Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (2007 Measures No. 3) Bill 2007. In general, Labor supports much of the bill. There are 10 schedules: seven of them are fairly straightforward and three of them have been subject to some debate—and two of those have been covered in detail by my colleague the member for Prospect. Today, I want to mainly concentrate on schedule 10 because—as dry as the tax law appears to be with its dense language and convoluted sentences which are guaranteed to make your eyes glaze over if you are a sane person—the philosophies and attitudes of the government well and truly show through, and how those attitudes and philosophies are applied impacts on our daily lives. Schedule 10 deals directly with an issue that deeply concerns the people in my electorate, and that is the net movement of Australian jobs overseas.

The bill and the amendment moved by Labor illustrate the differences in approach by the government and the opposition to building our future. Schedule 10 deals with new withholding arrangements for managed fund distributions to foreign residents. It improves certainty and provides simplicity—and those are good things. We support schedule 10 as far as that goes. The way that schedule 10 does this is by amending the Taxation Administration Act 1953 to implement a new withholding regime for distributions to foreign residents of net income from managed investment trusts attributable to Australian sources. The new regime applies where the distributions are made directly or through certain Australian intermediaries. However, income consisting of dividends, interest or royalty income are generally excluded from this measure, as are capital gains on assets other than taxable Australian property.

Under the current law, and as a result of schedule 9 of this bill, a trustee of a managed investment trust will be liable to pay tax on a beneficiary’s share of the net income of the trust if the beneficiary is a foreign resident at the end of the income year and is presently entitled to income of the trust. The rate at which tax is payable varies and depends on whether the foreign resident is a company, individual or trustee.

In practice, most distributions from Australian managed investment trusts to foreign residents are made through one or more Australian intermediaries. There is uncertainty about the nature of the legal relationship between Australian intermediaries, managed investment trusts and foreign resident investors, which could vary depending upon the terms and conditions of the arrangement under which the intermediary provides its services. This creates uncertainty about taxation obligations in terms of both the requirement to pay tax and the rate of tax payable.

Leaving aside those excluded items, under the existing law a managed fund that makes a distribution of income to a foreign resident must withhold at different rates, depending on whether the foreign resident is an individual, company, trust or foreign superannuation fund, and rates vary from 29 per cent to 46.5 per cent. Schedule 10 introduces a flat rate of 30 per cent, which applies to all types of nonresidents, thus taking out the uncertainty. It also reduces the compliance burden by reducing costs associated with tracing different types of income and different types of recipients of that income, as is currently the case. It also removes the need for managed investment trusts and intermediaries to have to classify the nature of a foreign investor as an individual, company, trustee or foreign superannuation fund. Consequently, the measure will also reduce the uncertainty regarding the obligations of managed investment trusts and intermediaries to withhold amounts from distributions to foreign residents. This in turn will improve Australian property trusts as a designation for foreign capital.

These compliance cost savings and the reduced uncertainty would increase the efficiency of the Australian managed funds industry in providing funds management services to foreign residents. This would result in a greater ability of the Australian managed funds industry to compete against foreign managed funds for the management of the investment of foreign residents’ savings. However, we on this side of the House do not believe it goes far enough. Our amendment asks the government to go further: not to 30 per cent but to a lower, flat and final 15 per cent rate. We do this because fund management is one of the areas where we have great strength as a nation and where we are internationally competitive with our skills and experience but not with our tax regime, even with the new 30 per cent flat rate. It is because of our obligation and commitment to the future of this country, to its businesses and its workforce, that we must act as a country to exploit our strengths for our own benefit and the benefit of our children. This is one of the great differences that we find in this dry tax amendment: a government that is still essentially coasting on good times, tinkering and making some changes, and an opposition committed to the future and prepared to make bold steps to ensure that we remain prosperous beyond the mining boom.

It is a role of government to find the strengths of a nation, to exploit those strengths and to remove the impediments that prevent them moving forward. Our amendment to reduce the flat rate to 15 per cent does just that. When I am out doorknocking in my electorate, the concern that members of my community show about the number of Australian jobs that are moving offshore is quite strong. It is an issue that is raised incredibly frequently in my electorate and has been for quite some time. Every time we see another Australian company talking about moving some of its jobs offshore, I receive a number of phone calls and people raise it with me at the shopping centres and when I am doorknocking.

This is, of course, a very real concern and it is something we should all be concerned about. I am not suggesting for a moment, with the global trend of companies finding various inputs in various parts of the world, that we can stick our finger in the dyke indefinitely and prevent jobs from going offshore. There are some things that we can do that protect the safety, security and privacy of Australian citizens but, in the long run, we will find greater and greater movement of inputs, particularly in services, from one country to another. What we can do is be concerned now—preferably before now, but certainly now—that we maintain a strong net movement of jobs towards Australia by identifying where our strengths are and where Australia can actually attract jobs from offshore to our shores. The area of film comes to mind, and after a long, 11-year delay the needs of the film industry have very recently been dealt with by the government. Areas of the environment come to mind as well, where for some time we were leaders in providing solar power, for example. We certainly are not now.

The funds management industry is another one where we have great strength and the ability to attract jobs from elsewhere to Australia. That is certainly something that we should be doing robustly. Australia has a robust funds management sector. Thanks to the superannuation guarantee established by the Hawke and Keating governments Australia has one of the most developed funds management sectors in the world. Australia’s funds management industry is the biggest in Asia and the fourth-biggest in the world. The managed fund market can be split into two broad categories: Australian real estate investment trusts and other trusts, for example share trusts.

Australian real estate investment trusts comprise 73 per cent of the listed management investment market and pay the majority of withholding tax. The 2006 budget announced that the government would simplify the withholding arrangements by introducing the amendments in this schedule. The Leader of the Opposition announced in his budget reply that we would reduce the headline withholding rate on the distributions from managed investment funds to nonresidents from 30 per cent to 15 per cent and abolish the deductibility of debt to all managed investments. This would boost the exporting of Australian financial services to the region, making Australia a managed funds hub. It was strongly supported by the industry.

Australia has more than a trillion dollars under management but attracts only a small proportion of the funds available to be managed internationally. The international market is predicted to top $60 trillion over the next three years, and a large proportion of that will be found in our region.

Labor’s commitment to reducing the withholding rate to 15 per cent brings our tax rate into line with the US and Hong Kong. Our funds management industry is one of which we can all be proud. It is well regarded around the globe and with competitive tax regimes in place is well positioned to become the financial hub for the region. If we want to prosper, the job of government is to build on our competitive strengths and to remove impediments to success. Our policy and our amendment today do just that.

The policy has been well received around the country. Peter Verwer, CEO of the Property Council of Australia, said:

The Opposition’s proposal for a 15% final withholding tax rate is more likely to generate additional tax revenue and create jobs as the world will give us more of its money to manage. The Opposition’s proposal also makes sense because it:

• puts Australia’s withholding tax rates on a similar footing to other advanced markets, in particular the United States—

and—

protects government revenue.

Robert Gilbert, CEO of the Investment and Financial Services Association, said: ‘The proposed introduction of a new 15 per cent flat and final withholding tax would remove a significant and burdensome administrative requirement for non-resident investors and Australian fund managers. Importantly, this measure also entails boosting tax integrity, as a flat and final rate would protect the public revenue.’ Here in this bill, if the government accepts out amendment, we can make a significant difference and invest in our future. We have no choice, if we want to prosper beyond the mining boom, but to do just that.

Our export performance has been appalling in recent years. A report released this week by the Committee for Economic Development of Australia shows that infrastructure bottlenecks are contributing to all-time low export volumes and Australia’s skyrocketing foreign debt. The report shows that in 2005 export volumes had fallen to just over 17 per cent of GDP from 19 per cent in 2001, the biggest fall in export volumes as a share of GDP in 45 years of data. And this is at a time of the biggest mining boom and the highest global growth in 30 years. The annual average export volume growth of 7.3 per cent in the eighties and nineties is now absolutely a thing of the past, with growth virtually frozen at just 2.1 per cent a year over the period 2001 to 2006. Labor’s amendment, which would allow significant growth of the funds management industry in Australia, would go a small way towards redressing that trend.

Since the superannuation guarantee was introduced by Labor in 1992, funds under management have grown from $250 billion to $1 trillion—that is, averaging growth of 11 per cent a year for 13 years. In 2004-05 the finance and insurance industries combined added $62 billion to Australia’s gross domestic product and accounted for 8.5 per cent of the total economy. This was up from six per cent in 2000 and represents a 157 per cent increase since 1985. This in turn represents average annual growth of 5.3 per cent over that 20-year period, making it the third fastest growth sector in the Australian economy after communications and property.

This is an industry that is confident in its future. The Australian Investment Management Survey 2005 reported that 50 per cent of CEOs surveyed in the sector expect growth of more than 20 per cent over the next three years. This is a great success story. This is a confident, skilled sector that is capable of an even greater contribution to our economy and to our future. I commend the amendment to the House and ask that the government let this sector get on with what they are doing—get the impediments out of the way and let them get on with it. They will be a great export story, they will create jobs here, and we will all benefit.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (2007 Measures No. 3) Bill 2007. This bill is an omnibus bill which amends a number of provisions related to income tax law. The provisions I rise to make specific reference to are the government’s changes to the tax treatment of forestry managed investment schemes, which are provided in schedule 8 of the bill.

There has been a lengthy debate across rural Australia about managed investment schemes for forestry and for horticultural enterprises. There have been concerns that managed investment schemes have benefited from tax advantages not available to other agricultural enterprises that are competing for land. The government has undertaken extensive consultation on forestry managed investment schemes. The Minister for Revenue and Assistant Treasurer, the Hon. Peter Dutton, has held a review of the taxation treatment of forestry managed investment schemes and consulted widely with farmers, timber community representatives and the MI scheme promoters.

The regional forest agreements process was introduced to bring about some scientific and reasoned evaluation of timber harvesting activities and to ensure forest activities were environmentally sustainable. The environmental forest debate of the 1980s was partly resolved with the creation of the regional forest agreements. These agreements were signed off by state governments with the federal government, with designated areas identified for locking up national parks, and other designated areas being accepted as areas for timber harvesting. In reaching this difficult compromise, environmental values and sustainable harvesting regimes were taken into account. Both Labor and Liberal governments accepted this compromise. However, in Corangamite the Bracks government overrode the RFA and locked up the Otways.

The national forest statement issued by the previous Keating government in 1992 gave a clear direction as to the way in which sustainable forestry should be undertaken in Australia. Part of this statement was the development of plantation forestry to fill the gaps that locking up former forest areas had created. Again there was general agreement on this policy position. The development of the policy position of Plantations for Australia: the 2020 vision was a plank which gave the imprimatur to plantation investments. I have always agreed with growing trees and supporting the forest industry and the timber workers, but I have come to the view that plantation investments were skewed by the overwhelming tax considerations. For instance, $1,600 per hectare is the actual cost of growing trees, whereas the MIS promoters were charging investors up to $9,000 per hectare. Also there were some concerns that plantations were in locations where trees would not grow very well. My very strong view is that it is bad public policy to run any industry, be it forestry or agriculture, on tax breaks. The key element of forestry investment should be the final return—actually growing trees for profit, not for tax.

It is interesting to note that around the world the experience has been that forestry has a long investment horizon. In the case of Australia, the blue gums have an investment horizon of between 12 and 15 years, softwood trees have an investment horizon of 25 to 30 years and, of course, hardwoods have a longer growing period and have an investment horizon of about 50 years. The blue gums now have a shorter growing rotation, coming from 14 years to 11 years, and this has changed the approach of the taxation arrangements.

The blue gum, Eucalyptus globulus as they are known, should be grown in areas that have 650 millimetres, or 26 inches, of rain and a good soil type, and preferably in areas that have over 30 inches of rain. They are evident in the Heytesbury settlement in southern Victoria and in a large part of western Victoria in the seat of Wannon. Promoters of the MI schemes for blue gums emphasise the tax advantages rather than productive investment. That has been my main argument over the last 12 months.

Tax minimisation is the objective of investors who are trying to deal with an income tax problem at the end of the financial year, in June. They are less concerned with the end profitability of the MI scheme. They hope to get a return or to get their money back, in the end, but they invest for the up-front tax deduction. It is interesting to note that the cost to Commonwealth revenue was in the area of $600 million in 2005. I am pleased that the government has decided that horticultural MI schemes will no longer be allowed by the Australian Taxation Office in relation to almonds, olives, walnuts and cattle stations. These schemes have not taken into account market signals but have been driven purely by tax. Horticultural MI schemes developed using the forestry model enable people to rearrange their tax affairs. The bigger MIS companies rely totally on fees-for-service for their profitability, not on timber outputs. They do not have an ongoing commitment to the final forestry woodlots.

I have given this issue a lot of thought and made a public submission to the Dutton Review of the Taxation of Plantation Forestry. It is on the minister’s website. In that submission I covered a number of issues, which I would like to list: plantations, 2020 Vision, investment horizons, forestry policies around the world, the woodchip export industries, imports of timber products, managed investment schemes, tax incentives for selected industries, globulus blue gums, the current position of MI schemes in Australia, investor costs and investor returns, timber companies’ profitability and capitalisation, world market and woodchip values, MI schemes for other land users, value of the investment, the ATO and the MIS tax regime, and the production of timber for the national good. I made some observations and recommendations relating to: tax incentives being provided at the end of the production cycle; the sale of woodlots in a secondary market, which is something the government has agreed to; investors in the agricultural business of growing trees; MI schemes for other agricultural products; and horticultural products. As I said, the government has agreed with my recommendation that those schemes be discontinued. The Taxation Office has raised concerns at the uncertainty of whether investors in MI schemes are ‘carrying on a business’ or are passive investors, and the ATO commissioner has foreshadowed that the ATO will change the way they assess MI schemes.

In responding to the ATO’s decision, the government is introducing a new, specific tax deduction for investors in MIS forestry schemes, to encourage further investment in growing trees and to help achieve the government’s forest industry policy Plantations for Australia: the 2020 Vision. The key element of the legislation is that, to qualify for tax deductibility, 70 per cent of the cost of forestry MI schemes will need to comprise direct forestry expenditure, or DFE. Under these reforms, the whole definition, accounting, tax reporting, structure and management of forestry MI schemes will hang on the 70 per cent DFE test. The 70 per cent test is likely to lead to ongoing conjecture, debate and legal court challenges over what costs are allowed and what are not. The proposed court case on the passive investor compared to the active investor could pale into insignificance by comparison. Direct forestry expenditure is defined as ‘amounts spent by the scheme manager, or an associate of the scheme manager, under the scheme that are attributable to establishing, tending, felling and harvesting trees; and amounts of notional expenditure reflecting the market value of land, goods and services provided by the scheme manager that are used for establishing, tending, felling and harvesting trees’. The provisions apply specifically to forestry for growing timber—not for tree plantings for the purpose of growing horticultural produce, such as avocados or olives et cetera. The legislation also provides for a change from the current 12-month rule to an 18-month pre-payment rule. The act states:

The 18-month pre-payment rule provides for ‘seasonally dependent agronomic activities, including ripping and mounding a plantation site, applying fertiliser, tending the seedlings prior to planting, and the actual planting’.

The changes also allow for the introduction of a secondary market in MIS plantations whereby investors are able to sell their investment after four years. It is intended that this will encourage additional investment in plantation forestry, particularly in long rotation softwoods and hardwoods, by unlocking investors from a 14-year or 25-year investment commitment before seeing a return.

There are concerns about how the 70 per cent on-ground expenditure test will apply to forestry MI schemes. This measure is being introduced to discourage potential rorting of MI schemes with unreasonably high profits at the expense of taxpayers and to address concerns under the previous arrangements that MIS promoters were charging $9,000 per hectare for MIS trees when the actual cost of putting trees in the ground was only around $1,600. Given the long lead times of investment and production before harvest, it will be difficult to legislate for the 70 per cent direct forestry expenditure test. The detail of how the 70 per cent direct forestry expenditure test will work is covered in the fine detail, buried away in schedule 8 of the bill and in the explanatory memorandum.

In an attempt to define what MIS company costs may and may not be included in the 70 per cent on-ground direct forestry expenditure, the bill states that the following costs may not be included: MI scheme marketing—including advertising, sponsorships, sales and entertainment; insurance; contingency funds or provisions for MI scheme financing; lobbying activities; general business overheads, which include the salaries of MIS promoter company CEOs but not overheads directly related to forestry; subscriptions to industry bodies; and commissions for financial planners or financial advisers. The perceived high commissions paid by MIS promoters to financial advisers have been a key concern of those who fear these schemes have been abused. Compliance with requirements related to the structure and operations of the forestry management scheme, supervision of contracts and legal fees relating to any matter mentioned in subsection 394-45(3) also may not be included.

This list of costs specifically excluded in the bill from the items of allowable direct forestry expenditure under the 70 per cent rule is not an exhaustive list. There may be other costs that cannot be included in the 70 per cent list. The definition of allowable direct forestry expenditure is wide enough to hide many sins. Establishing a plantation includes: planting, coppicing and grafting activities, and other methods of plant propagation; site preparation costs, such as ground clearing, fence clearing, deep ripping and mounding, fertilisation pre-planting, weed control, constructing channel irrigation, roads or fire breaks; pre-establishment costs such as site selection; costs of tending plantations, including inspection, monitoring, pest control, fire hazard reduction, re-planting, coppice management, fertilising, pruning and thinning; and felling costs, including harvesting activities, felling trees, lopping off branches and bark removal.

There is great potential here for MIS promoters to overstate the cost of these allowable direct forestry expenditures. How will the tax office monitor and determine whether the proposed expenses are reasonable or overstated? Australian taxpayers have reason to be concerned at any costings for forestry MI schemes that claim to comply with the 70 per cent  DFE because many of the schemes we have seen would not comply. The Bureau of Rural Sciences undertook a survey of the costs of plantation investment in the first year of MI schemes for the Department of the Treasury’s review of MIS schemes last year. The findings were that, on average, the eligible DFE costs as under this bill were $2,180 and the non-DFE costs were $3,870. Therefore, on average, MI schemes surveyed by the BRS would not have complied with the new provisions. If we see many forestry MI schemes complying with the 70 per cent DFE test under the new legislation then we should be concerned that something is wrong. How will the tax office be able to effectively assess the accuracy of claimed expenses?

Despite the best of intentions, it does not appear that the reforms introduce a ‘market pressure’ test on forestry MI scheme expenditure. There are no market signals on direct forestry expenditure. On the contrary, there is an incentive for MI scheme managers to incorporate gold-plated costs under the DFE to achieve the 70 per cent test. A concern with the current MIS arrangements is that there are no market signals limiting the expenses of promoters—high commissions, full-page advertising in national newspapers and the latest and most expensive technology use on the ground. These are things normal farmers could never afford to pay, but anything is affordable under MIS so long as you can market the scheme to an investor desperately looking for a tax deduction in June.

The MIS promoter will need to demonstrate ‘reasonable expectation’ that costs will be incurred, and this ‘reasonableness’ will need to be assessed by the tax commissioner. But at no time is there a requirement that the DFE costs be assessed compared with the costs a normal farmer could be expected to incur to establish a hectare of trees on his land for profitable timber production. In the long debate on MI schemes I have established through consulting with people in the industry and on the ground that it costs around $1,600 per hectare to establish tree plantations. An independent valuer in Western Australia quoted establishment costs of $1,427 per hectare. The Forest and Wood Products Research and Development Corporation’s 2005 report Eucalypt plantations for solid wood products in Australia—a review put the cost of establishment for pulp logs at $970 per hectare, before rent. At a meeting I was challenged by a departmental official in the forestry sector who claimed establishment costs were really in the order of $4,000. There is a lot of difference between $1,600 and $4,000, and the taxation commissioner will have a hard time finding the truth! The BRS survey also demonstrates what a difficult time the tax commissioner will have sorting out reasonable costs. The survey found land lease costs varied between $175 and $420 per hectare.

It was always going to be difficult for any government to legislate that 70 per cent of the cost to an investor of a forestry MI scheme be for direct forestry investment. The range of costs the BRS has found for land leases just demonstrates the potential for an MIS promoter, with a slick accountant, to manipulate the DFE costs. Forestry MIS arrangements last over many years—around 14 years for pulpwood or longer for softwoods—and this bill provides that the lifelong payments by investors and lifelong DFE expenditure be assessed under the 70 per cent rule at day one. There will be no audit several years into the forestry MI scheme to assess whether or not the DFE share claimed at the start of the project is in fact the reality. The concern would be that as the scheme progresses the actual share of allowable DFE costs will slip below the 70 per cent rule. It is important that the assessment of the 70 per cent rule be rigorous because the taxman will potentially lose a lot of revenue to these schemes which may have otherwise been directed to improving government services or general tax cuts. By incorporating land leases, or effective lease rates, in the allowable direct forestry expenditure, it will still be possible for MIS promoters to use these schemes to pay off massive investments in land—and in doing so to push up the price of agricultural land in competition with farmers, as we have seen occur in Heytesbury and in south-west Victoria in my electorate of Corangamite.

In times past there has been a lot of debate in this place over tax complexity, with the GST being an example. When it comes to the 70 per cent DFE, this bill would fail the birthday cake test. The wages for a project coordinator who undertakes ‘community liaison’ or ‘education programs’ are included; the wages for a project coordinator who undertakes lobbying are not. Legal advice for drawing up contracts for forestry contractors is included; legal advice for drawing up contracts for forestry investors is not. Wages for accounts staff who deal with both MIS forestry workers and head office need to be apportioned—and therefore would be both allowable and not allowable. Harvesting and lopping off branches is included in DFE; in-field chipping or milling is not. There are a lot of frills and icing on the MIS forestry cake. Some of it is allowable direct forestry expenditure and some is not. It will be very complex for the tax commissioner to sort it out.

In conclusion, I have been a strong advocate for sustainable forestry and for the jobs of our hardworking timber workers. These men and women have been forced out of the public forests. If Australia is to supply the demand for timber and paper products, we need to encourage investment in plantations. The challenge is to encourage legitimate investment in forestry where the motive is growing useable timber and generating a profit. Any scheme that relies on generous tax breaks is subject to failure and may not deliver the timber our industries need. The government has decided to close down MI horticulture schemes because of concerns they are tax driven. The government will need to monitor the implementation of these new provisions, which I have set out in my speech, very carefully.

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

I rise to speak in the debate on the Tax Laws Amendment (2007 Measures No. 3) Bill 2007. I find it a little odd that this omnibus bill contains 10 significant tax measures ranging from the tax treatment of lump sum superannuation death benefits paid to the nondependants of ADF personnel, Australian Federal Police, police officers of each state and territory service, as well as the Australian Protective Services, right through to the repeal of the dividend tainting rules. The minister has obviously decided to put these measures into one instrument with a view to proceeding. I intend to limit my remarks to schedule 4, which aligns tax treatment of lump sum superannuation benefits paid to nondependants with that which currently applies to dependants where the deceased:

... died in the line of duty as:

(a)

a member of the Defence Force; or

(b)

a member of the Australian Federal Police or the police force of a State or Territory; or

(c)

a protective service officer ...

Superannuation death benefits paid to dependants of a deceased person are taxed more concessionally than those paid to nondependants. ‘Death benefits dependant’ is defined in the legislation as a deceased’s spouse or former spouse, a deceased’s child aged less than 18, any person with whom the deceased had an interdependency relationship just before he or she died, or any other person who was a dependant of the deceased person just before he or she died. As a result of the simplified superannuation reforms, from 1 July 2007 superannuation death benefits will be tax free without limit if paid to dependants and taxed concessionally if paid to nondependants—at 15 per cent if paid from a taxed fund and at 30 per cent if paid from an untaxed fund. Labor is supporting these provisions as they recognise the valuable role played by defence personnel and police in maintaining the safety and security of local communities and the nation as a whole.

As most members would be aware, prior to coming to this place I spent a number of years representing the professional and industrial interests of police officers in each state and territory police jurisdiction and the Australian Federal Police. I know first-hand the dedication, commitment and professionalism exhibited by these people in fulfilling their duties on behalf of their respective police services.

From talking to these people over many years—I am sure the Minister for Revenue and Assistant Treasurer, who is in the chamber, would agree, as would the member for La Trobe—I know that it is very rare for the motivation of people entering the police force to be anything other than that they are joining to make a difference. This bill, particularly schedule 4, is a recognition of the special role played by the ADF and certainly our police officers.

Only last year the National Police Memorial was opened on Police Remembrance Day, 29 September 2006. The Prime Minister attended, as did many members of this House. The memorial, situated at Kings Park, has 719 names of police officers who have died serving their respective state or territory during the course of their duties. Since January 1999, over 30 police officers have been killed in the line of duty.

Schedule 4 of this bill goes some way towards recognising the important role that Australia’s police play in our society. It is also a well-recognised fact that police face significant physical and psychological rigours which are reasonably unique to that occupation. One thing which stands police apart from other employees is their oath of office. Police officers take an oath of office which gives them enormous powers but at the same time places them under enormous responsibilities. This personal responsibility distinguishes the obligations of police officers from those of most other employees. A police officer is obliged under their oath of office to put himself or herself in a situation of physical or psychological harm where it is necessary to keep the peace or to protect the lives and properties of members of the public. I am sure that is something we all sometimes take for granted. It is very easy to blame the police for not being somewhere when a crime is being committed. I assure members that these people take their job very seriously, and part of that is putting themselves in harm’s way to protect their community.

The other significant aspect of their oath of office is that it obliges a police officer effectively to be on duty 24 hours a day, seven days a week. The oath of office obliges a police officer to intervene in any situation in which he or she perceives an offence is being committed, regardless of whether he or she is on a roster. That has significant implications for an officer’s safety. Those things are taken into account.

I will briefly mention a very unfortunate incident that occurred in Ultimo on 28 February 1998. Young Constable Peter Forsyth, who was off duty at the time, saw a drug deal taking place. As was required under his oath, he put himself back on duty and tried to apprehend the people involved. Unfortunately, he was fatally stabbed. That brings home not only the dangers involved in police work but also the fact that the people who take on this occupation must be prepared to put themselves on duty if they witness an incident. That is not required of other employees who may or may not be rostered on. If police officers are aware of an incident, they are obliged to take action to address the situation. I understand from the commissioner that Constable Forsyth was extremely well regarded. This incident demonstrates the commitment, dedication and professionalism of police officers and what they are prepared to do to look after the communities they serve.

I should also mention the fact that police officers have been serving with various overseas detachments on behalf of this country for many years. Police officers commenced service in Cyprus in 1964. In addition to that detachment, Australian police officers have been serving in Thailand, Namibia, Cambodia, Somalia, Mozambique, Haiti, Bougainville, the Solomon Islands and, more recently, East Timor. Australia’s peacekeeping obligations have seen this government and previous governments call upon state and territory governments to ask for volunteers for overseas service to honour Australia’s peacekeeping obligations. Once again, these police officers demonstrate dedication and commitment not only in serving their state but also in the way they continue to serve this country in its peacekeeping role.

In concluding, I pay tribute to the activities of the Police Federation of Australia, which is the professional body that represents the nearly 50,000 police officers serving in the various state, territory and national jurisdictions. I particularly commend federation president Peter Alexander and the chief executive officer Mark Burgess for their persistent lobbying on behalf of all Australian police officers. That persistence has resulted in major changes to superannuation death benefits paid to nondependants of police personnel. Nondependants of Australian police officers killed in the line of duty will now have access to the same concessional tax treatment for superannuation death benefits as dependants when they receive a lump sum. That is a significant step forward. It is also significant for other services, including the Australian Defence Force and the Australian Protective Service. For that reason, I support this bill.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (2007 Measures No. 3) Bill 2007 to make a couple of observations about two of the schedules in particular but also to support the amendment moved by the member for Prospect. This TLAB 2007 measures No. 3 bill is an omnibus bill comprising 10 measures. It effectively amends five separate tax acts. Most of the amendments proposed are non-controversial and they make the tax system fairer. They are designed to cut down on tax avoidance and, as the member for Werriwa indicated, they very importantly recognise our defence force personnel killed in action.

The first schedule I wish to touch on is schedule 8, which deals with forestry managed investment schemes. Schedule 8 inserts a specific deduction into the tax law to provide that initial investors in forestry managed investment schemes receive a tax deduction for their contributions. Labor support this proposal. We think it strikes the right balance between ensuring that Australia has a sustainable plantation industry and addressing tax integrity. Forestry has a vital role to play in our approach to dealing with climate change, but we do have to recognise that there is a long lead time before people who invest in forests and carbon sinks get a return. In our view, the 70 per cent rule gets the balance right between maintaining integrity in the tax system and fostering sustainable plantations.

The 70 per cent requirement does impose some compliance and administrative burdens. We hope they will not prove unduly burdensome, but the importance of managed investment schemes to rural and regional communities is a terribly significant factor. There are a number of downstream jobs associated with the businesses that grow under managed investment schemes and, whilst we understand that these schemes have caused some controversy between competing interests in rural and regional Australia, we believe that the plantation and forestry industry attaining critical mass so that it can make its contribution to our sustainability is important. So we welcome those changes.

While I am on the subject of investment schemes, I note that the government consulted the forestry sector about these schemes. That is in stark contrast to managed investment schemes in other sectors where there has been a failure by the government to consult. The Minister for Revenue and Assistant Treasurer made an announcement in February this year that tax deductions would no longer be provided for non-forestry managed investment schemes, but those in the industry were not given adequate notice or appropriate consultation, and there was an inadequate transition period. That has created massive uncertainty in rural and regional Australia.

Clearly the government does not have any idea about the impact its decision will have in rural and regional Australia. Labor recognise the need to assess this impact. We called for a Senate inquiry into non-forestry MISs and a full and open analysis of the impact of the government’s decision on rural and regional Australia. We think that when these decisions are taken, whether by the tax office or as a result of lobbying the government, there has to be appropriate consultation. That has not happened. Labor will continue to consult on these issues and to discuss them with the agricultural sector and those affected in regional Australia.

The second schedule I want to go to is schedule 10, which deals with a decision made by the government last year to introduce a flat withholding tax from Australian managed investments to overseas residents. The member for Prospect has moved an amendment which embodies an announcement that the Leader of the Opposition made in his reply to the budget speech that Labor propose to halve the tax rate that this bill imposes. Schedule 10 enacts a flat 30 per cent withholding tax on distributions to foreign residents from managed investments. Under the law, all trustees must withhold an amount from distributions to nonresidents, the unit holders of the various trusts.

In essence, the law does that in order to require people to pay tax. A problem exists because the rate of tax that is withheld varies according to the entity receiving the dividend. That has caused a lot of complications and this bill seeks to address that by providing for a flat withholding tax. The problem is that the tax proposed to be imposed is a flat 30 per cent. Not only does that involve an increase in taxation—whatever happened to the commitment the government carries on about that it will never increase taxes? This schedule does that because it imposes a flat 30 per cent, and that involves increases for certain categories—but the worse problem is that the 30 per cent is well in excess of withholding tax rates in other countries. It is double that of Canada, France, Germany, the Netherlands, the United Kingdom and the United States. It is triple that of Singapore and more than four times that of Japan.

The problem should be obvious: a higher rate will be a deterrent from investing in management investment vehicles in Australia. That is what will happen, and what will that do in turn? It will impact on the ability of Australian fund managers to compete globally. It is a deterrent to investment in our financial services sector, which is highly regarded around the world and whose funds under management provide the largest saving pool in our region and the fourth largest in the world. Australia is the No. 2 property trust manager in the world. This nation pioneered real estate investment trusts. The Real Estate Institute has called for a lower rate of withholding tax, but that request has fallen on deaf ears as far as the government is concerned. You would think the government would want to support one of its champion industries, an industry that has actually gone out and made it and cut it in the world. But, no, not this government.

I might also say that funds under management, and the significant growth there, did not come about just by chance. Nor did it come about because of anything this government did. The fact of the matter is that it came about because of an initiative of the Hawke and Keating governments in the eighties and nineties to establish compulsory superannuation in this country. We faced up to one of the great intergenerational challenges of our time, and that was the ageing of the population and how to ensure that people can retire with economic dignity. We did not just commission an intergenerational report—this government commissions reports and then ignores them, and it leaves out things such as climate change when assessing what the intergenerational challenges are—we set about acting upon it. Labor in office in the eighties and nineties developed a compulsory superannuation scheme and a provision for retirement income savings that is the envy of the world. They did it with the cooperation of the trade union movement—that group of people that this government wants to pillory every occasion it gets.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

I remind the member to come back to the subject of the bill.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

This is the subject, Madam Deputy Speaker. This is very much the subject matter. This tax is going to cripple an industry which was developed by this country through the policies of a former government. I think it is important for this House to understand that this tax will hold back that which we have grown. That is the whole point of speaking in this debate. It is important for the House to understand—particularly when you have a rabid government trying to get its electoral survival back in shape by attacking the trade union movement for being a backward force—that the trade unions have been a very positive force in this country. The trade union movement has contributed to one of the great intergenerational challenges of our time. The trade union movement actually sat down and said they were prepared to forgo wage increases in return for the introduction of superannuation.

The Prime Minister, of course, wants to make comparisons about real wage declines but fails to include the growth in superannuation, which was the trade-off. When you think about it, it is just as important for workers in this country to have economic dignity in their workplace as it is for them to have economic dignity in their retirement. But it was only Labor that had the will, the wit and creativity to develop that solution. I will not stand for the government’s continuing attacks on the trade union movement in this country when in fact we have something that is the envy of the world and which the unions have been responsible for creating. By joining with business and the trade union movement—and through the sacrifice that they had to make through wage offsets—we established this scheme.

The significance of compulsory superannuation in this country now gets taken for granted, but it was fought every inch of the way by the party which now sits in government. The Prime Minister often comes into this place to talk about how his government supported the great reforms that we introduced. They did not support any of our measures to introduce compulsory superannuation in this country—not one bit. They then set about trying to nobble the industry funds, because they saw them as union controlled. Of course, they are not. The management of them—the trustee arrangements—is handled equally by the employers and the unions concerned. This is a genuine partnership that we must forge, not ridicule.

I am talking not just about the contribution the trade unions have made to developing superannuation in this country but also about the industry that comes off that. I am talking about the export opportunities, the pool of savings, the ability to fund the nation’s investments and the commitments to infrastructure. We cannot achieve those in an economic sense unless we have savings. Superannuation provides that pool of savings, but it also provides a financial services sector which has expertise in the management of these funds and in ensuring that the investments return the maximum. This is a funds management industry that is recognised worldwide, but it cannot compete if it has to deal with other countries that have significantly lower tax rates. That would nobble it—and that is what this particular bill does. That is why the opposition has moved this amendment.

I think it is very important, also, to remind the House that the financial services sector is one of the great service export opportunities for this nation. I have spoken on previous occasions about the appalling export performance of this government. Despite the resources boom, the rate of growth in exports under this government is only half that which was achieved when Labor was in office, with all of the inherited economic difficulties Labor had to confront—a 10 per cent unemployment rate, an inflation rate of 11½ per cent and interest rates up at 16 per cent. And they talk about our economic management! The government always want to ignore the economic management that we inherited back in 1982-83. Who was the Treasurer of the country in those days? It was one John Winston Howard. That was the legacy he left us—a sclerotic economy. It was an economy that was still essentially reliant on commodity exports because it did not have the confidence to develop the elaborately transformed manufactures or our services sector. Labor, in each of its 13 years of office, was able to grow exports at eight per cent a year. This government, with one of the longest resource booms in history, can only manage four per cent. And the case of services is even worse. Over the financial years 2000-01 to 2005-06 the growth was only 2.1 per cent. It was 7½ per cent when Labor was in office—three times the growth.

We often talk in this parliament about the importance of agricultural exports and resource exports. They are important to this nation, but the great opportunities for this nation are in services. If we have a tax regime that is going to hold those services back, we are denying the opportunity for this country to realise much more effectively its potential. A major contributor to that exports slowdown that I talked of before—to the halving of the rate of growth in exports under this government—has been the government’s failure to nurture the services sector. Here we have yet another measure that is actually going to hold the services sector back.

Financial services exports have really stalled over the last few years. We should be encouraging them. We should be saying to the world we are proud of what we have created. We have created a superannuation scheme that is the envy of the world. We have a fund management industry that is the envy of the world. Why don’t we export those services? Why don’t we encourage an environment in which they can be exported?

It has been very interesting to note in the last couple of days the great contrast in relation to the Future Fund, whose custodian role has been placed overseas—not here in Australia, not encouraging the services sector. It is an interesting contrast. Labor want to encourage the export of our services—in particular, our financial services. The government’s solution is to nobble them with a tax and then to export the Future Fund and import their services. It is a very strange way to do business.

We should be proud of the industry that has been created. We should remind ourselves of what created that industry—it was Labor’s initiatives. Now we have a government that cannot even see that the smaller dimensions of this can hold back those initiatives. This is an issue that we do have to address front on and squarely. It is why the leader of the Labor Party in his address-in-reply to the budget announced an initiative that was brought forward by the member for Prospect, a member who has consulted with the industry. He spoke to the Property Council, the Real Estate Institute and all of those groups that were listed in his speech, all of whom applauded our initiative. Why? Because we are behind Australian industry. We are about encouraging it to export and to excel in that which it does well—and not just to excel here but to take the opportunities overseas and grow the opportunities for our young people.

This financial services sector could become the hub in Asia, but it will not if this initiative goes ahead. This will be one of the things that holds us back. The other thing that holds us back is the failure of the government to develop an export strategy that encourages our services sector. We really need the government to pick up our amendment in the short term. In the longer term we need to change the government and get back into office a government that believes in doing something for our export services in this country and taking the challenge to the rest of the world. We are up there with the best of them; let us provide the framework in which we can compete globally. (Time expired)

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

in reply—Can I start by thanking all the members who have taken part in this very important debate on the Tax Laws Amendment (2007 Measures No. 3) Bill 2007. Schedule 1 to this bill amends the tax integrity rules concerning private company distributions, division 7A of the Income Tax Assessment Act 1936. The amendments will reduce the punitive nature of the provisions by removing the automatic debiting of a company’s franking account when a deemed dividend arises. The amendments will also reduce the extent to which taxpayers can inadvertently trigger a deemed dividend under division 7A. The commissioner will also have the discretion to disregard a deemed dividend in certain circumstances. These changes demonstrate the government’s commitment to addressing legitimate concerns about the impact of tax integrity measures on taxpayers, especially where taxpayers are attempting to meet their tax obligations. Not only will the changes provide greater flexibility; they will also reduce compliance costs for taxpayers.

Schedule 2 to this bill will ensure that certain superannuation contributions made during the period 8 December 2006 to 30 June 2007, such as those made by a friend, are included in the non-concessional contributions cap calculation that covers that period. Schedule 3 will improve the taxation of resident testamentary trusts by ensuring that an income beneficiary of such a trust need not be assessed on the capital gains of the trust, from which they will not benefit. These changes will allow the trustee of such a trust to choose to be assessed on the capital gains instead.

Schedule 4 of this bill will allow nondependants of a member of the Australian Defence Force, a member of any Australian police force or an Australian Protective Service officer killed in the line of duty to access the same concessional tax treatment for lump sum superannuation death benefits as dependants. This means that from 1 July 2007 eligible nondependants will pay no tax on the lump sum superannuation benefit left to them by someone who has died in the line of duty. I acknowledge the contribution made to this debate by the member for Werriwa. I had the benefit of listening to his speech on this schedule to the bill and I know that he holds very passionately his views on this topic. I commend his presentation.

Schedule 5 will extend by one year a transitional period under the thin capitalisation rules. The extension will enable a thorough assessment of the impact of the thin cap rules of adopting Australian equivalents to international financial reporting standards. It will also provide time to develop and consult on any permanent changes to the rules that may be considered appropriate.

Schedule 6 to this bill will reduce compliance costs for companies by repealing the dividend tainting rules. As a consequence of the introduction of the consolidation regime and the simplified imputation system, the dividend tainting rules are no longer necessary.

Schedule 7 to this bill clarifies the exemption from interest withholding tax by more closely specifying the types of financial instruments that will be eligible for the exemption. Broadly, the instruments now eligible for exemption are debentures, non-equity shares, syndicated loans and other instruments prescribed by regulation. These amendments reduce uncertainty for taxpayers by confirming the policy intent in relation to debt interest, which is broadly that Australian business should not face a constraint on access to offshore capital for significant investments because of interest withholding tax. They also, though, enhance the integrity of the tax base.

Schedule 8 of this bill inserts new rules to ensure that investment in forestry managed investment schemes is encouraged to facilitate the continued expansion of our plantation forestry estate. Initial investors will be eligible for income tax deductions for any contributions they make, provided a 70 per cent direct forestry expenditure rule and some other requirements are met.

To address the government’s concerns about the level of commissions charged, this measure incorporates an arms-length pricing rule and a requirement that all the trees are established within 18 months. In addition, the schedule requires the manager to include investors’ contributions in its assessable income in the income year the contributions are first deductible to the investors. Secondary market trading of interests in forestry schemes will introduce pricing information regarding forestry scheme investments. To facilitate a deeper secondary market for forestry scheme investments, the schedule allows both existing and new interests to be traded. Initial investors will be subject to a full-year holding period and market value pricing rules and are required to return sale or harvest proceeds on revenue account. The schedule also clarifies the income tax treatment of sale or harvest proceeds received by secondary investors, and a deductibility of payments by secondary investors to the schemes.

Schedule 9 makes amendments to require Australian trustees to collect tax on trust taxable income payable to the trustee of a foreign trust. After these changes, Australian trustees will be required to pay tax on the taxable income of the trust attributable to any foreign resident entity, whether it be an individual, company or trust.

Schedule 10 to this bill enables Australian managed funds to collect a non-final withholding at a single rate—the company tax rate—on distributions of Australian sourced income to nonresidents that are not dividends, interest or royalties, and the nonresident investor will be able to claim a credit for the withholding tax on lodging an Australian income tax return. This schedule will improve the efficiency of Australia’s managed funds industry and provide greater certainty to the industry.

I will turn for a moment to the second reading amendment moved by the member for Prospect, which has taken place in relation to schedule 10 of this bill. This schedule, as I outlined, expands the existing PAYG withholding system to cover distribution of Australian sourced income from managed investment funds or foreign residents. The member proposes to reduce the withholding rate from 30 to 15 per cent and make it a final tax. The measure in this bill was recommended by the independent Board of Taxation in its review of international taxation arrangements, and the recommendation specified a non-final rate of 30 per cent. This measure does not introduce a new tax—it merely codifies and simplifies a tax withholding system already applied to many foreign investors.

This government has reformed Australia’s tax system to allow the managed fund industry to grow and to prosper, and implementing recommendations from both the Review of Business Taxation and the Review of International Taxation Arrangements has put in place a highly competitive tax environment. In fact, Australia’s managed investment fund industry is the fourth largest in the world, according to industry figures. Australia also tops the list of real estate investment trust markets in the Asia-Pacific region and is around the second largest in the world.

This government encourages foreign investment into Australia, and—this is a key point—the Treasury costing prepared in accordance with the Charter of Budget Honesty puts the cost at more than $100 million. Members of the Labor Party believe the cost to be only $15 million per year. This demonstrates what economic idiots they are. They provided their own assumptions to Econtech and did not require the assumptions to be questioned by Econtech. Labor Party assumptions were supplied to Econtech and were costed at $15 million. Is it any surprise to people that the Labor Party wrecked the Australian economy when they were last in government? They have costed a measure at $15 million—

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Bowen interjecting

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

It is only $400-odd million out over the estimates. It has been a convention by both this government and the previous government that the Treasury of the government prepares these costings and provides them to the government of the day. There was not a convention under the Labor Party that they would release the assumptions—

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Bowen interjecting

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

Mr Crean interjecting

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Prospect and the member for Hotham will cease interjecting.

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

because they know now that their costing of $15 million over the estimates is out by about $400 million. What does that say to the Australian people at the moment who are considering what a Labor government would mean to the economy? This should be a great demonstration to the Australian people that members of the Labor Party are still not ready to manage the Australian economy. They are $400 million out in this one measure alone over the estimates. That would put the Australian economy on a path to disaster. If people in the Australian business community want a demonstration of how bad Labor would be in the management of the Australian economy, then look no further than this measure.

We know that the member for Prospect, the member for Lilley and the Deputy Leader of the Opposition were in a mad panic when they put forward their industrial relations policy, which had been put together by the union bosses. We knew that they had this policy, this grand statement, put together by the union bosses—the puppeteers of the Labor Party, the people who would again be in charge of the Australian economy if Labor were returned to power in this country. They put together this business- and job-destroying industrial relations policy, which was rejected quite properly and soundly by business. They said: ‘This is a nonsense. The industrial relations policy of the Australian Labor Party, masterminded by the union bosses, the puppeteers of the Australian Labor Party, would destroy jobs. It would result in the same wrecking of the Australian economy that took place in the late eighties and early nineties.’

So that was the Deputy Leader of the Opposition, the member for Prospect and the member for Lilley. Some people do not realise that the member for Lilley would be the Treasurer of this country in a Rudd Labor government. People need to think about that. People need to think about how bad that would be for the Australian economy, for Australian families and for Australian small business. It is demonstrations such as this, where they cannot properly cost these sorts of policies, that undermine the legitimacy of the economic credibility that they claim to have.

In the face of all this sound opposition from business about Labor’s industrial relations policy that would crush jobs, put people out of work and drive up interest rates, Labor had a mad run-around between them. The Labor think tank—the member for Prospect no doubt, and the member for Lilley, the shadow Treasurer—raced to the Leader of the Opposition and said: ‘Jeez, we’ve got a real problem. How are we going to get business back onside? What’s the measure that could bring business back onside? How can we try and show business that we’re not about destroying jobs and we’re not about destroying the economy?’ Let me tell the member for Prospect and those opposite that Australian business is smarter than you think.

Australian business knows that Labor would wreck the economy. It knows that this policy has been put up not because the Labor Party believe in this policy, not because they would want to commit $400 million over some of their social programs to this policy, but because they are trying to recover themselves with Australian business. The Labor Party know, as Australian business knows, that the Labor Party and their union bosses—80 per cent of people who now sit in the Labor Party are former union bosses or union hacks—are dangerous for the Australian economy. If we want to return to the days of industrial disputation, of business being destroyed, of small business having to sack people, of interest rates of 17 per cent—and up to 20 per cent—for families, which drove them out of their homes, then the Australian Labor Party are what we need to run the Australian economy. That is what the Labor Party are all about. They are dictated to, they are dominated by and they are answerable to the Australian union movement.

This stunt by the Australian Labor Party is to try to curry some favour with the business community. Put aside all of the rhetoric: Labor do not believe in creating jobs in the business community. When they were in government last, their policies demonstrated that clearly. This is nothing more than a shabby attempt to try to mend bridges with the Australian business community. Let me tell you privately: the Australian business community see straight through it. They know this is a sham. They know that, when the Charter of Budget Honesty reveals the true costing, Labor in government will walk away from this policy at a moment’s notice. I can promise the Australian people and the Australian business community that, when Labor have to properly cost this policy—when all these lunatic-Left people are running around as ministers in government—and they want to look at priorities in a Labor government, this will be the first policy that Labor would walk away from. That is because they costed it at $15 million a year. This policy was costed by Treasury—not by the Treasurer’s office, by me or by the Parliamentary Secretary to the Treasurer but by the same Treasury that is hailed by some members of the Labor opposition. The Treasury has provided the costing assumptions, and it is the Treasury whose costings the Labor Party will have to abide by.

Let me say to Australian business: when Labor realise the error of their ways—when they realise that this is not a $60 million project over the four years of the estimates but closer to a $400 million or $500 million measure—they will walk away from this in a heartbeat, because they are beholden to the union movement. The union movement destroys jobs in this country; it is not about creating opportunities for workers as the unions claim. The union bosses in the Labor Party sit along that front bench and they would sit around the cabinet table with Mr Rudd in a Labor government, and those that are out there believe in preserving jobs for union bosses. Their rhetoric is nothing to do with creating opportunities for Australians such as has been demonstrated by the economic performance of the government over the last 10 years. We have created opportunities for two million people to go into jobs. We have put real wage increases at greater levels than the negative levels they were at under the Labor Party. The Howard government, through our economic management, have been able to pay dividends to people in small business and to families. The Labor Party stands as shabby as ever, particularly on this measure. For those reasons, I commend this bill to the House.

Question put:

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