach. You can imagine him, waving his hand, as the royals tend to do, in his petrol-powered limousine, saying to all others—other than maybe less than three per cent in each electorate—‘Let them eat cake. Let them queue for their LPG conversion, then let them queue for their grant.’ I am not yet sure whether that will be one day, two days, two weeks or three months. Certainly, if they get the conversion next week it would be a miracle, if they were not already booked in but, if they get it next week they will have to wait until after 1 October to claim the cost back. So there is a huge cash flow issue.

But the Prime Minister does not care. He is not affected by any of these measures. If he were serious about LPG, he would have done something about the Commonwealth’s own fleet. It is a case of ‘Let them eat cake, I’m happy in my petrol powered car; let the others line up for the opportunity to convert to LPG..’ What a disgraceful approach to the pressing energy reform issues that are facing this country—our import dependency; our spiralling cost of fuel, and the tax that is attached; and, the impact that is having on Australian families, individuals, not to mention Australian business, small, medium and large.

So I invite the member for Moncrieff to reflect on those points and respond, if he wishes, on behalf of the government. It is up to him, because he is the only one who came in. Can you believe that, despite the fact that the opposition had about 20 speakers on the Petroleum Retail Legislation Repeal Bill 2006a critical piece of legislation, which goes directly to petrol prices in this country—there is one speaker on the government side? Were they scared to get up in this place and take the Prime Minister on? Or, even worse, were they told by their whip that they were not entitled to speak on this bill because the government did not want a recurrence of what happened with the Special Minister of State, who belled the cat, who exposed the illusion of the Prime Minister’s energy plan? There is one speaker on such an important bill, a bill on which we had foreshadowed some very important amendments to the Trade Practices Act, which would have protected small businesses and consumers generally not just in petrol retailing but right across the board. It was an opportunity for government members to support that amendment.

Another important amendment is the one that will take away this restrictive idea that only the Treasurer should have the power to empower the ACCC to investigate what is happening with not only petrol prices but prices in addition to petrol prices. We believe that not just the Treasurer but any house of this parliament or any committee of this parliament which sees a prima facie case that something is wrong in a market, particularly petrol, can refer to the ACCC the power it needs not just to look at prices but to look behind prices. More particularly, the big disappointment here was the Minister for Industry, Tourism and Resources. We asked him a very simple question: how many people around the country, and in individual electorates, will take up his LPG offer? He would not give us the answer. We know he knows the answer, but he refuses to give it because it is embarrassing.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Mr Speaker: I believe the member for Hunter may be confused about which bill we are debating. This has absolutely no relevance to the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006. It is a lame attempt by the member for Hunter to fill in his half hour. I ask you to bring him back to relevance.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

This is a second reading debate.

Harry Quick (Franklin, Independent) Share this | Link to this | Hansard source

There is no point of order. The member for Hunter will get back to talking about tax laws and their repeal.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

The member for Rankin is absolutely correct. The member for Moncrieff should have a look at how wide-ranging the bill is. The second reading amendment makes it even more wide-ranging. Out of respect for the House, I am going to move from this issue very quickly and close by saying this. The minister and the Prime Minister have costed their energy plan. In particular, they have costed the LPG grant. Therefore, it is obvious to anyone who knows anything about finance and how the Commonwealth budget works that they know how many people will have the opportunity to take up the LPG grant—of course they do. That is the only basis on which they can cost it.

We accept that they have to make some assumptions. If it is, say, 2.8 per cent of people, if they want to put a caveat in saying it is plus or minus one per cent, we will be happy with that. Minister, you know the answer to the question. Simply come in here and tell Australia how many people will benefit from the centrepiece of the Prime Minister’s energy policy—the centrepiece, the big bang, the LPG grant. How many people will benefit? My back-of-the-envelope calculation is about 400,000 vehicles or people—depending on how you count it, it varies—out of 13 million, or less than three per cent in each electorate, including the electorate of Moncrieff. Come in and tell us, Minister. That is all we ask. We just want you to be open with the Australian people and tell us what this means for them.

Given what I believe will be a very small impact, what is there in the minister’s energy proposals that does anything tomorrow, next week, next month or even next year to put downward pressure on petrol prices? Petrol is the fuel on which people will continue to rely. You isolate one fuel as the centrepiece of your policy—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I remind the member for Hunter that he should address his comments through the chair and should not use the word ‘you’.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. If the Prime Minister devises an energy plan that focuses on just one policy, instead of taking up Labor’s blueprint, which focuses on a wide range of fuels, what will happen? It was funny when the Minister for Industry, Tourism and Resources raised the question of supply and demand rather incorrectly yesterday during question time. What will happen is that demand for LPG will rise. And what will happen then if supply cannot increase because of capacity constraint? There are only so many converters and LPG tanks in the country. Of course, the member for Rankin, who has a PhD in economics, knows, and he learnt this in economics 101, I am sure—

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Inelastic supply, the price will go up.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

We do not need to get into the inelasticities, but the answer is that the price will go up. We have seen evidence of that already. I do not want to cast aspersions on the conversion industry. They will do their very best, but if they are inundated by people and put under pressure, what will the temptation be? If you have far more customers than you can deal with, it is a bit like bulk-billing. If you have too many patients you do not bulk-bill. That would only encourage more patients and you cannot handle them. If you are a converter, there is a temptation to say: ‘It was 4,000 yesterday but things are tight, big queues. It might go to 4,500 tomorrow or even worse next week.’ These are the things the government has not considered in this energy policy. Why? Because this is a hastily and recklessly cobbled together policy designed as a political fix. But yesterday, by virtue of the revelation of the Special Minister of State, it blew up in their faces. We are going to keep asking the question. We want the minister to come in here—we know he has the numbers—and simply tell us how many people will benefit.

I turn to the bill at hand, an important bill. I remind members that this is a very wide-ranging debate. The member for Moncrieff has a sterling opportunity, the opportunity of a lifetime, to respond. The Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 in reality—unfortunately I cannot be complementary of the government, again—is an enormous failure.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

Try to find something nice to say.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

The member for Batman wants me to try. I will think about that. This is the government’s attempt—a very weak attempt—to show that it is embarking upon taxation reform.

Since this government came to office in 1996, the tax act—and the member for Rankin knows this only too well—has expanded to 10,000 pages. So 1,000 pages a year over 10 years is not a bad effort. Yet this government was going to reduce taxation burdens and compliance, but there are now 10,000 extra pages. Out of desperation to demonstrate some attempt at reform—and probably off the very good work of the member for Rankin, who was in here on a daily basis embarrassing the government over the enormity of the tax act—the government came up with this plan to ask the Board of Taxation to look at the inoperative provisions that might exist in the act. So, if you find inoperative provisions and then get rid of them, you can say that you are reducing the tax act in volume terms.

In 2003 the Board of Taxation undertook that exercise, as instructed by the government. It finally reported to the Treasurer in October 2005. The sheer amount of time that it took the Board of Taxation to undertake the task is in itself an indication of how difficult a task it was to get through a tax act that is 10,000 pages long—an act that has been through the trauma of the change from the wholesale sales tax system to the GST. In October 2005, the board told the Treasurer that it had identified 1,900 pages of inoperative provisions. You can imagine the Treasurer’s disappointment. He had gone to 10,000 pages. He thought he had a bit of a stunt, a bit of a plan, a political fix to get the Board of Taxation to give him some recommendations that would show that he was on the job—that he was reducing the size of the act. But 1,900 pages was not going to deliver for him by any means. So what did he do? He sought to make it larger. He went digging for other provisions, many of them going to wholesale sales tax and other areas that were not the focus of his original proposal. Remember: we are talking about income tax not wholesale sales tax. In any case, the Treasurer managed to grow the number of pages to some 4,100, and that is the issue we are considering today.

It is the operative provisions of the tax act that are of concern to tax practitioners and others who deal with the tax act, not the inoperative provisions. I do not see too many people running around concerned about parts of the tax act that do not apply to them or are not relevant to them anymore. They are worried about the operative provisions. Major commercial publishers have agreed to print an archived volume of the repealed provisions, so even these repealed provisions will not disappear from the shelves of tax practitioners. Savings provisions come into operation by virtue of the Acts Interpretation Act, which ensures that repeal does not affect the operation of those parts of the act which were in force at the time the taxpayer undertook the activity. So to claim that 4,100 pages have been cut out of the tax act is grossly, deliberately and misleadingly exaggerated. The major problem is the operative provisions.

The economic benefits of this measure are not significant whereas real reductions in the compliance costs of tax for small business and for individuals would enhance returns, economic growth, employment and tax revenue and would lead to lower prices in more competitive markets. This bill is a missed opportunity for our Treasurer, who we know is lazy. That is the bottom line here. We know that his backbench knows he is lazy too; that is why he ran away from the leadership fight.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Too lazy to challenge.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Too lazy to challenge? That might be pushing the ‘lazy’ angle just a little too far. But we know that the very small level of support the Treasurer would have had in any leadership challenge is largely a reflection of his laziness. I know that is what his backbench think. They think he is a lazy Treasurer who relies on the economic foundation that Labor laid when last in government, which has now led to 15 years of continuous economic growth. He has sat back and just enjoyed it—no real reform; he has ridden on Labor’s wave.

The Treasurer relies on spin. He is pretty good in question time—almost as good as Paul Keating, I would suggest, and I think he has largely modelled himself on that style. He is pretty good in question time with the spin but, when it comes to the substance, there ain’t much happening! His backbench knows that. And I think the member for Moncrieff might know that—he might take the opportunity in this wide-ranging debate to indicate his view on that very issue.

While Labor welcomes the bill, we call upon the government to do something about the operative provisions of the act that will actually make a difference to people. That is what we are trying to achieve by way of our second reading amendment. It should also be noted that the government is not just repealing provisions; it is changing the law in only small ways. The best example is the change to section 26(e) in respect of assessable income of goods in kind. This has been rewritten, and the operation of the act was changed in a minor way. The point is that this bill is mistitled. When savings provisions and ‘rewrites’ are considered, the bill involves much more than the repeal of inoperative provisions, as does the example in section 26(e). But they are not the kinds of changes I am talking about. This determines that goods received in kind are assessable income, but it is never used due to the operation of the FBT.

Let me talk about this concept. Once upon a time we did not have FBT, so there was a tax law to make sure that, if an employee were given a gift in replacement of a salary, then that gift or that additional amount of money would be taken to be assessable income of the employee. That does not happen anymore because the FBT takes priority over that law and there is no reason to go back to that law. So there has been a little bit of tweaking there, but it does not matter. It is a nonissue for Australian taxpayers and Australian businesses. It is just another example of a wasted opportunity.

I have with me a report entitled Beyond 4100. The title is self-explanatory. It is written by the Tax Institute of Australia. It was written to back up what I am saying. In point of fact, I have probably backed up what they have said. I am happy to give them the lead. They are the real experts. They have more resources than I have to look at these things in greater detail. They also have more corporate history in these issues than I have. They are saying that it is okay to repeal these provisions—they do not greatly affect people anyway—but that you have to go beyond 4,100 pages and get your teeth into the things that do matter to people. You have to make some real reductions in areas that will make a difference to Australian taxpayers and every entity that has an obligatory interface and relationship with the tax act and the Australian Taxation Office.

In the second reading amendment, we have borrowed, if you like, the ideas of the Tax Institute. We have looked at them: they seem to make sense; they seem to be efficient; they seem to have efficacy; and they seem to be pretty good ideas. It is not for the opposition to write law in this place. It is an area in which you must tread very warily and where a comma or a full stop in the wrong place can make a difference. The lazy Treasurer has the resources of two departments behind him—Treasury and the tax office—and therefore has the capacity to do something meaningful about the tax act. Some real changes could be made to lift the compliance burden on individuals and businesses, to introduce a more competitive environment into the Australian economy and to raise productivity levels and economic growth.

So, I say to the Treasurer, ‘Rather than sit back and rest on the Labor reforms of the eighties and the nineties, have a look at Beyond 4100 and Labor’s amendments—they highlight the important parts of Beyond 4100—and take this opportunity to make a real difference by tidying up the tax act, reducing the compliance burden and, therefore, spreading the benefits of that reform right throughout the Australian economy. This will basically give individuals and businesses the break they have been looking for a long time.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

It was interesting to hear the member for Hunter attempt, as he did, to fill half an hour in responding to the government’s positive steps to slash some 4,100 pages of tax laws, including 2,600 pages specifically from the income tax law. Almost one-third of the income tax law and over half of the Income Tax Assessment Act 1936 are being repealed in the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006. So the bill, at its very core, is good news.

I have been in parliament for a relatively short period of time—about five or six years—but I think it would be very rare to have the opportunity to come into this chamber and debate a bill that proposes to remove one-third or some 4,100 pages of the tax act. I am pleased to associate myself with this bill and to support it in the chamber because it is a positive move forward.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. In accordance with the standing orders, there is a requirement on members of parliament to be accurate in their statements or at least to attempt to be. There is no way that this legislation removes one-third of the Income Tax Act. The member was counting other tax acts as well, and he should be more honest in his statements.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

I understand your point of order. Thank you, Member for Rankin. I believe the speaker is attending to that responsibility.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

What I specifically said is that it is almost one-third of the income tax law and over half of the Income Tax Assessment Act 1936—and that is a fact. I will very happily turn to statements of factual correctness. The member for Hunter certainly allows a very wide berth when it comes to whether or not things are truthful.

The member for Hunter has established quite a precedent. I would be very pleased to hear the member for Rankin make a couple of factual statements. The member for Hunter touched on leadership. Perhaps he could start with whether or not he still supports the former member for Werriwa. We know that the member for Hunter was the key supporter, the key backer, the key numbers man and the key driver of that failed Labor Party leader, Mark Latham. That is the track record that the member for Hunter brings into this chamber. I would ask one of the other roosters in the Australian Labor Party whether or not there is still support there.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

Mr Deputy Speaker—

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I thought this was a wide-ranging debate. The member for Hunter invited me to address issues of leadership.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I rise on a point of order, which goes to the question of relevance and the issue of tax. I do not think what goes on in either party room is relevant to this debate; otherwise we might have a debate about where he stands on his support or otherwise for the Prime Minister or the Treasurer and their leadership struggles. I suggest you bring him back to the debate.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I understand your point of order. I call the member for Moncrieff.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I was invited by the member for Hunter to make comments on leadership, and I am. The member for Hunter was not pulled up by the previous Deputy Speaker on issues of leadership. This is a wide-ranging debate. Tax laws are a key part of former leaders and their various policies. I am happy to answer the member for Hunter’s remarks. I am happy to make reflections on whether or not the member for Hunter is in a position to make comments on leadership, because it was the member for Hunter, as I said, who was such a strident and fierce supporter of the former member for Werriwa, Mark Latham—the man who has been charged with criminal offences.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: I am just thumbing through the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 and I cannot find any section in the legislation that deals with the material that this member is now traversing.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Thank you, Member for Rankin. I understand your point of order. I am sure the member for Moncrieff will attend to his responsibilities in speaking to this bill.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I recognise that the Labor Party is putting you in a difficult position, as the Deputy Speaker previously in the chair was happy for the member for Hunter to address leadership issues. I am not seeking to exacerbate the position in which you find yourself, but simply to answer the request by the member for Hunter for me to address the issue of leadership. I am reflecting on the fact that the member for Hunter, as a finance spokesman for the Australian Labor Party, appears to have some significant and pronounced deficits when it comes to character judgement—and perhaps even judgement with respect to policy. If the member for Hunter backs Mark Latham, the former member for Werriwa, then you would have to be concerned about Mr Latham’s decisions and policy statements, which the member for Hunter supports.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I take a point of order. The member for Moncrieff has 20 minutes to share his views on tax reform in this country, and he has used the first 4½ minutes to talk about anything but. If he really does not have anything to say about tax reform and the legislation before the parliament, I would suggest, respectfully, that you sit him down.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Thank you for your advice, member for Rankin. The member for Moncrieff, I am quite sure, understands his responsibilities in this House and the necessity to speak to this legislation. I call on him to do so.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I am happy to talk about this government’s track record on tax. I am pleased to talk about what the Howard government is doing to lighten the taxation burden on the general population in a literal sense—which we have a strong and proud record of doing—and also in a figurative sense. The bill immediately before the chamber today is a rare bill, which I am pleased and proud to support. The bill slashes 4,100 pages from income tax law and deserves the full support of both sides of the House. Not surprisingly, the Australian Labor Party—which we know from past form stands in the way of anything that reduces the levels of taxation on the Australian people—apparently does not support this bill. That is the conclusion I am forced to draw from the remarks of the member for Hunter.

We have seen, based on the Australian Labor Party’s track record, that it stands opposed to tax cuts. Recently the Howard government delivered some $36 billion worth of tax cuts. We rely on the numbers we have in this chamber and on our majority in the other place to move those cuts through both houses so that the Australian people are able to enjoy less of a tax burden. The Australian people recognise that it was the Treasurer, Peter Costello, and the Prime Minister, John Howard, who delivered $36 billion worth of tax cuts for them. Those tax cuts were delivered only about five weeks ago. So Australians today are paying less tax thanks to the sound economic management of Peter Costello and John Howard.

Our track record stands in stark contrast to the rhetoric we hear from the Australian Labor Party. When you compare the 13 years of Labor in government to the past 10 years of the coalition in government, a couple of key factors make the difference between the two governments apparent in people’s minds. I will touch on those because they are worth reflecting on. First and foremost are economic responsibility and economic governance. Under the coalition, Australians today are enjoying a 4.8 per cent unemployment rate—the lowest unemployment rate this country has seen for over 30 years. This government succeeded in bringing that about, not with the assistance of the Australian Labor Party, but with its absolute and total objection to it. It seeks to stop every reform we make to improve the lot of ordinary Australians.

This government’s reforms are delivering 30-year lows of unemployment. That is no thanks to the Australian Labor Party. In contrast, when we were in opposition in the past we supported any good policy announcements the Australian Labor Party made when it was in government. But we do not get that kind of cooperation from the Australian Labor Party today on Work Choices and on other labour market reforms, which I believe the member for Rankin probably generally supports. The Australian Labor Party stands in blunt opposition to the kinds of reforms that have brought unemployment in this country down to 4.8 per cent, to 30-year lows.

What is the Labor Party’s track record on unemployment? The answer to that question is one million unemployed Australians. That was its legacy, the legacy of the current opposition party, who hold itself out as an alternative government. Let us talk about interest rates, which have become a favoured topic of the Australian Labor Party of late. Under the coalition, interest rates are now averaging—

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I take a point of order.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Oh, the Labor Party does not like to talk about interest rates because of their 17 per cent—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Moncrieff will resume his seat.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Reluctantly, Mr Deputy Speaker, I again draw your attention to the fact that this legislation repeals inoperative provisions of the income tax act and other acts. While it is a wide-ranging debate on tax, the member for Moncrieff is not talking about tax at all.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Thank you, member for Rankin. I understand your point of order. The bill we are debating is a tax amendment bill. The member for Moncrieff, I believe, is addressing the issue of tax, and, however you may disapprove of what he is saying, he has the right to say it.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

This is a classic case of the Australian Labor Party once again engaging in acts of hypocrisy. They say they want a wide-ranging debate on taxation. I am simply highlighting the way in which the Australian people now have an easing of the tax burden on their shoulder thanks to the Howard government. The member for Rankin does not want to hear it, but I will go on because it is worth saying.

It is important that people understand the reason why they are better able to meet home loan repayments, the reason why they have greater job security under this government and the reason why the government’s tax take is lower than it was under Labor. On all of these measures, I am very pleased to talk about the coalition government’s track record. I invite the member for Rankin to talk about the Labor Party’s track record, because, on every measure, Australians are better off under 10 years of coalition government than they ever were under the Australian Labor Party. As I said, interest rates are only one of those ways. At 7.8 per cent currently, with average interest rates of just over seven per cent under this coalition government, interest rates stand in stark contrast to the average under the Australian Labor Party of over 12 per cent. An average of 12 per cent and over for the Australian Labor Party, an average of just over seven per cent for the coalition; 13 years of Labor, 10 years of coalition—let the facts speak for themselves. And that is before I even touch on the peak of interest rates under the Australian Labor Party. The member for Rankin was probably in the chamber at the time. It was 17 per cent under the Australian Labor Party, with one million unemployed Australians. That is the legacy of the Australian Labor Party.

Let us also talk about why the coalition government is able to reduce taxation. Let us talk about why the government is passing on $36 billion worth of tax cuts to the Australian people. The simple reason is that this government has run nine budget surpluses, budget surpluses that the Australian Labor Party were not able to run. The track record under this government is the repayment of some $96 billion of Labor Party debt. Under the coalition, in 10 years, we have seen $96 billion of debt that was a legacy of the Leader of the Opposition and a legacy of members of the Australian Labor Party, which this government has paid off in full, saving Australians some $4 billion per annum in interest. That is money—some $4 billion each and every year—that we are now able to dedicate to roads, to health, to education, to tax cuts; the kinds of expenditure that the Australian Labor Party would never even have dreamt of when their period in office was coming to an end in 1996. These are the kinds of advantages that the Australian people enjoy today thanks to responsible economic management under the Treasurer, Peter Costello, and under the Prime Minister, the member for Bennelong, that the Australian Labor Party were unable to deliver because they were not disciplined when it came to spending in government.

I would also like to touch on what the member for Hunter spent half of his speech addressing—that is, energy policy. I was pleased today to see that the member for Batman and the member for Hunter were not disagreeing. It makes a pleasant change, because earlier this week we heard the member for Batman and the member for Hunter at loggerheads on ABC radio, embarrassingly for the two Labor members, one following the other on ABC radio. We had the member for Hunter attacking the government’s policy on excise, and we had the member for Batman defending the government policy on excise.

Today, when the member for Hunter was touching on excise, I note that he made no remarks about what Labor would do with excise. He was happy to talk in general terms about excise, but there was nothing specific from the member for Hunter. I invite the member for Rankin to perhaps outline to the House what the Labor Party’s policy is on excise and whether or not the Labor Party is going to cut excise, as the member for Hunter suggested would be the case. I would be very interested to hear some kind of commitment from the member for Rankin about Labor Party policy on excise, because I would remind the House that, again, it was the coalition government that not only cut excise in 2001 but also froze the CPI indexation of excise. As a result of that coalition government pronouncement, fuel prices today are approximately 7c cheaper per litre than they would have been had that Labor Party policy stayed in place. Make no mistake: it was the coalition government that froze the excise indexation to CPI; no thanks to the Australian Labor Party. It was this government that stopped the excise indexation to CPI.

I should also say that the reaction that I have had from my constituents to the Prime Minister’s announcement that we would subsidise, to the amount of $2,000, the cost of converting vehicles to LPG so that people can take advantage of the 40 per cent cheaper price, on average, of LPG has been very positive. I genuinely know that people in my electorate of Moncrieff, the city of the Gold Coast and elsewhere will be embracing the opportunity to convert their vehicles to LPG, especially given that now, as a result of this $2,000 subsidy from the Howard government, the cost of that conversion will pay for itself in about four months—not two years, as was previously the case, but four months.

It is also worth mentioning that the Western Australian Labor government—they seem to be good blokes over there in the west, Mr Deputy Speaker Haase; I am sure you would probably understand—are happy to pay an additional $1,000 towards the cost of conversion. But where are all the other state Labor governments when it comes to easing the burden on Australian taxpayers with the price of fuel? Where are the other state Labor governments when it comes to making some kind of contribution towards easing the hurt that Australians are feeling at the petrol pump? The Howard government is doing it to the tune of $2,000. The Western Australian Labor government is doing it to the tune of $1,000. Perhaps the member for Rankin can ring his mates in the Queensland Labor Party. The Premier is out there. He is in election mode today, Member for Rankin. Why don’t you pick up the phone and see whether you can get Peter Beattie and the Queensland Labor Party to also help out with a $1,000 subsidy? I encourage the member for Rankin to also make some remarks in that respect—as to why the Labor Party in Queensland, absolutely rolling around in funds from the GST, with bigger budgets from the GST than they have ever had, doesn’t help out. I invite him to pick up the phone and ring his mate Peter Beattie and get a $1,000 commitment from the Premier in Queensland. I would welcome it. Perhaps the member for Rankin could also indicate whether he would welcome it.

But I want to talk specifically about some of the hypocrisy, and it is hypocrisy, that I heard from the member for Hunter, who made disparaging remarks when he played the man—that is, the Prime Minister—about the fact that the Prime Minister, to use the words of the member for Hunter, ‘was in his petrol powered limousine, saying “Let them eat cake”’. This is from the man who presumably—and I notice he did not answer my question—also got a Comcar in to the House this morning, the same man who is accusing the Prime Minister of acting in a nonchalant way. It is a complete and total act of hypocrisy from the Australian Labor Party, and it does them no justice whatsoever.

With respect to petrol pricing, if there is truly going to be some immediate relief, let it be from the GST. The GST amount has been increasing as a result of the increasing price of petrol, and the Australian Labor Party is the beneficiary of it in every state and territory. Let the state governments tomorrow come out and say that they are happy to take less GST. They have more money than they have ever had previously. I simply summarise to say: I welcome this bill. I invite comments from the Labor Party as to its form when it comes to taxation. Let the Australian people remember they are $36 billion better off from tax reform. (Time expired)

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

The Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 removes inoperative provisions from the Income Tax Assessment Act. It is not the inoperative provisions that create the complexity of the Income Tax Assessment Act but the operative provisions, which are unchanged in this legislation. Nevertheless, Labor supports it. The member for Moncrieff is wrong on that account and on a number of other accounts, and I want to take the opportunity to convey to the parliament the number of errors that the member for Moncrieff made when he started talking about matters that were at least tangentially relevant to this legislation. He claimed in his speech just given that this legislation removes 4,100 pages from the income tax law. That is completely untrue. It removes 1,900 pages from the income tax law, and the Treasurer included other legislation—indirect tax laws—in order to bulk it up and get to the 4,100 pages that the member for Moncrieff asserts come out of the income tax law when in fact they do not.

The member for Moncrieff ran out of petrol after about five minutes and went on to make a number of completely erroneous assertions. He was talking about interest rates. He is probably too young to remember that in 1982 the Treasurer of this country, now the Prime Minister, John Howard, presided over 90-day bank bill rates of 22 per cent. That was not fully reflected in home loan mortgage rates because there was an upper limit of 13½ per cent on mortgage rates. In those days, poor people could not get into a home. Fast forward to 2006 and poor people again cannot get into a home, even in a deregulated system. That is because, as the Reserve Bank points out—and the member for Moncrieff is wrong again—housing affordability today is worse than it was many years ago, even when interest rates were very high at periods during the 1980s. But the member for Moncrieff has asserted that housing affordability has never been better. It has never been worse, and that is because of the house price boom—the bubble that has been created through the mismanagement of this government—in combination with rising interest rates.

Interest rates have risen three times already since the 2004 election, when the Prime Minister promised that interest rates would be at record lows. They had already risen four times before that. The last seven changes in interest rates have been upwards. The market is factoring in a 90 per cent probability of a further interest rate rise before the end of this year, and there is also in prospect another interest rate rise before the next election some time next year. We certainly do not need any lectures about interest rate rises or promises about interest rates from the member for Moncrieff.

The member for Moncrieff went on to say that the coalition supported Labor’s reform program. The coalition never supported superannuation. It opposed with every device it possibly could the spreading of superannuation to the working men and women of this country. The coalition never supported the introduction of the fringe benefits tax or the capital gains tax in order to finance reductions in the top marginal rate of income tax and the second-top marginal rate of income tax. Those were very important economic reforms, but the coalition absolutely opposed them. The coalition opposed the introduction of an assets test in 1984, when Labor had already anticipated the problem of the ageing of the population. That was an important reform opposed by the coalition. The coalition opposed the petroleum resource rent tax, which collects a fair share of revenue from the huge increases in oil prices. Oil prices are now above $US70 a barrel. The PRRT was designed to ensure that the community gets a fair share of that. That measure was opposed by the coalition. So let us not hear this rubbish about how the coalition in opposition supported Labor’s reform program.

The member for Moncrieff then went on to say that the government has run budget surpluses but that Labor did not run budget surpluses. I draw his attention to Budget Paper No. 1. If we go to page 13-5, we see that budget surpluses were run by Labor in, for example, 1987-88, 1988-89, 1989-90 and 1990-91. What was significant about two of those? They were 1.7 per cent of GDP. What are the budget surpluses now? They are 1.0 per cent of GDP. The member for Moncrieff is again wrong, but he has taken his tuition from the Treasurer. The Treasurer said in this parliament on 10 May 2000:

First of all, we put the budget into surplus on a headline basis, which the Labor Party never did. Then we say, ‘We ought to put the budget into a surplus on an underlying basis,’ which the Labor Party never did.

That was a completely false statement made in this parliament by the Treasurer. He has given tuition to the member for Moncrieff to continue with these completely false statements. Labor produced headline surpluses in 1987-88, 1988-89, 1989-90 and 1990-91.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

We actually had to do the hard work of saving.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

That is right. In a short, 20-minute speech, where the member for Moncrieff had already run out of petrol after five minutes, he made several completely false statements. He then asked questions about Labor’s position on excise. The Leader of the Opposition has said that it would not be economically responsible to cut excise on fuel—certainly at this stage when there is no room because of the government’s economic mismanagement to further stimulate the economy. This is because of what I have just said: that further interest rate rises are very much a prospect. There is a 90 per cent probability of an interest rate rise before the end of the year—after the three interest rises we have seen already following the Prime Minister’s statement in the 2004 election that interest rates would be kept at record low levels.

Then the member for Moncrieff said that I should get on the phone to Peter Beattie and tell him to provide an extra subsidy of $1,000 for LPG conversions. In the parliament two days ago the Prime Minister was saying this, just after the Treasurer had said that it is all the states’ fault—that there is this fiscal expansion feeding into price pressures and feeding into interest rate pressures—because they are running deficits. So you have the Treasurer saying the states are not running budget surpluses anymore and that that is a problem and then you have the Prime Minister and the member for Moncrieff saying that they should create bigger deficits by providing a LPG conversion subsidy themselves. It is about time that the coalition got its act together. Who is the member for Moncrieff siding with: the Prime Minister or the Treasurer, because they are at odds? I thought he was the Treasurer’s man; but he has backed the Prime Minister. He comes and goes. He is very flaky.

In relation to the inoperative provisions being removed from the Income Tax Assessment Act, I would point out that, far from reducing the complexity of the Income Tax Assessment Act, far from making it simpler, in just 10 years the coalition has added 100 extra tax breaks to the income tax system—so-called tax expenditures. This is what the Business Council of Australia has said about the increase in complexity of the Income Tax Assessment Act:

Much of this complexity is due to the need to administer tax concessions targeting particular groups, or to prevent large-scale exploitation of existing ‘holes’ in the tax base by administrative means.

What an indictment of this government. The Business Council of Australia is right: this government has made the income tax system far more complex. Removing inoperative provisions does not make it any simpler; it is the operative provisions that make it complex. Now there are a lot more operative provisions as a result of the government poking 100 more holes in the Income Tax Assessment Act. When the government came into office, the Income Tax Assessment Act ran to 3,600 pages. That was back in 1996. It has now passed 10,000 pages. So it has gone from 3,600 to 10,000 pages. What sort of undertakings did the government give in relation to simplifying the tax system in this country? On 31 January 1996 the present Prime Minister, the then Leader of the Opposition, said:

... I will be establishing a small business deregulation taskforce. That taskforce will have a specific brief from me as Prime Minister, to report within six months of the new Government taking office. Its main responsibility will be to advise on ways in which the regulatory and paper burden on small business can be reduced by up to 50%.

After that, on 24 March 1997, in a ministerial statement the Prime Minister conceded:

The volume of tax legislation has become a tidal wave which threatens to overwhelm small business.

He said in the same statement:

During the election campaign we committed ourselves to the goal of reducing the burden of paperwork and red tape on small business by 50 per cent in our first term. I am confident that our response to the Bell report, along with other initiatives that we have already taken, will make a substantial contribution to that objective by the end of our first term.

They did nothing other than add to the complexity of the Income Tax Assessment Act. They added to the burden of red tape on small business. On the Alan Jones program about a year later, on 14 August 1998, Alan Jones asked:

Will the number of pages in the Tax Act be reduced by the introduction of a GST?

The Prime Minister said:

Yes it will because some of the anti-avoidance measures which take up a lot of pages are going to disappear. I don’t know by how many pages but it will be some reduction I understand.

If we go forward another year to see what has actually happened, we see that nothing has happened other than that they started working on this new GST, this new monster tax. So far from simplifying the system, they were massively increasing the complexity of the tax system in this country. On 22 September 1999 the Treasurer appeared on the Alan Jones program. Alan Jones said:

It’s unreadable and unintelligible, there’s a massive GST program that’s going to overtake us ...

The Treasurer said:

Well I think that’s right.

So there is a massive GST program that is going to overtake us. He probably said that ‘that was the Prime Minister’s fault because that was his great big tax adventure, not mine’. On the Alan Jones program he went on to say:

And that’s why we’ve got to get the number of pages of the Tax Act down. That’s what we’re working on right at this moment.

So on 22 September 1999 they were working on getting the number of pages in the Income Tax Assessment Act down. Rubbish. They were working on coming into this parliament every second day with a tax laws amendment bill to further increase the complexity of the tax act, to poke more holes in the income tax base, and to create an extra burden on small business and on anyone who pays income tax in this country. Let us go forward to a quote from Gary Banks, the Chairman of the Productivity Commission. He said on 22 December 2003:

The Income Tax Assessment Act—often taken as a regulatory ‘barometer’—has grown particularly rapidly since its inception. At nearly 7,000 pages, the ITAA is now nearly 60 times longer than the paltry 120 pages that did the job when it was first introduced in 1936.

That quote was made in 2003. So the Productivity Commission was complaining about the size and complexity of the Income Tax Assessment Act. Let us now look at 2004. Appearing on the ABC radio program Life Matters with Julie McCrossin, the host, was Michael Inglis, who is a Sydney based tax barrister. Mr Inglis said:

But I can’t resist. When I spoke to you last time, April of last year, Income Tax Act, 8,500 pages. Do you know what it is currently?

Julie McCrossin responded:

I want you to tell me—

I bet she did. Mr Inglis said:

We did a great service last year we really improved things.

He said:

Currently, in fact it’s a few months old, 10,500 pages for your income tax legislation. Add in GST, FBT, super, 13,500 pages, 9.5 million words.

That was on 15 January 2004.

The government has promised and promised and promised to make the Income Tax Assessment Act simpler. What does it come up with? It comes up with a bill to remove the inoperative provisions, whereas it is the operative provisions of the Income Tax Assessment Act that make it more complex. This legislation does in fact remove up to 50 per cent of the volume of the Income Tax Assessment Act 1936. This legislation is best understood not as a tax policy but as a forest policy. This legislation was designed to reduce the number of trees that are cut down to produce the Income Tax Assessment Act. It is a forest policy, not a tax policy, because it effectively does nothing to simplify the Income Tax Assessment Act.

Another way of thinking of the task of simplifying this legislation is to compare it with the human genome project, which had the goal of identifying all of the approximately 20,000 to 25,000 genes in human DNA and to determine the sequences of the three billion chemical base pairs that make up human DNA. It took 13 years to unravel the human genome. It has taken this government 10 years to try to simplify the Income Tax Assessment Act. More progress has been made on the human genome in 13 years than this government has been able to make in more than 10 years to simplify the Income Tax Assessment Act, and still it has made no meaningful progress. There are virtually no legislative changes in this bill that simplify the Income Tax Assessment Act. How do we know that? We are told that by the explanatory memorandum. This bill simply pulls out redundant provisions and does not simplify the Income Tax Assessment Act at all.

While we are on the subject of simplicity, yesterday the Treasurer announced that he was implementing a new GST-simplified accounting method for restaurants, cafes and caterers. In his statement, he said:

Businesses with an annual turnover of up to $2 million will be eligible for the SAM.

That is the simplified accounting method. The statement ends:

Further information on the new simplified accounting method can be found at www.ato.gov.au.

That is the website of the Australian Taxation Office. When you go to the website, you see that there are no details about the new simplified accounting method for the GST for restaurants, cafes and caterers whose turnover is less than $2 million. This new method is coming in on 1 October. We have had a bit of a debate in this parliament about airbrushing transcripts and on whether they appear or not. The Treasurer has announced a new simplified accounting method for the GST about which there are no details. He just wanted the announcement effect. A new simplified accounting method for the GST reminds me of another proposal—that is, the proposal of the Australian Labor Party called the ratio method. When I developed the ratio method and it was adopted as Labor Party policy, it was warmly received by the small business community. In fact, a spokesperson for COSBOA, on 8 August 2001, said:

I can say with absolute clarity that the members of the association who were in the room were very impressed with the idea because it was simple.

We had a Labor Party proposal to simplify the GST for small businesses with turnover below a specified level. It sounds like that is exactly what the coalition is doing, but we will not know until we see the detail when it is finally posted on the ATO’s website. We do know that in 2001 the Treasurer thought this was a terrible idea. The Treasurer issued a press release on 12 October 2001 headed ‘Beazley’s big BAS bungle’.  In referring to the ratio method, he stated:

... it can only work if businesses pay more GST than they are liable for!

…         …         …

If this—

that is, the ratio method—

amounts to less than the actual liability, then companies will choose it and open up a large revenue hole. But Labor says it has to be revenue neutral. It can only be revenue neutral if Labor can get an equal number of companies to overpay to make up for those that cherry pick the advantage.

That sounds like a critique of the new simplified accounting method—or has the Treasurer had a change of heart? We will only know when that information is posted on the website. But when the ratio method was released, apart from the spokesman for COSBOA saying it was a terrific idea, the minister’s department—the member for Groom was then the minister for small business—did a critique on it which was released by him to the media and which basically said that it sounded like a pretty good idea. The ratio method was described as having the potential to be a vote winner, after the then shadow Treasurer, Simon Crean, unveiled it.

So there was Labor, back in 2001, proposing real measures to simplify the GST, real measures for tax reform. This government has taken 10 years to produce a piece of legislation that does nothing more than remove inoperative provisions, retaining all the complexity of the Income Tax Assessment Act. It fails every test of tax reform. Whenever it sits a test of tax reform, it fails, and it deserves to be condemned for doing so.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Before us today we have a Clayton’s tax simplification bill. This is the sort of bill you have when you are not serious about tax simplification. The Treasurer introduced the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 in June and he did so with much fanfare. He made the claim that the bill would repeal over 4,100 pages of inoperative tax law. He claimed that a third of the income tax law and over half of the Income Tax Assessment Act 1936 was gone. He claimed that this was a major reduction in the volume of tax law. He made all these claims, but he was wrong, and he knew he was wrong. I suspect we have heard from only one member of the government’s backbench on this issue because, quite frankly, they know it is wrong as well. They do not want to come into this place to defend the Treasurer’s exaggerated claim.

The member for Moncrieff came into this place with a view to taking some responsibility for the unpredicted resources boom and the commodity prices that we are currently enjoying—to which the boost in employment is attributed. But, to his credit, he indicated that the government did not predict the skills shortage and also that the government made cuts to TAFE and further education and abolished the Australian National Training Authority. All these things just fell into the government’s lap, yet if you listened to the member for Moncrieff you would think we were riding on the back of a resources boom as a consequence of the election of the Howard government back in 1996.

I am sure that no other member believes that—unless it is on the ministerial script for today—but I thought the member for Moncrieff put in a sterling effort to back up the unsustainable claim that this is about reform. They should not make these extravagant claims, because they know this is not reform—this is window-dressing, at best. If the Treasurer counts numbers in the same way that he relies on this as amounting to a reform of the tax act, it is no wonder that he was not serious about making a leadership challenge. We need to get it straight that 4,100 pages will not be removed from the income tax act as a result of this bill. The major publishing companies have already agreed to print the archive volumes of the repeal provisions. The repeal provisions will not disappear from the shelves of the tax practitioners; they will not disappear from our life to that extent. The pages might be moved to a different volume of the tax act, but they will remain on tax practitioners’ shelves gathering dust.

This bill does not act to reduce the complexity of Australia’s tax laws. The Treasurer knows that. He knows that the only way to reduce the complexity of the tax laws is to change the operative provisions. Repealing inoperative provisions and shoving them into another volume that gathers dust in the corner of someone’s office does not reduce the complexity one little bit. It does not make the system simpler. The simplicity of any system, particularly a tax system, will always be driven by the provisions that operate, not by the provisions that do not operate. A bit of window-dressing to the act, or a bit of pruning of the pages, does not amount to introducing simplicity into our tax system.

The things that matter to anyone who operates any system are the things that generate operations. So, unless we give attention to simplifying the operative provisions, we are simply masquerading this notion of simplification. The driver of the complexity of the tax system is and can only be the operative tax provisions. The complexity of Australia’s tax system will only ever be reduced if we address the operative provisions of the tax act. The system will only ever become less complex if the government gets serious about tax law and does not just tinker with it when it suits it.

As has been pointed out previously, there are currently more than 240 tax expenditures—tax breaks, concessions and the like—which erode the revenue base and make the system more complex. In the 60 years between the introduction of the Income Tax Assessment Act in 1936 and this government coming into power in 1996, in excess of 150 additional tax expenditure lines have been created. In the decade this government has been in power, another 89 have been added to that mix. In addition to these concessions, in 2000 alone nearly 90,000 private, binding tax rulings were given. These rulings create precedents which add to the complexity for tax practitioners who interpret the tax arrangements and, indeed, to the complexity of the act itself.

You do not need to be a tax expert to work out that the system has become complex. Blame for the complexity of Australia’s income tax system can pretty much be laid at the feet of the current government and, more particularly, the Treasurer. Yet the Treasurer comes into this place and says the bill will slash dozens of pages from the tax act. If this is the criterion for removing the complexity, I fear it will never happen whilst this government holds office. The Chairman of the Productivity Commission, Gary Banks, said in 2003:

At nearly 7,000 pages, the Income Tax Assessment Act—

the 1936 and 1937 statutes read together—

is now nearly 60 times longer than the paltry 120 pages that did the job when it was first introduced in 1936

He goes on to say that, notwithstanding the admirable recent attempts at tax simplification, that is the position. I would also like to quote something the Chairman of the Productivity Commission said which was not quoted by the member for Rankin but which adds a little more colour to this:

To take a fanciful turn, were this rate of growth to continue unabated, I am informed that by the end of this century the paper version of the Tax Act would amount to 830 billion pages; it would take over 3 million years of continuous reading to assimilate and weigh the equivalent of around 20 aircraft carriers!

That is not my view, and I am sure he is taking slight licence in saying that, but it is not bad commentary coming from the Chairman of the Productivity Commission. He was not actually seeking to heap accolades on the government over their management of the complexities of the taxation act at that point. I agree that the predictions are somewhat fanciful; nevertheless, they highlight that unless we get serious in our attempts to reduce the complexities of the tax act—if we just tack bits on here and there—we simply will not be addressing its shortcomings and the act will simply grow. This government has become a serial offender when it comes to tinkering with the tax act. It has added bits here and bits there to accommodate special interest groups or their mates, and the act has grown in its volume as a direct result.

The amendments, layer upon layer, can only produce complexity. That is exactly what this government has presided over when it comes to the tax act. Sure, the bill before us does involve the rewriting of some provisions. However, as the rewriting still requires navigation between a 1936 act and the 1997 act, probably not much can be said for its quality. The government talks about efficiency and simplicity but if its performance is measured by the impact it has had on the tax act it has to be regarded as a dismal failure.

Labor moved a quite complex second reading amendment to this bill, one which I support. It is based on some of the uncontroversial recommendations of the Taxation Institute of Australia in its report Beyond 4100. I am sure that the members opposite are aware that recently the Taxation Institute released this report, which outlined a range of areas in which there could be real reform in income tax. While the bill could be best described as a bit of plastic surgery—although, unfortunately, when you come out of this operation you still are wearing the same nose as when you went in—the Taxation Institute was proposing real and substantive reform to the taxation act. It is true that some of the institute’s recommendations would be more readily accepted than others, but it is certainly a worthwhile contribution to the ongoing debate about reform of the Australian tax system.

That said, the most uncontroversial recommendations of the report recommend that provisions that are almost never used and those that can not be readily enforced should be repealed or redrafted. These provide the basis of Labor’s second reading amendment and I encourage the government to support the amendment and support a genuine attempt to simplify the Australian tax law.

Tax is never far from the minds of working Australians, especially at this time of year when everyone seems to want to make their annual trek to the accountant’s office to file their return. But I am sure that many would love to be able to file those returns themselves, to have a system which was less complex, a system that would lend itself to being user friendly and where people could go about their business while paying to the Commonwealth their fair share of reasonable tax. I am sure that that is what most workers would prefer to do.

The growth in the volume of tax law and its increasing complexity, which brings with it compliance costs, continues to be a concern for taxpayers and taxation practitioners. There seems to be a litany of tax bills presented in this place as the government goes about its way of tinkering here and there, making modifications to the taxation system. As it includes and excludes various provisions, and as it attempts to curb tax minimisation on the one hand and open up new opportunities to avoid paying tax on the other, these complications continue to expand.

The government has come in for some criticism of late, as you would recall, when it comes to tax. Bear in mind, we all know that this government is the highest taxing and highest spending government in Australia’s history, and I do not think that is an underserved criticism. I think there is some accuracy in that statement.

Interestingly, the OECD Economic Survey of Australia Volume 2006/12, released in July of this year, made some comments not only on Australia’s fiscal position but also on its tax system. The OECD says:

Tax revenues for the immediate year ahead have been under-predicted in each of the last four budget years by an average of $6.8 billion, about 0.8% of GDP, with the fiscal balance under-predicted by $7 billion.

In addition to this interesting comment on the systematic failure of the government’s revenue predictions, the OECD makes a couple of other interesting comments when it comes to the taxation system itself. In that regard, the OECD says this:

Recent cuts in the higher rates of personal income tax and the widening of thresholds are to be welcomed. However, the extent of the changes in the 2006/07 Budget suggests that the focus of any future tax cuts should switch to reducing high effective marginal tax rates faced by many households in the lower income deciles.

That’s correct—the OECD is saying that the focus of tax cuts should be switched to reducing the high effective marginal tax rates now worn by people in our lower income households.

As I read it, I could not help thinking that I had heard that sort of suggestion before. In fact, I had. That was actually Labor’s response to the squandered opportunity that was the last budget when this government sold Australia out. It was Labor’s response to a budget that once again spectacularly failed Middle Australia and spectacularly failed working families in this country. It is a call I have made in this place before, and I will be making it again and again until this government gets serious about fixing the system. When you put in, you should be entitled to expect to get your fair share out.

Of course, suggesting that the focus of the tax cuts should be on reducing high effective marginal tax rates is not the only comment the OECD makes when it comes to Australia’s taxation system. Other interesting comments made by the OECD on the government’s opportunity in relation to the complexity of Australia’s tax law include:

The government should continue to seek opportunities to reduce the complexity of the tax law.

That is not talking about how we simply go and prune a few pages off the tax act or how we can take a few pages out of that act and store them in an archived volume somewhere else where you will still have to refer to them to navigate through the taxation system. What the OECD is saying very clearly is that this government should take those opportunities to address the complexity of Australia’s tax law. If anything, quite frankly, this government has got to wear that criticism.

Everyone will recall that last year, with much fanfare and flourish, the member for Wentworth released his own contribution to the Australian tax debate. He presented some 280 options for tax reform last year, yet today he is silent. It is only the member for Moncrieff who decided to come and back up the Treasurer on this piece of art. I can only imagine that the member for Wentworth is still sitting in his office thinking that the Treasurer may have somehow overdramatised his claim that this bill was the culmination of a serious effort to reduce the complexity of Australian taxation.

To give him his credit, the member for Moncrieff did come down to the chamber to try to make a spirited contribution in this debate. As I said earlier, I think all he wanted to point out is the fact that the country is presently riding high on a resources boom and, as a consequence, this government wants to claim all the responsibility it can for that. He was the lone voice. If the Treasurer can only muster people like the member for Moncrieff to run a diversion— (Time expired)

Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

I too wish to speak on the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006. When the new tax system was introduced, the government said:

… a modern tax system is one of the keys to Australia’s future economic growth and dynamism.

According to the government:

The existing tax system is out of date, unfair, internationally uncompetitive, ineffective and unnecessarily complex.

The solution they gave was A New Tax System because, as they said at that time, ‘systemic problems require systemic solutions’. According to the explanatory memorandum for the bill we are considering today, the government are making ‘continuing efforts to reduce unnecessary complexity in the tax laws’. If this is the best they can do, they have got a long way to go.

This bill repeals 4,100 pages of inoperative tax laws. Of course, that is welcome, but it will not fix the underlying problems with the tax law: the complexity of the laws and the burden that creates for taxpayers of all sizes. In 1996 the tax law was 3,500 pages long; today, after more than 10 years of Peter Costello’s treasurership, it is 9,500 pages long. It has gone from 3,500 pages to 9,500 pages. As Gary Banks, the Chairman of the Productivity Commission, observed in 2003:

Were this rate of growth to continue unabated, I am informed that by the end of this century the paper version of the Tax Act would amount to 830 billion pages; it would take over 3 million years of continuous reading to assimilate and weigh the equivalent of around 20 aircraft carriers.

Repealing superfluous tax law is always welcome, but what has the government done? It has not, for example, streamlined annual income tax returns. It has not simplified all of the tax offsets, deductions and exemptions that make it difficult for people to work out their tax liability. On top of that, the Treasurer’s tally of 4,100 pages of repealed laws includes several inoperative sales tax acts—acts which have not been operative for six years, and acts which do not relate to income tax.

I note that the Taxation Institute of Australia is calling for a more comprehensive rewrite of tax laws. The BCA has made this point:

… regulation should be simple, clear, well explained and sensitively enforced.

If you want an example of regulation that is not any of those things, you do not have to look much further than the income tax system.

As I have said before, Labor sees tax reform, guided by the principles of competitiveness, efficiency and fairness, as an investment in the drivers of growth. By international standards, Australia’s income tax system is too complex. While other countries have been getting on with the task of simplifying their income tax systems, we have been adding to its complexity. According to the OECD’s personal income tax database, the comparative complexity of Australia’s tax system has been increasing relative to other countries.

While taxes have traditionally been seen as the primary mechanism for governments to raise revenue and deliver services, they are also increasingly viewed as an important factor in the conduct of the market. All this bill will do is repeal the inoperative provisions—that is, it is a fresh coat of paint when the tax system needs a major overhaul. Last year there were 15,000 separate tax rulings and determinations. That is around 290 a week—58 each business day or one every 7.3 minutes. This means that 15,000 times a year taxpayers and their agents find the tax laws so unclear that they need a ruling from the tax office about how the law applies to their circumstances.

To me, this is as clear an indication as you could get that our tax law is far too complex and requires serious reform. The new tax commissioner said earlier this year that the complexity of the tax legislation does not trouble the average taxpayer. I was certainly surprised to hear that. He said that the average taxpayer does not care whether you have 10 pages or 10,000 pages of tax law. He said that a typical taxpayer earns income and has some deductions and that’s it. A typical business has business income, trading stock and operating expenses and that’s it. He also said that 78 per cent of taxpayers use a tax agent so they do not face the complexity themselves.

That is very disappointing. It is a narrow view of the costs of the regulatory burden. Why do ordinary taxpayers have to fork out more than $150 to have a tax agent fill out their tax return—the tax commissioner certainly has not answered that question—and why can’t it be simpler for more taxpayers? The 15,000 tax rulings last year tell us that, for businesses of all sizes, there are too many sections of the tax law that are impossible to interpret. Tax lawyers may have to consult half a dozen pieces of tax legislation to answer a straightforward tax question. That complexity means that corporate taxpayers are spending tens of thousands of dollars on advice or ATO rulings.

This kind of complexity is an impediment to doing business. For example, businesses are often stalled from making acquisitions, disposals or forming a consolidated group while they wait for legal advice or an answer from the tax office. Tax complexity can harm the efficient allocation of resources and, in the long run, that puts growth at risk, which is why we do need some substantial action in this area and that is not, unfortunately, contained in this bill.

The government have begun the process of reducing the burden of regulation, but there is little evidence that they understand why it is important. Earlier this year the British government made a call for what was called sensible debate on risk in policy making. It is little wonder that its call on regulation and risk has struck a chord around the world. The British government pointed to the detrimental effect of overregulation, its impact on business and the competitive culture of nations. Looking at regulation through the prism of risk is a worthwhile, new way to frame the debate on regulatory reform. The British PM put it in these terms:

… we are in danger of having a wholly disproportionate attitude to the risks we should expect to run as a normal part of life. This is putting pressure on policy-making … to act to eliminate risk in a way that is out of all proportion to the potential damage. The result is—

lots—

… of rules, guidelines, responses to ‘scandals’ of one nature or another that ends up having utterly perverse consequences.

Labor believe in smarter regulation. We believe in regulating where it is necessary. So easing the regulatory burden is an essential component of Labor’s agenda. Real change on this front requires structural reform. Part of the key to reform lies in fixing up the regulation impact statement process to ensure that regulation which fails the cost-benefit test does not get up. The government has not been up to the mark in this area at all. On top of that, we need to review industry by industry and, where appropriate, wind back the existing regulatory burden by (1) specifying the objective of each regulation and quantifying its benefit to business and consumers; (2) quantifying the cost of the regulation on the prices that firms charge and its impact on their capacity to remain innovative and competitive; and, (3) removing or redesigning regulation that is expensive but offers little benefit to either the consumer or the markets.

Percentage targets or rules such as the ‘one in, one out’ approach are useful if they do provide discipline and we set our sights high. We should also explore greater use of sunset clauses to ensure the regulatory burden is regularly assessed on a ‘use it or lose it’ basis.  But the ultimate test is high standards at a lower cost to business, and that must be our objective. Yesterday the Treasurer announced the government’s response to the Banks report Rethinking regulation. I think it is pretty fair to say that the Treasurer’s announcement showed a lack of passion for this important policy area. I look forward to the government embracing a new approach to regulation but, unfortunately, it was not on display yesterday at the Treasurer’s press conference.

The red tape burden on business has significantly increased under the Howard government and an attempt to reverse that trend is welcome. In particular, we welcome a five-yearly review of regulation to continually review and remove unnecessary regulations. The Banks task force report Rethinking regulation was a comprehensive review of business regulation, but the government’s response must be a wholesale change of the culture regarding regulation. Before the government announced its response to the Banks report, Labor had already made the following proposals: (1) impose limits on regulation, such as introducing a rule that a regulation must be abolished before any new regulation can be introduced; (2) explore new, flexible, low-cost regulatory models being adopted by our competitors, such as the United Kingdom; and, (3)  reform regulatory impact statements to ensure that the economic costs of red tape do not outweigh its benefits.

Labor has long been arguing for a new wave of productivity-enhancing reform to lock in prosperity for tomorrow, not just today. Despite the government’s response to the regulation task force report, there is a level of complacency in government policy settings that does not respond to the urgency of the challenges we face. Nowhere is this more evident than in the area of competition policy and regulatory reform. Quite simply, in these areas the government has hit the snooze button. Competition policy and regulatory reform have barely moved forward since the mid-1990s. Australia was only one of three OECD countries to see productivity growth accelerate in the 1990s, with productivity growth reaching three per cent a year—its highest growth rate for 40 years. In 2004-05, productivity fell by 1.3 per cent—the first fall since 1986-87, the largest since 1982-83 and only the sixth fall in over 40 years. In the 1990s, Australian productivity was moving rapidly towards US levels. We are now almost back to where we started.

The most tangible evidence of our deteriorating competitiveness lies in our trade performance. Despite record commodity prices, our trade and current account deficits remain near record highs. The BCA recently warned that the performance of the Australian economy is slipping and we are heading for trouble. In the face of this ever-intensifying global competition, Australia needs to be more productive, not less. And to do so, Australia needs a new wave of competition policy to lift the economy up and sustain our living standards into the future. Federal Labor is developing a new competition policy agenda not just for the first term of the next Labor government but for the next 20 years. Dealing with the regulatory burden and improving our tax laws are among the key challenges—challenges that this government simply does not get.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

On the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 and banking, I can remember doing a doorknock on the Gold Coast to help the candidate of the party I was then in. The gentleman said, ‘I used to be an accountant; I would like you to come in and see why I am now not an accountant.’ He had a copy of the taxation act that applied some 15 years prior to that date and a copy of the current taxation act. The taxation act when he started working as an accountant some 20 years previously was less than three-quarters of an inch thick—smaller than the thickness of my little finger. The current act—and I am flying by memory here—appeared to be about a foot thick. The volumes of the act came to some 12 inches. He said, ‘Nobody can be familiar with that, and if we make a mistake we are liable now to criminal charges.’

The father of the English-speaking people, none other than Alfred the Great, when he wrote down the first laws in British history said, ‘I have not presumed to put down many laws in writing for I do not know what will be suitable for those that follow after me.’ That is very humble and simple. I mean—are the tax laws working now with this huge act compared with 20 or 30 years ago? Is the federal government reeling from a lack of income from taxation? Their tax take has more than doubled in the 12 years that they have been in office. They have hardly been badly served by the tax department; it has been a marvellous success story.

A little knowledge is a dangerous thing. We are continuously told in this country how wonderfully well off we are. If you look at the internal economy, then I think the government would get about 80 per cent. They have done a good job and their Public Service has done a good job. But if you look at the outside world, you find that this country has nothing now that it can sell to the outside world. Look at sheep and wool, which was our biggest export item in 1990—nearly 10 per cent of the entire Australian export earnings. Sheep numbers have dropped clean in half following the deregulation of that industry. The beef industry, with moderately good prices, is down 26 per cent. Sugar is down 15 per cent. Dairying is down around 15 per cent. I do not know about wheat, but, of the big five, four of them are down dramatically. They are simply vanishing. They cannot compete against a 49 per cent average OECD subsidy, and they cannot compete against people who work for $8 or $9 a day. I think $8.50 is what a Filipino is paid for agricultural work in the Philippines, for example, from where they are trying to bring bananas at the present time.

We had manufacturing but we do not have manufacturing now. Under the free trade agreement our motor vehicle industry will naturally close down. We cannot possibly compete against the giant economies-of-scale plants in the United States. Even there they are sometimes moving out to cheap-labour countries. In countries like Japan they mobilise finance so as to be highly competitive on their assembly lines with state-of-the-art technology. We cannot afford to do that in a tiny home market of 20 million people. I do not think there is anyone in Australia who would see the motor vehicle industry as anything but doomed. And that is the last manufacturing that takes place in Australia now. I rang the Baxter boot company to buy a pair of boots—they make very good country boots—and they said, ‘By the way, Bob, we are moving out of manufacturing.’ I think they started in 1856, but they cannot any longer compete against competitors that have their boots made in China, so they will be closing down their manufacturing arm. It was about eight or nine months ago that I spoke to him.

So manufacturing is gone and agriculture is going. What exactly can this country produce? I happen to represent the biggest mining province on earth, for the sake of the better term, given the amount of mineral riches that are compressed into a small area in north-west Queensland. We were producing $5,000 million worth, but the price of metals has trebled so I suppose we would be producing about $10,000 million worth now. Australia’s exports in total were about $90,000 million last time I looked. We can process the minerals we are producing at the moment but we cannot process the output of extra mines that are coming on line—Lady Annie, Lady Loretta, Douglas River, Rocklands to name but a few. These are mines that are in the pipeline for development. But we have no electricity on the northern grid—we have run out of power. People are building small, extremely expensive gas-fired power stations in order to get by. That is the best they can do. But we have our friendly national competition policy! As the Treasurer told me in answer to a question, ‘If a mine wants a power station, then let a mine build a power station.’ With all due respect, that demonstrated his towering ignorance to the Parliament of Australia. Power stations of their very essence have to be multi-user facilities. No individual project, no matter how big, can warrant a power station. We built a power station at Gladstone. It was one of the biggest in the world at the time it was built. It had no customers.

The government is saying that their fiduciary and monetary settings are excellent, as is their approach to taxation. They say they have balanced the budget. If I could unilaterally double my income at the press of a button, I could balance my budget too. This government has more than doubled its income by massively increasing taxation receipts. When they came in they were collecting about $100,000 million a year. Now they are collecting way in excess of $200,000 million—I think the figure is about $230,000 million. They say that some of that is GST. It is, but then they are paying less money to the states—and I am not for one moment saying that the states are innocent in this massive spending spree by government.

So it looks good, but it is like the locomotive going along at 100 kilometres an hour. It is beautiful in the locomotive looking at the scenery going past. But someone up the front says, ‘We’re running out of diesel.’ You say, ‘It looks all right to me. We’re going along fine. We’re going along at 100 kilometres an hour.’ The diesel, as far as the economy is concerned, is finance, and if you keep borrowing at the rate of $60,000 million a year, there comes a time when you have to pay it back. All us who have been in business know that at some period in our lives we had great growth in our land values or something of that nature and we said ‘Jeez, this is Christmas. I am now worth $2 million.’ And we went out and spent the $2 million. While we were spending it, it was great fun, but of course the party was over when we had gone through the $2 million and we had no income. That is the situation for Australia. We do not produce anything that we can sell to the rest of the world.

To return to mining, we cannot process our metals. We are being reduced to a quarrying operation. The last three mines opened in North Queensland were owned by Indians. They did not have the electricity available to process the product. They put it in a ship and took it home to India to process; they were not going to take it to a port in Australia. Who really could blame them? I could not really attack them. I could attack the government. Gladstone was a power station built without any customers. It not only had an excess of capacity allowing for growth; its total capacity allowed for growth. That is the reason why Australia secured the aluminium industry. I am exaggerating a little bit, Mr Deputy Speaker Adams, because you had an aluminium industry, albeit a very small one, down in Tasmania. But the big, massive-scale aluminium industry, which is the second-biggest export earner for Australia, was started by the Gladstone power station, which was built as an infrastructure item by the state government, with no customers. Now it would be the most flagrant breach of national competition policy. It could not happen today. If we rolled the clock back and we had had a national competition policy and the various other government policies then, there would be no aluminium industry in Australia today. I do not know how much of a coal industry we would have, either, because no individual mine had the money nor was it big enough to be able to build a railway line and a port at Gladstone. The government had to do that.

This place does not understand individual projects. They do not understand them at all. They do not understand the point of view of the businessman. There is hardly a single person on the whole front bench of the government who has ever been a businessman—who has ever backed his judgement with his own money. Bjelke-Petersen had a saying: if you have not backed your judgement with your own money, you should not be making decisions with other people’s money. I think the success of his government proved that adage to be very correct indeed.

Today we are discussing the collection of taxation and the abolition of a lot of excessive tax laws. I applaud the government for cutting back that foot-thick document maybe to about nine inches. Do we really need all of these laws? I always think it is the hallmark of socialist government that they feel they can pass all the laws and make you good. I have found laws to be the refuge of evil people. Give me the freedom of no laws any day over the restrictive practices of excessive law.

The collection of taxation in Australia has increased. I hope I have got the correct figure here, because even I am a bit staggered by this figure. One of the government reports said that the cost to government of collecting the GST is $500 million a year. I would have to emphasise to the House that I would question that, but that was the figure that was published in this particular government report. Undoubtedly, there is a huge cost in collecting GST; there is no doubt about that. Many thousands of public servants were employed in addition to those who were already employed when the GST came in.

Was this the optimal way to travel? Sir Leo Hielscher was a Queensland Treasurer. He was offered a World Bank position—a very great honour for Australia—which he rejected. He was twice offered a position with the Reserve Bank or the senior position in federal Treasury here in Canberra—I do not know which it was, but it was one of the two—and he rejected that also. I think he looked forward to retirement; he had been on the board of many Queensland businesses, and I do not think he wanted to leave Queensland, as a lot of senior public servants do not. But, whatever his reasons, he was a very distinguished treasurer, and one of the great architects of the juggernaut economy of Queensland. This juggernaut has carried government after government successfully into election victories because of the fat that was built in during that period under Bjelke-Petersen, Sir Leo Hielscher and many other luminaries.

When the then federal Treasurer, who I think may have been the current Prime Minister, was talking about GST originally, Bill Gunn, who was the Deputy Premier of Queensland—and I suppose he was running the state when Joh was going to Canberra—had me up. I used to be his right-hand man. He said, ‘What about this GST?’ I said, ‘Intelligent people are saying it’s a good idea.’ He said, ‘No, it’s a stupid idea.’ I said, ‘They’re finding it difficult to collect taxation.’ And he said, ‘No, financial transactions tax.’ I said, ‘What’s that?’ He said, ‘One per cent. Every time you use your credit card or write a cheque, we take one per cent. The banks become the collectors and it costs us nothing; it costs the people of Queensland nothing. We just take one per cent.’ I said, ‘Won’t people work in cash?’ He said: ‘What are you going to do? Carry $1,000 around in your pocket to save $1?’ I said, ‘No, not likely.’ He said, ‘Well, there’s your answer.’

According to advice from the Parliamentary Library that I have taken over a period of years, it would appear that you would collect a lot more from one per cent than you do from 10 per cent GST. GST is terribly unfair to us people who live in country Australia. The cost of living in places like Normanton and Hughenden is 20, 30 and 40 per cent higher than the cost of living in Brisbane. GST is added to that, increasing dramatically the burden that we must carry. Of course, there is no relief for people in these towns who are on fixed incomes, retired or living on the pension. People say, ‘Yes, but the cost of housing’s cheap.’ You try building a house when the cost of a bag of concrete in Canberra is $6 and the cost in Cloncurry is $15—that was quoted to me over the phone today.

We would say that the GST is a grossly unfair tax. It falls heavily upon us people in country areas. One of the massive sources of revenue for the Australian government is the tax on petrol. Lucky you if you live in Sydney or Melbourne or Brisbane, where you have got commuter transportation systems. But outside the metropolitan areas, as you would be well aware, Mr Deputy Speaker Adams, we do not have any commuter transportation systems. I say to my brother, who is a lecturer at the university: ‘When you go to work of a morning on the train, you get subsidised to the tune of 50 per cent. When I go to work in the morning in my motor car, I pay 100 per cent tax.’ This is because of the escalating price of fuel. That was true in the middle of last year but it is not so true now; it is about 30 per cent to 50 per cent. Whatever it is, it is no longer 100 per cent. But the tax was 100 per cent on the price of fuel. The price was about 70c, the tax was 28c and then the GST went on top of that.

People who live outside the metropolitan areas get hit three times under the tax arrangements as they now stand. Why implement the GST when you had available to you the financial transactions tax? As I said previously, a little knowledge is a dangerous thing. At this stage, I have only a little knowledge on this and I need to get a lot of knowledge.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

Hear, hear!

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

I am freely and frankly admitting that, which is more than the member for Dickson’s colleagues do. And if you are pitting yourself, my friend, against Sir Leo Hielscher, who was offered the World Bank position, then good luck to you, son. The member for Dickson will not, in 10 lifetimes, get anything on the record similar to what Sir Leo put on the record.

It is not my idea, I would emphasise to the member, but the idea of the most successful state government economically—probably in the nation’s history. This country, at the present moment, rides in the coal truck. Where do you think the coal is coming from? And who do you think put it there? They put it there with government payment for infrastructure. There was no money put up by private industry at all, so, if we had this government’s policies, we would not have any coal industry in Australia. I am giving the member for Dickson a little bit of a lecture so he can have some serious knowledge instead of the superficial knowledge that he has.

At least when I have not been happy that I have done enough work on it, I admit that. But I know this for a fact: we do not tax the purchase of money. If you are saying how much was spent in Australia today, a huge volume of that—it might be a third or a quarter or some figure like that—is spent buying Australian money. Again, I am just a poor, simple Cloncurry man, so I would not know. But Mr Tobin—he got a Nobel Prize for economics, so I think he might know a bit more than some of the members in the House—suggested that we should put a tax on the purchase of money. George Soros, one of the most successful money makers in recent history, said exactly the same thing, and that is the reason we are not putting the tax on, because it is a stock market and it is those speculators. (Time expired)

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

I thank the members who have made a contribution to this debate on the Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006. I begin by making a confession to this House that, up until the contribution by the member for Kennedy, I thought the most disastrous contribution that could ever be made to the Australian economy would be made by Kim Beazley as Prime Minister, given the way in which he tried to wreck the economy under the Keating government. The ignorant display by the member for Kennedy, then, is a very poor reflection on his contribution to this debate. I also want to thank, in particular, the member for Moncrieff, who made a very sound contribution to the debate.

This bill implements a variety of changes and improvements to the tax laws. In 2003, in accordance with the government’s aim of reducing complexity in tax laws, the Board of Taxation began a project to identify inoperative provisions in the tax laws. In October last year, it reported to the Treasurer that it had identified 2,100 pages of inoperative provisions in the income tax law and recommended that they be repealed. The government, of course, accepted that recommendation.

As well as the 2,100 pages of provisions identified by the Board of Taxation, this bill repeals a further 500 pages of income tax provisions that were subsequently identified as inoperative and 1,500 pages of inoperative provisions from other taxation acts. In total, the bill repeals over 4,100 pages of inoperative provisions, including over half of the Income Tax Assessment Act 1936, almost a third of the entire income tax law and 48 sales tax statutes that are wholly inoperative. Repealing the inoperative material will not only significantly reduce the length of the tax law but also make it easier to use and lower the compliance costs borne by those who use that law.

As well as repealing inoperative material, the bill makes some other improvements designed to make the tax laws easier to use. For example, it replaces multiple definitions of some terms with a single definition. Rationalising definitions in the tax law has been argued for by some taxpayer representatives and was recommended by the Banks task force report, Rethinking regulation, in January 2006. That sort of improvement will bring more consistency to the tax laws and make it simpler for taxpayers to understand and meet their obligations.

The flow-on effects of repealing the inoperative provisions will provide further benefits for taxpayers and tax practitioners. The Commissioner of Taxation has advised that approximately 200 public rulings that refer to provisions that are being repealed will be either revised or withdrawn. The commissioner is also working with tax professionals to improve the readability of other public rulings affected by the bill. Repealing the inoperative provisions and making the other improvements are important parts of the government’s continuing efforts to reduce the complexity of the tax law. The government will look for similar opportunities in the future to improve the tax laws and reduce the regulatory burdens and compliance costs faced by business and other taxpayers.

Before I conclude, I would like to make some comments on the second reading amendment in response to the member for Hunter. The first point I would make is that the member for Hunter has moved an amendment to repeal over 100 sections of the income tax law. The member for Hunter also moved an amendment to repeal a number of provisions that I am advised do not exist or are in fact being repealed by this bill. So it is worth making the point that Labor should never be trusted with numbers. Labor have no economic credibility.

The fact that, on the advice that I have, the member for Hunter has moved an amendment to repeal a number of provisions that do not even exist or are in fact being repealed by this bill that is before the House really shows how devoid he is of any credibility in this area. The member for Hunter wants to position himself as part of the alternative government of this nation, but he cannot even get his own amendments right. The government will have a look at those 100 or so sections. I will take some further advice. Hopefully that advice will say to me that the member for Hunter has not got it all wrong, but I suspect he probably has.

Removing inoperative provisions is of course an ongoing process. I remind the House that the process has seen the removal of over 4,100 pages of legislation covering literally thousands of sections. I also wish to correct the honourable member on another error that he made in his presentation to this House. The government has not presided over the growth of the income tax law to 10,000 pages, as asserted by the member for Hunter. In fact, the whole act does not number 10,000 pages, and, in any case, this government is repealing 2,600 pages of that legislation. That is a third of the total size of the income tax law.

I also want to respond to some erroneous claims by the member for Rankin, who claimed that the bill only withdrew 1,900 pages from the income tax law. Again, I repeat for the benefit of the member for Rankin that the bill does in fact remove 2,600 pages from the income tax law and 1,500 pages from other tax laws, making 4,100 pages in total. In conclusion, I thank members for their support of the government’s ongoing efforts to improve the quality of the tax laws and to make the tax laws and how they operate in this country more efficient. I commend the bill to the House.

Question put:

That the words proposed to be omitted (Mr Fitzgibbon’s amendment) stand part of the question.