Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the Tax Laws Amendment (2010 Measures No. 5) Bill 2010. This bill amends various taxation laws to implement a range of improvements to Australia’s tax laws. The first schedule deals with changes in the federal government’s support for our local Australian film and television industry, an issue that I recently spoke on in the House. I believe the industry has a crucial role in providing an image of Australia overseas and in giving us the benefits of local production, not only in what we get to see on our screens but also, particularly, from an employment point of view.

Schedule 1 of this bill amends the eligibility criteria for accessing the film tax offsets by expanding access to film tax offsets in two ways. Firstly, the amendments reduce the minimum qualifying expenditure threshold for the postproduction, digital and visual effects offset from $5 million to $500,000. Secondly, the amendments remove the requirement for films with qualifying expenditure of between $15 million and $50 million to have at least 70 per cent of the film’s total production expenditure as qualifying Australian production expenditure in order to qualify for the location offset. It is estimated that these changes, which will apply retrospectively from 1 July 2010, will increase expenditure on the film tax offsets by $6.9 million over the forward estimates period.

These changes are aimed at attracting offshore productions to Australia and expanding opportunities for Australian postproduction, digital and visual effects providers to bid for international work. The amendments are also expected to increase employment opportunities and to assist in building capacity and expertise in the local film industry, which in turn will provide benefits for domestic productions. The change to the location offset in particular will also reduce compliance costs for affected entities.

Supporting the Australian film and television industry has many benefits for our nation. The Australian films and TV shows watched overseas help people from other nations better understand Australia, encourage overseas tourism and help Australia make a contribution to the world’s storytelling. Locally, a vibrant film and television industry creates highly skilled jobs and builds local expertise and skills in the industry. The industry has a great impact on our local communities. Local content contributes to the development of our national culture and shared identity.

This bill will amend the tax laws to enhance support for foreign investment in local film production. Foreign funding of films and TV dramas has helped expand our local industry over the years, and the overseas investment employs local skilled workers and helps develop facilities and industry expertise. In the three years from 2007-08 to 2009-10, total foreign expenditure on Australian production was $453 million. In 2009-10, five features and two dramas funded from overseas were shot in Australia, accounting for expenditure in Australia of $170 million, which was about 25 per cent of all expenditure on film and TV production in those years. In 2009-10, total expenditure on postproduction, digital and visual effects was $210 million, with $17 million of that funded from overseas. The provisions of this bill allow for an expansion of foreign film and TV expenditure by putting overseas investment into our local industry, and underpinning our local industry with more investment is exactly what we need. These amendments are expected to increase employment opportunities and to assist in building capacity, expertise and knowledge within our local film and TV industry, which is a great thing for our domestic productions.

I turn to schedule 7 of this bill, which provides for an expansion of the education tax refund so that school uniforms can be included as eligible expenses. Federal Labor introduced the education tax refund and now we are expanding the items that can be claimed to include school uniforms. Extending the education tax refund to school uniforms will provide great assistance to Australian families and help to ease their cost-of-living pressures. To receive the education tax refund, parents must be recipients of the family tax benefit part A. The education tax refund allows eligible parents to claim 50 per cent of their eligible education expenses up to the maximum claimable amounts, which are indexed each year and are currently set at $794 per primary school student and $1,588 per secondary school student. The education tax refund will be available for school uniform expenses incurred from 1 July 2011, with the first refunds paid in the 2012-13 financial year. Eligible parents can reduce the cost of their children’s education, and I encourage all parents to keep their receipts and make sure they claim their schooling expenses.

I welcome the expansion of the education tax rebate to cover the cost of clothing and footwear that is required or approved by a school with a school uniform. It is a big expense for many families and it will make a real difference. Anyone who has had children at school knows that the cost of uniforms is a big hit on a family budget. Even if it is only a pair of school shoes, the costs soon add up—and it is not only one pair of school shoes per year. At the time when children go to school they are generally growing quite fast and little feet grow very quickly into bigger feet. Several pairs of shoes a year is not unusual and, if you multiply that by a number of kids, you suddenly have a very large expense. This measure will be a great help.

I recall speaking in this place on the original bill that introduced the education tax refund in November 2008. It was called the Tax Laws Amendment (Education Refund) Bill 2008. Although that is a somewhat boring title for a piece of legislation, it has been of great benefit to over a million Australian families. I spoke of how working Australian families stood to benefit from the 50 per cent rebate of eligible education expenses and of the help this would bring to household budgets. As I noted at the time, the education tax refund is an offset and can even be claimed by those families or persons who have no tax liability. This is especially important for people who receive disability support pension, Newstart or youth allowance, as many recipients have no requirement to pay income tax. As I also noted at the time, the education tax refund is available for those parents whose children are in home schooling and allows them to deliver materials to their own students—that is, their children.

In addition to the cost of school uniforms, as from July next year, the following items are eligible under the education tax refund, many of which parents may not know are claimable. Items such as desktop and laptop computers and components used to build a home computer, along with running costs and repairs are eligible, as are items such as printers, USB flash drives and accessories such as wireless mice and laptop carry bags. If parents lease or hire a computer from their school, this expense can also be claimed. And for anyone who knows how much a set of printer cartridges can cost—a set of four cartridges for an inkjet printer can easily top $120—the education tax refund is a certainly a great help if your children do that sort of work at home. Importantly, the cost of establishing and maintaining a home internet connection is covered—and this is a must for most children who are given tasks to do at home and invariably want to research on the internet. Also covered under the education tax refund is computer software such as word processing programs, spreadsheet and database applications, presentation software, internet filters and antivirus software.

It is not only computer related items that can be claimed under the education tax refund; it also covers school textbooks and other paper based learning materials such as study guides and stationery—for example, pens, pencils, glue and compasses and many other things. The costs of photocopying and printing can also be claimed if a separate receipt is issued. As I also noted in 2008, the expense limit can be combined between the family’s children and, if expenses exceed the limit for the financial year, they can be carried over to the next year—for one year only. If a family has more than one eligible child, the expenses can be pooled and divided between the children involved so that they can have access to the items purchased.

Over a million families claimed the education tax rebate in 2009-10, delivering $615 million directly to those families. But many families who receive family tax benefit part A are still not aware they can claim this benefit. I certainly go out of my way to remind my constituents and anyone I meet that, if they have children and they receive family tax benefit A they can also receive the education tax refund. I spend a lot of time advertising this locally. The more we can get the message out that help is available for families the better.

I know that this measure to include the cost of school uniform clothing and footwear will be very popular, and I look forward to doing my bit to ensure local parents and parents across Australia make the most of the education tax rebate. I commend this bill to the House.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I rise to support these minor changes to the tax laws as proposed in the Tax Laws Amendment (2010 Measures No. 5) Bill 2010. However, schedule 2 of this bill, relating to changes to capital protected borrowings, has been referred to a Senate committee for further scrutiny. As the bill says, schedule 1 of the bill makes two changes to the eligibility criteria for accessing film tax offsets. The coalition acknowledges the reduction in compliance costs that these changes will have for this industry.

The overall bill has our support but, as I said, schedule 2 of the bill will obviously be subject to review following the Senate Economics Committee assessment, which will report on 24 March, regarding amendments to capital protected borrowing provisions. This reflects coalition concerns around the proposed benchmark rate that has been chosen to be used within this bill. When capital protected borrowings entered the Australian market in the early 1990s, all interest on these products was tax deductible. Treasury and the Australian Taxation Office in the late 1990s then moved to limit the fraction of interest which could be claimed as a tax deduction, with part of the interest allocated as an investment expense and therefore obviously deductible and part allocated as a capital expense and, therefore, as capital, obviously not deductible.

In 2002 the Full Bench of the Federal Court ruled that the component of interest applicable was in fact deductible, and the High Court later refused an appeal from the tax commissioner. After this, legislative action was required and the Howard government moved to introduce an interim methodology apportioning deductibility for capital protected borrowings and opened the consultation process to determine a longer-term methodology. The new methodology was introduced from 1 July 2007. Until this, any interest paid in excess of the Reserve Bank’s indicator rate for personal unsecured loans would not be deductible. Government and industry were content with this; however, Treasury, being Treasury, wanted a lower rate.

In the May 2008 budget the Rudd government lowered the benchmark interest rate to the indicator lending rate for standard variable housing loans—a move that would net the government an additional $70 million in revenue. This is where the coalition’s concerns began to emerge. As everyone on this side of the House understands—and I say to the new member for Canberra: watch and learn—housing lending rates are significantly lower than personal unsecured lending rates. Industry lobbied the government for change and the Rudd government delayed proposing legislation to implement their proposal.

This brings us to where we currently are with the legislation. In the May 2010 budget the Rudd government undertook changes to the benchmark interest rate so that it was 100 basis points above the indicator lending rate for standard variable home loans—that is their version of a compromise—with revenue forecast to be $28 million less. However, the proposed benchmark interest rate at current interest rate levels is about six percentage points below the personal unsecured lending rate. That is why the coalition wishes to defer the final decision on schedule 2 of this bill until the Senate committee has reported, in order to determine whether the government has actually got this right.

Schedule 3 extends the main residence capital gains tax exemption to a compulsory acquisition or other involuntary realisation. We will be supporting this change as this allows the taxpayer who has had part of their asset compulsorily acquired to reduce or disregard a capital gain made as a result of the compulsory acquisition. I think that is very reasonable. Schedule 4—deductions in relation to benefits for terminal medical conditions: obviously we support this part of the bill, which allows complying superannuation funds and retirement savings account providers to claim deductions for terminal medical condition benefits. Schedule 5 deals with changes to the 1999 GST act to allow non-profit subentities access to GST concessions of their parent entity.

How fitting it is to have the minister, Minister Crean, at the table—my old foe and friend from GST days. And how the roles are reversed. How the worm turns—and hopefully it will turn again.

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

Mr Crean interjecting

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I well remember! And he is a good man, this one. Standing right here—

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

There were the Hockey Bear pyjamas.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Hockey Bear pyjamas were brought to the table during question time. That is when the Speaker used to allow all those sorts of props. And my friend here, the now minister for—education?

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

No, regional development.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I am sorry—regional development. He came to this place every day and asked question after question on the GST. He asked, ‘How much is a bag of salad going to cost?’ and brought in a bag of salad; he asked ‘How much are Hockey Bear pyjamas going to cost?’ and brought in the Hockey Bear pyjamas; ‘How much is this can of food going to cost?’ and ‘How much is a bottle of Coke going to cost?’ I well remember those days, and the lessons have been learnt.

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

It was actually the radio interviewer who asked about the can of Coke.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

No, it was actually on the 7.30 Report that they asked me about the can of Coke.

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

Mr Crean interjecting

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

That is quite right. So I would say to the government that there are lots of long memories in this place from previous debates about tax, and we will not disappoint. So here we are with changes to the 1999 GST act—proposed by this government. And they were going to roll back the GST.

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

But that is what you are going to do on—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

No, we are going to abolish, not roll back, because you were selective in rolling it back. But that was not your idea. I am sure that was the Leader of the Opposition at the time, Kim Beazley.

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

We’ll wait and see whether you get rolled on this one.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Well, from our perspective, we are abolishing—totally abolishing. It is all gone. And I would say to the minister for regional development, ‘Watch this space,’ because I am sure this will be a very interesting debate on the carbon tax. I thought that, when the former Prime Minister, the member for Griffith, said in 1999 in relation to the GST that 1 July would be—was it ‘a day of infamy’? Maybe I am misquoting him there. It was something along those lines. I thought, ‘Well, what about the day he was dumped as Prime Minister? That was a pretty significant day.’

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

Mr Crean interjecting

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I would say to the minister for regional development: how ironic it is that he is now sitting at the table proposing extensions to the GST act when he so vigorously opposed it at the time. How the worm turns. But, of course, as the minister knows, his friend and colleague, the representative of the AWU in Canberra, the Deputy Prime Minister and Treasurer, has introduced or increased—

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

Mr Crean interjecting

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

13 different taxes.

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

It pays to have a memory in this place.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

It does pay to have a memory in this place. It is like Groundhog Day, in one sense. Thirteen different taxes Labor has introduced or increased since 2007, since they were elected. That is quite a record. They have not abolished any taxes, but they have increased or introduced 13 taxes in just three years. And now the Treasurer does not bother to turn up at the announcement of a tax. He cannot even be bothered turning up because it has just become so commonplace. We could go through them: the alcopops tax, $3.1 billion; a new tax on Australians working overseas, $675 million; cutting Australians’ tax-free superannuation contributions, $2.8 billion; restrictions on business losses, $700 million; changes to employee share schemes, $200 million; the cigarette tax hike, $5 billion; and the mining tax—well, God! How much is that? We do not know. And you know what? They do not know either. How is that, the mining tax? Ethanol taxation increases—I will be interested to see what the minister for regional development thinks about that. He is quite silent.

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

The mining tax?

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The ethanol tax increases—do you support those?

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

The mining tax?

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The ethanol tax increases?

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

Going into infrastructure in the region.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The member for North Sydney has the call.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

What about the LPG tax increase? Tightening restrictions on medical expenses before you can claim them on tax—that was $350 million. Increasing the luxury car tax, $555 million; the flood levy, $1.8 billion; and then, No. 13, lucky 13—the carbon tax. How much is it going to raise? We do not know. The government does not know. How much is it going to apply to various industries? The government does not know, so we do not know. Who is going to be exempt? Well, the government does not know, so we do not know. All the government knows is that it is imposing a new carbon tax right across the Australian economy, and the Treasurer, as deputy chair of the committee responsible for the recommendation, did not have the guts to turn up to the announcement. So much change! So many tax increases! The Treasurer cannot even be bothered turning up.

We are a party of accountability. We are a party of responsibility. We are a party of transparency. Even though we did not win government, we are quite properly seeking to implement our policies as if we were elected to government. After all, half the Australian people voted for us. After all, we hold more seats in this place than the Labor Party. After all, we have policies that we believe will grow the Australian economy, reduce the burden of taxation and make it easier for people to meet their bills head on. In committee, we are going to introduce a similar but not exactly the same amendment to this bill which will give Australians a receipt for their taxation contribution and explain to them in detail where their hard earned tax goes. This receipt, a core part of our election commitment, is about transparency and accountability.

Of course, as I shall say again and again during the committee stages of this bill, we are asking this parliament to let the sun shine in to give Australians full transparency about where their hard earned bucks are going. It was the Prime Minister who said, ‘I will open the curtains and let the sun shine in.’ It was the Independents who said, ‘This is a new paradigm. This is a new environment where there will be total transparency.’ Let them vote our way this time. Let them vote for transparency and accountability. This government are scurrying away from their tax summit commitment, which of course the Independents identified as one of the reasons they were going to back the Labor Party. They said that. That is one of the reasons they were backing the Labor Party: the Labor Party are going to have a tax summit by 30 June 2011.

You know what—in the first few weeks of 2011 the government announced two new taxes: a flood tax and now a carbon tax. Let me say to you: the whole year is turning out to be a tax summit—not just one or two days in June but the whole year—but the problem is they are not abolishing any taxes and they are not reducing any taxes. All they are doing is announcing new taxes and higher taxes. So, from our perspective, we say, ‘Let the sun shine in. Open the doors of the parliament. Let the people see exactly how wasteful the Labor Party are in government.’ That is their form. As my leader said, the Labor Party have never seen a tax they did not like and have never seen a tax they did not want to hike. That is their form.

I see the member for Canberra watching intently. As a new member, I would say to her, ‘Run away. Run away. Do not be associated with this mob because, ultimately, even the good folk of Canberra—as the highest average net earning people in the country—will come to understand that sooner or later you cannot trust Labor with money and sooner or later you just cannot trust them with tax.

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

I speak in support of the Tax Laws Amendment (2010 Measures No. 5) Bill 2010. Let the sun shine in; open and transparent. What about the Charter of Budget Honesty that those opposite so fearlessly touted when they were in government? Guess what—they did not comply. Did they submit their costings before the last election? They hid things. It was secret. They did not want to reveal to the Australian public the full extent of their economic irresponsibility. They somehow came up with the notion that they had $50 billion worth of savings. Guess what—when the Australian people, in their infinite wisdom, decided to construct the parliament the way it is and there were negotiations with respect to who should form government, they had to come clean. They had to submit their election promises to the Treasury and to the Department of Finance and Deregulation—and guess what. The shadow Treasurer can wax lyrical and sing songs all he likes, but, when it was really revealed, there was a $10.6 billion fiscal black hole. Talk about irresponsible. Those opposite have form.

They talk about their history. Let’s have a look at their history with respect to tax. We have the GST, which he mentioned. Let’s think about the ratio of tax to GDP—never below about the mid-20s. It never got to 20.9 per cent, which we have presently. The Howard coalition government were the biggest taxing government in the history of the country—far more than this. They talk about economic responsibility. How many tax bills and how many savings are they trying to stop on the red carpet in the Senate? We have seen a performance by the shadow Treasurer that would be good for an Oscar, but the reality is that it is on the red carpet that they are playing their economically irresponsible and silly games, and here he can say all he likes—‘I’m the member for North Sydney. I’m the likeable, lovable cuddly bear’—but the truth is that they are acting irresponsibly in the other place. The shadow Treasurer can come in here and give us his little sermonettes, but they started acting irresponsibly when they were on this side of the chamber. Whether it is Work Choices or taxing the devil out of the Australian people, that is what those opposite did. What they thought about economic responsibility was to privatise everything they possibly could and send people to the scrapheap. That is their idea: take away people’s rights at work.

The shadow Treasurer was given a lot of licence by you, Deputy Speaker Scott, with respect to taxation. He sat in the Cabinet. He was responsible for Work Choices and he was responsible for every economic decision they made.

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

Mr Crean interjecting

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

Absolutely! So let us talk about tax. Let us talk about the consequences of raising those taxes. I see the member for Hinkler over there. He knows very well that the Howard coalition government did not use the tax laws well with respect to providing for road funding in regional and rural Queensland. How many roads were not funded? Look what they did with the Warrego Highway, the failures on the Warrego Highway. We have increased the funding for the Warrego Highway and the Brisbane Valley Highway. And there is the Ipswich Motorway which they had no idea about at all. So with respect to raising tax and spending it appropriately and responsibly in regional Queensland, it has been this government that has allocated $37 million of road funding with respect to the area and $22 million in regional and rural Queensland.

Let us talk about economically irresponsible behaviour and investing in infrastructure. The legislation before this chamber now means a number of things by schedule. The first schedule is at the request of the Australian film industry, increasing our capacity and employment opportunity by reducing the minimum qualifying expenditure threshold from $5 million to $500,000 and removing the requirement for films with qualifying expenditure of between $15 million and $50 million to have at least 70 per cent of the film’s total production expenditure as qualifying Australian production expenditure in order to qualify for the location offset.

There is a change with respect to the benchmark interest rate under the Income Tax Assessment Act, schedule 2. That relates to borrowings that a person may undertake to purchase listed shares. The investor is protected from any fall in the prices by the capital protection feature and the benchmark interest rate determines the cost of capital protection. I welcome this particular legislation which will have a positive fiscal impact of about $170 million over the forward estimates.

With respect to schedule 3, there is an extension of the capital gains tax exemption with respect to compulsory acquisition under, say, the land acquisition legislation of states and territories that enables an exemption with respect to land adjacent or close to the principal place of residence, and we are talking about it covering up to two hectares.

There are a number of other changes with respect to schedules as well. There is the extension of deductibility for not-for-profit subentities. For example, if you have a situation with a church or a charity organisation which has an exemption, extending that exemption to subentities also is a sensible way to go about it. This can be a bit of a challenge. If anyone has served in a not-for-profit organisation, as I have, they will know that there are a number of committees and organisations below those that can have some difficulties with respect to these concessions. This is simply confirming what the Commissioner of Taxation is doing anyway, so it is putting at law what is happening in practice. It is a sensible measure.

Schedule 4 is really just to fix up an anomaly with respect to medical condition benefits to members under superannuation funds and retirement savings accounts. I think that is a prudent thing to do as well. Schedule 6 also makes some amendments with respect to running balance accounts and that makes prudent economic management as well.

Schedule 7 is the one I want to talk about briefly, the education tax refund. I warmly welcome this particular extension. The press release from the Prime Minister on 13 July 2010 said that she would extend the option to apply to uniforms under the education tax refund. Existing items at that particular time included the cost of computers, computer equipment, textbooks and trade tools for secondary school trade courses. I noticed that the Prime Minister made reference—and it was reported in the Sydney Morning Herald on 14 July last year—to school uniforms, and I agree entirely with the comment. She said:

… having a school uniform helps undercut the kind of unhealthy competition we can see at schools to have the latest, most expensive, fashionable gear.

That would be my observation. It is a long time since I went to school, but I can see that school uniforms are important. Indeed, I can recall one day in year 11 at Bundamba State High School, as it was called in those days, having almost a Damascus road conversion experience on the issue of school uniforms. Having been someone who could not see the benefits of them until a uniform-free day took place, I became a St Paul advocate for school uniforms thereafter. I saw how young people, particularly young women, tragically wore the trendiest and the most expensive gear. So I am a passionate believer that school uniforms are a great leveller. They also help with respect to discipline, and they are good preparation for work life because in many jobs people wear uniforms.

This is an important reform and I think that it will help families in the Ipswich and Somerset regions to get access to the kind of support they need. Anyone who has got children knows what I mean. I have got two who are both at university, but I recall having to take them to school uniform shops or to shoe shops to buy shoes as their feet grew, and you see that sort of thing all the time. Mums and dads talk to me in my electorate office and in the mobile offices about the cost of education. It is not as free as they would like and certainly the cost of school uniforms is very expensive.

I know that has been the challenge, by the way, in the flood affected schools in my electorate, and I want to pay tribute to the wonderful work particularly done by people in the P&C and to people like Shelley MacDonald who is the P&C president at Ipswich State High School and at Brassall State School as well. The work that she and her committee have been doing, particularly in helping get those schools back on their feet, is most laudable. A lot of the tuckshops and school uniform shops are run by P&Cs and so in those flood affected areas in my electorate the P&Cs and school communities have been working fantastically well to ensure that young people, who lost their uniforms and particularly their shoes in those days of flood crisis in Ipswich and Somerset region, got help.

If you look at a school like my old primary school, Ipswich East State Primary School, 40 per cent of the kids lived in houses that were flood affected. At the school itself, the out-of-hours care area, the music room, a number of classrooms as well as the school grounds were inundated. In schools like that many of the kids lost their uniforms, their shoes, their sporting gear and a lot of their personal possessions. So this amendment can have a practical impact in my seat, in seats such as Moreton, Brisbane, Oxley and Ryan and in seats across Australia which have been affected by the floods crisis. This is a practical way to help mums and dads and I am pleased that the coalition supports it. I think helping working families with high living costs is what this parliament should be all about and what we should do.

I am passionately of the belief that giving kids the best education they can have improves not just their self-esteem and their dignity but their employment opportunities and their financial security for the future. I am a passionate advocate for education, which should not be the purview of those on the left or the right of political life. It is about social justice, social inclusion and equity, but also about increasing the profitability of our economy and making sure our businesses work as well as they can. It is in the national interest for us to extend the education tax refund for school uniforms. I warmly welcome this particular initiative.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

I rise to cast some comment on the Tax Laws Amendment (2010 Measures No. 5) Bill 2010. Whilst the TLAB No. 5 has seven schedules, I wish to constrain my comments to the schedule dealing with the film tax offsets. I think we all realised that the Australian film industry has developed and become incredibly diverse over the last 20 years. The federal government has continued to support the international film industry, and economic benefits have flowed from that. Indeed, I was with the Hon. Senator George Brandis SC in 2007 when the former Howard government announced the 15 per cent tax offset at the Village Roadshow Studios in my electorate of Fadden. Fadden contains one of only two significant sound stage areas and studios in the country, the other major studio being the Fox Studios in Sydney.

The success of that original 15 per cent rebate generated enormous interest from overseas. That, combined with a lower dollar—certainly relative to the dollar at parity at present—meant the industry was able to attract a large number of big-budget US feature productions that generated substantial economic benefits to the region. Now, unfortunately, we are competing against more countries around the world, and these countries since 2007 have consistently and constantly upgraded their rebates to attract production. We were leading the world in terms of offset rebates in 2007. We are now, unfortunately, dragging our heels. I dare to say Australia has even lost its competitive edge and we have certainly seen a substantial decline in international production. While several projects that have looked at Australia—for example, Battleship and Green Lanternwould have injected something like $90 million into the local economy at least, those two major productions chose to shoot in other countries because, frankly, the 15 per cent rebate as well as the post-production and location offsets simply were not competitive.

International productions, I suggest, are imperative for the Australian film industry. They have the funds, for example, to build infrastructure. Warner Bros feature film Fool’s Gold built a $2.1 million water tank at the Village Roadshow Studios in the electorate of Fadden which then, of course, attracted productions like Nim’s Island, Triangle and Sanctum to film in Australia, building on that substantial infrastructure that had previously been built. These three projects alone would have spent around $60 million in Australia. Narnia: The Voyage of the Dawn Treader invested money in infrastructure at Cleveland Point, but still injected over $70 million into the economy. The Australian film industry is a great revenue generator, especially when it comes to goods, services and employment in electorates around the country.

As Australia starts to lose its competitive edge we are also starting to lose experienced technicians and actors to overseas jobs, or people are simply leaving because the work is not there. It does not take rocket science to work out that this is creating a substantial skills shortage, where we simply cannot meet supply and demand for what international productions require, should international productions seek to come to the Australian market. Vendors who obviously benefit from these productions may reduce staff or, in some cases, close down. As the injection of international funds has the potential to sustain these businesses long term, the obverse is also true: the lack of injection of international funds will see a decline in these businesses. Education and training will not be available to universities, especially if the demand for those skills is not there. Those universities that offer film and television degrees will lack the experience and capabilities to move forward with their courses and training.

Luckily, domestic productions still exist, but their budgets are substantially smaller than those of the international blockbuster types of productions. Domestic productions also spend a lot less than international productions. It is estimated you would need about 10 to 15 Australian productions to generate what one international production could generate. Australia has spent 20 years growing the industry and we have had a major stake in the international market, backed up in 2007 by the Howard government’s move for the 15 per cent tax offsets, which began to anchor some of that. The worldwide global response has seen our competitive edge now begin to slip. It would be disappointing to see the industry deteriorate to a level that it could not recover from.

Village Roadshow Studios has made a compelling case to me and has urged me to say to the Australian government that perhaps there is a need to review the PDV incentive from 15 per cent to higher amounts. This is especially important because of the high Australian dollar and also what other countries around the world are doing. If you look at global incentives for film production you will begin to see why our current 15 per cent lacks the ability to draw big-budget productions from overseas. In continental United States of America, New Mexico has a refundable rate of 25 per cent; Arizona, transferable, 20 to 30 per cent; Oklahoma, rebate, 35 to 37 per cent; Kansas, 15 to 25 per cent; Alabama, refundable, 25 to 35 per cent; Georgia, transferable, 20 to 30 per cent; Kentucky, refundable, 20 per cent; North Carolina, refundable, 25 per cent; Pennsylvania, transferable, 25 per cent; West Virginia, transferable, 27 to 31 per cent; Michigan, refundable, transferable, 30 per cent to 40 per cent—and the list goes on and on.

Some argue that Australia began the revolution in providing incentives for big blockbuster productions in the film and television industry with our 15 per cent. The world has caught up at an astonishingly rapid rate. Let us look elsewhere. In Alberta, Canada, there are grants for 20 to 29 per cent, plus bonuses. It is the same in British Columbia and in New Brunswick, where the refundable amount is up to 40 per cent of the labour costs only. In Nova Scotia 25 or 50 per cent of the labour costs are refundable, plus a range of bonuses. Look across the world. Italy gives a credit of 25 per cent, Ireland gives upfront funding of 28 per cent and there are discretionary rebates of up to 50 per cent in Singapore. The days of Australia providing the most generous incentives to lure film and television here are rapidly coming to an end, which is disappointing. The world has caught up and it has caught up fast.

I commend the government on their 2010 Review of the Australian independent screen production sector, which was released about a week ago. I urge the government to continue to review the current taxable offset rates and to continue to engage with industry to look forward. In terms of where the government are going now, I support their film tax offsets that this bill brings forward. I certainly support schedule 1, which is making changes to the eligibility criteria for accessing the film tax offsets. The minimum qualifying expenditure threshold for the post-digital and visual effects offset—what the industry calls postproduction—is reducing from $5 million to $500,000. I support the government, which believes that these measures better align the incentive with the standard industry practice for such work to be divided amongst several companies, usually in job lots of less than $5 million.

I certainly support the government in its move for a location offset—that is, the removal of the requirement for films with qualifying Australian production expenditure of between $15 million and $50 million to have at least 70 per cent of the total of the company’s production expenditure in the film as qualifying expenditure in order to qualify for the offset. This makes the offset now available to smaller budget films that exceed the $15 million threshold but still need or want to make a substantial part of the film elsewhere. This makes enormous sense, considering the location opportunities across the world, the opportunities for shooting in different parts of the world. It still makes Australia competitive and it still provides an option for film and television, especially big blockbuster type films, to come to Australia and to use Australian facilities in some way.

The measures within the bill, especially on the film tax offsets, are certainly supported by the coalition and enjoy my strongest support. I will conclude by asking the government, as part of its review of the Australian independent screen production sector, to also review the producer offset. I will be writing to the minister specifically about this. Currently, the producer offset has a minimum spend of around $1 million and provides up to a 40 per cent tax offset for Australian spend. However, there is a limit to the number of episodes that you can qualify for. I believe the number is 65. We have the somewhat absurd situation now where the amazingly popular Sea Patrol has reached that limit. We all love Sea Patrol. I look at the advisers’ box and I see a group of people who love Sea Patrol. Sea Patrol has hit 65 episodes. It has been filming for five years, under Village Roadshow, on the sound stages in my electorate of Fadden. Now they are seeking to wind down and will not be producing any more episodes because the producer offset is not available for them.

The beauty of Sea Patrol is not only in injecting local money into the economy. The Navy generously gave an Armidale class patrol boat for many months for the filming of this series. I joined the military in 1988 as an Army officer. I went to the Australian Defence Force Academy. I look at all of my Navy mates, all the naval midshipmen—naval officers now—who joined with me. So many of them joined because, at the time, back in the eighties, Patrol Boat was being aired on our screens. It was the same thing: the military had given a patrol boat. People saw that and said, ‘You know what? I would love to go and join the Navy.’ As we deal with recruitment issues and a range of challenges, especially within Navy at present, here we have a prime opportunity—a show based around a patrol boat and around naval officers, sea men and women, going to sea. We are going to lose that. We are going to lose the opportunity to show the great things about the military and serving on one of our Armidale class patrol boats. It is a great recruitment opportunity that we are going to lose simply because Sea Patrol has hit the 65-episode limit under the producer offset.

I say to the minister, whom I have a fair amount of respect for and who I believe will understand these issues: can we have a look at the issue of the episode limit in the producer offset so that we do not come to the point where we lose something like Sea Patrol that has great ancillary benefits not just for the industry and the economy but also for the wider application of its recruitment opportunities and how it makes people see the military as a career opportunity. I will certainly be writing to the minister to ask him to look specifically at the issue of Sea Patrol and, more widely, the producer offset and the 65-episode limit. I will find out how that limit got there, the rationale for it. In the current world of an exceptionally high Australian dollar, where production incentives across the world have grown beyond all measure since 2007, now is the time to review a range of these offsets to make the Australian industry more competitive.

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

I too rise to support the Tax Laws Amendment (2010 Measures No. 5) Bill 2010. This bill is largely uncontroversial. It deals with seven aspects in various schedules. As we have just heard in the dissertation from my learned friend the member for Fadden, film tax offsets are one of those areas. The other matters dealt with in this bill are protected borrowings, capital gains tax exemptions, deductions for terminal medical conditions by super funds, capital gains tax concessions for not-for-profit subentities, concessions in running balanced accounts, and educational expense tax offsets covering school uniforms. As I said, these are largely uncontroversial. The last one I mentioned gives rise to the government’s commitment to include school uniforms as part of the education tax refund.

There are two areas on which I would like to concentrate my contribution. The first is schedule 4, which deals with the release of benefits for terminal medical conditions by super funds. This will bring it in line with the requirements under the Superannuation Industry (Supervision) Act, which provides for conditions of release in the case of terminal medical conditions. Presently, under the act, deductions are allowable in the case of death, permanent incapacity, temporary incapacity or for relief of those medical conditions. What it does not do is provide conditions of release in terminal medical conditions. This schedule will bring it in accord with the Superannuation Industry (Supervision) Regulations 1994.

Aside from this, oddly enough earlier this week I had the opportunity to speak in this parliament on behalf of a constituent, Ms Leanne Kilmore, who was diagnosed with a very rare form of breast cancer. Immediate surgery was prescribed. After surgery she was placed on what I understand to be the highest dose of chemotherapy. Ms Kilmore, a single mum of two, sought to get some relief from her superannuation fund because, being a single mum, she still had the dilemma of running a household and providing for her kids while not being able to work and while undertaking the surgery and chemotherapy. It is a really sad story because she had to set aside the last parts of her chemo treatment. It got to a stage where she had exhausted all her leave and she needed her employment to provide for her children. She did not have the assistance of family and friends and, despite the advice of her doctors, had to set aside her last chemotherapy treatments. Notwithstanding the unilateral decision she did take, she has made a full recovery.

The point I make about this is that, when Ms Kilmore applied for relief out of her superannuation fund after her surgery, at the stage of her chemotherapy treatment her condition was not legally regarded as a terminal condition. Maybe if she had made the application prior to the chemo treatment, when she was diagnosed as having this rare form of breast cancer and requiring immediate surgery, it would have been different. I would like to think that in future there might be some latitude and super funds will not simply be allowed to hide behind the face of the regulations. I have seen the consequence of a mum who took a decision in very dire circumstances, without the support of family, to set aside what could have been life-saving treatment. In her case, fortunately, she recovered, but I do think her example is a salient reminder to us that not everything that occurs in life is black and white and there does need to be some flexibility.

The other area I would like to talk about is schedule 7, which deals with school uniform costs. It amends the education expense tax offset, which is the educational expenses tax refund. This is an area of policy I am particularly proud of. In my electorate of Fowler there is a very high proportion of families. There are 6,700 families with school kids under the age of 15. That is a significant number. Fowler also has a high population of migrants, all going to new schools. Speaking of migrants, I have the distinction of having the most multicultural electorate in the whole country. A lot of new Australians, particularly refugees, decide to settle there. We have a community that values diverse cultures and traditions and we rejoice in it.

Schedule 7 is quite significant. Sending a kid to school in jeans and a T-shirt may not look so flash compared to other children turning up in expensive shoes, expensive joggers—fashion statements on the run, particularly for high school students. A uniform is very positive for high school students. Apart from showing a uniform position of the student body, it not only promotes school pride but also is an opportunity to promote schools amongst our community. Most of the schools in my community have both a summer and a winter uniform, so that adds additional expense. There is no doubt when the education expense tax offset was introduced it was an amazing success, providing up to 50 per cent of eligible expenses or up to $780 per student in primary school and $1,558 for eligible expenses for secondary students. These are quite significant contributions to the financial relief that parents need. Provisioning children for school is not an inexpensive option these days. I have been able to survive that myself, but now I see what my daughter is going through with her three children going to school and I can sympathise—but, fortunately, it is not my direct responsibility these days. No doubt my daughter Elizabeth is quite happy with the education tax refund, particularly for what it has meant in the provisioning of computers for kids, accessing of books and all the rest of it.

Surprisingly enough, this year they have decided to move closer to home. I am very pleased that they have decided to move a couple of kilometres up the road from us, but the thing is they had to change schools for three kids. That meant a new set of uniforms, but, for the first time, these uniforms will be eligible expenses for the purposes of the education tax refund. I think that is a very positive thing for the community and the school, and it certainly helps mums and dads with their expenses and providing for their school age children.

I just mentioned my electorate being the most multicultural in the country. I would like to take the opportunity to acknowledge the Cabramatta Cabra-Vale Lions Club and particularly its president, Ms Jenny Tew, for their efforts with local youth. Significantly, the Lions Club also took it upon itself to set up two junior clubs, called Leo clubs. One of those clubs was for Cabramatta High School and the second was for Pal College. This involves young students of high school age in the values and ethics of the Lions Club and shows them that it is good to participate in assisting others. Amazingly, these two clubs raised $10,000 for the flood victims of Queensland. It is a good thing for young people to be involved in. It is certainly very healthy to be able to learn community values in a positive way. I thank the Lions Club for what it has done in that area, building on lasting friendships and demonstrating the value of service to the community, leadership and personal development. These are very important qualities for Australians, and it is particularly important for youth to grow up understanding the value of those qualities and what they mean for our community.

I also thank Ms Beth Godwin, Principal of Cabramatta High School, who has been so exceptional in her student leadership. For the work she has done she was recently recognised by the Fairfield City Council as its citizen of the year. She runs a fabulous school. I get to see the product of her work; there are a very positive bunch of young people growing up at the school, paving the way for great advances in the community at large. I also thank the Principal of Pal College, Mr Seth Pal. His college distinguishes itself with its pride in the development of community values as part of its curriculum, ensuring that young people have the opportunity to understand that being part of a modern community is not about what you get from the community but about what you contribute to it. Those two principals do a sterling job and I am very proud to have those two schools operating so well in my electorate.

I conclude by saying, as I said at the outset, that this bill is largely uncontroversial. It does some very good things in its seven schedules, but I would like to credit the government in particular for schedules 4 and 7. Not only in my electorate but in my own family, I get to see the value of the education tax refund. The extension of it to provide for uniforms will make a very real difference for many people, particularly those on low incomes. I commend the bill to the House.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

in reply—Firstly, I would like to thank all those members who contributed to this debate. Schedule 1 of the Tax Laws Amendment (2010 Measures No. 5) Bill 2010 is particularly welcome in the days after the Academy Awards in Los Angeles because it increases access to film tax offsets. These changes reduce the minimum threshold for the post-digital and visual effects offset and simplify eligibility requirements for the location offset. This measure is also expected to increase employment opportunities and to assist in building capacity and expertise in our local film industry, which will in turn provide benefits for domestic productions. The Gillard government is committed to assisting the film industry to attract offshore productions to Australia and to expand opportunities for Australian providers to bid for international work. We do, of course, recognise and congratulate the 10 Australians who were nominated for Academy Awards and the four of our fellow citizens who in fact won an Oscar this week. Their work and their great talent make us all very proud.

The change to the location offset in the tax laws amendment bill will also reduce compliance costs for affected taxpayers. This schedule gives effect to the government’s 2010-11 budget announcement. Schedule 2 adjusts the benchmark interest rate used in the taxation of capital protected borrowing provisions to the Reserve Bank of Australia’s indicator lending rate for the standard variable housing loan plus 100 basis points for capital protected borrowings entered into, amended or extended after 7.30 pm Australian eastern standard time on 13 May 2008. The new benchmark interest rate provides a more appropriate basis for apportioning the expense and capital protected borrowings between interest on a borrowing that does not reflect the payment for the capital protection on the one hand and the costs of capital protection on the other. The costs of capital protection will not be treated as interest for tax deductibility purposes. The new benchmark rate takes into account industry concerns over the credit risk borne by lenders for the costs of capital protection that is paid on a deferred basis.

This schedule also provides for transitional arrangements for capital protected borrowings entered into or extended at or before 7.30 pm Australian eastern standard time on 13 May 2008 from 30 June 2013. It allows capital protected borrowings entered into on or before 13 May to apply the existing benchmark interest rate until 30 June 2013 or the life of the product, whichever is earlier. The amendments are expected to save $170 million over the forward estimates period and are another demonstration of the government’s commitment to ensure that our tax system is as fair and efficient as possible.

Schedule 3 extends the main residence capital gains tax exemption to cover a capital gains tax event that is a compulsory acquisition or other involuntary realisation. The extended exemption will apply where part of a main residence is compulsorily acquired without the dwelling itself being compulsorily acquired. This ensures that there will be no CGT implications for taxpayers if part of their adjacent land is compulsorily acquired without the dwelling also being compulsorily acquired.

Schedule 4 of the bill allows superannuation funds and retirement savings account providers to deduct the cost of providing terminal medical condition benefits to members and account holders. On 16 February 2008 the superannuation law was amended to allow superannuation funds and retirement savings account providers to provide benefits if the member was expected to pass away due to a terminal medical condition in 12 months. However, from that time an anomaly has existed in the law. While superannuation funds and retirement savings account providers have been able to deduct the cost of providing benefits relating to permanent incapacity and the payment of death benefits, they have not been able to claim a deduction for the cost of providing terminal medical condition benefits. This amendment rectifies that anomaly and will provide consistent tax treatment for similar insurance arrangements. Schedule 4 also makes some minor amendments to reflect the drafting convention that someone should be referred to by the term ‘individual’ rather than the term ‘person’.

Schedule 5 of the bill confirms the Commissioner of Taxation’s interpretation of the GST law in allowing non-profit subentities to access the GST concessions available to their parent entity. As part of these amendments, non-profit subentities will be allowed to access the higher registration turnover threshold of $150,000 for non-profit bodies. This measure takes effect from the start of the first tax period after royal assent.

Schedule 6 simplifies how business activity statement liabilities can be offset. It ensures that the Commissioner of Taxation need not apply a payment, credit or running balance account surplus against a tax debt on a business activity statement unless the tax debt needs to be paid. This measure will reduce unnecessary complexity and ease the costs of complying with our taxation laws.

Finally, schedule 7 provides for the expansion of the education tax refund so that school uniforms are included as eligible expenses, along with existing eligible expenses like laptops, home computers, school textbooks, stationery and tools of trade. The refund will be available for school uniform expenses purchased from 1 July 2011, with the first refunds paid in the 2012-13 financial year. The education tax refund will help an estimated 1.3 million Australian families who experience the pressure of back-to-school costs. The refund allows eligible families to claim 50 per cent of their eligible education expenses, up to a maximum refund of $794 for high school children and $397 for primary school children, on back-to-school items. Extending the education tax refund to include school uniforms, along with the childcare rebate and Paid Parental Leave demonstrates the Gillard government’s commitment to reducing cost-of-living pressures on Australian families.

As I believe I have outlined, this Tax Laws Amendment (2010 Measures No. 5) Bill 2010, as presented, deserves the support of the parliament. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.