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

The Tax Laws Amendment (2010 Measures No. 1) Bill 2010 is an extraordinary piece of legislation. I know this government is not a socialist government but it is a government to the left of the mob on the right here, and it is moving to protect tax deductions. The briefing paper actually says that the measures will protect tax deductions of 19,000 investors in forestry MIS from an unintended outcome. It is a most extraordinary statement—to come forward and say, ‘We are moving this legislation to protect tax dodgers.’ ‘Extraordinary’ is the only word that keeps leaping to my mind.

It behoves me to back up the statement I will make that there is no social, community, environmental or economic benefit in the MISs; in fact, the complete opposite is true. I opened an olive farm somewhere west of Warwick and, yes it was a new industry in Australia. We were importing a lot of olives from overseas, and it was providing industry in a western area in Queensland. It was, in all ways, a good operation. Since then, what was originally a good operation has metastasised into a most malignant phenomenon. I speak with authority because, in my homeland of Far North Queensland, the MISs have announced that they want 40,000 hectares of sugar cane land to convert it to growing trees. If they do that, I can assure you, Madam Acting Deputy Speaker Saffin—and you would know this as well as I—that we will close sugar mills. They will simply close. I do not know how the AWU justify their existence. There are 5,000 members in the sugar mills but we have not heard a single bleat from the union. I can tell you what: their own membership is going to start bleating about them very shortly. Far North Queensland has a very wicked record as far hitting the AWU goes. I am speaking with some vehemence on this. Quite literally, 2,000 or 3,000 people in Far North Queensland will lose their jobs when those mills close. We are battling to keep open three or four of those mills now—they are hanging by a thread—and taking 40,000 hectares of cane land away from them will seal their fate.

The government want to protect the people who are doing this, so let us have a look at some other aspects of this. We are going to replace sugar mills which, let us say, in Ingham employ 2,000 people, and we are going to replace them with forestry. As it turns out, we have a forestry operation in Ingham already, which was put in by the government many years ago—some 10,000 to 15,000 hectares of plantation timber—and it created 12 jobs; that is all. So we are going to replace 2,000 jobs in the sugar industry with 12 jobs in the forestry industry. The word ‘extraordinary’ keeps leaping to my mind. There are public servants here today—and they have no ability to defend themselves—and the government must be taking advice from somebody here. Not only must the government wear the opprobrium and the blame but also the public servants, if they have not gone to their minister and said: ‘Hold on a minute. Where’s the social benefit here? Where’s the economic benefit here? Where’s the environmental benefit here?’

For those of you who have an interest in the environmental benefit, I most certainly always describe myself as antigreen, but the honourable Deputy Speaker will have great respect for her predecessor Mr Causley in this place. I asked him, ‘Don’t we want plantation timber?’—because I actually thought plantation timber was good from a range of viewpoints—and he said, ‘Have you driven north of Brisbane?’ I said, ‘Say no more.’ They call it the ‘pine desert’. I have been fascinated by it, and I have actually pulled up the car and walked around. There are no butterflies, there are no insects and there are no birds; it is just a silent, deathly chamber producing very few jobs now because we do not do the processing of wood in Australia, as it is sent overseas for that purpose. All we have is a big machine that goes along and cuts down the timber and puts it on a truck and it goes to the port and then overseas. We have 15,000 hectares in North Queensland that produce 12 jobs—and I can speak with authority.

The MISs and Timbercorp envisage monoculture on a vast scale, and remember that they are not going to the other side of the Great Dividing Range. All of Australia’s landmass is west of the Great Dividing Range. But, oh no, they are not putting trees in west of the great divide. They are putting the trees in east of the great divide, on the only little bit of country which we have left in Australia on which we can produce food. They are taking food production away and, in our case in Far North Queensland, they are taking sugar production away and replacing it with an absolutely disastrous monoculture. But that is not the end of this story.

In greening Australia we planted a million trees in North Queensland. I am reliably informed that we have somewhere between five and 15 per cent of them left. Trees need an awful lot of looking after. These fly-by-night tax-dodge merchants move the corporate money into their own pockets. There is no money left to look after the trees, and trees need a hell of a lot of looking after. White ants kill trees and they get choked off by grasses. Mr Geoff Bush, one of the biggest farmers in North Queensland, if not in Australia, gave us a look at some of the plantation timber opposite his farm, and the guinea grass was higher than the trees. What they were actually growing were weeds. I am not saying guinea grass is a weed, but there were plenty of other weeds in amongst the guinea grass. It did not even remotely resemble a plantation. There is no money being put into looking after trees at all: ‘We just grab the tax dodge and run away—that’s all.’

In Ingham they claim there are some 7,000 acres of trees put in. A very significant proportion of them went underwater in the floods there last year. I wanted to get out and embarrass the people that advised the government this was a good idea and also embarrass the minister because of his incompetence in this area and take a picture of all the trees that were not there, that were all gone. Seven thousand acres of trees had simply vanished. I was taken again to have a look at them and was shown the photographs. But within two weeks of the floodwaters receding they were out there replanting, because they were deadset terrified that someone like me was going to go out there and get those photographs and get national publicity for the sort of chicanery that is taking place with the MISs.

Let me detail another aspect of the MISs. A close member of my own family was advised by his accountants, because he had a big tax problem one year, to take a lot of money and invest it in the MISs. I said: ‘Don’t be ridiculous. You’ll never see that money again.’ He did not believe me and got in touch with the retired head of a bank in Queensland. The retired head of the bank said: ‘I’m not aware of a single dollar of capital that has been returned to an investor. Never mind about paying any profits or any operating surplus; not a dollar of capital has been returned.’ So why are we doing this? Timbercorp were running around skiting that they were going to own 20,000 square kilometres of Australia, beating their chests and telling us all how marvellous, powerful and rich they were. Where are they now?

I went down to the Riverina recently, and Bill Shorten was there that day and gave one of the addresses. Every one of those speakers got up and said they are destroying our industries. They are paying huge amounts of money, double the market price for the land. They put the trees in, they take the water off farmers that are producing genuine product, there is no water left for the farmers and, of course, the trees are never going to be harvested. There is not a single person in North Queensland that believes that a single tree will ever be harvested. Carol MacKie showed me the photographs in Ingham of where the trees had been, and there are no trees because of the floods. At Cardwell Geoff Bush and Robbie Singh, and I am being very specific here, showed me the plantation where the guinea grass is higher than the trees. Don’t you realise that this is all a farce just to dodge tax? That is all it is about. But how stupid are the people who are investing in it? You do not want a tax dodge unless you are going to get some money back somewhere. You may as well give it to the government if you are going to give it to a bunch of charlatans who race off with the money. It will be interesting to see how much the people get back out of these corporations that have fallen over.

Where a sugar mill is closed down because of a very serious environmental issue, I and a lot of other people thought it would go back to native forest land, rainforest in our case. That is not what has occurred. On the last farm that I inspected that had gone out of sugarcane production, there were 230 acres of giant sensitive weed and singapore daisy. I could not believe it. I walked for about a kilometre around the place and I just could find no patch of it that was not singapore daisy or giant sensitive weed. When the government closed down the tobacco industry, again I thought it would go back to natural scrubland. There is no scrub there. It is all weeds. Weeds are the great competitor and they have choked out all of the natural scrubland. So we now have the situation that we are cultivating weeds where these sugar mills and other things have closed.

If the government said that you have to go west of the great divide and you have to put irrigation in, that would guarantee the growth of the trees and no competitors to the trees but never in a million years would you be able to cost out irrigating trees. There is just not enough money in the trees. Even if you cost it out over a 30-year life cycle, it is not going to happen. All over Far North Queensland there are giant pine trees, and I mean really giant pine trees that are 70- to 80-foot high. They were all planted because there was going to be a fortune in pine trees. Quite frankly the government’s pine tree plantations in north Queensland, which were very intelligently put in as small pods so that we did not have a monoculture type situation that we have with the MISs, have never been harvested nor will they ever be harvested. Most of them have been knocked down in a cyclone, broken off or something. We were told that it would be a good thing—it was a great investment and we would make a lot of money out of it over a 15- or 20-year time frame. That has not come to pass.

To be very specific one of the senior people associated with one of the sugar mills told me: ‘We are making 120 million gross and our cost structure is 115 million. We grow about 25,000 hectares of cane land in the area’—it might have been a bit more. He said: ‘They say they are going to take 40,000 hectares in north Queensland. That means we have to lose at least 7,000 here but, if we lose 7,000 of our 24,000 hectares, then we will close the mill. Instead of grossing $120 million as we are at the present moment, we will lose a fifth of that or whatever it is and we will only be making $95 million. We’re not going to be trading insolvent, so we will close the mill. So you understand if your friends in Canberra continue with the MISs then they will close all of the mills in north Queensland if they get their target amount of 40,000 hectares.’ Of the three companies up there one of them wanted 15,000, one of them wanted 12,000 and it added up to a target of 40,000 hectares in north Queensland. The old-time Labor Party would be turning in their graves if they saw a Labor government moving legislation to protect tax dodgers who are in many cases nothing more than con merchants.

There is one last aspect of this which I should address. These people say that they are going to plant a tree, it is going to grow into a big tree and it is going to yield a great benefit for Australia when harvested. I point out that that is an absolute myth. We do not process trees in Australia anymore, they are taken overseas to be processed and that arrangement will increase rather than decrease. When they plant the tree they are planting a foreign item—these trees are Indian teak, they are exotics. White ants, for example, do not attack them if they are a foreign tree—so we are bringing in a foreign culture into our environment, which does very great damage as well.

In wrapping up, the principle of defending people who are dodging tax is the worst possible type of principle. In fact, just the opposite should occur. They are taking good productive land and turning it into nonproductive land. Even if it were productive, even if they took this through to processing and we accepted their argument that it was profitable, we already know that the outcome is that 2,000 jobs will be replaced by 12 jobs. We already know that. We have plantations being harvested at this very moment and they are worth 12 jobs. We know that we have 2,000 jobs in the sugar industry.

They announced the opening of a new sugar mill in Ingham, which willbe a wonderful thing. It will be a mill be based on ethanol and biofuel production rather than sugar, which give a lot better return over a long period of time and would use the bagasse. There would be high-pressure boilers, which hardly any of our sugar mills have, so that all of the sugar cane fibre, which is left over after you take the sugar out and convert it into ethanol, would be transformed into electricity. We can produce 2,000 megawatts of electricity from these sugar mills with a little bit of assistance from the government—not a lot, but a little bit. There are 40,000 megawatts of electricity produced in Australia. We can give you 2,000 megawatts, which is five per cent of Australia’s entire electricity production, for virtually no cost at all forever. The first mill that was supposed to produce this has announced that it is not going to open as a result of your MISs. The other issue is that the state government is saying that they are not going to allow any more licences to harvest water for the immediate future. So the industry says that, under those circumstances, they cannot open up this mill. An extra 400 or 500 jobs in Ingham have already gone up in smoke as a result of this. I can say the same thing at Mareeba, Gordonvale, Tully, Innisfail or any of the towns in the far north.

Mr Deputy Speaker Scott, you would be well aware of this—if there has ever been a disaster, it has been the corporates going into agriculture. There is hardly a single solitary corporate left in the cattle industry in Australia. That is, arguably, our biggest agricultural industry and there is hardly one left, one of them is in very serious trouble, there is another one and that is about it. What a failure. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

in reply—I thank all members who have spoken on this Tax Laws Amendment (2010 Measures No. 1) Bill 2010. The opposition have indicated that they support each of the schedules except for schedule 1, and so I will confine my remarks to schedule 1. Schedule 1 implements the government’s superannuation clearing house proposal, which as well as being an election commitment, as the opposition have acknowledged, is an important contribution to reducing red tape and the business compliance burden for small business in particular. It is a very important initiative. It has been acknowledged as such. For example, the Association of Superannuation Funds of Australia said this measure was:

The most significant first step in lowering administration costs for employers …

The House and the Australian people are entitled to ask: what has the business community done to deserve the treatment it has received from the opposition today and over recent days? Yesterday and the day before we saw the opposition proposing a great big new tax on Australian businesses—not just big business but right down to medium-sized businesses—to fund their thought bubble on parental leave, and today we see the so-called party of small business selling out small business and saying that they oppose this schedule. They oppose this initiative to reduce the compliance costs and burden of paperwork on small business in dealing with what can be a very significant issue of multiple superannuation payments to multiple funds on behalf of employees.

The opposition have indicated some reasons for their opposition. I will go through those in sequential order. Firstly, they are critical of Medicare. They are critical of Medicare’s ability to deliver this service. They are critical of Medicare’s expertise. They say Medicare has no expertise in delivering services in relation to superannuation. The fact of the matter is that Medicare deliver a range of services on behalf of the government. They did so under the former government, they do so under this government and no doubt they will do so under future governments. The service delivery mechanism of Medicare is not confined to health only. They deliver a range of government payments and services which range from irrigation matters, right across the spectrum of government services. To suggest that Medicare is not particularly qualified in service delivery, that Medicare is not able to deliver the service, with all due respect, is completely incorrect.

The opposition is critical of Medicare’s engagement with the industry. They say we have not had enough engagement between Medicare and the superannuation industry in relation to the development of Medicare services. The honourable member for Cowper at various points in his speech quoted evidence given before the Senate committee. He has taken some of that evidence and not taken other elements of that evidence. That is his right; that is his prerogative—just as it is my right and prerogative to correct the record. It is fair to say that Medicare has been very assiduous in its consultation with industry and is well developed in its plans to deliver this service on behalf of government. In fact, Mr O’Shaughnessy, on behalf of IFSA—the opposition was keen to quote IFSA but did not quote this part—said:

In regards to Medicare we believe that the manner in which Medicare have been formulating their approach will advance the development and uptake of much-needed improvements in electronic payments in the industry. The Medicare working group meetings which IFSA have sat on have been positive and constructive and have demonstrated that Medicare have, first of all, proven to be responsive to industry needs in building system requirements to facilitate contributions, acceptance and processing.

For the record of the House, Medicare has developed two working groups on the implementation of this very important issue—one for the superannuation industry and one for small business. Those have been very important in helping Medicare deliver this initiative on behalf of the government.

The opposition was critical of the use of Medicare and said we should be using the private sector to deliver this service. Importantly, the government made the decision, based on the advice of the Treasury, to adopt the model of Medicare for very good reasons. One was that Medicare was well qualified and experienced to deliver the service efficiently. In the view of the government, it was the most efficient. Secondly, a very important part of this initiative was the commitment by the Labor Party in opposition, which we retain in government, that when a small business makes a payment to the superannuation clearing house that employer has fulfilled their obligations and should not worry about what happens to the payment after it is made. They should not worry, for example, if the company that they have made the payment for goes out of business. They should not worry if the payment does not reach the employee, because they have fulfilled their obligations. It was the view of the government that if you were to do that—and it was a very important part of the initiative, because if you did give that commitment to small business they would be correctly very wary of making those payments—the best way of meeting that commitment to employers and employees would be to have the government deliver the service through its service delivery arm—Medicare.

The opposition may disagree. They have that perfect right. The opposition may say they would have a different approach. They have that perfect right. But they need to be cognisant of the facts. They cannot simply say, ‘Risk is part of life and we don’t care about the risk and we don’t care if you say to employers that they have fulfilled their obligation and therefore if something goes wrong employees will be denied their superannuation.’ They say that we are saying there is an element of risk already. But there is an essential difference. The essential difference is that this is a service provided on behalf of the Australian government, and the Australian government is saying to small business people, ‘You will have fulfilled your obligation to your employees once you have made a payment to a superannuation clearing house.’

The honourable member for Cowper said that in some way this may take away from the focus of Medicare at an important time of health reform and would endanger Medicare’s delivery of health services. This is again incorrect. As I said at the outset, Medicare already delivers a range of services on behalf of the government. They do so with no impact on the delivery of their core responsibilities when it comes to health. This is a measure which is fully funded from the budget. It is fully resourced. Medicare need not draw down on its existing resources. It is fully resourced by the appropriation from the budget, so that reason for complaint from the opposition is also nonexistent.

I accept that there are private sector operators who believe they could deliver this service. Of course I do. I accept that there are successful clearing houses in operation at the moment. Of course there are. There are clearing houses which have been in operation for a long time which would like to deliver this service on behalf of the government. That is a fact. But we have a duty not to outsource our policy development. We have a duty to develop public policy in the best interests of all players—small business people and employees as well as the superannuation industry generally. It is not incumbent on the government to deliver a service which suits one particular segment of the superannuation industry—whether it be superannuation funds, small businesses or individual employees—but to deliver one which maximises the benefit for the entire superannuation sector. So, while I respect the views expressed by others, those views were considered, as the shadow minister himself acknowledged, through an extensive consultation process. However, the government has decided that the best way to deliver this service is through the government’s service delivery arm, in this case Medicare.

The opposition can express their concerns. They can move their amendments. They can say that, on that sorry day when they next form a government of Australia, they may do things differently. That would be perfectly appropriate. But I say to the opposition: you will have a choice when this goes to the other place. Are you for small business or are you against it? Are you for reducing small business compliance costs or are you against it? Will you pass this important policy to reduce costs for small business or will you oppose it? Will you stand in the way of the government implementing this election commitment or will you honour the government’s implementation of its election commitment to introduce a small business clearing house? That is the choice the opposition will face. They will need to decide whether they support this legislation or oppose it. The government will be pursuing it vigorously. The opposition is perfectly entitled to express their views—that they would do things differently—but, at the end of the day, they will have a choice. It is not a choice I am going to relieve the opposition of making. Do they support small business or not? Otherwise we will know that the opposition does not support small business.

The opposition have raised concerns. They are not concerns which they raised with me. They are not concerns which they raised, I understand, in a briefing with the Treasury on this item. If they want more briefings from the Treasury or from Medicare, I am more than happy to make them available to the shadow minister so that he can reconsider his position. I am more than happy to make available to him whatever information it is reasonable and prudent for him to have, either through the House or through other mechanisms, because this is particularly important. We want to help small business. We want to reduce the compliance costs. When I go out and talk to chambers of commerce and when I have discussions with business, I hear from small business that one of their biggest compliance burdens is superannuation. One of their biggest compliance burdens is making payments to different funds on behalf of different businesses. They want this fixed. Get out of the way and let us fix it. Do not stand in the way of small business. If you want to take a different approach then do so, but do not stand in the way of this important initiative.

I know the opposition is in a particularly cranky mood these days. I know the opposition is particularly obstructionist. I know the opposition likes to take the ‘Dr No’ approach. I know that, if the government were to come in here tomorrow and move ‘that the sky is blue’, the opposition would find a reason to oppose it. Do not stand in the way of this important legislation if you want to be seriously regarded as a party which supports small business. If you want to live up your to your rhetoric and your claims to be a party of small business, then the very least you can do is let us get on with the job of implementing this commitment to the small business community.

What does the small business community want? They simply want to be able to make their payments to one place. I dare say the small business community does not care if it is Medicare. They do not care if it is Centrelink, Australia Post or a private sector operator. They just want somewhere to make their payments. That is what we are prepared to give them. I invite the opposition to join us in giving it to them.

Question agreed to.

Bill read a second time.