Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

Before question time I was speaking about three aspects of the Tax Laws Amendment (2007 Measures No. 1) Bill 2007. I comprehensively dealt with the first and the second and I was dealing with the key question of what happens to a superannuation guarantee payment where there is a default by an employer. The provisions in this bill will allow the commissioner to indicate what steps have been taken to investigate the complaint and the actions taken under the act in order to do it. So the employee will have a more perfect knowledge. I also argued we should have a class action with regard to this for all of those people in Australia affected by the Treasurer deciding not to go ahead with the second tranche of Labor’s tax cuts, which were commuted into a three per cent super guarantee, which would have taken it from nine per cent to 12 per cent. At paragraph 2.9 of the explanatory memorandum to the bill, these two points are material with regard to that broader consideration:

• the employer has objected to the Commissioner’s assessment of the SG shortfall …

In this case, take it as the Commonwealth and take it as the Treasurer. The shortfall is in fact at least three per cent, if not six per cent. People could have an adequate retirement on 15 per cent. That really is the absolute minimum. This government has kept it foreshortened at nine per cent. It continues:

• the Commissioner has recovered or is seeking to recover a relevant amount of SG charge owing in relation to the employee.

That is the nub of the situation we have in Australia. We are really going to be six per cent short of what should be the minimum target for ordinary working Australians, baby boomers and everybody else who has not had enough time to put into it. It is this government’s actions over the last 10 years, where, in their recent changes, they have rewarded the rich in relation to super and they have effectively defrauded those who are poor and nicked that six per cent that should have been rightfully theirs.

Much as I want to continue for a long period of time on this, I know the member for Rankin is eager to take up this point and argue simply, clearly and cogently that the Treasurer of the Commonwealth of Australia should take note of this bill, that the parliament should charge that he be compliant with what was formerly legislated, that he should not have taken away that extra surcharge—the three per cent in the next productivity dividend. That would have gone to 12 per cent and that was the platform for the next and final agreement to go to 15 per cent. The Australian people have been utterly deprived of what is rightfully theirs and the superannuation guarantee for the whole of the rest of people’s lives in retirement has been impoverished thereby.

I might call the parliament’s attention to the fact that I have gone over my time by about two minutes. In fairness to everybody else, I should let the member for Rankin have a go.

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Blaxland for his kind observation of the forms of the House and I call the honourable member for Rankin.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Thank you. The Tax Laws Amendment (2007 Measures No. 1) Bill 2007 contains three main provisions. The first relates to Operation Wickenby, which is an investigation into tax avoidance or, perhaps more properly described, alleged tax evasion activity. It allows the Commissioner of Taxation to disclose taxpayer information to Operation Wickenby task force officers and to officers of future compliance operations. This is a measure to assist the tax office in its investigations into suspected tax evasion and tax avoidance activities. Labor has a long record of supporting measures that are legitimately directed at protecting the revenue base—measures by the tax office to ensure that people pay their fair share of tax.

I said Labor has a proud history, and I certainly will not go right through the postwar era, but I wish to point out that it was Labor in opposition that dragged the then Treasurer and now Prime Minister of Australia kicking and screaming to the dispatch box when the number of memoranda prepared by the Treasury in the late seventies and early eighties had become so voluminous that they could no longer be hidden from the public gaze. Those memoranda related to the assault on the income tax base perpetrated by bottom-of-the-harbour schemes, wet Slutzkins, dry Slutzkins—all sorts of imaginative schemes—into which members of the Liberal Party were up to their snorkels.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Hey!

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

This is true. This is a matter of public record of the early 1980s, particularly in the grand state of Western Australia.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. I take offence at that and ask the member to withdraw.

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

No, the comment was a generic one and not directed at either you or—

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

I took offence at it. The suggestion that members of the Liberal Party were extensively engaged in this sort of behaviour is just wrong.

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

The minister will resume his seat.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The records show that this activity was rampant and there were very senior people involved in that activity, as I say, up to their snorkels in it. It was Labor in opposition that helped blow the whistle on this rampant activity. I must point out too—and you would be aware of this, Mr Deputy Speaker—that the coalition managed inadvertently to blow the whistle on itself by organising the Costigan inquiry into the painters and dockers union. While we are talking about painters and dockers and all things maritime, the reality is that that inquiry found instead evidence of widespread abuse of the tax system through these various schemes.

If we wind the clock forward, we see Labor in parliament supporting the government in this case. Fortunately, the Treasurer has not been dragged kicking and screaming into authorising action through Operation Wickenby. I point out, however, that the annual report of the tax office a couple of years ago referred to the innovative establishment of a special unit directed at high-wealth individuals. To paraphrase the relevant part of the report, it said words to the effect that, unfortunately, there is no shortage of work for that unit. Labor argues, and has consistently argued, that people should pay their fair share of tax. This measure is designed to go some distance towards ensuring that people do pay their fair share of tax. Therefore, Labor supports the amendment in this bill.

The government has indicated that it is committing $300 million to Operation Wickenby over seven years. The budget measures in the 2006-07 budget increased revenue as a result of the operation. It has been estimated that the increased revenue could be $323 million over four years. If you do a little bit of simple arithmetic that might not seem to be a huge return on the investment that is going in. But when we evaluate anti-avoidance and anti-evasion activity on the part of the tax office we see that it is about not just the direct return but the signal that it sends to tax dodgers around the country that the tax office is vigilant and will run them to ground and bring them to account. So there is a much bigger second dividend through the overall impact on compliance with the income tax laws of this country.

I will note that compliance levels overall, according to the tax office, are pretty high, but where they are not it undermines the integrity of the tax system. It sends out a message: if some people are avoiding tax, why should honest taxpayers pay their fair share when very wealthy people do not? Therefore, these sorts of measures, even if they do not produce what seems to be a huge rate of return directly, are nevertheless well and truly worth while.

The second set of provisions in this legislation address the prohibition in the current law on the disclosure of information about the progress of any action taken by any person in relation to the Superannuation Guarantee (Administration) Act. That is a way of saying that at present the tax office is prevented from providing information to employees on the progress of their superannuation guarantee complaints. The amendments will allow the tax office to give information to an employee in response to the employee’s complaint that his or her employer has not complied with the employer superannuation guarantee obligations. This is a common-sense amendment. Of course, if an employee feels aggrieved and feels that his or her employer is not doing the right thing in providing the superannuation guarantee payments to which he or she is entitled then a complaint obviously can be made. But, under current laws, the tax office is prohibited from advising the employee of the progress of that complaint. It can become a bit of a black hole. So this will shine a light into the black hole and allow the employee to at least be apprised of the progress of the assessment of that complaint.

Supporting this particular provision gives me the opportunity to support the superannuation system in this country more generally—a superannuation system for which the coalition has been claiming credit lately. It is as if nothing ever happened before 1996. I recall, as do so many Australians, that a very significant change occurred in Australia in the late eighties and the 1990s, under the previous Labor government and under the direction of Paul Keating, firstly as Treasurer and then as Prime Minister. That, of course, was the introduction of the superannuation guarantee.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The minister at the table, Minister Hockey, groans about this. He should not groan about it. It is one of the great achievements, one of the great reforms, of the previous Labor government and one of the most enduring reforms that this country has ever seen.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

I am prepared to accept that. I accept that.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Before that, superannuation was the province of the wealthy. What these changes did was to extend superannuation coverage to working Australians more generally. Not every working Australian is fully covered now. We would always like to see better coverage for women, for example, who are in and out of the workforce, having children. When they reach retirement age they tend not to have the size of the superannuation savings asset that perhaps men who are fully employed through their lifetimes do.

The second area of concern is in relation to casual employment. There is a very large section of the workforce that is casually employed. Quite often, sadly, employers do not make the necessary contributions in superannuation payments in the informal part of the Australian economy. As a consequence, those who are in and out of casual employment can find themselves in the predicament that when they retire they do not have adequate savings through their superannuation.

These measures of the previous Labor government also had the effect of protecting the integrity of the budget, because we could not foresee a situation where the entire retirement incomes of working Australians would be provided through the budget in the form of the age pension—and there was the farsighted approach adopted by the previous Labor government.

It is interesting that the minister has interjected, in a very friendly way on this occasion, saying that he is prepared to acknowledge the contribution of the previous Labor government in developing and implementing these measures. It is a pity that his colleagues at the time did not follow suit; they opposed the superannuation guarantee at every opportunity. And when we hear the Prime Minister saying, ‘Labor opposed this and Labor opposed that, but we supported the reform program of the previous Labor governments,’ that is just not accurate. The coalition in opposition did support some measures, but it was vehemently opposed to the superannuation guarantee arrangements.

However, it realised that it too would have to deal with the integrity of the budget and other matters in relation to the adequacy of retirement incomes, and, therefore, in going to the 1996 election, it said that it would, in effect, deliver on the extra instalments on the superannuation guarantee in what it described as a more equitable manner or a more efficient manner. It did not. One of the big savings measures adopted in the 1996-97 budget was the most short-sighted savings measure that you could imagine—that is, the government cancelled that increase in the superannuation contribution from the Commonwealth. As a consequence, the retirement incomes of working Australians were no longer assured.

The government then gave some of the proceeds of that back as income tax cuts in 2000, claiming that they were jolly good fellows, that they were compensating for the GST and introducing the biggest income tax cuts in Australia’s history. All they were doing was giving the Australian people back some bracket creep and the superannuation commitments—

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

When did you ever do that?

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I will come to that, Minister—that the coalition said it would honour. The minister said, ‘When did Labor ever give back bracket creep?’ I will tell the minister when Labor gave back bracket creep: Labor gave income tax cuts seven times in 13 years, returning all the bracket creep and more.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

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

Order! I do not think the member requires protection, but the minister should stop interjecting!

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Treasurer Costello has told the National Press Club and this parliament that Labor never delivered income tax cuts in his memory. Labor gave seven rounds of income tax cuts in 13 years, returning all of the bracket creep and more. So you had better go back to the old brief, Minister, because you absolutely do not understand that Labor did in fact return all the bracket creep and more in seven rounds of tax cuts in 13 years.

The superannuation savings assets of working Australians have now passed $1,000 billion—$1 trillion. This is a magnificent achievement, created, fashioned and inspired by the previous Labor government.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Mr Hockey interjecting

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

That $1 trillion—and I note and welcome the fact that the debate has livened up here, and so it should—is projected to grow to $3 trillion by 2017. So we will have a magnificent situation where working Australians will have superannuation assets of more than $3 trillion by 2017.

Joe Hockey (North Sydney, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

Thanks to the coalition!

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Thanks to the coalition? You see, they do not remember anything that happened before 1996. They do not believe or accept that Labor introduced the superannuation guarantee. They do not accept that; they like to rewrite history.

Let us look forward to the future of $3 trillion of superannuation savings, which means an adequate retirement income for many working Australians who would never have had an adequate retirement income if it were for the attitude of this minister, the member for North Sydney, and this minister, the member for Dickson, and their party, which never believed in the superannuation guarantee and opposed it at every opportunity. When under public pressure going into the 1996 election, their party said they would honour the commitments. They lied, broke their promise and called it a budget saving before returning it in part in 2000 as income tax cuts, saying: ‘Aren’t we magnificent? The biggest income tax cuts in Australian history.’ All they were doing was returning the money to the Australian people that they took off them in 1997.

This legislation goes on in its third schedule to propose amendments to a number of the tax acts to extend employee share ownership concessions and related capital gains tax treatment to stapled securities. This is a measure that we support, but I will take the opportunity again, because we are talking here in this legislation about tax avoidance and tax evasion activity, to talk a little about employee share ownership plans that come in the form of executive share schemes.

The Minister for Defence, when he was the Chair of the House of Representatives Standing Committee on Employment, Education and Training, chaired an inquiry into employee share ownership plans. We thought we were genuinely looking at ways of increasing employee share ownership. But what came to light, in a mini version of the Costigan inquiry, was the rampant tax avoidance that was going on through executive management schemes. This meant that executives in Australia could get big tax breaks on their share options, hope and expect that the value of those options would increase over time and get really big tax concessions. Not only do they do that lawfully; they were engaging in avoidance activities that the tax office said at the time were more or less under control because they had managed to detect them. I was at a meeting where we tabled one of the latest plans. The blood drained from the faces of the coalition members of that committee, because it showed that these rorts were still well and truly rampant.

But the most amusing and, in a way, the most disgusting part of this was that one of the key recommendations of the Liberal members of that committee was to institutionalise—legalise—the rorts so that executives would basically be able to take most of their remuneration tax free. That is what Dr Nelson, the current defence minister, recommended. Labor opposed those recommendations. Perhaps that report was better described as ESOP’s fables: employee share ownership plans were supposed to be these wonderful things to increase employee participation in the company through a share ownership, but in fact these rorts had been implemented and were rampant.

Here we have now the minister, who is wounded by the fact that he has presided over this sort of tax avoidance and tax evasion activity in this country—

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

Mr Deputy Speaker, I have two points of order. First, I draw your attention to the bill that is before the House and the fact that there is no possibility for the contribution being made currently by the member for Rankin to be relevant to the bill that is being debated. The second point of order is in relation to the offensive remarks he made as he was being asked to sit down, and I would ask that he withdraw them.

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

There are two points: firstly, this is a bill that does permit the wide-ranging comments that have been made; secondly, I did not hear any offensive remarks but, if there were, I would ask the member to withdraw.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I am not aware of the remarks to which the member is referring. If he has taken offence, I withdraw. On the first point of order, the third schedule of this legislation, Minister, is about employee share ownership plans. How more relevant can you be? Have a look at the brief. Work out why you are in the chamber. Read out the notes at the end but do your homework, because it is on employee share ownership plans. I will end this where I started: the coalition has a very bad history, a very bad track record, in clamping down on tax avoidance and tax evasion activities, going back to the Costigan report and going forward to that disgraceful set of recommendations by the current Minister for Defence. Fortunately, the Treasurer repudiated him and did not implement those recommendations, but I am sure that there would be plenty here who would like to see further rorts extended to executives around this country. Labor will be vigilant in cracking down on tax avoidance and tax evasion and on protecting the revenue base of this country.

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

I thank the shadow minister and I observe that, but for the fact that he appeared to enjoy the experience, there was a level of interjection which was beyond that which is normally tolerated.

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

in reply—I take the opportunity to thank those members who have contributed to this debate on the Tax Laws Amendment (2007 Measures No. 1) Bill 2007. I want to make some comments in response to some of the issues discussed during the contribution of the previous speaker, the member for Rankin. I thought that he may well have taken the opportunity to clarify his position in his own misleading of listeners to Brisbane radio this morning. He was called to account by the presenter, Madonna King, for what could only be described as a dubious contribution to the Work Choices debate in this country which we are currently undertaking. This is a further demonstration of Labor’s inability to put forward a coherent policy. It was very similar to the way in which the Leader of the Opposition is conducting himself—that is, to walk both sides of the street. On this matter and others he cannot help himself but to say one thing to the unions and another to those people who were listening this morning. It was a terrible contribution, and if he had any sense of decency he would have taken the opportunity to present himself to this place to clarify the remarks and to apologise to the people of Brisbane for deliberately providing misleading comments about this debate to listeners of ABC radio this morning.

This bill amends various taxation and superannuation laws to implement a range of changes and improvements to Australia’s taxation system. Schedule 1 amends the tax secrecy and disclosure law to allow the Commissioner of Taxation to disclose certain taxpayer information to officers in the Project Wickenby task force. It also allows this disclosure of information for similar task forces that may be established in the future. Project Wickenby is a multi-agency task force that provides significant support to the difficulties that are faced by our law enforcement agencies.

As part of my contribution to this summing up speech I do want to thank members who have contributed, as I said in my opening remarks, but I should take the opportunity to answer some questions and points raised in the course of the debate. The member for Prospect noted a concern that personal tax information provided to ASIC under the Project Wickenby secrecy changes could be disclosed to a third party. I take the opportunity to thank the member for his question and I note that agencies who receive information as a result of those changes will be subject to secrecy obligations similar to those currently applicable to tax officers.

The amendments preserve the general protection of taxpayer privacy while removing impediments to the Commissioner of Taxation disclosing certain information to task force agencies to aid concerted law enforcement by Project Wickenby and similar task forces that may be established in the future to protect the public finances of this country.

As noted by the member for Riverina—and I thank her very much for her valuable contribution to this debate—this bill delivers on the government’s 2006-07 budget announcement to allow the Commissioner of Taxation to provide information to employees on the progress of their superannuation guarantee complaints. From 1 July this year, the commissioner will be able to provide employees who complain that their employer has not paid their superannuation entitlement with information about the steps taken to recover any superannuation guarantee charge from the employer. These changes from 1 July form part of the government’s commitment to improving the Australian Taxation Office’s responsiveness to superannuation guarantee inquiries and will remove a significant community irritant around the administration of the superannuation guarantee system.

Schedule 3 amends the tax law to extend employee share scheme concessions to certain stapled securities. Currently, it is difficult for employers without unstapled ordinary shares on issue to provide employees with access to the employee share scheme concessions. Industry has recognised that the amendments will dramatically simplify the operation of employee share schemes for employers with stapled securities. This will allow more employers to offer employee share schemes. The measures in this bill will make positive improvements to Australia’s taxation laws and are further evidence of the government’s commitment to individuals and businesses.

Over the past decade, the government’s strong economic performance has seen both individuals and businesses benefit from lower taxes and greater incentives to save and invest. Eighty per cent of taxpayers are now on a top marginal tax rate of less than 30 per cent and businesses face a top rate of 30 per cent. Real household wealth has doubled since 1996 and business profits are at record highs. These results have not been achieved by good fortune alone but as a consequence of a clear economic philosophy and experience. The amendments in this bill are further evidence of the government’s support for individual taxpayers and the business community and of our determination to see continued economic prosperity in this country. I commend this bill to the House.

Question agreed to.

Bill read a second time.