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

Before the debate is resumed on this bill, I remind the House that it has been agreed that a general debate be allowed covering the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. The original question was that this bill be now read a second time, to which the honourable member for Groom moved an amendment. Therefore the immediate question is that the amendment be agreed to.

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

I speak in support of the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. These are quite technical changes which essentially put beyond doubt the question of where the excise on condensate will apply in the region called the Rankin Trend. The region was prescribed by the Commissioner of Taxation, but the North West Shelf partners initiated legal proceedings challenging their excise liability based on the validity of the prescribed condensate production area. The subsequent price determinations were made by the Commissioner of Taxation. Given the value of the revenue—and a huge amount is associated with this particular legislation—the government decided proactively to take steps by this legislation. In the 2011-12 budget, the government announced it would legislate the definition of the Rankin Trend area.

I cannot let go by that the Senate Standing Committee for the Scrutiny of Bills criticised the federal Labor government in relation to this legislation. I think they are wrong. They said it was retrospective and that it may:

… trespass unduly on personal rights and liberties, in breach of principle 1(a)(i) of the committee's terms of reference.

The bills do not actually impose any additional impost, so it is not retrospective in the sense that the committee outlined.

I am going to address the issue of the broader tax agenda and the budget in relation to what we are doing, and some history is required in relation to this. In the 2008-09 budget, the federal Labor government announced the removal of the crude oil excise exemption that had applied to condensate production since 1977. The condensate production is subject to an excise regime equivalent to that applying to stabilised crude oil discovered on or after 18 September 1975. Under the arrangements excise is applied to condensate production for individual 'prescribed condensate production areas' in a manner similar to income tax assessment, with higher rates applying to production exceeding certain thresholds up to a maximum of 30 per cent.

I mentioned before that the Commissioner of Taxation issued a by-law prescribing the Rankin Trend and another area called Angel, being condensate production areas located in the North West Shelf project area. As I also mentioned before, the partners in the North West Shelf project challenged the excise liability on the basis that the Rankin Trend is not a valid condensate production area. They claimed it is of uncertain size and contains petroleum accumulations from which condensate had not been produced, as well as being an area where no hydrocarbons are present.

This legislation undertakes a statutory definition in relation to the Rankin Trend production area by reference to the reservoirs within the intended Rankin Trend area which currently produce condensate. The amendments also provide for the Minister for Resources and Energy to add known but currently non-producing reservoirs to Rankin Trend by specifying them in regulations when he is satisfied they form part of the Rankin Trend field and after considering the affected areas. There needs to be an efficient exploitation of the resource. This is important legislation because this is an important resource and important revenue for our economy and our country. It is important also to get the system of taxation correct. I have said before in this place that sometimes you can measure the income tax assessment legislation by weight, not by sections, subsections and chapters. We need to make sure that we get a sustainable taxation system. If we are going to have a strong economy, a sustainable environment and a just society into the future, we have to make sure that the legislation is accurate and that there is no lack in definition specificity in legislation which covers the collection of taxation. This is sensible legislation and it is part of our broader tax agenda.

I am pleased to talk about some of the things that we have done and to wrap this into the framework of what we are doing in the budget. In the 2011-12 budget we announced that we would legislate the definition of the 'Rankin Trend area', so I am happy to talk about what we are doing in the budget to make the taxation system simpler and fairer. Since the 2010-11 budget, we have announced a number of reforms, about a dozen, for what we have described as Australia's future taxation system review. We have made many changes. Reforming the statutory formula method for valuing car fringe benefits, phasing out the dependent spouse tax offset, abolishing the entrepreneur tax offset and developing a small business tax package, which includes the $5,000 immediate deduction for motor vehicles, are important measures. We are also providing certainty for investors in relation to infrastructure projects of national significance to carry forward their losses with an uplift factor. Also—and this has particularly benefited my electorate of Blair in South-East Queensland—we have increased family tax benefit part A payments for 16- to 19-year-olds by $4,200 per child, because everyone knows that the cost to families, single parents and couples does not abate when a child turns 16 years of age. Another important measure is the extension of the education tax refund to uniforms, which we have announced as part of the budget framework that I said this legislation should be seen as part of.

We are also planning to improve the tax system governance by committing to a principles based approach to tax law design. We will allow the Board of Taxation to initiate its own reviews into how tax policy and laws are operating and establish a new tax system advisory board. So there is much we are doing. Also, the minerals resource rent tax will allow the cutting of company tax rates to 29 per cent from 2013-14. This is another assistance to small business across the country. I mentioned the instant write-off for all assets under $5,000 and the bringing forward of that company tax rate to 2012-13. Also, there is the lifting of the superannuation guarantee from nine per cent to 12 per cent. In my electorate alone, that would see 43,500 Blair residents get an increase in their superannuation. This is really important because this gives dignity, confidence and financial security to people in my electorate and communities across the country so that they can live out their retirement with respect. We have $1.3 trillion in superannuation sector funds established by previous Labor governments and carried on.

It is a tragedy that the coalition are not supporting the minerals resource rent tax or the boosting of the superannuation guarantee to 12 per cent. Once again, they demonstrate that they have never been in support of real tax reform. What they want to do is mouth the words but never actually carry out genuine reform. They often criticise us in relation to tax and alleged waste, but, really, when they were in power the coalition wasted money on middle-class welfare as opposed to spending money on health, education, roads, infrastructure and the like. We also know that we are the most prudent managers when it comes to monetary issues and fiscal issues. We have been committed in this country to floating the dollar, deregulating the banking sector, ensuring the Reserve Bank has independence and also ensuring that the Australian taxpayer gets value for their dollar. We are not the big-taxing and the big-spending government of the Howard years where the tax as a percentage of GDP rose up to 24.1 per cent. It is not 24.1 per cent now; it is 21.8 per cent, so those opposite should really have a good look at the budget papers; but they do not want to really look at the budget papers. Real spending over the next five years is at one per cent, the lowest since the 1980s, but in its last five years we saw the profligate, willy-nilly Howard government spend at the rate of 3.7 per cent. Those opposite have a narrative about us, but the reality does not bear it out.

The legislation that the Assistant Treasurer is presenting to this parliament is important legislation; once again it demonstrates that this Labor government is interested in tax reform. The Labor government will hold a tax summit in early October to make sure that we can get the best and brightest people in this country together to talk about the way forward in taxation. I must say, the fact that we have seen this government deliver tax cuts three years in a row so that people in my electorate across Ipswich and the Somerset region get personal income tax cuts is a demonstration of this government's commitment to carrying out tax reform and also gives people a helping hand under cost-of-living pressures. If you are on $50,000 a year, you are currently paying $1,750 less in tax; and if you are on $100,000 a year, you are currently paying $1,900 a year less in tax, as a result of this government's efforts. It is this government which has been prudent with respect to managing the dollars and prudent with respect to government expenditure. It has made good investments in South-East Queensland and good investments in health, hospitals and infrastructure, but it has also made important changes that we have seen here.

I support this legislation. I think it is a part of the whole fabric of what Labor governments are about: reforms of the taxation system, prudent management of money and investing in infrastructure and communities across the country. I commend the legislation.

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

I would like to thank all the members who have taken part in the debate on the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. Before I come to the content of these bills I must address some of the comments made by the member for Groom in his contribution to the second reading debate. It is with some pleasure that I notice that the member for Groom is here. The member for Groom stated that the coalition will be supporting these bills. However, he then moved a second reading amendment. The member for Groom has an interesting understanding of the concept of supporting government legislation. But I am not surprised the opposition is, as we know, all opposition and insufficient leadership.

If we take their pulse on just about any issue before this parliament, there is no economic heartbeat. When we try to engage in robust policy debate in this country, all we get nowadays from the opposition is relentless negativity. The hill of inconsistencies is now slowly but surely becoming a mountain. They say they are for the workers, but at the same time they want to axe hardworking public servants. They say they want to keep a lid on inflation, but they want to dump rocket fuel on the mining sector by giving mining an effective $11 billion tax break. They say they want to stick up for cost-of-living pressures, but they will also blow the budget by $70 billion. This is something that I know every member on this side of the parliament gets.

The parliament has serious economic debates to have in the second half of this year—the mining tax, the carbon price package, the tax forum, lifting superannuation, reducing corporate taxes, investing in infrastructure, supporting 2.7 million small businesses and helping sectors to grow. But how can these national conversations occur sensibly with a federal opposition that are not taking things seriously. What is most unfortunate is that they constitute a cabal of cynicism that not only turns the country off but turns their backs on the possibility and hopes for the future. By contrast, we on this side find our purpose in optimism and energy. The Gillard government is committed to Australia's future. We have made some tough policy decisions which will ensure the future prosperity of Australia and Australians. There are big challenges on the horizon, but this government has the policy options which provide a solution to the challenges that Australia faces in the next decades. Taking into account our multispeed economy, we will be introducing the minerals resource rent tax—the MRRT package—which will take a percentage of the profits that miners make from Australia's non-renewable resources and which will fund important measures. These measures include the instant asset write-off for small businesses and a cut to the company tax rate, which, from 2013-14, will be down to 29 per cent and which will include a head start for small businesses for whom the rate cut will commence in 2012-13. Cutting the company income tax rate increases domestic productivity and domestic investment. More capital means higher productivity and economic growth and leads to more jobs and higher wages. These measures will ensure that Australia comes through the current mining boom with more prosperity and a stronger economy. The MRRT will also fund the increase in employer superannuation contributions from nine per cent to 12 per cent. This will significantly increase the future retirement incomes of many Australian workers. For example, a 30-year-old earning average full-time wages will have an additional $108,000 in retirement savings.

From their public statements to date, the opposition appears set to oppose these measures when they are introduced. I noticed that the member for Groom mentioned the energy white paper, but what he neglected to mention is the importance to the future of Australia's energy security of taking action now and setting a price on carbon pollution. A price on carbon pollution goes to the question of how to price the available energy options for Australia. Rather than saying one thing to one audience and another thing to another audience, this government is taking action by putting a price on carbon pollution. The member for Groom is right to raise the need to resolve the issue of the energy white paper, but it cannot be resolved without considering the impact of a price on carbon.

The Gillard government's response on this issue is vital to the discussion of different energy options for Australia in the decades to come. We have committed to a clean energy future through our carbon price package, and we will be supporting affected families and businesses to transition to a cleaner economy which will position Australia as a world leader in renewable energy. If given his way, the Leader of the Opposition would tax families to compensate polluters through his so-called direct action plan, which would cost each and every taxpayer some $720 a year. But the Gillard government understands that there are families are doing it tough, that the global economy is volatile, and Europe and the US are in the midst of public debt crises. Rather than ignore this, we are working on policies to spread the benefits of the mining boom and secure economic growth in other sectors of the economy.

Returning to the bills immediately at hand: the amendments contained in these bills serve to address uncertainties that have arisen following the implementation of the government's 2008-09 budget decision to remove from 13 May 2008 the crude oil excise exemption which is applied to condensate production. The amendments provide the necessary certainty by inserting a statutory definition of the prescribed Rankin Trend condensate production area as the area that includes those reservoirs or groups of reservoirs producing condensate which form part of a single field. The amendments also allow for other reservoirs to be included within the Rankin Trend condensate production area by regulation where the minister for resources is satisfied that they form part of the same field.

The Excise Legislation Amendment (Condensate) Bill makes minor technical amendments to the Petroleum Excise (Prices) Act 1987 regarding the determination of volume weighted average of realised prices—the VOLWARE price. The amendments clarify that VOLWARE price determinations, which are integral to determining excise liability, are not invalidated by failure to provide relevant petroleum producers with a written notice setting out the terms of the determination. Were this the case, no excise would be payable in circumstances where a notice was not provided. To ensure that the ability of producers to seek a review of VOLWARE price determination is not affected, the amendments also extend the review provisions to allow producers to seek a review within 28 days of receiving a formal notice of price determination.

The amendments contained in the bills will have effect from 13 May 2008, consistent with the commencement of the original 2008-09 budget measure. As the amendments serve only to clarify and confirm the application of crude oil excise to condensate production as it has been applied since 13 May 2008, they do not impose any additional impost on industry participants and have no revenue impact. Rather, they provide industry with the necessary certainty regarding the application of the crude oil excise to condensate producers in the North West Shelf area and protect the excise revenues collected to date under the original 2008-09 measure. I again thank those who have participated in this debate and commend the bills to the House. Question put.

That the amendment be agreed to

The House divided [17:44]

(The Speaker—Mr Harry Jenkins)

Question negatived. Original question agreed to.

Bill read a second time.