Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

As I was saying before I interrupted myself yesterday, I particularly want to focus on schedule 6 of Tax Laws Amendment (2008 Measures No. 2) Bill 2008, which amends the Income Tax Assessment Act of 1997 to update the list of deductible gift recipients. There are a number of worthy organisations that the Assistant Treasurer had identified in schedule 6. Schedule 6 allows deductions for gifts to the Council for Jewish Community Security from 10 August 2007. I want to focus on that area in particular, because I have long identified this area as a problem for a minority in Australia, but it is a serious problem.

The Council of Jewish Community Security was established to assist the provision of security and protection for members and institutions of Australia’s 120,000-member Australian Jewish community. Government members—and, I believe, the opposition—have long supported this measure and wished these organisations well, in concert with what we believe to be the way forward in terms of security measures for schools—Labor’s school security program: a policy that we took to the 2007 election. I am very pleased that the Minister for Education, the Deputy Prime Minister, has been so hard to the task with that particular funding proposal.

It began on 10 August 2007 when the then shadow minister for education announced that Labor would provide funding of up to $20 million for special security needs for schools that are assessed to be at risk, whether they are public or private, religious or secular. In January the Deputy Prime Minister, in her capacity as education minister, reaffirmed the government’s commitment to ensuring the safety of these schools. The government has long been aware that Australian Jewish community schools are in a range of at-risk religious, ethnic and secular schools and are forced to maintain often elaborate and very costly security measures above and beyond those of other schools to guarantee the safety of their students. Hitherto these schools have received no Commonwealth funding for these measures. Often these expenses act as a significant drain on the capacity of these schools to devote resources to educational pursuits. Some of the families I introduced the shadow minister for education to last year before the election were large. We went to one school where the two little girls we met both came from families of 14 and 15. The problem of having to pay security costs constitutes an unfair impost, on top of school fees, to pay for security costs per student simply because the students, owing to an accident of birth, are deemed at risk. In my view, and the government’s view, this is grossly unfair.

I want to emphasise that these schools and institutions are not at risk from normal violence and that they are not at risk, as are some schools, from normal vandalism—if we can use the expression ‘normal’. But, as I mentioned on the Sunday program that I participated in some years ago, the schools face a national security risk that is equivalent to the risks faced by some embassies. While the government’s policy of providing direct assistance to these schools is a more holistic approach than the policy of the previous government—and it is one that I have campaigned for for more than a decade—the policy of providing a deduction gift recipient status for the Council of Jewish Community Security is also a step in the right direction. It is a complementary step that the government can and has taken to meet this burden. This should encourage people to lend a helping hand to this worthy activity.

I want to pay tribute in particular to the professional but very dedicated security people who look after all of these institutions. If one went to a synagogue or a Jewish community centre at any time one would see that these people from the community security group provide security and coordination with the various appropriate police forces. I cannot mention them by name, because that might jeopardise their security, but Gavin and the other people who are responsible for this very serious task are owed great credit. Any responsible reasonable measure which helps ensure the wellbeing of schoolkids of any colour or creed is to be commended. This measure makes it easier for members of the Australian Jewish community to donate to causes that aid the provision of safe education and the safe operation of the institutions.

It is a positive development, especially for those who until now have had to dig very deep simply to have their children or their institutions operate in safety and in accordance with their religious beliefs. In the often quoted words of Edmund Burke, ‘All that is required for the triumph of evil is for good men to do nothing.’ With this measure, the men and women of this parliament are showing their commitment to those who ensure that the potential for evil to target minority in this country will not prevail, and ensuring that they can continue to be supported through measures that increase the tax effectiveness of community members supporting such initiatives.

I want to pay tribute in particular to two gentlemen in Melbourne who I am very aware of. For years they have shouldered the task of making sure that these security organisations have enough to protect the various institutions: Mr Roy Tashi and Mr David Smorgon. They, in particular, have led this vital work. I do not normally praise journalists. People know that I have a very sceptical attitude to people like old ‘Scissorhands’ who sits up there in the press gallery, but I do want to identify Mr John Lyons, the former executive producer of the Sunday program and formerly of the Sydney Morning Herald. He decided to take this issue up as a personal investigation and I believe sparked the interest of a large number of my colleagues in the House, both on this side and on the now opposition side, in this issue. That has actually led to this change in legislation.

I am proud to be part of a government that takes a holistic approach to this problem of the security of a minority of Australians—the serious, non-partisan identification by this House of organisations that are a risk to all Australians; the 13 organisations that are so comprehensively looked at by the intelligence committee and then reported back to this parliament and dealt with in a non-partisan way. They are not dealt with by the Attorney-General as a matter of fiat; the whole parliament takes this thing very seriously, together with the security measures for schools and expenditure that the education minister has undertaken. This item in schedule 16 means that people who are Australian citizens can, like all other Australian citizens, attend their institutions and schools with some degree of understanding that their safety will be protected, as with other Australians. I commend this bill and this schedule to the House.

Scott Morrison (Cook, Liberal Party) Share this | Link to this | Hansard source

I also wish to address my remarks on this bill to schedule 6. This amends the list of deductible gift recipients in the tax act to assist listed organisations attract public support for their activities. The inclusion of these new organisations as part of this bill is an initiative of the previous government, and I am pleased to support these measures. I commend all of those organisations listed, and those to whom the matter is extended, for the work they do in our community. More generally, we debate this bill today during National Volunteers Week. The combination of these events presents an important opportunity to reflect on the status of our not-for-profit sector, their contributors and volunteers and the important role they play in our community at a global, national and local level.

Australia is a strong and prosperous country. We have also demonstrated our ability to be a very generous country. In my own electorate of Cook, in Sydney’s Sutherland shire, we have a proud record of volunteering and support for community organisations. My predecessor, the Hon. Bruce Baird, would often quote the statistic that there were more volunteers for the Sydney Olympics from the Sutherland Shire than from any other part of Australia. Our challenge as a nation is to see our generosity rise to a new level. We are living in a post-prosperity world, and this is the result of our success. On this side of politics, economic questions have never been a passing interest. The management of our economy has always been core business for the coalition. Our commitment to economic policy and reform has fuelled the policy visions of generations of Liberals, and the fulfilment of these policies, most significantly by the Howard-Costello government, has played a central role in the prosperity we enjoy today.

A by-product of this success, however, has been that economic prosperity is no longer seen by new generations of Australians as an end in its own right. The question being asked by these new generations is, ‘What is our prosperity for?’ In responding, we must be careful to prevent complacency returning to economic management. Prosperity can never be taken for granted. Our longstanding principles of economic conservatism remain hallmarks of the Liberal approach—not a passing fashion or a politically expedient slogan to wheel out at election times. As Liberals, we believe we should leave what people do with their hard-won prosperity to themselves. After all, it is our opponents who champion the nanny state—as evidenced again last night by their fortnightly payments now for the baby bonus.

But as we see surpluses and individual wealth grow, there is no danger in giving voice to how we can harness this prosperity to work together to create an even better and more generous society. Our opponents believe that such efforts are best directed through the state. The Liberal answer rests in returning the focus of such efforts to our communities. Our communities are the front line in creating a better society, and I believe this is a fundamental Liberal notion. In our post-prosperity age, there is a fresh hunger for real community—not the community of government institutions and bureaucrats, but the community of families and individuals that creates identity and purpose for life. As a society, we have allowed the realm of community to retreat. Our communities have become desensitised and disempowered by our state-centric models. It has got to the point where we barely notice we are even doing it any more.

We have created an expectation for the role of government that exceeds its natural mandate and, too often, its capacity. Just ask anyone who relies on—or even works for—the Department of Community Services in New South Wales and they will tell you so. Our response today is too often, ‘What is the government doing?’ rather than, ‘How as a community can we act to address the crises we face?’ whether it is ageing, respite, youth homelessness, suicide, mental illness or substance abuse, just to name a few. The question for government is: what role can it play to strengthen and support the naturally formed institutions of our communities to enable communities to play a greater role and a more direct role in addressing the challenges we face, in particular the social challenges?

Our role in the Northern Territory intervention is a case in point. Our objective in the Northern Territory intervention, as introduced by the Howard-Costello government, is not to run these communities but to help these communities find their feet again. After decades of socialisation and dependency, the Howard government acted to support these communities by seeking to re-establish a secure environment for families by removing influences, such as pornography, that would undermine their rehabilitation and ensuring that government support was targeted to restoring individual health and wellbeing by tying welfare to food, hygiene and education.

Our objective is to not be there, or at least no more so than in any part of the wider community. That is what closing the gap actually looks like: functional communities. The former approach would leave us in these communities to a disproportionate level forever. This is Liberal community policy in action in the most extreme of conditions. Thankfully, the rest of our communities are not in such a derelict state. However, our community institutions are in need. Our sports clubs, volunteer clubs and charitable organisations, like those that are mentioned in this bill, are all under-resourced and overworked. Surely an objective of government should be to reinforce and support the health of these organisations so as to enable the government sector to retreat from the front-line role of service delivery in more areas, opening up the opportunity for direct community action and involvement by community organisations. We should certainly seek to fund, but why, as under the Labor model, should government seek to control and own?

Community organisations are best run when they are community owned and directed. There is an accountability that exists under this model that governments cannot replicate. Those making the decisions on services are the ones who will more often find themselves in front of someone who is using and relying on those services, whether it is in the direct provision of those services or as part of their local community. By all means provide a national or state-wide context to funding arrangements and ensure appropriate protections for public funds, but do not let centralised bureaucracies use such reasons as an excuse to commandeer. The Labor view, I believe, is to command and control in these areas. I believe the Liberal view is to nurture and support. And I believe that this is the intention of this bill: to encourage community support for community organisations, to address community problems.

However we must go further. As a nation we have demonstrated our generosity, but it must become a more permanent and substantial feature of our society. Such a goal should be an objective of government. We need to develop a serious culture of philanthropy in this country that can build a not-for-profit sector that can provide the institutional depth and capacity necessary to be a more significant partner in dealing with the many challenges our community faces, as well as providing support for those in need, both within Australia and overseas.

The Giving Australia report, funded by the previous government, concluded that ‘a diverse and healthy non-profit sector contributes to a stronger, more prosperous and cohesive civil society’, and I agree. The report notes that there are 700,000 non-profit organisations in Australia, with an estimated total revenue of $33.5 billion back in 2000. Approximately 20,000 organisations have tax-deductible status. In 2004, 13.4 million Australians, or almost 87 per cent of the adult population, gave a total of $5.7 billion. Half of those donations were $100 or less and just over half, 51 per cent, of those donations were one-off. Furthermore, since 1997, personal giving has increased in absolute terms by 88 per cent, or by 58 per cent in real terms after adjusting for inflation.

It is not just in the area of donations that we are increasing; it is also in the area of volunteering itself. ABS statistics show that, in 2006, 5.2 million Australians, or just over a third of our adult population, participated in voluntary work and contributed 713 million hours. This is up from 4.4 million Australians in 2000 and 3.2 million in 1995. The same statistics show that people who are volunteers are more likely to have made a donation than those who are not volunteers—85 per cent compared to 72 per cent. It is also true that these volunteers do more than just give their time, often putting themselves out of pocket for expenses directly incurred in performing their service or in lost wages or earnings. I particularly note the sacrifice made by small business people who are involved in volunteering, who take time away from their businesses and incur a loss of earnings for that reason.

The study attributes a number of key reasons for the growth in volunteerism and the increase in charitable giving: the increasing size of the adult population; sustained economic prosperity, with more people in employment, rising wages—and let us not forget that over the course of the last government there was a 21.5 per cent increase in real wages—rising disposable income and improved business profitability, which are all things that went forward under the previous government; and greater and positive publicity for giving and increased fund-seeking activity by charitable organisations, using more sophisticated methods.

I also note the report says that, while 51 per cent of donations are one-off, non-profit organisations are almost always likely to be sustained by regular and generous giving than by one-off measures, and they acknowledge that taxation measures are a good way to foster planned giving, as is provided for in this bill. It is therefore not surprising that the following measures introduced by the previous government have played an important role in encouraging greater giving by Australians. Those measures included: five-year averaging of donations; deductions for gifts of property over $5,000; deductions for gifts of shares under $5,000; deductions for minor benefit contributions, such as gala dinners; deductions for workplace giving, which has been particularly successful; conservation covenants; capital gains tax for gifts within the cultural gifts program; and the introduction of the prescribed private fund.

A recent study by the Australian Centre for Philanthropy and Nonprofit Studies at the Queensland University of Technology, titled Good times and philanthropy, identified that between 2001 and 2006 more than 450 PPFs had been established by individuals and companies and that since that time estimates point to more than 600 in operation. So these are successful measures that have encouraged the flow of charitable giving in this country. As a nation we have become more generous, but I believe we can do much better. A study recently undertaken by BERL in New Zealand, in March last year, estimated that Australian giving accounted for 0.68 per cent of GDP. This compares to 0.81 per cent of GDP for New Zealand and 1.6 per cent for the United States. So there is a further distance to travel. The QUT study also noted that the total value of donations claimed by individuals as tax deductions in 2005 was $1.7 billion. This accounted for 5.3 per cent of the total value of deductions. This is only slightly higher than the amount claimed for using tax agents in this country.

The study also noted that there were 4.3 million Australians who made charitable gifts and claimed them in their tax returns for 2005. That is the highest level on record. However, this represented an average of just one-third of one per cent of these donors’ assessable taxable income. Across all taxpayers, when this is averaged out, this represents just 0.00032 per cent of the average Australian taxable income. So we can do better and we must do better if we are to ensure that our non-profit organisations who stand in the breach for our communities can continue to perform their valuable service and, even better, expand their operations.

To this end I believe we need a national strategy on philanthropy and volunteering that builds on the success of the Howard government’s policies and leadership in this area and works to deliver better and more inclusive outcomes for our communities. This must include increasing our current level of giving as a target, increasing and recognising volunteer involvement in non-profit organisations in all ways that we can and increasing the institutional strength of our not-for-profit sector. We need more A-list non-profit institutions evident in other Western democracies—these institutions that have depth, capital, experience, properly structured governance, the capacity to step in in so many more conditions in a way that government cannot and the capacity to engage the not-for-profit sector as a key partner in addressing community challenges. We need better institutions that become better partners.

Such a strategy will require us to look at many issues, including additional taxation measures that provide an incentive for planned giving and compensation and/or relief for out-of-pocket expenses for volunteers. Costs and processes associated with background checks are something that Volunteering Australia has highlighted. This is a very necessary step in the process but one we must ensure the not-for-profit sector is resourced to perform. The implications of occupational health and safety requirements also need to be addressed. There is a need to increase awareness of non-profit organisations and their activities, and I must admit this bill does go some way towards advancing that goal. We also need to look at partnership models for accessing public sector support to build institutional capacity, information and data resources to better understand the incidence of and influences upon philanthropic activity, a review of red-tape regulation impacting on the activities of non-profit organisations and improving the transparency in governance arrangements for nonprofits. A national strategy that can advance these causes is one that I believe can lead to greater institutional capacity in the non-profit sector in this country and ensure a greater response by our community to address the challenges we face.

In closing I wish to make particular reference and give recognition to a constituent of mine whose own activities are recognised in this bill—Ian Thorpe and his Fountain for Youth. Ian Thorpe is a proud resident of the shire, in the seat of Cook. Ian is an inspirational Australian whose achievements in the pool provided us all with a sense of what is possible when great talent is combined with great dedication. He has been an outstanding ambassador for Australia, in and out of the pool, most notably in tourism. Both before and while I was managing director of Tourism Australia, Ian was a fantastic ambassador for Australia, particularly in Japan, and always made himself available to advance our national cause wherever he could. He was deeply admired and remains deeply admired by the Japanese people. He is a great asset to Australia in our relations with that country. He has been an outstanding ambassador for Australia and he is now applying those same characteristics to his post-sport life. His foundation focuses on advocacy for the needs of ill children, building alliances with the corporate sector and general community to raise awareness and funds to bring positive changes to the lives of children by improving their health and education. These include, for instance, a literacy empowerment project in remote Indigenous communities east of Katherine in the Northern Territory as well as funding research into Rett syndrome, which is a devastating genetic disorder that is one of the most common causes of severe, progressive intellectual disability and affects one in 10,000 female children. I commend both Ian and his organisation for their work and all those organisations that are included in schedule 6 of this bill, and I commend the bill to the House.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

In rising to support the Tax Laws Amendment (2008 Measures No. 2) Bill 2008, which improves our nation’s tax and superannuation laws, I would like to concentrate on two of the six amendments—and, if it is not forgoing too much of the convention of this place, I would like to say that I agree with the member for Cook, perhaps not so much with his praise of the departed Howard government but with his thrust about the importance of charity and giving in Australian life.

It is a shameful fact that Australia is in the grip of a serious skills crisis. I believe one of the major policy failings of the previous government was its cavalier attitude towards our future prosperity, as evidenced by its neglect of skills formation in Australia. Our nation has simply not trained enough new or existing workers to keep up with the demands on our economy and our workforce. As you know, Mr Deputy Speaker, even in the meatworks in your own electorate we have seen the skills shortage hit hard. In times of record prosperity, this is unforgivable.

Unlike the previous government, the Rudd government takes this skills shortage very seriously. We know that investment in skills creation is fundamental to the next wave of economic reform. That is why, earlier this year, the Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion introduced the Skills Australia Bill, the first step of many that this government will take as part of a comprehensive approach to secure a prosperous future which maximises workforce participation and productivity. That is why in the budget last night we delivered on our commitment to establish Trade Training Centres in secondary schools to give young people the opportunity to study a trade at school. That program is worth $2½ billion over the next decade. That is why last night the budget delivered our commitment to 450,000 new training places over the next four years. In fact, the budget extended that commitment to $1.9 billion over five years to fund 600,000-plus new training places.

I congratulate the Prime Minister, the Treasurer and the Deputy Prime Minister for proving to the Australian people that promises made during the election campaign are actually promises kept by the Rudd government’s first budget. Australians know that, for our country to prosper and thrive, we urgently need to develop our whole base of skills training.

I think these tax law amendments are another step down that path. I would like to refer in particular to schedule 5, early completion bonuses for apprentices. This measure ensures that apprentices in areas with skills shortages will not pay tax on early completion bonuses provided by state and territory governments up to $1,000. As of now, these early completion bonuses are treated as taxable income. This measure will change that, and I think this is a great incentive for those young apprentices eager to get out into the workforce and help ease our skills crisis. As this bill outlines, this will apply to the early completion of apprenticeships in specified occupations affected by the skills shortage. At the moment, the great state of Queensland is the only state to have an early completion bonus for apprentices. I hope that perhaps other state and territory governments, with the passage of this bill, will introduce similar bonuses to encourage apprentices.

I would also like to comment specifically about schedule 6, deductible gift recipients. This is a crucial intersection between generous Australia and the non-profit sector. The Parliamentary Secretary for Social Inclusion and the Voluntary Sector, Senator Ursula Stephens, has spoken at length on this matter, and I am grateful for her research on the matter. As we have heard previously, there are approximately 700,000 non-profit organisations in Australia. Many of these are small and depend on voluntary commitment. About half of them are incorporated. Perhaps about 35,000 of these organisations employ staff. As the member for Cook correctly stated, 20,000 of these organisations have deductible gift recipient status. In fact, the contribution of the non-profit sector’s total revenue is about $35 billion. Indeed, in the 2005 Giving Australia report it was estimated that the donation of money, goods and services to non-profit organisations by individuals and business was estimated at $11 billion a year. In 2004 Australians gave $7.7 billion. Of this, $5.7 billion was donated by 13.4 million people, or 87 per cent of all adult Australians. Two billion dollars, interestingly, was provided by 10.5 million people through charity gambling. $3.3 billion came from 525,000 businesses, or two in every three Australian businesses. In terms of personal time, 41 per cent of Australians volunteered in the year 2004, providing no less than 836 million hours of their time—an average of 132 hours per year.

Despite all of this good work, it is crucial to strengthen the generosity of Australians and the resources of the not-for-profit sector. Even with the increasing size of our population, for sustained future prosperity and nation-building and to deliver for working families it is necessary to increase the number of non-profit organisations able to seek increased donations. Therefore, I strongly support this measure giving deductible gift recipient status to 13 worthy groups, including groups active in my own portfolio area of disabilities, such as Wheelchairs for Kids. We are aware that this government is strongly committed to supporting people with disabilities, and we know that out there in the community there are thousands and thousands of people working tirelessly to do the same thing. Wheelchairs for Kids looks further afield, to the great unmet need which exists for children with disability right through the developing world. Twelve years ago, a member of the Rotary Club of Scarborough began making wheelchairs for children with disabilities in the Third World. Now 100 volunteers make these wheelchairs, and in enormous numbers—13,000 by the end of 2007. This organisation is funded entirely by donations from the public except for the rental expenses, which are covered by the Western Australian government. I hope that, this initiative having been granted this status, many more donations will flow to the initiative, which brings desperately needed assistance to the marginalised and often neglected children.

I am also happy to note that Playgroup Australia has been listed for deductible gift recipient status. Playgroup Australia—which I have the pleasure of working with in my portfolio—is the national body and leading representative and advocate for playgroups. As a federation of eight state and territory playgroup associations across Australia it collectively represents more than 100,000 families and 135,000 children at approximately 8,000 playgroup sessions every week. The Australian government has funded playgroups since 1975, and the evidence is clear that forums such as playgroups are not only fun but also a valuable investment in a child’s cognitive, physical, social and emotional wellbeing. Community playgroups are initiated and managed by parents or caregivers. Supported playgroups are initiated by a paid coordinator who works with the families to help them develop skills to participate in or run a community playgroup independently over time. Supported playgroups target families from culturally and linguistically diverse groups and backgrounds, Indigenous families, families with mental health and/or disability issues, teenage and young parent families and families who are socially isolated and disadvantaged. I have been working with Playgroup Australia since I was given the privilege of representing people with disabilities by our Prime Minister, and I hope that this listing helps them continue to offer the vital support that they provide to the parents and children who need them so much.

I would also like to comment briefly on the AE2 Commemorative Foundation. It is a fantastic organisation. What this is about is ensuring and dealing with the issue of the fate and the future of the Australian submarine AE2. Talking to the organisation, I found that they are pleased with this status listing for them because it will make the source of funding much more available from individuals and organisations. Many philanthropic organisations have a requirement in their charter about the status of who they donate money to. The AE2 Commemorative Foundation is hoping to raise $2 million plus. In fact, as recently as the Anzac Day period, they were meeting in conferences in Istanbul to talk about the future of the AE2. There have been plenty of grandiose schemes to raise the AE2, but it has been decided to leave the AE2 to lie on the bottom. Instead, the foundation will protect and preserve her and educate people about the AE2.

Having welcomed the listing of these organisations for deductible gift recipient status, I find it extraordinary that to recognise such legitimate efforts on behalf of people we have such a complex process, requiring the amendment of the tax act in the manner in which we are doing it. Perhaps it is time for fundamental reform of charities legislation and for an appropriate piece of legislation which captures the specific work of charities and not-for-profit organisations. I commend the legislation and these organisations—the organisations listed, especially in schedule 6, and the other 20,000 organisations and, indeed, all of the not-for-profit sector. Perhaps they deserve better. Perhaps we need to provide better legislation, better regulation and greater support for the invaluable support that they provide to the Australian community.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

The tax laws amendments were fundamentally crafted and conceived by the previous coalition government, and for those reasons I will be supporting all six schedules. The first three are significant improvements for the business community, and the remaining three are also modifications to the tax laws, which we support.

Of course the key event overnight, the release of the first Rudd government budget, is of great concern to those very businesses that are affected by this legislation, the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. They will be looking at legislation like this to see whether there really is any follow-on at all, any follow-up, any commitment and any heart for small business. For those who read the fine print, there is very, very little in it for the small business community. That is a surprise, because right now of course we are facing the abyss of unemployment, interest rates and inflation.

You only have to go back about 12 months to remember those fateful statements by Wayne Swan and Kevin Rudd that the economy was on autopilot, that we were riding on the back of a mineral boom, that it was so easy to run an economy like Australia’s. Of course, now they have realised that it is not. The narrative that we are hearing at the moment about this economy being in diabolical stress and under crisis from the threat of inflation is just a softening up, with the reality being that there will be significant job losses faced in Australia over the next 12 months.

Let’s be honest about working families. There is nothing Robin Hood about losing a job, certainly not if we are talking 65,000 or 130,000 Australians. If you drill it down to a community like Redlands, you are looking at a thousand people who are in work at the moment being out of work by this time next year under this government’s watch. Last night was the first opportunity for a clear articulation of exactly what this government intends to do about it.

We have had a clear opportunity over the last three or four weeks of budget leaks—this new approach with federal budgets where you leak components of it to assess media reaction without actually providing any opportunity for a close, hard look at the detail. So, by the time we got to the budget last night, there was actually nothing left after we took away these authorised leaks.

A new government’s first budget is always that hallmark moment where you say, ‘Where are they heading?’ You take away the spin and you say, ‘What are they actually doing with the money? Is it an anti-inflationary budget? Is it cutting government spending?’ No, far from it. It was a spending budget, raising government spending by around $3 billion. You would not do that if your heart were in fighting inflation. Any of those cuts that were described last night have simply been matched and exceeded by further Labor spending. That is not the way to fight inflation at all.

The second point to look at is: exactly who were the losers? There is almost a sense that if you are not mates with the government then you lost out last night. The carers who dared stand up for their one-off payment still have not got the security of that being an ongoing payment. It is quite easy to say, ‘We are looking at revisiting and revising carer payments,’ but there is nothing to stop you putting it in those forward estimates. But of course it has not been done. It was a begrudging single payment to those that need it most: the carers.

You do not have to look too far to see that the veteran community got almost nothing out of last night, almost as punishment for not queuing up and revering the new Commonwealth government. Seniors have very little to show for it. And what about those genuinely living with disabilities? The Parliamentary Secretary for Disabilities and Children’s Services, who has just left the chamber, has almost nothing to show for it in the form of improved payments for a group that needs it most.

We appreciate that we have a Prime Minister who takes months and months—even years—to come up with a new idea. Looking at last night’s budget, can I find even a single idea that belongs to Kevin Rudd? I saw plenty of copy from the coalition government. Tax cuts were announced because the government committed to them. But those tax cuts delivered last night, courtesy of the hard work of former Treasurer, Peter Costello, were promised nearly 12 months ago. If the economy has shifted so much, where was the will from this new government to say: ‘If we are serious about fighting inflation we will pay some of those tax cuts into superannuation. We will actually do something genuine with that $30 billion to fight inflation’? But there was no heart, no courage; they were just meeting that obligation, which of course we support, being our own tax cuts.

Let’s go through the rest of the budget. Find for me in that budget one idea that we can sheet home as being Kevin Rudd’s idea. I saw a few Kim Beazley ideas. I saw plenty of coalition copy. But did we have a single idea from this person, our Prime Minister, in the budget last night? I saw a budget of almost nothing. I felt that you could just pop the numbers in and pop the numbers out. It could have been any government in the world releasing a budget in a surplus environment. I would like to see one idea from an individual who has predominantly feasted on the media around a 2020 Summit. He has had 12 months in opposition to get his ideas together, 12 years in opposition as a party to come up with some ideas, and what do we have? We have articulated root and branch tax reform. That was thought bubble No. 521. It got a headline for him. What is he talking about—root and branch tax reform?

We are going to have the future tax system reporting back to the government over the next 18 months to two years. Is this a government with vision? Where are the ideas on tax reform? Where was the tax policy at the last election? We are talking about a vacant approach to policy setting relying on consensus driven summiteering. The state governments will surely follow up with their own summits and will stack those seats at the summits and just listen to the ideas that we may choose to implement. This is a government without any idea at all on tax. To simply say, ‘We are matching what you are doing and we might add a dollar here or there’ is policy vacancy at its worst. We have had six months to deliver a budget that actually set a new direction for Australia. And all we have heard is the Robin Hood, the tough decision of stealing from the rich and giving to the poor.

For those 48,000 families involved, my recollection was that the baby bonus was effectively an incentive, not a welfare payment. Aren’t we confusing the two here? It was an incentive that we saw in a falling fertility rate to increase population. And Australia appears to be one of the few countries that can actually report a turnaround and an increase in fertility rates. The baby bonus was part of that suite. It did not act in isolation and I do not say that it had complete causation, but the baby bonus was an important part.

There are a lot of policies here that I think have been built more on ideology than on evidence. You saw the challenges yesterday. Lay down the evidence for your tax policy. Lay down your evidence for the means testing. There simply has been none laid out whatsoever. So that hope that we might be moving away from politics by ideology—the accusation laid upon this government when they took office late last year—is far from being played out, and the suspicion remains distinctly that this was a budget to punish those who had not supported the government.

This is a country obviously awash with money and it takes a certain brand of economic management to do it effectively. I am not saying that the textbooks on economics can tell us exactly how to manage a booming economy with all the threats of inflation. Of course it is a serious problem that requires addressing. But this situation is predominantly being politicised by a government desperate to sheet home any of the bad news to the decisions made years and years ago. I have always challenged that side of the House to say that from today they take responsibility for the outcomes of the Australian economy. They are still yet to do it. Perhaps it is a sign of an immature government, perhaps a sign of a government that simply runs on announcements with very little follow-up and very little detail.

We may talk about some of the groups affected by these tax laws amendments to get a picture of that, be they the apprentices or those running small businesses. They will feel the first pinch that we are already seeing in the southern states of the loss of jobs and the loss of strength in the economy. It will lead directly to the need for increased welfare and to the support required for Work for the Dole, which has also been diluted after last night’s budget.

History will recall the horrible reality that we have a new government with an opportunity to take the tough decisions, but it did not. Let us try to work out in a multiple-choice scenario whether we have (a) a government here prepared to take tough and unpopular decisions that are right for the long term or (b) the announcement effect of constant symbolism and tokenism and fiddling around the edges when in fact they have a wonderful mandate with their own state governments to make significant reform. I am not talking about just wiping away this year’s surplus by transferring it to universities. I would support many of these payments and seeing infrastructure issues being addressed particularly in bottleneck areas of the economy. But last night was an opportunity for the really big decisions that simply never came.

The horrible reality is that Australia is an economy that has weathered some extraordinary external stresses and has an internal stress at the moment and a government that is refusing to take responsibility for it. It is refusing to take responsibility on petrol prices. How many times do we have to hear about FuelWatch and the cop on the beat as we watch the fuel prices rise? Of course I do not hold the government responsible for crude oil prices and global fuel prices, but I hold them responsible for promising ordinary Australians that they would do something about it. If they know they have no control over it, why do they engage in that vacuous promise-making about making it easier for working families when the only formula they have is putting them out of work? How is that the Robin Hood philosophy in the end? When the three key markers of government success—inflation, unemployment and interest rates—are judged two years from now, you want to be very certain, members on the other side of this chamber, that you are in front on the ledger on at least two of those three markers. Right now two of them are slipping and, with the greatest respect, you appear to have no control over them whatsoever.

I do not like to make the analogy of a little bloke sitting in the cockpit of the 747 whose feet cannot touch the ground and with a sea of dials in front of him. The plane is on cruise control at the moment but there is that sense that the government do not know what touching any of those buttons or knobs will do and they are just hoping that the plane is going to stay level. There is that fearful moment when you think with your first budget that you have to touch a control and work out what happens and you realise that running an economy is far more difficult than you ever realised from the opposition benches.

Right down in Redlands where the tax laws amendments will be biting home, there will be a sense of sadness that investing in our schools has gone, that community water grants have effectively gone, that some of the really important programs that were delivering infrastructure where it is most needed have gone. The criticism already from my area is that in that wonderful opportunity to have an inspiring budget it really was visionless. Work for the Dole has been semidismantled. There is almost a sense that the government is doing as much as they can without getting any opprobrium from what is at the moment predominantly a fawning and sycophantic media, that it is effectively a case of: go ahead, do whatever you want while it is washing over us at the moment. You have free rein so, for something different, why not try something visionary and long term. You have got effectively no scrutiny at the moment. It is nothing less than fawning media approbation.

So why don’t you go right ahead and try something truly daring like making a long-term decision rather than just talking about these nebulous funds that are going to be delivering all the key infrastructure in the future. What have we got for the next 12 months? You have got a chance right now to plan for tomorrow. We have got feasibility and planning in the tens of millions. You had six months and every possible group to report back to you—and we have talked about the advisory groups and committees—but it almost seems that it has come to nothing. You had months to pull this together and years in opposition to pull together those in think tanks that were going to give you direction. But I truly have the sense of a Prime Minister devoid of any ideas whatsoever. It all sounds great on Sunrise, but is there one thing in that budget that could truly be laid on the table and you could say, ‘This is Kevin Rudd’s plan for the future’? There is more a sense of: how do I distribute the surplus without making things any worse for me than they are already?

The objective of cooling the economy obviously requires an anti-inflationary approach. But of all the reforms we have read about, you are taking with one hand and giving with the other. If you are going to introduce a ready-to-drink tax, if you are going to have excise tax for trucks and remove that support for those who are actually moving food around this country, and if you are going to introduce a luxury car tax, of course you will be pushing up prices. Some of the internal analysis shows that it could increase CPI by between 0.3 and 0.4 per cent. So why are you engaging in taxation measures that are making things more expensive in the phase where you are actually trying not to do that at all?

We can already see some of this Labor labour ideology coming through, attacking those who take responsibility for their own health insurance. Make no mistake here, people of all income levels pay for private health insurance for their own reasons. The great success of the coalition government was that they managed this blend of private and state funded service provision in health, education and child care. By moving the Medicare surcharge levy to $150,000, it is effectively saying, ‘We are a government that does not want to pay the 30 per cent rebate anymore but we lack the courage to remove it. We are a government that want to reward those who do not plan for their own health in the future and support the private health system and we are not going to support those who choose to take the burden off the public hospital system.’ I know that that is deeply ingrained Labor ideology that you have never managed to have the courage to articulate, but after writing a letter of comfort to the industry, you will simply achieve it by stealth.

What we really wanted in this budget was fiscal restraint—but you increased government spending. We wanted national saving—but all we heard about were nebulous funds. We wanted infrastructure bottlenecks addressed—but there was not that long-term commitment to anything except feasibility and planning. Most importantly of all, I think ordinary Australians, everyday Australians, wanted increased participation in the workforce. It is a simple request, that we get more Australians involved and engaged and fewer of them relying on state funded welfare. Well, we—the bad news is—are heading in exactly the reverse direction.

The symbolism we have seen trotted out over the apology for Indigenous affairs and the weak-hearted support for the intervention was horribly revealed last night when we saw a tiny mention—just three or four lines—for Indigenous Australia. Those commitments last night, for between $50 million and $60 million per year for the next four years, were chickenfeed. I can respect that there is still a review going on of the intervention and I can understand that those findings are yet to come back. But let’s be honest about the intervention. It is the first step in 35 years to set out positive social norms and reinforce them through a carrot-and-stick approach, and it would not have been that hard over the last six months to have had some supporting legislation encouraging states to join the intervention and to be putting the support where it is most required. We are not talking about building more schools or more homes. What we are talking about is stopping child abuse. That was the essence of the intervention, but there was no mention of that last night. I challenge the minister to explain whether she truly cares about the intervention or whether this is something that gets rolled out because it was an election commitment you had to make so that you got into government, and warmth in the embrace of this intervention is completely lacking.

This intervention will roll out over 12 months. It will be reviewed. Those who have had their health checks will get their follow-up. But the intervention was so much more than that. The intervention was reordering community social norms so that families could come together and say: ‘We regard attending school as something important. Looking after your home through tenancy agreements is something that should be supported. Having your kids checked out at a health centre is something that should be common, ordinary practice. Possession of pornographic DVDs in communities where there is one television on the verandah and the whole community gathers around is probably not going to be a good thing where child abuse is reported as endemic.’ That is just common sense for you and me in a community where we long ago understood ratings and classifications, but in Indigenous communities things work differently. So the intervention said, ‘For the moment, let’s have no pornographic DVDs, let’s not broadcast R18+ pornography into Indigenous communities and give them a chance to regather, reorder the positive social norms and have a hope that, for those who do not agree with those norms, their income could well be managed because, for the first time ever, there has been a tiny bit of a stick together with the carrot.’ But there is nothing coming from that side of the House; there is just a watch and wait. And that signal does percolate down to those working on the ground, to the public health officials and bureaucrats, that this is what we call a soft-pedalling government on the Indigenous intervention. The classic example was not only the legislation to which I just referred but your decision to extend CDEP, unreformed, for another 12 months. Here was the one opportunity to turn sit-down money into genuine work, and it was lost through the simple signal of extending CDEP for 12 months.

To conclude my remarks on this legislation, the businesses that will be affected by it will be seriously thinking in the next six months about whether they can employ more people. Unemployment has increased from 4.0 per cent earlier this year to 4.2 per cent. Much of that I put down to the collapse in small business confidence that occurred over the Christmas holidays. It is no coincidence that there was a change of government, but now we have unemployment at 4.2 per cent and rising and a government that is just starting to make those first little noises about: ‘We will have loss of jobs but a whole lot more if we don’t control inflation.’ Well, of course we have to control inflation, but there is no excuse for you on the other side of the chamber to be turning working families into non-working families. There is no excuse for cutting back hours for the very aspirational Australians who over the last 10 years have benefited from a strong economy. You have a responsibility here to look after those who need it most, and part of that is a job. As my colleague the member for O’Connor on this side of the chamber has so frequently said, it is one thing to rob from the rich and give to the poor, but you do not want to start paying the poor in unemployment benefits. Is that your plan? Because business will be left with that simple reality, that with an unfriendly government and with no chance to raise productivity and workforce participation, there may be no other future for Australian business. (Time expired)

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

Listening to the previous speech I was reminded of the time some years ago when an American missionary who did charity work came to my home town of Ipswich and I took her to watch an AFL game. The Brisbane Lions were playing St Kilda. As she watched the game she could not quite understand what was going on. At the end of the match we went down on the field, as you do, and ‘Aka’ was doing his handstands. It was a great time—the Brisbane Lions had won, we all sang their song and it was terrific. As we were going away she said to me, ‘Wasn’t that a great soccer match!’ I said to her, ‘Well, you know, it really isn’t soccer, it’s AFL.’ And as I was listening to the previous speaker, the member for Bowman, I was wondering whether he had actually been there last night when the Treasurer gave his speech. So I am going to go home and scan the ABC footage to see whether he was there, because I do not think he understood anything of what was said last night. I am not sure whether the Liberal Party has a national secretariat, as we on this side of the House do, but I was wondering whether his speech was faxed over to him this morning and so he said: ‘Right, I’m going to make this speech that is completely irrelevant to the bill that is before the House; I’m just going to wing it’—and that is what he has done. My background is as a litigation lawyer, and if I had got up and made a speech like that in these circumstances a judge would have told me, ‘Mr Neumann, you’d better get back on track.’ That was an extraordinary speech by the previous speaker. Mr Deputy Speaker, I am actually going to address the bill before the House. It may be shocking, it may surprise those opposite, but I am actually going to address the bill, which is all about good government.

I speak in support of the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. This bill covers a broad range of areas by schedule, and I want to address four in particular that show that this government is pro business, pro market and pro working families. The extension of the late payment offset, which will allow employers to use a late contribution to offset part of their superannuation guarantee charge liability, is the first point. The second point is the provisions to ensure the market value substitution rule does not apply where a capital gains tax event C2 occurs in relation to a widely held company or a unit in a widely held unit trust. The third point is exempting the first $1,000 of an early completion bonus paid to an apprentice from income tax and the fourth point is the amendments to the uniform capital allowance and capital gains tax provisions in circumstances where amounts are misappropriated by an employee or agent. The previous speaker, I note, did not address any of those topics.

Firstly I want to speak about the extension of the late payment offset to allow an employer to use a late contribution to offset part of the superannuation guarantee charge liability. This bill is an important part of the Rudd government’s plan to reduce the burden on small business. As someone who worked for 21 years in small business, I am pleased to support it. It will allow fairer treatment to employers who make contributions after the due date. It amends the previous act to further extend the period within which an employer can make the required superannuation guarantee contribution after the formal due date and still be eligible to use the superannuation guarantee late payment offset.

The current act prescribes a minimum level of superannuation support that all employers are required to pay for eligible employees into a complying superannuation fund. Otherwise the employer will incur liability to pay the superannuation guarantee charge. The purpose of this bill is to remove the anomaly in the system which imposes harsh penalties on well-meaning employers who pay their superannuation contributions late. The bill extends the late payment offset for employers and ensures that late contributions are still counted towards the required superannuation guarantee payments of an employee. The implication is that employers will no longer be required to pay the same amount twice. It reduces the burden financially as well as in a regulatory way. Currently, if employers fail to make the required contribution within 28 days of the due date, they must make the payments through the superannuation guarantee charge and make them payable to the Australian Taxation Office. Many employers I have spoken to do not understand this and, unfortunately, make the payments to the employees’ superannuation fund. Under the pre-existing legislation that payment is not taken into account and they are forced to pay twice thus increasing their financial burden.

The law currently says that from 1 January 2006 an employer who makes a late payment within one month after the due date can use that late payment to offset their superannuation guarantee charge for the quarter—the payment is quarterly. However, if they make it after that one month, they are unable to use the offset under the current law, so it is an impost upon them and a burden. It is a double payment rule, effectively, for those who unintentionally miss their quarterly superannuation payments. The truth is that those who deliberately avoid making contributions to their employees’ superannuation are not likely to be caught by that because they simply will not do it, and the Australian Taxation Office must adopt a very strenuous and tough approach in that regard.

In opposition we called upon the former coalition government to fix this harsh treatment of employers. However, it was not corrected in 11½ years. It is disappointing that Labor’s calls for this fell on deaf ears, although, in fairness, it must be said that the former government were proposing to do it before the lapse of the last parliament. It is a constant complaint from employers and it is good that the current Rudd Labor government has listened to employers as part of its consultation with all segments of the community. In line with our commitment to reducing red tape for small business, we are taking this early action to show employers that we are fair dinkum about listening to their concerns and complaints. Our priority is to help small business because small business is the engine driving economic productivity and growth in this country. Profitable businesses mean high wages, highly skilled employees and helps working families in our community.

Currently there is a disproportionate penalty imposed on employers who pay that late superannuation contribution, and we want to change it. This initiative will be welcomed in my community of Blair, which takes in all the Lockyer Valley, part of the old Boonah shire and two-thirds of the city of Ipswich. There are many business people who work hard in my community. They have profitable businesses making contributions not just in terms of the work they do on a daily basis but also in terms of their community’s life as well. I am pleased with the philanthropic type provisions that we see in this current legislation as well. This legislation will end, once and for all, the possibility that employers find themselves with additional costs. As someone who was running a business and who built it up from scratch, I know that you need all the help you can get. This will be helpful to those who are struggling. There are significant incentives—and they will remain—to ensure employers make their contributions for their employees. Penalties and interest can be imposed by the Australian Taxation Office on employers for late payments—and so they should. I believe this bill is part of the Rudd Labor government’s pro-market, pro-business and pro-working families agenda.

The second area also helps those who received no capital gain but in fact are stuck in circumstances where they end up having to pay capital gains tax on unrealised gains. This bill will ensure that the market value substitution rule does not apply when a capital gains tax event C2 occurs in relation to companies and unit trusts. The bill amends the tax laws to ensure that the market value substitution rule does not apply where a capital gains tax event C2 occurs. Taxpayers will now be treated fairly; they will only be taxed with capital gains tax on the amounts they actually receive in their pockets.

The former coalition government received serious representations from shareholders in companies, particularly shareholders in listed companies, who were adversely affected by the operation of the market value substitution rule. But that fell on deaf ears as well. Eventually, they wanted to change it right before the election, and parliament lapsed. Often, shares are cancelled at a price set in advance and there is an upward movement in the share price by the time the cancellation actually occurs. In these cases shareholders are unfairly subject to capital gains tax on unrealised gains. I am pleased for the provision of equity that this change will take place.

This rule was originally designed to prevent people from manipulating capital proceeds arising from a capital gains tax event which occurred when they were not dealing at arms length. But it has resulted in an injustice to shareholders. The existing tax law means that people pay tax on capital gains when they should not. We should reduce the burden on working families in this community. I am pleased to support this. It is good for my community and the hardworking businesses in my area. This turning off of the market value substitution rule is a good thing in terms of justice, equity and fairness to business.

The third issue was really a Queensland issue. Like on a lot of things, we are ahead of the pack in Queensland. This third thing is exempting from income tax the first $1,000 of early completion bonuses paid to apprentices. This schedule amends the Income Tax Assessment Act 1997 so that the first $1,000 of an early completion bonus paid to an apprentice by a state or territory government will not be subject to income tax. Queensland is ahead of the pack on this. This will put more money in the pockets of apprentices. Generally speaking, the apprentices in my constituency are not well paid. They have made personal sacrifices to complete their education and training. We need to encourage them to complete their apprenticeships.

Putting more money back into the pockets of low-paid apprentices to meet their daily needs by reducing their income tax is the fair thing to do. It is good policy in terms of encouraging people to undertake their apprenticeships more quickly. It is good for apprentices and it is good for business. We cannot have apprentices dropping out of courses. We need a well-trained and highly paid workforce. Productive employees cause by their efforts productive businesses. We need to do everything we can to reward hard work and effort. Completion bonuses are a way to do it and tax relief concerning early completion bonuses will help.

Currently, only Queensland pays a bonus to apprentices who have completed their training contract in an identified skills shortage occupation. If they are full-time apprentices, they must complete their apprenticeship at least six months early; however, if they are a part-time apprentice they need to complete it at least 12 months early. I hope the other states and territories will follow Queensland in this regard. I hope that this will encourage apprentices to quickly complete their training. It is good policy.

The final issue that I want to talk about is amounts misappropriated by employees or agents. The changes here will overcome a technical problem in the tax laws which prevents amounts misappropriated by employees or agents not being deductible and taken into consideration for capital gains tax purposes. As an employer, I have been in circumstances where an employee has misappropriated money from me, so I am pleased to be able to talk about this. It is a difficult area to cope with. There is a sense of betrayal, and then you find that, even though the money is not available to you, you have to pay tax on it.

Capital gains tax from asset sales are taxable for other CGT purposes or under the uniform capital allowance provisions. The uniform capital allowance provisions apply to business operations and allow ongoing deductions for capital expenditure. However, the CGT often only applies in the circumstances of the disposal of assets. The current tax laws do not acknowledge that amounts misappropriated by employees and agents following an assets sale should be taken into consideration. It is right that these misappropriated amounts reduce the termination value of an asset, the disposal of which is assessed under CGT provisions. Under the uniform capital allowance provisions, the amount of income misappropriated is included in working out the tax consequences. It is appropriate that the amount misappropriated is also recognised as loss when the malfeasance occurs.

These tax law amendments by schedule are about helping business. They are about helping shareholders. They are about cutting red tape. They are about fairness and equity. I am pleased that they follow on the Treasurer’s speech last night. If the member for Bowman needs a copy of it, I am happy to provide one for him. If he wishes to come to my electorate office in the Brassall shopping centre, I would be happy to sit down, have a cup of coffee with him and explain it to him. We build on a Labor budget. Unfortunately, the born-to-rule mentality of the previous speaker must go. From time to time we win elections, and from time to time we deliver Labor budgets. I am pleased that the Treasurer has delivered for my electorate. I look forward to the Building Australia Fund financing critical infrastructure in my area, I look forward to the Health and Hospital Fund helping Ipswich General Hospital and other places, and I look forward to the Education Investment Fund helping the universities in my area. I look forward to having the cup of coffee with the member for Bowman at Michel’s Patisserie at Brassall shopping centre, Hunter Street, Ipswich if he wishes to come and have a chat with me.

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. Like the member for Blair I feel bound to comment on the extraordinary contribution made by the member for Bowman, the previous speaker from the opposition, to this debate. The member for Bowman managed to say nothing about the bill before the House and spent his time railing against imagined faults in the budget announced last night. By contrast, the member for Blair has addressed the bill and I propose to do the same thing.

This is a bill which will amend Australian tax laws to fairly recognise the loss a taxpayer receives as a result of having an amount misappropriated from them. Secondly, it is a bill which will improve Australian superannuation laws by ensuring that employers are not harshly penalised for failing to pay their superannuation contributions on time. Thirdly, the bill will ensure that taxpayers are treated fairly by only paying their capital gains tax on the amount they actually receive from a transaction. The bill will also ensure consistency in taxation treatment of Endeavour Awards, a merit based scholarship program administered by the Department of Education, Employment and Workplace Relations.

I want to deal first with schedule 2 of the bill because that amends the Superannuation Guarantee (Administration) Act 1992 to further extend the period within which an employer can make the required superannuation guarantee contributions after the formal due date and still be eligible to use the superannuation guarantee late payment offset. Effectively, this means that employers who make a very late superannuation guarantee payment will not be required to pay twice the required amount. At present, an employer who fails to make the required superannuation guarantee payment after the due date is potentially liable to pay the required superannuation guarantee contributions twice. This occurs where the employer makes a late payment into their employees’ superannuation fund after the end of the second 28-day period and is then liable to pay the ATO the relevant superannuation guarantee charge.

The amendment contained in the bill has as its aim the removal of an anomaly in the superannuation guarantee system that imposes harsh penalties on employers who pay their superannuation contributions late. This was a very common complaint from employers to Labor’s superannuation spokesman when we were in opposition. Labor pushed the then coalition government for the changes that are contained in this bill in relation to superannuation guarantee contributions. As with so much else, the coalition promised to act on the matters that employers and industry were calling for but had not done so at the time that the last election was called. The measure in relation to superannuation guarantee contributions, which forms part of this bill, is part of Labor’s agenda of supporting small business. It removes an anomaly that many employers had been concerned about. Labor is listening to small business and the concerns of employers.

This bill also seeks to exempt income tax from the first $1,000 of early completion bonuses received by apprentices from state governments. As the member for Blair has already pointed out, this is a Queensland initiative, which I acknowledge. It is a good initiative and it is something that I hope will be extended by other state governments for the early completion of apprenticeships. The tax measure now being introduced will assist other state governments to introduce the scheme introduced in Queensland. The amendment ensures that apprentices will not have to pay tax on the bonus they receive for completing their apprenticeships early.

The amendment is needed because income tax law would otherwise treat remuneration for services, which is what this is, as part of ordinary income. That would mean that payments that are very much one-off and in the nature of a bonus, like this early completion bonus, would be taxable as ordinary income. And of course what that means is that some of the incentive that is sought to be provided by schemes of this nature for early completion will be removed. This amendment ensures that the full amount of the bonus remains in the hands of the apprentice who is keen enough to finish her or his apprenticeship early.

In a time such as now of skills shortages in critical areas it is essential that we provide as many incentives as possible for workers to receive training and to speedily complete their training. We face a shortage of more than 200,000 skilled workers in Australia over the next five years. The Rudd Labor government is committed to closing the skills gap by expanding places in a more responsive vocational education and training system. As announced in the budget last night, the government will provide $1.9 billion over five years to deliver up to 630,000 new training places and that includes of course 85,000 apprenticeship places.

We are also committed to ensuring that not only programs like that but also associated legislation such as this bill are put in place to ensure that training to help ease the skills shortage is delivered in a way that ensures that those who are training are not worse off. As the Treasurer has stated on numerous occasions, we face significant inflationary pressures and that has driven up the prices of petrol, housing and groceries. The government understands how this affects working families. We realise that every single dollar counts and amendments like this, which seek to tax-exempt the bonus for early completion of an apprenticeship, will ensure that there is more money back in the pockets of workers and working families, including apprentices.

The other part of this bill that I wanted to address is some, but not all, of the deductible gift recipients who are now to be added to schedule 30 of the legislation. I will take some time to discuss how all of these recipients are very deserving organisations for deductible gift recipient status, but I want to deal with some in particular.

The first is the Amy Gillett Foundation. It is a fact that the manner in which cyclists and motorists share the roads is the subject of negative media stories more often than one would wish to see. I am convinced that the majority of motorists do show cyclists the due respect that they deserve. But unfortunately, as we have seen from a spate of recent stories from Sydney, there are always individuals who disappoint. Road rage incidents surrounding cyclists are entirely unacceptable and there does need to be an active education and awareness campaign for the public. I am very glad therefore to see that the Amy Gillett Foundation is one of the deductible gift recipients that has been added to the tax legislation by this bill.

The Amy Gillett Foundation was inspired by the life of Amy Gillett, who was tragically killed while training in Germany in July 2005. She was an Olympic rower who moved to cycling, and her life was ended at the tragically young age of 29. The terrible accident in which she was killed severely injured and jeopardised the careers of Katie Brown, Lorian Graham, Kate Nichols, Alexis Rhodes and Louise Yaxley—all then members of the Australian Institute of Sport’s elite cycling squad. The Amy Gillett Foundation seeks to reduce the incidence of injury and death caused by interaction between cyclists and motorists. It does that by raising awareness, educating cyclists, conducting research, fundraising and influencing public policy. It also conducts an annual ride called Amy’s Ride, which is a fundraising ride held in Victoria on the Bellarine Peninsula around Geelong. It is also designed to promote key messages of safe and responsible road use.

As a keen amateur cyclist myself, I am well aware that these messages and their education campaigns save lives. They ensure that motorists and cyclists are constantly aware that they should be accommodating of each other on busy roads. For that reason, the Amy Gillett Foundation is a very worthy recipient of deductible gift recipient status.

There are some other organisations that have been added to the list that invoke the commemorations that we have just had in the last few weeks both of Anzac Day and, in the last couple of days, in this House, of the Battles of Fire Support Bases Coral and Balmoral. About three weeks ago, the whole country celebrated the spirit of the Anzacs at dawn services and marches across Australia, taking time to reflect on how, on 25 April 1915, young soldiers landed in Anzac Cove in Gallipoli. On that day, we remembered the 1.5 million Australians who have served their country proudly. The deductible gift recipient status has been conferred on the AE2 Commemorative Foundation because it is appropriate to recognise some of the lesser-known stories of Gallipoli, sometimes referred to as the ‘silent Anzacs’.

The HMAS AE2 was the first allied submarine to successfully dive and evade the heavily mined areas off the Gallipoli Peninsula. As the Anzacs prepared to storm the beaches, it was her mission to create a diversion, to draw fire away from the soldiers and to ‘run amok in the shallows’. The AE2 was then ordered to enter the inland Sea of Marmara and cut off supply lines to the Ottoman Empire. Other allied submarines had tried and failed, yet a characteristically Australian approach allowed the crew to evade capture for five days. They supported their Army brothers until finally succumbing to Turkish fire. Her 32 crew were taken prisoner of war and the AE2 lay on the seabed, unfound until 1992. The AE2 Commemorative Foundation’s objective is to protect and preserve the AE2 and to tell the uniquely Australian story of her brave crew as part of the great Anzac tradition, to remind Australians that for every well-known story you hear about the Anzacs there are many others you have not heard, which should not be forgotten.

Over 100,000 Australian servicemen and servicewomen died in the horrors of the two world wars. The Memorials Development Committee, which is also to be given deductible gift recipient status, seeks to ensure that their deaths are not forgotten and that the sacrifices they made on the battlefield are remembered in our nation’s capital on its most spectacular avenues. The Memorials Development Committee seeks to place two separate but complementary national memorials on Anzac Parade, leading up to the Australian National War Memorial, to commemorate the sacrifices that these service men and women made to their country. These memorials will honour the men and women who gave up so much so that we can continue to live in this great country of ours.

The night before last, I stood in the Great Hall of Parliament House to commemorate the Battles of Fire Support Bases Coral and Balmoral, Australia’s largest and most protracted engagement of the Vietnam War campaign. It was a humbling experience to stand alongside the veterans and their families. Yesterday, they attended a ceremony at the Australian Vietnam Forces National Memorial on Anzac Parade. I look forward to attending a ceremony on Anzac Parade to commemorate those who have fallen in both world wars, when the Memorials Development Committee project is complete in 2010. The Memorials Development Committee is another worthy recipient of deductible gift recipient status.

The member for Melbourne Ports has spoken in detail about the Council for Jewish Community Security, which is also a worthy recipient of the deductible gift recipient status. The measure is an adjunct to the $20 million school security plan for all schools that was announced by Kevin Rudd during the election campaign last year and confirmed in January of this year by the Deputy Prime Minister. As the member for Melbourne Ports explained, the Council for Jewish Community Security does wonderful work. It relies on a large number of volunteers from the community who provide protection for community institutions. It is a matter of regret that in our country there should be a need for a community security organisation at all for any community. But since there is, regrettably, then deductible gift recipient status is an appropriate governmental response.

Finally, I will briefly comment on the deductible gift recipient system. It is my hope that the review of the tax system, which has been announced by the government and which is to take place later this year, will look closely at the somewhat cumbersome system of using legislative identification of particular organisations—which is what we see here in this bill—where there is added, to an already long list of organisations which receive deductible gift recipient status, some further organisations. Using this system potentially causes a long delay between the establishment of a charitable organisation and confirming the tax deductible status of gifts that are made to that organisation. A system which identifies eligible classes and enables quick administrative approval of deductible status would be desirable.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak in support of the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. My comments in support of this bill today go specifically to schedule 5 and, in a small way, to schedule 6 of the proposed bill. As people in my electorate of Petrie are well aware, I am strongly committed to the area of education and training, and to seeing improvements in these areas in the future. That is why it is my pleasure to be speaking about this amendment. The schedule 5 amendment is just another step towards addressing the skills shortage in this country. The people in my electorate and my communities want a federal government that will invest in education and in training—a federal government that has a long-term strategy for addressing the skills crisis and productivity levels in this country.

The Howard government failed my electorate and the Australian people in this task. The member for Bowman today spoke about the government taking responsibility for their actions, yet we are still to see the opposition taking responsibility for their lack of investment in education, training, health, infrastructure and the environment and for the effect that the Work Choices laws had on working families. Last night the Rudd Labor government and the Treasurer, Wayne Swan, announced a budget that commits to the financial investment necessary to deal with the skills crisis.

For too long education and training has been ignored. Investment in education has fallen behind and training has been undervalued. Over the past decade the Howard government failed not only the resource sector but many small and medium businesses across my electorate and across the country by failing to invest in apprenticeships. We became a nation obsessed with university qualifications to the detriment of trade qualifications. We, as a community and as a society, must regain the pride that we held in tradespeople. We must recognise that a trade qualification is just as valuable as a university degree and that a trade is a career path that provides many opportunities. The people that I talk to in my electorate want investment in education. They want investment in training. Adults and students alike want the opportunity to enrol in apprenticeships.

The state governments, with Queensland playing a significant leading role, had been tackling the skills shortage problem for the past few years. The problem is that they had no support from the federal government. They had a federal government that failed to lead the agenda. That is why Labor’s education revolution is essential to this nation and to my community. By reinvesting in our children’s future, by opening up new opportunities to gain skills, we are laying the foundation for a highly skilled workforce. Our aim is to encourage businesses once again to see the important role they play in Australia in establishing and maintaining a skilled workforce. That is why it is the federal government’s responsibility. It is a responsibility that this government, the Labor government, has acknowledged and embraced. Labor’s commitment to establishing trade training centres in all 2,650 secondary schools across the country is a groundbreaking initiative that I strongly support, as do the schools, parents and students throughout my electorate.

The work that schools across my electorate are already undertaking is inspiring, and discussions are occurring throughout the schools about the needs of our local community and our local businesses to determine what the focus of their trade training centres should be. Many older Australians in my electorate understand the importance of trade qualifications. They know the value that the community placed in such skills. They know that people were proud to be tradespeople. We need to restore this pride, this value.

Schedule 5 is another step towards achieving this aim—to encourage our current and future workforce to enter into apprenticeships. Schedule 5 does this by exempting from income tax the first $1,000 of early completion bonuses paid to apprentices by state or territory governments, where certain conditions are met. This exemption plays an important role in addressing the skills shortage in this country, and the measures being taken by the federal government and the Queensland government do address this shortage.

The Queensland government has committed $7.2 million over four years for the new $1,000 bonus scheme for apprentices completing their training early. The early completion bonus is an initiative of the Department of Education, Training and the Arts in Queensland. The bonus became available from 1 January 2007 to apprentices, in apprenticeships from selected skill shortage industry sectors, who complete their apprenticeships early. To be eligible apprentices must complete their apprenticeship at least six months early, in the case of full-time apprenticeships, or 12 months in the case of part-time apprenticeships. The selected skills shortage industry sectors of automotive, construction—including general, civil and off-site—engineering, hospitality and electro technology are the targets of this initiative and under each of those categories there is quite a long list of certificate III trade qualifications that are available and considered to be skill shortage industry occupations that would be entitled to this $1,000 bonus. The bonus arises from a number of actions identified by the Queensland skills plan, which was launched by the Queensland government on 8 March 2006. These actions include dealing with the demand for skilled tradespeople, attracting more people into apprenticeships and making apprenticeships work better for apprentices and employers. The bonus addresses these actions by applying only to identified apprenticeships where there are skills shortages, acting as an incentive to attract more people into apprenticeships and encouraging early completion, and making apprenticeships work better for both apprentices and employers, through an increased awareness and implementation of competency based training.

Since the introduction of the program, 2,871 apprentices have received a payment of $1,000 each for early completion. Four hundred and thirty-three of these apprentices—approximately 15 per cent—were employed in the Brisbane north region. The fact that in the past 12 months 433 additional trade qualified workers have been able to enter the workforce earlier than otherwise may have occurred is exciting news for north Brisbane and my electorate of Petrie. Of course, as this initiative is only 12 months old, it is expected that these numbers will continue to grow over the coming years. According to ABS 2006 census data, in the electorate of Petrie, males between the ages of 15 and 19 years have a 12.2 per cent unemployment rate. For ages 20 to 24 years, there is a seven per cent unemployment rate. For females in the electorate between the ages of 15 and 19 years there is a 9.6 per cent unemployment rate; and between the ages of 20 and 24 years there is a 6.3 per cent unemployment rate. In total, for ages 15 to 19 years there is a 10.9 per cent unemployment rate, and between the ages of 20 and 24 years there is a 6.6 per cent unemployment rate. In addition, areas such as the Redcliffe Peninsula have a median weekly household income of $774 compared to the Brisbane region’s $1,157. Initiatives to encourage individuals into apprenticeships and the early completion of apprenticeships are vital for our youth and low-income workers in the community. The benefits of obtaining a skill in a skill shortage occupation increase the likelihood of full-time employment and higher earnings. That is why I support this bill and will continue to promote the benefits of a trade qualification.

Having been a member of the Training and Employment Recognition Council for many years, I am aware of the need to address the skills shortage in this country and that new initiatives need to be implemented to assist in achieving this aim. The Queensland government are moving forward in their efforts to address the skills shortage through the release of the Queensland skills plan. The federal government now has the opportunity to build on that initiative through its education revolution and the new directions for vocational education and training.

As recently as last Friday, I had the opportunity to visit Craigslea State High School in my electorate. I was there to witness the school being awarded accreditation with the Council of International Schools. I would like to take this opportunity to congratulate Craigslea State High School on this significant achievement. I know that the school has worked extremely hard over the past two years to achieve this recognition. In addition, while at the school, I had the opportunity to inspect the school’s new commercial kitchen. The school strives for excellence, and that is clearly evident in the efforts it has gone to in establishing a fully functioning commercial kitchen that reflects, and in many cases is superior to, a normal workplace environment in the hospitality sector.

The school is currently delivering certificates I, II and III qualifications in hospitality. It is exciting to see a school delivering Certificate III in Hospitality Operations as this course contains units from food and beverage and also commercial cookery. The certificate III also counts as eight credits towards the student’s Queensland secondary education. The benefit of the school based apprenticeship and traineeship system is that it ensures that students leave school with multiple pathways to pursue a career. Upon completing their secondary schooling, students who have completed the Certificate III in Hospitality Operations with Craigslea State High School will be able to, if they desire, enrol in the Certificate III in Hospitality (Commercial Cookery) and have units of competency recognised as prior learning. This is important in addressing the skills shortage in Queensland as the Certificate III in Hospitality (Commercial Cookery) is a recognised skill shortage occupation and forms one of the apprenticeships that the early completion bonus applies to.

To show the holistic approach to further education, students who are enrolled in a school based apprenticeship and who then enter into a full-time or part-time apprenticeship in a skill shortage occupation after their schooling is complete would be able to access the early completion bonus if they finish within the eligible period. This is just another incentive to get trade qualified workers into the workforce sooner. These facts emphasise the need for the amendment before this House. To tax this bonus is to take away the primary purpose of the bonus: to act as an incentive to apprentices to complete their qualification early. This amendment is needed because currently this bonus is characterised as income. This proposed amendment will directly benefit many in Queensland who are currently undertaking, and who will undertake in the future, apprenticeships in skill shortage occupations. It is for these reasons that I support the amendments as prescribed in schedule 5 of this bill.

In relation to schedule 6, I am pleased to support an amendment to the tax laws that will give recognition as deductible gift recipients to a number of organisations that fulfil important roles in our community. This not only will allow for tax deductions for donors who currently give to these organisations but hopefully will encourage new donors and larger donations in the future. The following organisations appear in schedule 6 of the amendment bill: World Youth Day 2008 Trust, the Council of Jewish Community Security, Wheelchairs for Kids Inc., Memorials Development Committee Ltd, AE2 Commemorative Foundation Ltd, Ian Thorpe’s Fountain for Youth Ltd, Amy Gillett Foundation, the Spirit of Australia Foundation and Playgroup Australia Inc. Each of these organisations plays an important role, the significance of which has been covered by some of the other speakers to this bill including the member for Melbourne Ports, the member for Maribyrnong and the member for Isaacs. It is appropriate for this government to provide what assistance it can to these organisations through this amendment, to encourage and support donations to these organisations.

I would like to give a special mention to Playgroup Australia, who recently celebrated National Playgroup Week and World’s Biggest Playgroup Day 2008. Bill Shorten and I joined the Chermside West playgroup for their morning playgroup session recently. I also had the opportunity to attend the World’s Biggest Playgroup Day ‘Pollies at Play’ held at the Speaker’s Green at Queensland Parliament House. Of course, many events were held all around Queensland and Australia during National Playgroup Week, and I take this opportunity to congratulate Playgroup Australia for their fantastic efforts in organising those events. I am sure many parents and children alike enjoyed the day and appreciate the work of Playgroup in providing a social and safe environment for both parents and children. This bill will benefit many in the electorate of Petrie and I am pleased to commend it to the House.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to lend my support to the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. In starting, I have to make some comments in relation to the contribution—if we can call it that—from the member for Bowman. I think it is quite extraordinary that, in relation to his contribution, we had a 20-minute rant which at no time at all addressed the bill that is before the House today. Consistent with the contributions made from this side of the House, I will be addressing the bill and indicating the areas where I support this important legislation.

Tax policy is an area that always can be improved. There is no doubt in my mind that our current taxation arrangements are creaking with age. We need a good, hard look at our system before it becomes a significant hindrance to our economic growth. I look forward to a comprehensive tax review during this 42nd Parliament. I welcome the Prime Minister’s comments following the very successful 2020 Summit that the time has come for a root and branch review of taxation and, further, the Treasurer’s announcement last night in the budget for the most comprehensive review of taxation since World War II. The bill that is before the parliament today does not regard the root and branch review, but there are positive aspects nonetheless. Though I see the need for a root and branch approach to tax reform, it does not hurt us at this stage to do some pruning. We are a government that gets on with the job and that is why this legislation is here before the parliament before we do the root and branch analysis of the taxation system.

In particular I wish to support schedules 4, 5 and 6 of this bill. Schedule 4 exempts the Endeavour executive awards and the Endeavour research fellowships from income tax for all recipients in respect of the amounts received on or after 1 July 2007. These research fellowships allow our best and brightest to study here and abroad. The length of a scholarship ranges from four months to three years, depending on the particular award. They are worth between a minimum of $25,000 for a short-term scholarship to a maximum of $160,000 for a long-term scholarship, depending on the specific award. The Department of Education, Employment and Workplace Relations administers the program and it is funded by the Commonwealth government. While some Endeavour award programs are exempt from tax because their recipients are studying full time, others are not fully tax exempt because the recipients are classed as only studying part time. We seek to change this in this bill. To me, this is an important small step in combating the brain drain at the high end of business, industry, education and government.

I also seek to make some comment in relation to the early completion bonuses for apprentices. This is a commitment from this government to make sure that those who complete their apprenticeship early, those who are helping to resolve the skills shortage that this government has inherited from those opposite, effectively get the full value of that particular bonus. It is important that we saw last night a further 85,000 apprenticeships announced in the budget—an indication of the commitment from this side of the House to address the skills shortage that so threatens to constrain our economy. The Prime Minister, Kevin Rudd, and his government are committed to the education revolution. This amendment in the bill is a small step in the right direction.

Schedule 6 updates the list of deductible gift recipients. Among the list of organisations added to the list by this schedule are the World Youth Day 2008 Trust, the Council for Jewish Community Security, the Memorials Development Committee, the AE2 Commemorative Foundation, Ian Thorpe’s Foundation for Youth, the Amy Gillett Foundation and Wheelchairs for Kids Inc. I want to talk in a little bit more detail about one of those organisations: Wheelchairs For Kids. Wheelchairs for Kids Inc. is one that will benefit from being included in the deductible gift recipients list. This organisation has a wonderful story to tell. They build wheelchairs and send them overseas to countries not as lucky as our own.

As of this month, Wheelchairs for Kids Inc. have built 14,149 wheelchairs and shipped them overseas. Their organisation’s website tells a very interesting story. The Rotary Club of Surfers Sunrise had the idea of helping disabled kids in distressing circumstances by providing wheelchairs made partly of components retrieved from salvaged bicycles. After a lucky break with television fundraising, they asked other Rotary Clubs to join and the project grew. Through a family connection, the Rotary Club of Scarborough in Western Australia took it a stage further and involved prison inmates from two prisons and three schools in the task of making the chairs. The Rotary Club had been assisted by Christian Brothers, sponsoring Olly’s Workshop, a fully trained facility for troubled youth. The obvious synergy saw that the workshops became the nucleus of the operations of Wheelchairs for Kids. In the interests of quality and efficiency, production in the schools and prison workshops has discontinued now that the workshop has been set up properly.

Recognising that demand was virtually limitless and that more funds could be raised, further expansion was planned. At the same time it was realised that better wheelchairs could be economically produced from new materials. Wheelchairs for Kids soon moved into larger dedicated premises, financed by the Scarborough Rotary Club and Christian Brothers. The modern manufacturing workshop in the light industry area of Wangara in Western Australia is well equipped with power tools and all equipment needed for manufacturing, mostly donated by tool manufacturers and suppliers. All work is voluntary; no wages or salaries are paid, with Rotary and Christian Brothers providing the administration. The labour to turn the tubing and dozens of other components into shippable chairs comes from more than 100 retired volunteers. They work mornings on a self-imposed roster as a very effective and good humoured team, drilling, bending, assembling, checking out and, finally, packing. Today’s versions reflect feedback from the field—rough paths, lack of maintenance facilities and exposure to harsh weather all need to be accommodated. The wheelchairs have aluminium square-section tube frames, powder-coated steel axles and wheels with soft but puncture-proof tyres. A photo of this model—a strong, non-folding, three-wheeled chair that will negotiate a rough surface—can be seen on the organisation’s website. I recommend that colleagues have a look at the type of work that they are doing.

Wheelchairs for Kids are fortunate that the large cartons used for shipping the wheelchairs and their transport to the airport or to container packing centres on the east coast are donated. The overseas transport is provided by various aid agencies, who help with foreign import problems and distribution in remote locations. In 2007 almost $500,000 was donated, the suppliers were generous and 3,500 wheelchairs were made. The increase in cash received allowed Wheelchairs for Kids to purchase components in larger quantities and set up 2008 for significant growth at a constrained cost. The demand is for thousands, and the team has the capacity to easily double or triple output. All that is needed is money to buy the components and materials that must be bought.

Every $100 raised provides a child with a wheelchair. The organisation can do this because all of their manufacturing and administration labour is voluntary; administration is provided free by the Rotary Clubs, with the workshop manager, Brother Olly Pickett, provided by the Christian Brothers; suppliers provide materials at discounted prices and, in some cases, free, and transport is usually donated; rent for the now three workshop units is paid for by the government of Western Australia, and that needs to be acknowledged in this place today; and overhead costs are met by the Rotary Club of Scarborough. Every cent donated goes towards making and delivering a wheelchair to one of these seriously disabled children. No donated money is spent in any other way. This is an organisation worthy of support in our tax system. I commend the work that Wheelchairs for Kids are doing to make the lives of disabled children around the world that little bit easier. I also commend this bill to the House for the tax break that it provides in schedule 6 for organisations such as Wheelchairs for Kids.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. In particular, I wish to comment on two of the schedules, principally schedule 1 and schedule 6, under which various organisations have been identified for listing as deductible gift recipients. Before I turn to those schedules, I would like to respond to some of the comments of the member for Bowman, who, as the member for Dobell rightly pointed out, engaged in very little discussion of the matters currently before the House in this bill and went off on a rant about more general matters which I think we could describe as a response to the government’s budget.

In the member for Bowman’s comments, we see further contradictions emerging from within the opposition ranks when it comes to inflation—compared to our government’s determination to take the challenge of inflation head on. The member for Bowman referred to inflation, I think, as the abyss of inflation. There is an increase in the hyperbole coming into the rhetoric from those on the other side; really, the rhetoric has gone from nought to 100 in 10 seconds. If you go back and look at some of the comments that have been made previously by the members opposite, there has been a real degree of complacency when it comes to the issue of inflation.

We do not have to go back all that far, just into recent history, to see when the member for Higgins proclaimed, ‘There’s no life left in the inflation dragon.’ We see here today, in the member for Bowman, someone strapping on the armour again, coming out to go a second round with the inflation dragon, someone on the other side who has now come to an appreciation and understanding that we are facing a considerable inflation challenge. It is an inflation challenge that is the legacy of the former government. The highest inflation level in 16 years is stripping away the value of the wages of working people in this country. That is why it is one of the No. 1 priorities of this government. No doubt there will be more opportunities to address this in the course of debate about the appropriation bills. But I will just make the very simple point that the shadow Treasurer had previously denied the existence of this problem. That is on record, and he has done it on many occasions. I quote from the

Asked if inflation was out of the target band, Mr Turnbull said ... it was not.

He had previously said that it was a fairytale; it was a myth that the Treasurer was trying to create. I saw some of the shadow Treasurer’s comments last night in response to the budget. There was an alerted sense of concern about inflation, and the shadow Treasurer was indicating that the government perhaps should have gone further and made further cuts. From someone who was denying the problem of inflation just a short time ago, he has become someone who is now challenging the government, suggesting that the government has not gone far enough in inflicting those cuts that are necessary to slow overall demand. But, when asked to identify where he might have gone further, we had silence from the shadow Treasurer—a further indication of the opposition’s failure to come to a unified position on how to tackle the challenge of inflation.

In fact, yesterday I noted the comments by the opposition leader, who had previously said that the inflation crisis is a complete charade. For those of us who have been studying the comments of the Reserve Bank, there are not a lot of hand movements and gesticulations required in order to see the less than subtle messages coming from the bank—that is, that inflation is a genuine challenge that needs to be confronted. That is why I am very proud that the budget that was handed down last night by the Treasurer is one of the key armaments in this government’s fight against inflation, and that is something we will have more to say about in the future.

I would like to turn my attention to the provisions of the bill, in particular schedule 1. I note that the measure outlined in schedule 1 of the bill really does bring into effect a common-sense outcome that had previously not been achieved under the tax laws. I think that there is a comment in the explanatory memorandum that goes to the very heart of the issue that is being addressed by this particular measure. I will read from point 1.5 of the EM:

There is currently no provision in the tax law that recognises the reality that the taxpayer did not receive the economic benefit from the disposal as a result of the misappropriation.

This goes to the issue of the disposal of a depreciating asset in circumstances where, by virtue of the balancing adjustment event, there may in some cases be a tax liability arising—in particular, in cases where an employee or an agent may have been involved in carrying out the disposal and, in the course of doing so, may have misappropriated the proceeds. Therefore, you have a situation where, under the tax law as it currently exists—which this amendment seeks to change—in those circumstances the holder of the depreciating asset will end up paying an amount, or have an amount included in their assessable income, by virtue of the balancing adjustment event, which will be an amount that they are required to pay notwithstanding the fact that they may not have actually received any of those proceeds as a result of the misappropriation that had occurred by the actions of their employee or agent. It is a mischief that this amendment will correct.

The other element of it is in respect of the disposal of those depreciating assets that may have been held for a partly or wholly non-taxable purpose. The relevant CGT provisions would otherwise give rise to a potential tax liability being imposed upon the holder and disposer of that depreciating asset. The amendment seeks to ensure that the economic realities of what the holder of the depreciating asset faces are actually reflected in terms of what requirements for tax to be paid are actually brought to account by the tax legislation. So it is a very sensible amendment. It is one that, I think, would not be in dispute or contest, either in this place or for the common man on the street. There is no reason why tax should otherwise be payable.

I would like to now turn my attention to schedule 6 and the various provisions that are outlined there, particularly in relation to one of the organisations that have been identified and will become deductible gift recipients as a result of this amendment: the Finding Sydney Foundation. I wish to make a few comments in relation to the good work that the Finding Sydney Foundation have been involved with. We are all very much aware of the success that they have recently had in locating the Sydney, having located the Kormoran. This is a matter that has really been brought to completion, and there is no doubt that it has been greeted with mixed emotions by most Australians and, in particular, those who have been in some way personally affected by the going down of the Sydney. This provision allows for that particular foundation—which has done much good work, building on the back of a grant that had previously been made by the former government—to raise the funds necessary in order to achieve what has been achieved. I think most people would agree that it is sensible that this matter be resolved in this way and that deductible gift recipient status be awarded to this particular foundation.

I want to offer a couple of personal reflections on the impact of the work that the Finding Sydney Foundation have been able to achieve. There were two individuals who went down on the Sydney who lived within the area that is now my electorate. In particular, I wish to acknowledge Cook Merton James Morphett and Stoker Robert Stevenson. These gentlemen went down with the Sydney. I have not been able to locate Mr Stevenson’s family, but I have had some discussions with Mr Morphett’s family. I should also acknowledge that the Morphett family is one of the finest families in the district in the Penrith area. They are one of the pioneering families of the district. They were a very large family. One of the significant points that I wish to note is that, in fact, they had five sons who served this nation in its armed forces. I think that is a significant contribution that should be acknowledged, and I wish to have that acknowledged in the parliament today.

I will briefly quote from an article in one of my local papers, the Penrith City Star, where Mr Warren Morphett, the brother of Merton Morphett, reflects upon the impact of losing his brother with the going down of the Sydney and also on what the finding of the Sydney has meant for him and his family. He said:

“I’m pretty sad about the whole thing … It shattered the family.”

The article goes on:

Mr Morphett’s father was the first in the family to find out that the Sydney had sunk when he received a telegram on November 28.

Mr Morphett told me that the most significant thing about finding the Sydney was that it really has brought some closure to this chapter of his family’s history. It is a significant chapter in our nation’s history. I want to acknowledge the Morphett family and the suffering that they have felt as a result of the contribution that their five sons have made to this country and, in particular, the fact that now there is some closure. I wish to add my voice in support of the work of the Finding Sydney Foundation because, without their involvement, this closure could never have been achieved. I know that Mr Morphett and his family are also very grateful. I also acknowledge that one of my staff members’ great-grandfather, Mr Percy Willis, was also one of those Australians who went down on the Sydney. So this is a matter that I have taken a particular interest in, and I am very pleased to see that we are, by virtue of this amendment, proposing to give deductible gift recipient status to the Finding Sydney Foundation.

I wish to offer a couple of general observations on the operation of the deductible gift recipient status provisions that are outlined within division 30 of the Income Tax Assessment Act 1997. I will add to and amplify some of the comments that have been made previously in this debate by the member for Maribyrnong and the member for Isaacs in relation to the somewhat unwieldy nature of this particular division, which has grown in size considerably and in my experience and in my view has made the job for many non-profit organisations in this country very difficult when it comes to trying to assess whether or not they are eligible for the tax concessions that are associated with deductible gift recipient status. I think it is particularly relevant to make this point in Volunteer Week.

By way of illustration I wish to point out that the particular provisions that affect the endorsement or otherwise the listing of deductible gift recipients now account for approximately 90 pages in the tax legislation. So there are 90 pages to wade through for a not-for-profit organisation wishing to determine whether or not they are entitled to endorsement or have other avenues of redress in terms of seeking listing as a deductible gift recipient status. In my experience it is becoming increasingly the case that for a non-profit organisation to obtain the benefit of endorsement they need the assistance of a lawyer. In my previous profession, in a pro bono capacity, I often provided that assistance. But the pro bono resources available in this area are quite limited, and that means a range of organisations simply do not have access to the knowledge, the expertise and the know-how to frame an application that meets the requirements for endorsement under the act.

The other point I wish to make is that the act clearly allows for two alternative paths, the first being endorsement by the commissioner, and that involves characterising your organisation or demonstrating that your organisation fits within one of the established categories in division 30. The other avenue is by way of what we are now doing: specifically identifying those organisations within the tax legislation as organisations that are deductible gift recipients.

I wish to note a trend in recent years. We now have some 226 groups that are specifically identified in the tax legislation. In this particular bill, we are now discussing inserting another 13 groups. I wish to make it abundantly clear that I am not in any way opposing the entitlement, the eligibility or the appropriateness of these particular organisations being identified as being worthy of deductible gift recipient status. What I am suggesting is that, as we have now reached a situation where some 226 individual groups have had to go through a process that has resulted in amendments to the law so that the name of their organisation fits within the tax legislation, it is no wonder that this particular division has now reached 90 pages.

In addition to that, the other alternative is to demonstrate that your organisation fits within one of the categories. There are somewhere in the vicinity of 22 categories available under which you can make an application for endorsement. Within those 22 categories there are further subcategories. On my count there are at least 40 subcategories. So the legislation sets out 20-odd categories and 40-odd subcategories and those categories are the categories under which application can be made for endorsement by the Commissioner of Taxation. I note that, in statistics released by the Commissioner of Taxation, at the end of November 2007 there were somewhere in the vicinity of 24,000 active deductible gift recipients. So clearly the categories are dealing with a large number of those applications; notwithstanding that, there has still been a considerable need to go through the process of specific listing. That process involves the Assistant Treasurer issuing a press release at the time that a decision has been taken by the government and the government subsequently bringing legislation before this House. It is a very unwieldy process, particularly when there are administrative arrangements in place that can be undertaken as an alternative.

It would be my suggestion that, if we now have in excess of 200 groups that have to be specifically identified, there is in fact a case for reviewing the categories themselves. We have not found over the last few years just one or two organisations that do not fit neatly within the 20-odd categories and 40-odd subcategories; we now have over 200. I very much would like to see this whole issue of the not-for-profit sector and the way in which they are treated—not just for income tax exemption purposes, which is a separate issue, but for deductible gift recipient status considerations—dealt with as part of our broader consideration of simplifying the tax system. Frankly, in my experience, there are many organisations—manned, staffed by volunteers—that in the end walk away with their hands in the air and say, ‘This is just too complex, too difficult; we are not going to go through the process.’ Alternatively they put an application in, not understanding the process, and they end up having it rejected because they are not aware of what the requirements are or they are not capable of drafting that application in a way that reflects the true realities of what they are doing.

Notwithstanding that and those comments, I think it is a matter for future reform. I would very much like to see it on the government’s agenda as part of the broader approach to tax reform. But I certainly endorse the objectives and the hard work and the contributions of all of those volunteers associated with the organisations that are now being listed as part of this amendment. I support the amendment and in particular add my voice in support of schedules 1 and 6.

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

I thank all honourable members who have made a contribution to this debate on the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. I particularly thank the honourable member for Lindsay, who always makes a very well-considered contribution to tax law amendment bills based on his considerable experience in this area. He has correctly identified many of the issues that go to the complexity of getting status under the tax act for charities and benevolent institutions in this country whether it be deductible gift recipient status or PBI status or the other capacities to be recognised under the tax act. He has correctly identified the difficulties in operating under the Statute of Elizabeth, which has been in operation some 400 years, and charities have changed just a little in those 400 years. It is something that is exercising the mind of the government and something the government will be turning its mind to in a more detailed way during this term.

I thank all honourable members including those opposite—the shadow minister, the member for Stirling, for his contribution; the member for Cook for his contribution in relation to philanthropy, which nobody could disagree with; and the member for Bowman, who I am not sure actually did make a contribution in relation to the bill in any meaningful way but certainly made a long speech. I thank the member for Melbourne Ports, the Parliamentary Secretary for Disabilities and Children’s Services, the member for Blair, the member for Isaacs, the member for Petrie and of course the member for Lindsay and the member for Dobell.

I am glad that the measures in this bill are seen as relatively uncontroversial. It is appropriate that it be so. They are sensible measures which, as some members pointed out, have been introduced by both sides of the House. They do deal with technical inconsistencies in relation to the amount misappropriated by an employee or agent after they dispose of an asset on behalf of a taxpayer. Schedule 2 removes an anomaly in the superannuation guarantee system by extending the superannuation guarantee late offset payment. Schedule 3 amends the tax law to ensure that the market value substitution rule does not apply to certain CGT events, and schedule 4 provides an income tax exemption for the Endeavour executive award and for all research fellowships under this award.

Schedule 5, as several honourable members have pointed out, exempts from income tax the first $1,000 of eligible early completion bonuses paid by state or territory governments. At the moment this only applies to Queensland but of course it will apply to any state or territory which chooses to implement such a bonus.

Schedule 6 adds a number of organisations to the Income Tax Assessment Act 1997 in relation to deductible gift recipient status. I particularly take the opportunity of thanking the member for Melbourne Ports not only for his contribution in this debate but for his ongoing contribution in relation to the status of the Council for Jewish Community Security. He has played an integral role in getting that particular committee recognised in terms of the tax act. We remember of course that the previous government announced this particular recognition on the same day that the then Labor opposition announced a funding package for security in Jewish schools. As the then Leader of the Opposition and the then shadow minister were in the car on their way to make that announcement the previous government was informed that that was the case and they rushed out this announcement in order to counteract the announcement that the Labor opposition was at that point making. It was an announcement that was being made with the member for Melbourne Ports who had been lobbying members of the shadow ministry to have the particular security needs of some schools recognised, whether they were Jewish or of other religious minorities, because these were real issues that many of those schools are facing.

I also briefly take the opportunity of recognising the contribution of the former member for Cowan, whom many of us deeply miss in this House. He lobbied strongly for DGR status for Wheelchairs for Kids. In fact he took the opportunity in his valedictory address to this House to make that case. So although he has departed from this House, he deserves a large degree of the credit for the implementation of Wheelchairs for Kids in relation to the deductible gift recipient status. I recognise his contribution and I am sure that all honourable members join me in wishing him all the best in his retirement. I commend the bill to the House. I will be moving amendments in the consideration in detail stage, which the shadow minister, I understand, has been informed of by my office as a matter of course.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.