Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

I rise to speak on the statement made by the Treasurer yesterday in the House of Representatives on taxation. In doing so, I join with the shadow Treasurer, who responded in the House of Representatives to the Treasurer's statement yesterday. Of course, the Treasurer's statement followed last week's tax forum. It is very important that it be called a 'tax forum' because the Treasurer, Mr Swan, was very determined it not be called a 'tax summit'. The last time there was a tax summit was back in the 1980s. The road to this tax forum says so much about this government and so much about the Treasurer's grasp of economics and his true interest in tax reform, which is of course next to zero. When it comes to tax rises, this Treasurer's track record shows that is where his interest really lies.

This Treasurer has occupied that post since the election of Prime Minister Rudd back in November 2007. At that time he did not exhibit any interest in tax reform whatsoever. In fact, in the 2007 election the only tax policy the current Treasurer had was to copy the income tax cuts announced by the previous Treasurer, Peter Costello, and the previous Prime Minister, John Howard. We all remember that when those tax cuts were announced in the first week of the election campaign they were greeted with determined silence by the now Treasurer, who waited a week before saying he would copy them lock, stock and barrel except for some planned cuts to the top rate, which he said would be an aspiration for another day.

Then he got to his first budget, which of course followed the you-beaut 2020 Summit held in this place, where reams of butchers paper were sacrificed to a whole host of ideas for the new government to give it some sort of direction. One of the ideas out of that 2020 summit was the Henry tax review. That preceded over many, many months. When it was finally completed it was handed to the Treasurer, and he held it like it was some kind of dangerous device—for six months. It was going to be released 'as soon as practicable', he said at the end of 2009. But it took almost six months—in fact it was dropped about 10 days before the budget. I think it was the Sunday before the Sunday of the budget. Of course, it was released at that point when the Treasurer announced he liked one idea, which of course was the infamous mining tax. The road to this forum began after the election, at the insistence of the member for Lyne. There was going to be a tax summit by 30 June at the latest, and the tax summit was then shrunk to a tax forum. Many commentators wondered what the difference between a tax summit and a tax forum was, but luckily the Treasurer, Wayne Swan, was on hand to explain the difference. When asked by a journalist what the difference was, he said that a forum included about 150 people while a summit was a pretty tiny forum. The mind reels, but at least the forum, which occurred at the insistence of the member for Lyne, was delayed until last week and, of course, was shrunk in duration. Forty-eight hours is a generous interpretation. There were two days of talking and at the end of it another promise by the Treasurer of something he thought he would like to do in the future—

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

Another aspiration—

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

As you said, back in 2007, if he could. When it comes to tax reform, this government are interested only in tax rises. After they announced that they would agree to have their tax forum, of course, they announced their carbon tax. That was not allowed to be discussed, nor was the mining tax. The Australian public are a wake-up to this Treasurer and this government. Whenever they mention tax, they are always thinking of tax rises. The Australian public know it. The Treasurer's statement of bluff in the House yesterday will do nothing to dissuade them of that view, nor will the forum which he agreed to under sufferance to satisfy an Independent to give them government.

Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

It is a pleasure to rise to speak in this tax reform discussion and it is also a pleasure to follow the desperately irrelevant member for Casey, another member who, like his colleagues, has opposed every reform ever put forward by a Labor government: superannuation, Medicare, the NBN, clean energy and now tax reform.

Over the past few years we have heard media commentators declare that the reform era has ended, that the Hawke, Keating and Button reforms of the 1980s and 1990s were the high point of reform in Australia. But we saw at the government's tax forum last week, which I attended, that the dialogue of reform is ongoing. It is alive and well. It is a conversation that this Labor government will continue to engage in proactively with all Australians. Yet those on the other side were not even there.

At the tax forum we heard from big and small business; we heard from community groups, the welfare sector and unions; we heard from tax experts, economists and members of state and federal parliaments, including the Premier of New South Wales; and of course we heard from our Prime Minister and Treasurer. At times, there were sharply opposing views expressed, but we found some genuinely common ground and achieved a strong level of consensus among organisations and individuals with contrasting positions. By bringing stakeholders together and hearing each of their at times divergent voices, the tax forum provided what a program director of the Grattan Institute and participant at the forum, Saul Eslake, described in the Age today as the ‘starting point’ for far-reaching reforms.

At the tax forum held last week the penny finally dropped. It dropped for all those members attending and it dropped for some in the media. And that penny was taken up by the Treasurer. The tax forum demonstrated how goodwill and constructive policy discussion can build consensus. Unlike those in the Liberal Party and the National Party, we believe in a way of doing government that is evidence based; that does not listen to the inflexible negativity of cynics and those in the opposition but focuses on those positive and reasoned voices in the Australian community; and that works to build consensus around ideas like tax simplification and national harmonisation. While the forum produced a number of strong reform outcomes, as the taxation review chairman, Ken Henry, observed, its key role lies in opening people’s minds to a forward-looking reform agenda in order to meet the current and future needs of our patchwork economy.

As part of the carbon pricing scheme, we have tripled the tax-free threshold, effective from 1 July 2012. And the Treasurer announced at the end of the tax forum that, as the budget allows over the coming years, we will gradually increase the threshold to $21,000 in order to remove the low income tax offset and further simplify the tax system so as to spare over one million low-income earners from the inconvenience and expense of lodging a tax return. Remember that 80 per cent of Australians go to a tax agent, even though there is not always the need to. Saving them that expense is an important thing to do. According to George Megalogenis, writing in the Weekend Australian, this ‘is the reform we have to have … placing economic efficiency above political expediency’. The Treasurer also announced the establishment of a business tax working group that will develop ideas about the tax treatment of losses and explore ways to fund any changes to business tax as well as look at longer term business tax reform ideas. The states, led by Queensland and New South Wales, will develop a plan for state tax reform to bring to COAG in order to address existing inefficient state taxes. That was a landmark, and I congratulate those representative state parliaments who generously offered to work with us.

We heard from the member for North Sydney today that tax reform meant smaller government. The subtext to that assertion, though, is that, like their Tea Party cousins in America, ideology rather than common sense governs the economic thinking of the Liberal Party. Tax reform is about modernising and simplifying the tax system in a changing economy, while ensuring that government has adequate financial resources to support essential public services and meet the future needs of the Australian people. I encourage the member for North Sydney to consider what was said by Ken Henry at the tax forum, particularly that the fairness of the taxation system must be understood within the context of the system as a whole and not be based on the fairness of each of its specific taxes.

Finally, I would like to leave you with this insight expressed by George Megalogenis when he said that with the passage of economy-wide tax reforms, such as the carbon tax, by this Labor government:

Abbott becomes not a conservative but a reverse-engineer. What hope for reform in, say, 2016 if a prime minister Abbott is still furiously trying to return Australia to 2006?

(Time expired)

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

I rise this afternoon to make a contribution following the statement to the House on the tax forum conducted here in Parliament House last week. I am very disappointed in that tax forum. I come from one of the rural areas in Australia that are mining, agricultural and resource rich and that also provide much of the wealth for this nation, yet we see so little of that in terms of taxation revenue returning to these regions. What was missing in the debate last week was any serious discussion on the impact of the current taxation system—whether it is Commonwealth, state or local government for that matter—on businesses and communities in rural and remote parts of Australia.

At the time of Federation, when all the states came together to form the Commonwealth of Australia, almost 70 per cent of the population lived in rural, regional and remote parts of Australia and the rest lived in our capital cities. Today that number has reversed. Unless we get serious about decentralising our economy, those numbers will continue to grow. Madam Deputy Speaker Vamvakinou, I am sure you and others who live in capital cities are also concerned about the growth of cities and the challenges faced by state governments and local authorities in dealing with the impact of congestion because of the continuing population drift to the capital cities. We have to ask ourselves: why is that? Is it because of the job opportunities, the services provided and the health opportunities in the cities?

Today in rural and regional Australia, as this mining resource 'boom'—I do not like using that word—continues, it is quite extraordinary what is happening in electorates like my electorate of Maranoa and my home town of Roma. The Surat Basin, the Cooper Basin, the Galilee Basin and the Eromanga Basin are resource rich areas that are seeing unprecedented growth in my electorate. We are seeing fly-in fly-out workers who do two weeks on and then two weeks off. We are also seeing very little of the wealth created in the region enabling the local businesses in those communities to grow. That is where I would like to see a focus. I know that the states get the large bulk of the royalties that come from the resources under the ground, whether it is the mineral wealth or whether it is the oil or gas wealth, but we are seeing that wealth, the royalties, largely being spent in our capital cities. So there is a transfer of the wealth generated in rural and regional areas to our capital cities through the royalties. What I would like to see—and this is our party's policy—is 25 per cent of the royalties going back into the regions where the wealth is created, so we can start to grow the economies of those rural, regional and remote parts of Australia. If we can do that it will be a step forward, but how that money is spent will be only one aspect of it. The other side of that coin is: how do we encourage businesses to locate in those regions, create jobs, grow an economy and, at the same time, use the royalty money to build education, health and other services that will be required?

I was thinking the other day that if the resources of Kalgoorlie, Broken Hill and Mount Isa were discovered today, those communities would be built on a fly in, fly out model. They would not be the significant communities that they are today. The workers went there, the mines were built there and they grew those economies. It is the fly-in fly-out operations that are hampering one aspect of growth in these resource rich areas. I was looking at Nebraska, in the United States of America, where they have enterprise zones. Through the state of Nebraska, special tax credits are given to qualifying businesses that increase employment and make investments in the area. Nebraska is a very interesting study, because the state has approximately 1.8 million people and, in 2010, 755,000 of those people lived in the rural areas. Something like 80 per cent lived in towns of 3,000 or less, and the balance lived in the capital cities of Nebraska.

We must have a serious debate about the principle of an enterprise zone. I am serious about it, and I think that if we are ever to decentralise this great nation of ours we must start now. (Time expired)

Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to rise to contribute to this discussion on the statement on the tax forum and tax reform. The tax forum last week was an important opportunity for a community discussion on Australia's tax reform journey. It was a national conversation involving more than 200 representatives of community groups, businesses, super funds, investors, academics, professional economists, federal parliamentarians, state treasurers, unions—a whole range of different participants contributing really constructively to where we go as a nation.

There was a lot of discussion about how we can reform the tax system to ensure that it meets the needs of Australia into the future, because we are facing—as the previous member spoke about—a mining boom. But the boom is not being shared equally across this country. That is why the government has moved to look at the minerals resource rent tax to fairly share some of that boom. I will get to that in a minute. Unfortunately, we saw the opposition not wanting to act constructively in this conversation. Instead they wanted to get out and spread negativity and 'no' as usual. While they might be going out there and creating noise, we will get on with the job of actually reforming our tax system. Indeed, we have started that process. Over the past year and a half, we have announced 32 reforms that deliver on directions identified in the Henry tax review, and I would like to commend the Treasurer on his effort to look into this area and start reforming our tax system.

One of the biggest areas, as I mentioned before, is looking at how we can deliver the benefits of the mining boom across our economy, because not all businesses are benefiting from the mining boom. We have a huge pipeline of investment, a huge amount of excitement around this Asian century, but we need to make sure that all Australians benefit from this boom—unlike the previous government, who had $100 billion in excess of revenue from the mining boom mark I and squandered it. They absolutely squandered it. Unfortunately, it does fall to this government to ensure that there is long-term investment from this resources boom. That is why we have said that we will look at our non-renewable resources—resources that we can never get back—and we are going to gain revenue.

This tax will create $7.4 billion over the forward estimates. It will gain that revenue so that we can actually do some important things with it. We can boost superannuation. There is no better way to ensure that we are preparing families for the future than by boosting their retirement savings to ensure that they live a good quality of life in their retirement. This is incredibly important.

The other important thing we are going to do is to cut the company tax rate. Let us be clear: while the Labor government are going to cut the company tax rate, which will help businesses that may be finding it difficult to compete for labour and other resources in a mining boom to be competitive, what will the opposition do? They are going to increase the company tax rate by slapping a levy on businesses to fund their maternity leave scheme, with no thought to the impact of that cost being passed on to families. So rather than helping companies to be more competitive and to expand during this Asian century, they are going to ensure that businesses remain uncompetitive by adding a big levy for them. That is their first plan. We understand there is a patchwork economy, and that is why we want to help business to be competitive. We want to use the revenue from the mining boom to ensure that they continue to thrive.

There are a whole range of reforms, as I said, and we are starting on 32 reforms. The Treasurer made a number of commitments, looking at how we can continue to encourage participation in the workforce, but I would like to finish on this point: while we are being constructive, the Liberal Party are out there with no ideas except one, and that is the one the member for Mayo mooted: to put the GST on fresh food. That is their plan, without any discussion of any of these other reforms. They have one idea, and that is to put the GST on fresh food. That will impact on families in my electorate of Kingston, and I think that is a poor outcome for them. (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

The member for Kingston's contribution was much the same as the others: a lot of noise about no outcome and a lot of aspirational statements with no concrete foundation to them. You would imagine that the purpose of a tax summit would be to discuss and determine some sort of reform with some concrete measures for the future. But, lo and behold, as with most things this government does, it achieved nothing. The increase in the tax-free threshold had already been announced through the carbon tax—which has far greater effects on the economy than any compensation will ever achieve, and no compensation will be great enough for people who have lost their jobs.

This tax forum was just the latest in a long line of forums over the years. In total there have been eight since 1950. The latest prior to this one was the Henry review, of course, which had 130-odd recommendations of which the government succeeded in implementing two. They have announced another 30-odd reviews but, again, there are no outcomes and no practical direction in which way they want to go.

Since this government were elected in 2007, they have succeeded in introducing 19 new or increased taxes. Last time I studied any economic theory, the actual solution to growing your economy and building a stronger economy for the future was not more taxation but less taxation. A recent study by the Cato Institute in the United States bears that out: the higher you make the taxes, the less revenue you generate, because people, particularly at the wealthy end, try to find ways to minimise their tax, because they have the resources to do so. If, however, you lower taxes, your tax revenue actually increases, because there is less incentive to minimise your tax and there is more incentive to grow your business or grow your wealth. I suggest that perhaps this government start to expand the range of literature they read.

The coalition, by way of contrast, are committed to serious tax reform and we have long proven our commitment in doing so. Whilst there has been plenty of debate around the carbon tax and commentary on our introduction of the goods and services tax, the result of the introduction of that was that we reduced the income tax payable by 80 per cent of Australians to such an extent that they paid no more than 30c in the dollar. There are a number of stamp duties abolished, including the stamp duty on the transfer of shares. Given that we have a very active share market and our superannuation funds invest significant amounts in the share market, it helps reduce the cost of our superannuation retirement portfolios.

The coalition, despite the protestations of the government, has a plan for a more productive economy. At the heart of this plan will be the provision of competent, effective and stable government. The coalition will stop wasteful spending, will rescind punishing taxes and will encourage greater productivity and workforce participation. We have been very clear today that we will scrap the carbon tax because that will mean lower prices for electricity, gas and fuel.

In the spirit of debate, let us look at the carbon tax. This is where I have a real concern about the modelling that has been produced. There is the example of a cotton T-shirt and what energy goes into making that T-shirt. Energy is required to grow and harvest the cotton, transport it to the factory, and make, package and transport the chemicals used to bleach, dye or condition the cotton. Energy is used to run the machines on which the T-shirt is processed, it is used to create the packaging materials, it is used to ship the T-shirt to the store and it is used to keep the air-conditioning and lights on in the store. This does not include the energy we require to go to the store to purchase that T-shirt. Given the government's track record in projecting expenses in other things, I have serious concerns that those effects are properly modelled and that the compensation package is even going to get close to covering those costs. (Time expired)

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

I congratulate the member for Forde—not that I agreed with all of the suggestions he put forward but he did actually put some positive ideas forward in his speech. I have to say that listening to the opposition talking about the tax forum over the last few days and today I have not seen much positivity. I have seen quite considerable negativity, as we have come to expect from the opposition. It has highlighted for me what was so special about the tax forum. It was like two days of a patch of blue, two days of sucking in clean air and walking out at the end of it lighter than air because we had two days of some of the smartest people in the country in a room cooperating and talking positively not about themselves now but about what we need to do to make sure that Australia is a prosperous and secure nation in 10 years, 20 years, 30 years and 40 years.

All of us in this House know that we can get stuck in the media spin cycle and get stuck in very short-term issues in this place if we do not work very hard at looking for the long term. This was for me a wonderful opportunity to listen to people whose focus absolutely was on the long-term good of the nation. There were some wonderful examples of that. I should say that in my more cynical moments I think partly it was so positive because the opposition was not there and if they had come in they might have brought their negativity with them. But perhaps I should take some of the positivity from those two days and bring it into this place as well. In the spirit of positiveness and cooperation I will move on.

There were some announcements made at the end by the Treasurer that took some of those ideas raised at the forum and moved them forward. The business tax working group will develop ideas about the tax treatment of losses and ways to fund any changes from business tax and then look at the longer-term business tax reform ideas. The session for the states was particularly interesting and very productive. We had admissions from quite a few of the state representatives that there are taxes at state level that one would call bad. There was talk about harmonisation across states, there was talk about simplification and there was talk about extensive programs through COAG. Again, there was an incredibly interesting and positive discussion about the future, and a recognition that sometimes the simplest tax system for the user is not necessarily the system that the collector wants. But again, there was very open dialogue about that contradiction in the way we put our tax system together, and the need to address it in a very real way. There were even those almost utopian ideas of taking all the land based taxes—insurances, stamp duty, land tax, council rates and capital gains—and trying to find a way to make one harmonised simple system. That is utopia for the user—probably not achievable in my lifetime but certainly a great indicator that people are looking to the future and are prepared to talk absolutely about the way it should be in a perfect world. We should all do that much more often. Sometimes we cannot get there but sometimes we can get a lot closer.

There was also quite a bit of discussion about personal tax. The government's first priority in the personal tax arena is to build on the tripling of the tax-free threshold by increasing the threshold to $21,000 as the budget allows. The first part of that, the increase to $18,000, is part of the clean energy future package, which passed the House of Representatives today. So part of that is now on its way, and a very good thing it is too.

There was a range of other outcomes, from looking at small business complexity to superannuation during the drawdown phrase, not-for-profit concessions, improved tax system governance, and a new centre for excellence in research into the tax and transfer systems. It was really clear from the tone of the discussion through those two days that many people took with them the sense of commitment to the future out into their own constituency. I have no doubt that over the next few years we will see extraordinary contributions from that tax forum flowing through our tax system.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

We have had a million-dollar gabfest on tax reform from a bunch of experts the week before we are introducing the biggest reform that Australia has had in taxation, the carbon tax. It is funny that that was off the agenda. I want to put it on the agenda again. We have passed it today but the people I want to talk to about reform are the electorate. The people in my electorate are saying a lot of interesting things about the carbon tax, this major tax reform. Lynne Kingston of Glenella says that she voted for the Prime Minister at the last election but she will not make that mistake again—because of this carbon tax. There is Alan Zamparutti of Dolphin Heads, who says that the tax has nothing to do with the environment and it should not have gone ahead. Marc Turner of Cannonvale says that while we should be taking reasonable steps to reduce emissions, this tax is going to be inappropriate in the current economic conditions of the world. These are emails that came into me this morning.

Robert Hadley of Mackay says that this does nothing for the environment; it is just a government revenue raising piece. Paula Cooper of Blacks Beach is also opposed to the carbon tax. I have Lisa Hildenbeutel of Glenella who says to the government, 'How dare you do this to the nation?' These are the people who missed out on a say in this major tax reform. They were not invited to any place to come and sit down and talk with the government about this. I have Rachael Halls of Andergrove who says that the carbon tax is going to make costs go higher and not solve anything. Steve Halten of Airlie Beach tells the government that we should be voting no on the carbon tax. Ross and Linda Csincsi of Idalia say that the carbon tax is just a money grab. I have a Chris Bowen of Blacks Beach who feels the carbon tax is more about money and less about the environment. Robert Anderson of Beaconsfield says that this tax is pointless. Dr Greg Canning of Annandale reminds the Prime Minister that she said there would be no carbon tax and tells her to show some integrity. There is a Donna Bloedow of Mackay who says that this carbon tax is just another money grabbing scheme. Yvonne Davis of North Mackay tells the government that they do not have a mandate to bring in the carbon tax. Carol Ward of Rural View is appalled that this tax has not been put to a vote by the people. Olwyn Doyle of Beaconsfield has never seen such a blatant money grab as this carbon tax. John Doyle of Beaconsfield says that he cannot support a carbon tax that drives up the cost of living. Helen Virgo of Glenella wants to know why a carbon tax is being implemented on lives. Grace Veldhuis of Blacks Beach says that this tax will do nothing for the environment. Jack and Diane Dobbs of Proserpine say that this carbon tax should be stopped for many reasons. These are people who have been left out of having their say on this major tax reform. Again, John Daymond, of Slade Point, calls the carbon tax a money grab. Linda Dempsey of North Mackay says that under this carbon tax things are going to get worse. Steven of Seaforth says that the carbon tax will just send our businesses offshore. Paul and Kellee Fogg, of Cannonvale, point out that the cost of living will increase under the carbon tax. Murray Brehaut of Annandale says that the carbon tax will kill off business investment and be a financial strain for all Australians. Bruce Hart of Annandale says no to the carbon tax and tells the government that this will add to the cost-of-living burden that people currently have.

John Beningfield of Wulguru calls the carbon tax a scam. Bill Tuckett, again of Wulguru, says he is opposed to the carbon tax. Delma Coleman of Wulguru says that this will do nothing for the environment. Graeme Lodge of Mackay says, 'Reform as big as this requires a mandate, not a minority government.' Brian Eade of Ayr says no to the carbon tax. Laureen Hearne of Ayr says that Australians do not want this 'wealth redistribution tax'. Matthew Reed of Midge Point wants to know how the government can guarantee that he will not lose his mining job and then his home because of this carbon tax.

Anne Bundesen of Proserpine also calls the tax a money grab. Carley Radel of Mackay says that she is waiting for the next election to axe the government if they do not axe the carbon tax . Peter Ahchay of Eimeo says, again, that it will do nothing for the environment. David Jarrott of Mackay, who is a self-funded retiree says, 'This carbon tax is a "fighting-windmills" exercise.' Trevor Mackenzie of Mackay says that when the government went to the polls the Prime Minister said she would not bring it in and now it has become law. He says that the government do not have a mandate. These are all people who were not heard by the government on the most major tax reform that we have had in this nation, the carbon tax.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

It is with great pleasure that I stand to make my contribution to the statement on tax reform. I would like to congratulate the Prime Minister and the Treasurer for holding the tax forum here last week. It was really refreshing to see a government that is prepared to embrace tax reform and to examine the way that they are going to do things.

From my electorate I could see the excitement as people from business, industry, unions, employers, workers, and members of this parliament joined together to discuss tax reform. Since the start of 2010 the government has announced 32 reforms that deliver on direction identified in tax reviews. It is a great pleasure to see that the member for Oxley has joined us, because the member for Oxley has been very involved, over the period that he has been in parliament, in issues surrounding tax reform. Tax reform is one of the most important issues, I think, facing our society, because unless we reform our tax system—unless we look at doing things differently—there will be a very negative impact on employment and jobs. If the tax system does not keep up with the expectations and needs of our society it will affect our productivity and economy.

I listened to the previous speaker from the opposition. He spent his whole contribution in this debate not talking about the future or what exciting new things can be done to improve the way our economy functions but talking about the clean energy legislation. He referred to it as a carbon tax. He was reading out comments from people in his electorate. I think he missed a unique opportunity. I note that the member for Forde put forward some positive ideas and the member for Maranoa showed that he is a man who can think about the issues and the need to change. That was what the forum was about. It was about embracing the spirit of all the sectors of our community and saying, 'How can we do this better? What outcome could we come up with that is going to deliver a better tax system and a better economy for our country?'

As I mentioned earlier, 32 reforms have been delivered. The first wave was aimed fairly and squarely at responding to the emerging pressures of the patchwork economy and delivering on core directions in tax review. It is well known that we do have a patchwork economy. In the area I represent we have got a strong mining industry, which has seen the economy in the Hunter thrive. But there are other areas that are struggling, and the government wants to look at the whole economy, address the whole issue and address this patchwork economy.

One way of doing that is to get a better return for Australia's non-renewable resources through a profit based tax. Members of the opposition have opposed this. They have opposed any resource rent tax and they have said that they will repeal it if they are elected. I say to the members of the opposition that they need to think long and hard about this. This is mainly foreign companies operating in Australia, dragging out our resources. This is about them giving a fair return for those resources that they are taking out of our country. We want our resource industry to continue to thrive but we want those companies to contribute to our economy.

The other thing that was very, very refreshing that came out of that was the increase of tax-free threshold that was voted through parliament today—which those on the other side of this House opposed—and the commitment that was made at the tax forum to lift that tax-free threshold to $21,000. I congratulate the Prime Minister and the Treasurer for holding the tax forum and for engendering the discussion that took place. (Time expired)

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Last week we witnessed the spectacle of over 200 delegates assembled here in Canberra at a cost of $1 million of taxpayers' money. I suppose that, since this government has already clocked up a combined deficit in just four years of $150 billion, what is another $1 billion to throw away? The tax forum that we had last week was more fitting of a John Cleese comedy—the one where he stood up and said, 'Don't mention the war.' Just as absurdly, at this tax summit there was an order for no-one to mention the carbon tax. After two days of talk, what do we have to show for it? We have a working group. That is it, a working group—another forum, another working group, a lot of promises but absolutely nothing done.

Since we have had a tax forum, it is worth looking at how a tax system will have to work in the future. I was glad to hear the previous speaker talking about the future, because we need to consider how a tax system will work. One thing that we need to do as a nation and as a government is find the money to be able to afford a national disability insurance scheme. This is estimated to cost $6 billion a year.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Are you opposing it?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Absolutely not. We have heard from this government that it is going to take seven years.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Are you going to oppose it?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

What I oppose is the idea that we will have to wait seven years for a national disability insurance scheme. The Second World War was won in fewer than seven years. Carers and kids with disabilities should not have to wait seven years for it. That is something that we need to look at.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Why didn't you do something when you were in government?

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

Order!

Ms Hall interjecting—

Order! The member for Shortland is defying the chair.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Sorry, Madam Deputy Speaker.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Firstly we will need to look at how we are going to clean up the mess of the $150 billion of combined Labor deficits that have been run up in just four years. The interest payments alone on these combined deficits that we are going to need to fund in the future are going to amount to $7.5 billion a year at least. And we have to come up with that $7.5 billion from tax receipts until we start paying back the principal. In fact, it is interesting that those interest payments that we have to make for this wasteful and reckless spending of the last four years are greater than the cost of a national disability insurance scheme. Of course, even if we can get that $7½ billion just to pay back the interest, we also have to look at the principal. We have heard about the great Labor surplus that is coming in 2012-13. Let us just assume for a minute that the planets actually align and we do get that surplus—a grand total of $3 billion. At that rate it is going to take us 50 years to undo the mess of just the last four years.

The other thing where we need to look at how we are going to fund it in the future is the compensation for the carbon tax. We have heard this government promise that the compensation would be permanent. I see some head-nodding over there.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

What?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I can see some head-nodding. Compensation for the carbon tax will be permanent; I believe that is correct. What we have to understand is that the starting price of $23 a tonne goes up and up every year. Therefore, the compensation that we will need to find for this carbon tax also needs to go up and up every year. At $23 we have little more than a money-churning exercise. But, as the carbon price goes up and up and up, if it is to be an effective tax and if it is to change the behaviour that this government talks about then companies will avoid the tax and use other forms of electricity generation. So what will happen is that there will no money going into the pot for compensation but the permanent costs will be there. We have to work out how we are going to fund this shortfall. Then, once we get to the emissions trading scheme, we find that 50 per cent of the cost of buying permits will be sent offshore, so again there is not going to be the money in the pot to fund the compensation. These are massive black holes that we are going to have in our taxation system, caused by this carbon tax. That is why we need to have a closer look at our tax reform. (Time expired)

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Shortland for her wonderful contribution; it is a very timely opportunity as well. Last week was a good week for democracy in this country, and I think having the tax forum was a really positive and good thing to do. Like many people I went there with a view that maybe this would be just another talkfest. That was probably a fair criticism pre the tax forum, but I have to say that after two days I walked away with a completely different view. My view now is not only that this was tax forum absolutely essential, was good for this country, was in the national interest and was an absolute bargain at just $1 million but also that it is something we should look at doing every year. I think we should do that, because there was something that came out of it that really was important. It is important to get all of our community leaders in the one place, in the one room—the government leaders, the state treasurers, the Commonwealth Treasurer, ACOSS, the heads of unions, the community sector—and get everybody together to bang a few heads together, to actually talk about the issues and to say: 'Hang on, if we are all agreed on certain parts, why can't we get through this? What are the barriers? What are the blockages for us actually getting through some of this stuff?' There are significant barriers. Tax reform is not about a switch that is on or off; it is about long-term reform and long-term processes. But if we are ever going to get to that table—if we are ever going to get to that point—then you have to bring people to the table. You have to do it where they are all in the same room at the same time, where they can argue points through and they can say on the public record: 'We're interested. The states want to reform. They want to get rid of land tax; they want to get rid of certain taxes, certain levies, certain fees, taxes on insurance and fees on insurance.' They cannot just do it on their own. This is the great opportunity that is being missed by the opposition: by getting everybody together, Labor and Liberal governments—and that is the beauty about this: you can find new paths and new ways through dialogue, through talk and through listening—if we have a common goal, we will find a way to achieve it. I think that for the bargain basement price of just one small million dollars—it is a lot of money in the scheme of people's lives, but in the scheme of the national government of the Commonwealth it is a very small fraction of our democracy—it is a really good thing that we did that.

Today is a good day to be talking about this because today we heard a lot of calls about democracy. What does democracy mean? Let me tell you what I think democracy is about. It is about accepting the decision of the people. The people always get it right. Australian governments, like them or not, have always been in some way good. We do not always agree. I cannot say I agreed with governments of the opposite persuasion, but I did respect the fact that they got elected. Regardless of how governments get elected, they are the elected government of this country. I respect that process. I believe in the Constitution and in what this place represents. To disrespect that when it does not suit your own agenda is a slap in the face to all Australians—and not just to us, not just to our government, but to the office of Prime Minister. The office of Prime Minister is not about an individual. As we have seen in recent times, the Prime Minister can change. So it is about respect for that office and what it means for all Australians. By diminishing the office of Prime Minister you diminish all future Prime Ministers in that office—and that I object to.

Democracy should be about respecting the office of government. You do not have to agree. You are allowed to argue your point. You are allowed to fight for what you believe in. You are allowed to do all of those things. But the shambles and the disrespect we saw in question time today from people who were bussed in and signed in by the Liberal Party in full knowledge of what these people were going to do shows great disrespect for the institution of democracy and the institution of parliament. This is the sort of stuff we all tut-tut about when we see on the television screen at six o'clock the uprisings in the Middle East and in other countries where they cannot sort out their own internal affairs through proper election processes. Well, in this country we can, and we ought to stick to that.

This tax forum is part of that democratic process. I am not going to gild the lily in terms of how it came about. It came about through an agreement with one of the Independents, Rob Oakeshott—and that is fine. So we got to that place and we had the tax forum, and I think good things are going to come out of it. I am quite happy about what took place. We had more than 200 key decision-makers in this country sitting together and genuinely listening to each other. I really felt there was some genuineness in that room about trying to tackle some of those big and difficult issues that the Howard government, in its 12 years, could never fix—and in another 12 years could still never fix. Unless you bring people together you are never going to get through those difficult issues. I congratulate the government and everyone who participated, because that is what democracy is all about.

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

I stand here today proud to be part of a government that can deliver. I acknowledge the great words of the member for Oxley, who not only put things succinctly but also touched on the importance of our democratic system and tax reform. This tax forum was not just one of those forums where people sit around a room and talk a lot and go away and nothing is done. This was one of those forums that can really see great change come about. We saw this in the chamber this morning with the passing of the Clean Energy package through the House. We have seen it in healthcare reform, we have seen it in delivering for our schools and we have seen it in the Gillard Labor government's commitment to tax reform. Since the start of 2010 the government has announced 32 reforms to Australia's tax system which will deliver for small business, industry, the environment, working families, seniors and future generations—as you can see, the list is long. These reforms include cuts to business tax to help the struggling firms, with a company tax cut and a $1 billion tax break for small business; boosting superannuation and making concessions fairer; as well as promoting participation by tripling the tax-free threshold from $6,000 to $18,200. This demonstrates that Labor delivers.

What we as a Labor government have done is promote inclusion. We have sought to hear from groups and individuals across the country about what they want to see in reforming our tax system. We did this by hosting a two-day tax forum which showed that constructive and positive policy can be achieved when everyone comes along with goodwill. Almost 200 businesses, unions, community representatives, tax experts, federal parliamentarians and state treasurers came to the forum to have a meaningful and productive conversation about the direction of our country's tax system.

Among our other achievements, a few that stand out in my mind are those proposed in the 2011 budget, including plans to increase from 15 to 30 the number of hours people on a disability support pension can work and still retain access to their pension; the introduction of an immediate write-off for the first $5,000 of the cost of a motor vehicle for small businesses; the establishment of the Australian Charities and Not-for-profits Commission; and better alignment between family tax benefit part A and youth allowance. What is more is that Labor recognises that not every family or every individual is the same, which is why we have sought reforms which cater for the different needs of different Australians. We have improved participation incentives by delivering personal income tax cuts of $47 billion in our first three budgets. We will free over one million low-income earners from needing to lodge a tax return. We will make tax time simpler by introducing an optional standard tax deduction for work related expenses, starting in 2012-13, starting at $500 and increasing to $1,000 in 2013-14. We are increasing the superannuation guarantee age limit from 70 years to 75 years, helping mature workers remain in the workforce.

We have increased the childcare rebate from 30 per cent to 50 per cent of out-of-pocket costs, as well as delivering a historic increase in pension rates. We have introduced a new work bonus to reward age pensioners who do part-time work. These are great Labor initiatives and reforms.

In five minutes I simply cannot cover the extensive list of reforms this Labor government have committed to in such a short period of time in government. We have made those commitments to ensure that we are governing for all Australians, that we are the party for all Australians, whether from regional, remote or metropolitan areas. Whether they are in the workforce or retired, we as a Labor government are committed to delivering the important tax reforms needed to take this country forward.

I am proud of what this government has committed to, but more importantly this government is committed to making the tough decisions now and into the future, whether it be on climate change—as we saw in this House this morning—whether it is introducing a minerals resource rent tax to help business to increase superannuation for people's retirements and investing in infrastructure in our communities, investing in education and health, assisting those most in need and strengthening our economy.

This Labor government is up to the job. We are committed to tax reform; we are committed to delivering for the people of Australia. We have proved that today, we have proved it in the reforms that we have delivered since coming into government in 2007, and we will continue with that commitment to the Australian people.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

'Outcomes, outcomes, outcomes, outcomes'—that is how the member for Lyne opened his comments or should I say his ramble as part of his opening address to participants at the two-day tax forum last week. At least, he did not take 17 minutes to say it.

The summit was partly the member for Lyne's idea. It was part of his list of demands to support a Labor minority government following last year's federal election—and we all know how that government has panned out over the past sorry 14 months or longer. Goodness knows, if we have to put up with it for much longer, the taxpayers of this nation are going to be further cruelled, the family incomes will be further hard hit and many of the large businesses will become small businesses. Labor says it is a government for small business; that is because when they came into power in 2007 these small businesses were probably medium to large businesses.

I liked the comments of the economics editor of the Sydney Morning Herald, Ross Gittins, on 5 October about the tax forum. He said:

Sorry, but the tax forum reminds me of nothing so much as a bunch of kiddies lining up to sit on Santa's knee and whisper into his ear what they'd like for Christmas. Dream on, kids. The harsh truth is that neither the federal nor the state governments are in any position to simply cut this tax or that. They're all struggling to get their budgets back to surplus.

We hear the federal Treasurer so often say how he is going to get the budget back to surplus. I do not know who he is trying to kid; I think he is dreaming.

Mr Van Manen interjecting—All they got was hard boiled lollies.

Absolutely. Hard boiled lollies indeed. Mr Gittins went on to say:

So one of the ground rules Wayne Swan laid down was that all proposals for tax reform had to be 'revenue neutral' - if you cut one tax you have to increase another by the same amount. You'd like to pay less income tax? No probs - we'll just increase the rate of the GST to cover it. Or maybe we could increase the rate and remove the exemptions for food, education and health care. That would make the GST a far more robust revenue-raiser.

But the trouble with last week's tax summit or forum—call it what you like—is that the big ticket item, the carbon tax, which unfortunately passed through the lower house this morning, was not on the agenda.

The biggest taxation reform that this country has ever faced was not on the agenda of the tax forum and nor was it put to the people prior to the last election. It was not on the Prime Minister's agenda when she said, 'There will be no carbon tax under the government I lead.' Then, of course, we had that spectacle of the Prime Minister, the climate change minister, the Greens and the Independents lining up just a few months later saying that they were going to introduce a carbon tax. I say to them, as does the Australian public say to them: shame on you. One million lower income and part-time workers earning up to $18,200 a year will get to keep every dollar they earn without paying tax, while up to one million higher income earners on more than $80,000 a year will bear the brunt of the Prime Minister's price on carbon. Two days, 200 people and one million dollars, and the best this government's tax summit could do was to set up another committee and another review. This is in the year of decision and delivery. I mean, decision and delivery! What a joke. What a disgrace.

This government's idea of tax reform is to introduce—wait for it—new taxes. The member for Moreton knows this full well. To date, Labor has introduced and increased many taxes, including two big new taxes on mining and carbon. This government cannot name one tax that it has abolished—not one. It certainly cannot name a tax it does not like, because we all know, as the Treasurer said in his budget earlier this year, this is a typical Labor budget. Indeed it is a typical Labor budget. We all know how Labor likes to tax. The reason it likes to tax is that it loves to spend, and the reason it loves to spend is that most of the members on the Labor side of politics are ex-bureaucrats or ex-union hacks who have never had to run a small business. They have never run a small business, and they have never had the fear of not knowing where their next pay packet was going to come from. They have never had the fear of not knowing whether they were going to be able to put food on the table. All this government knows about is taxing. All they like to do is to rip the money away from farmers and families and good hardworking Australians. They do not back the people they espouse to back, the workers, but we on this side will. (Time expired)

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

It is always good to have you in the chair, Mr Deputy Speaker Murphy. I welcome this opportunity to address tax reform in this parliament and congratulate the Treasurer on convening a successful tax forum last week. It was great to see real policy debated, competing parties politely presenting competing ideas. See, Alan Jones, it can be done! You do not have to yell loudly. You can actually put your point of view forward politely.

All Australians know that we cannot bury our heads in the sand and pretend that our tax system is perfect. Neither can we pretend that there are no inefficiencies or inequalities in the system. I heard the member for North Sydney very quickly pooh-pooh the forum because he does not want to be part of the constructive conversation to better our economy. This is the same shadow Treasurer who refused to talk about economics after the budget and today oversees a $70 billion black hole in coalition policy. Meanwhile, Treasurer Swan convened a tax forum which showed just how positive discussions on tax reform can be when people come together with good will for the good of the nation.

It was not just politicians but also around 200 business, union, community representatives, tax experts and state Treasurers—Liberal and Labor—who came together. The forum provided a frank and open discussion on everything from business taxes, state taxes, personal taxes through to GST distribution and taxation governance. I particularly commend the contributions of my Queensland Treasurer, Andrew Fraser, and his Liberal counterpart from New South Wales, Mr Baird. These discussions and ideas will inform rational public debate as we continue to sensibly reform our taxation system.

Already the Treasurer, Mr Swan, has announced a business tax working group to review the tax treatment of losses and to look at longer term reform. Queensland and New South Wales state governments will come together to put political differences aside to develop a plan for long-overdue state tax reform. And the Labor government will also work to further increase the tax free threshold to $21,000—a boon for the hardworking lower paid people in our communities. The Gillard Labor government continues to deliver major reforms to our tax system because we know how important it is to modernise our economy. That is why the Treasurer commissioned the Henry tax review. In fact, over the last two years we have delivered 32 reforms in response to the sensible recommendations of the Henry tax review.

First the Rudd and now the Gillard government are following in the steps of the Hawke-Keating governments in driving reform. That is what the Labor Party does. There is no better case in point than the introduction of superannuation. Millions of Australians now rely on superannuation for their retirement. In many respects it is taken for granted today, but it was not introduced without a tough fight from the then coalition opposition. They lacked the courage to introduce tough reform then and they lack courage today. I hope for more ticker from the genial morning TV champion, the member for North Sydney, but I am starting to think that he might be all grin, no grunt.

I know it is pretty hard for the opposition to comprehend legislative reforms that are not about shoring up the short-term electoral cycle, but we must act in the best interests of our nation's future for the long term. Our reforms are about responding to the unique needs of our patchwork economy: reforms like getting a better return for Australians from the non-renewable resources that they own through a profits based tax; cutting business tax to help struggling firms with a company tax; and a billion-dollar tax break for small business. Big business and small business, all will get a cut—but they would actually get an increase under Mr Abbott's plan for maternity leave. It would be a 1.9 per cent increase. There are reforms like better preparing for an ageing population by investing in higher superannuation contributions, and promoting workforce participation by tripling—yes, tripling—the tax-free threshold from $6,000 to $18,200.

Of course, yesterday and today the parliament passed the historic Clean Energy Future package, surely a momentous day for the future of this nation, for our children and for our children's children. All those with vision recognise that. For the first time, the Australian economy will include a price on pollution. This major reform to our economy will facilitate a shift to a low-carbon future and also position Australians to embrace the clean energy jobs of tomorrow—a point made very deftly by the member for Wentworth, Malcolm Turnbull, in his speech overseas. He had to go that far away, to London, to be able to make the point that the Chinese are stealing a march on us already in some of these low-carbon future jobs. He wants Australians to be better positioned, and thankfully we have brought in the legislation today to make sure that that occurs.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak briefly on the important topic of tax reform. Let us give credit where credit is due. If there is one thing in which this government has a competitive advantage, if there is one thing in which this government has a superlative track record, if there is one thing in which this government has not been bested since Federation, it is in its capacity to convene forums, summits, reviews, inquiries and roundtables. The critical success factors are many. It is good to have a celebrity or two. If Kate or Hugh are available, that always adds to the magic. It is terrific to have some whiteboards, some butcher's paper, some focus groups, to really thrash through the ideas. But there is one critical success factor above all others when it comes to this government's unsurpassed expertise in summitology, and that is to ensure that you do nothing at the end of the exercise, because to do otherwise would be a most unfortunate misunderstanding of the purpose of the exercise.

I am sorry to say that in last week's tax summit—according to some; Tax Forum, according to others; tax non-negotiable, no liability, no responsibility accepted, informal exchange and interaction, according to others again—none of what was achieved has lived up to the promises. Sadly, we have seen once again the track record of getting people together and getting the media announcement but getting very little of substance to emerge. That is a matter for considerable regret because we clearly have a serious need to revisit the structure of our tax system here in Australia.

We had a tax summit which remarkably had many of the major issues ruled out from discussion immediately. The GST, the Treasurer said, was off the agenda. Carbon tax was off the agenda. The mining tax was off the agenda. And we had a very, very odd process in getting to the establishment of this exercise, starting with another summit, the 2020 Summit. Then we had the root-and-branch tax review, which the government did its best to ignore, and then the member for Lyne insisted that this grouping be convened. There are a range of serious issues that we could very usefully address when it comes to thinking about our tax system. We need to recognise that we are a relatively high taxing country in a relatively low taxing region. Many of the Asian countries with which we compete and which are part of the growth segment of the world have materially lower personal income tax rates than we do here in Australia. Many of those countries, for better or worse, do not have an expensive, full-service, Western world type social security system to fund as we do here in Australia. We need to recognise that capital is footloose and that one of the issues that is considered as capital and is allocated internationally is the tax system of various countries. If we want to be an attractive venue for international investment we need to make sure that our tax system is internationally competitive and is attractive to foreign investors.

Another reality of the tax system is that there is an inevitable and necessary nexus between how much you spend and how much you tax. Regrettably—though unsurprisingly, perhaps, under a Labor government—there was very little talk at the forum about containing spending and very little talk about getting the deficit down so that we can start to reduce the debt and we are not immediately spending the first $7 billion, $8 billion or $9 billion a year that is collected in tax in paying interest on debt. There was very little talk about those issues, and that is a matter for regret.

The other area that I want to talk about very briefly in the time left available to me is the superannuation system and some of the very perverse tax incentives which apply under that system. There are contribution limits that have been set by this government which make it now impossible to contribute more than $25,000 a year for those below the age of 50 and $50,000 for those above, and, in the latter case, you must also meet the second condition of having an existing balance of less than $500,000. There are extremely punitive tax rates if you inadvertently exceed those limits which can get up the high 90 per cent range—an extraordinary, inefficient, inequitable, ramshackle arrangement. So let us simplify the arrangements where people have made excess contributions and let us look at ways of making it easier for people to accumulate contributions, particularly where they have not used their full limit in one year. That would be a sensible thing to do.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

It was my pleasure last week to participate in the Australian government's tax forum, a forum designed to continue the important conversation about how to build a better taxation system in Australia. This forum, of course, does not sit in isolation. This government commissioned a once in a generation taxation report in 2009. The Henry review reported back with a range of important recommendations which this government is pursuing. In my own submission to the tax forum, I argued that among the core principles for tax reform should be the following: taxes should be shifted from mobile tax bases to immobile tax bases, taxation of savings should be more neutral and sustainable, polluters should internalise the social cost of environmental damage, disincentives to labour force participation should be reduced, and the tax system should be as simple as possible.

The Gillard government is delivering on each of these priorities. We are cutting business investment taxes and introducing a mining tax. We are increasing the compulsory superannuation contribution rate. We are putting in place a carbon price with the historic vote in the House of Representatives today, and we are reforming the fringe benefits tax regime on cars to remove the incentive to drive excess kilometres. We are reducing disincentives to labour force participation by phasing out the dependent spouse tax offset and simplifying the tax system by tripling the tax-free threshold—taking one million people out of the tax filing system—and replacing the ineffective entrepreneurs tax offset with more straightforward measures, such as an improved instant asset write-off.

There was a serious and substantive discussion of tax reform at the forum—not including the sorts of comments that we heard from the member for Bradfield, who claimed that Australia is a heavily taxed nation. That is an odd contribution for two reasons. The first is that the tax take has fallen over recent years. The second is that, even when it was higher than it currently is under the former Howard-Costello government, the then Treasurer, Peter Costello, was reported as saying that Australia was a lightly taxed country, one of the most lightly taxed countries in the OECD. So it is clear that whether or not Australia is a heavily or lightly taxed country for those opposite depends more on which party is in power than actually looking at the hard statistics.

There was a range of issues canvassed at the forum. There was discussion over who bears the corporate income tax. Ken Henry persuasively argued, along with Greg Smith, another member of the Henry review panel, that ultimately the burden of the corporate income tax in a small open economy like Australia's falls on labour. There was a discussion of the treatment of losses and potentially a shift towards an allowance for corporate equity. A working group that will look into that issue has come out of the forum. There was discussion of federal-state tax reform and many of the inefficiencies caused, particularly in an economy in which we want to encourage workers to move to the most productive industries and regions, and the discouragement to mobility caused by state and territory stamp duty. There was discussion about the challenges in Australia in which people face volatile shocks caused by natural disasters or changes in circumstances and the fact that state and territory insurance taxes discourage people from taking up insurance.

There was also a discussion about the importance of simplifying the personal tax system, an issue I have written on as an ANU professor: arguing that the government should do everything it can to try and ensure that to the largest extent possible we take people out of the system. It should not be the case that three-quarters of Australians require professional help to file their return. The government's tripling of the tax-free threshold, moving a million people out of the tax-filing system, is critically important. I also commend the decision to fund an independent Tax Studies Institute and would encourage people to donate to the institute.

Finally, I would like to pay particular tribute to the academics who attended the tax forum. Many others who were representing interests were being paid for so doing. That was not the case for the academics and tax experts. I would like to pay particular tribute to Sue Richardson, Saul Eslake, Nicholas Gruen, Harry Clarke, Alan Duncan, John Freebairn, Deborah Cobb-Clark, Chris Evans, Peter Whiteford, Frank Stillwell, Dale Pinto, Ric Simes, Judy Yates, Flavio Menezes, Kerrie Sadiq, Richard Eccleston, Paul Gerrans, Robert Carling, Ross Garnaut, Ian Winter, Bruce Cohen, Graeme Cooper, Richard Highfield, Ann O'Connell, Miranda Stewart and Neil Warren for their participation in the forum. (Time expired)

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

It is interesting to hear from my colleague across the chamber on another litany of self-congratulation on tax reform. Today especially, to congratulate themselves on what is going to be an economy-wide crushing tax that they have passed, based on an untruth told to the Australian people before the last election, is a real disgrace and they should hang their heads in shame.

Wayne Swan, the Treasurer, has talked very big on tax reform. At the 2020 summit, which was the first big summit that was meant to be the big brains and ideas trust of the Rudd government, now the Gillard government, the big idea out of that was to have the Henry tax review. We had the Henry tax review. It was a review that cost the Australian people, as I understand it, around $10 million. It took two years to complete and delivered 138 recommendations. It was a review that was meant to be a full root and branch review that the Treasurer was then going to implement. Did he implement it? No. There have been about 2½ recommendations of those 138 that have in fact been implemented. The rest have been left to sit there ignored on the sidelines. So it is hardly root and branch tax review.

This is something that the government is very sensitive about because the Henry tax review received over 1,500 submissions. It did take a significant period of time to complete and when it was completed the Treasurer sat on it; for 1½ years it did not see the light of day. So this is hardly a reforming government when it comes to tax. Far from it. This government believes that tax reform is synonymous with bringing in new taxes. The record of this government is very weak.

I would just like to touch on the tax grabs of this government. We have had 19 new tax grabs since 2007, including: the alcopops tax, raising $3.1 billion over four years for the government; a new tax on Australians working overseas, expected to raise for the government $675 million in revenue; cutting what Australians can put into superannuation tax-free, which is going to get the government $2.8 billion over four years; and restrictions on business losses that is going to generate for the government a revenue of about $700 million over the forward estimates. And it goes on and on: changes to the employee share scheme, a hike on cigarette taxes of about 25 per cent, the imposition of a mining tax, ethanol taxation increases, LPG excise increases, tightening restrictions on medical expenses before you can claim them on tax, an increase on the luxury car tax, a new flood levy, a tax increase on company cars, the abolition of the entrepreneurs tax offset, the phasing out of the dependent spouse tax offset, disallowing deductions against government assistance payments, removing miners' eligibility for the low-income tax offset on unearned income, deferral of tax breaks for green buildings and, of course—the big one—the great big new carbon tax, passed in the House of Representatives today.

The government's record is very poor. We know that their carbon tax is going to be a $9 billion a year tax for the first three years and is only going to go up and up, costing Australian households around $860 per year. But we know the ambition for this is that it will not be $23 a tonne, because the Greens let the cat out of the bag when Senator Hanson-Young said she would like to see it go as high as $100 a tonne or even higher.

Our record is very different. We believe that tax reform has to be genuine. We believe that it needs to be lower, simpler and fairer, and our record under Treasurer Peter Costello demonstrates that. When the GST was introduced, it removed inefficient state taxes. It reduced personal income tax rates as well, such that 80 per cent of Australians are now on a marginal tax rate of 30c in the dollar. This is in fact a real tax achievement. This is real tax reform. Treasurer Wayne Swan could learn a thing or two from former Treasurer Peter Costello. We urge him in fact to look at what a real reformer does. We urge this government to reform taxes.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to endorse the statement by the Treasurer this morning on tax reform and add my own comments in support. In doing so, I would like to focus on one critical area of tax reform and the economy—that is, superannuation reform. On Monday, with Minister Mark Butler, I hosted a forum 'A conversation about aged care' in Blacktown. The attendance there was phenomenal—the number of people who are nearing retirement age or beyond retirement age who are very concerned about not only their social wellbeing but also their retirement incomes. The importance of this cannot be underestimated. As the Treasurer mentioned in his remarks, one of the central thrusts of the tax review included saving for some of the gains and preparing for an increasingly ageing population by boosting superannuation and making concessions fairer. One of the announcements by the Treasurer following the tax forum was to examine potential reform for superannuation specifically during the drawdown phase.

As a government, we recognise the importance of longevity risk in the context of our retirement income strategy. We are committed to working with the industry leaders on this critical issue, as we have been to date, and identifying ways we can improve people's incomes after retirement and during the drawdown phase. We recognise that today a majority of Australians who reach retirement access their superannuation as a lump sum. Together with the superannuation industry, we need to encourage and remind people that there are benefits associated with the option of taking an income stream rather than a lump sum on retirement.

Without wanting to single out any superannuation providers in particular, on this occasion I want to mention Challenger as a great example of a life insurance company that recognises the importance of an attractive income stream for their products, such as annuities, available to Australians on retirement. I note that Jeremy Cooper, the architect of the Cooper review into superannuation and many of the proposals that feature in the government's stronger super reforms that were recently announced, is now driving some of these very important initiatives.

Ongoing reform of superannuation is not an option for Australia; it is essential. I note the transcript of session 4 of the tax forum, dealing with transfer payments and comments by Everald Compton, chair of the panel 'The economic potential of senior Australians', about how impressed he was that the Treasurer wanted a focus on the year 2050 and how Australia should be organised for the impact of our ageing population on our economy. These are the interesting statistics. Mr Compton noted that by this time—by 2050—the largest age segment of the population will be the age group between 85 years and 100 years and it will also be the fastest-developing segment of the population. So, in this context of the need to implement superannuation reform, I also note today the release of the latest Melbourne Mercer global pension index, which warns that, while Australia's retirement income system has climbed from fourth to second in the global comparison of pension income systems—that is recognising globally how well Australia performs in its retirement incomes policy compared to the rest of the world—we still require significant reform to help Australians secure sufficient retirement savings and to financially support this ageing population.

The report's author, Dr David Knox, commented that the best pension systems adopt what he refers to as a 'multipillar approach' to spread long-term risks between government, employers and individuals. His comments on this point are very enlightening:

Australia is very much in reach of becoming the first in the world to receive an A-Grade score—

in the index—

if we can address the issue of adequacy by raising the level of compulsory savings via superannuation and continue reforms to reduce costs …

For this reason, the government's policy is to lift the rate of superannuation from nine per cent to 12 per cent. That is why it is so important. In parliament this is an area where views are really at polar extremes. Everyone—the superannuation industry, workers, retirees, participants in the tax forum, independent modelling such as I just mentioned—accept and endorse the need to raise the rate of superannuation contributions from nine to 12 per cent. Everyone, that is, except the opposition. What hypocrisy. Those opposite enjoy parliamentary entitlements that far exceed the contribution currently enjoyed by most Australians. It is disgraceful how many of those opposite who were elected to government prior to 2004 enjoy defined benefits and notional contributions well in excess of the proposed 12 per cent, but they are so miserly, so politically motivated that they will not give workers the entitlements that they should be getting, an increase from nine to 12 per cent. They should hang their heads in shame. (Time expired)

Gai Brodtmann (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

Taxation remains one of the most controversial areas that any government or indeed any parliament must deal with. It is a fundamental responsibility of government to create and maintain a fair taxation system which meets the basic principles of equity, efficiency and simplicity. Taxation is essential if a government is to discharge its responsibilities. It is essential if we are to maintain defence of the nation, to ensure our citizens are protected from harm and to ensure that the social services that modern Australians have come to expect from their governments are continued. I would share with many others in this place the sentiment attributed to the American jurist Oliver Wendell Holmes Jr: 'Taxation is the price we pay for civilisation.' This is literally true. Without the protections and structures afforded by government, civilised society would not be possible.

I should make a disclosure: while I have no difficulty in paying my fair share as a citizen, as a former small business operator I did not always enjoy the process of complying with my taxation obligations. It was at times very complex and very difficult to comply. It really did add an extra burden to a busy business and cause many headaches—and thank you to my tax agent.

Designing a simple tax system that meets the needs of government to provide essential public services while at the same time making it the least burdensome it can be on the taxpayer, in terms of paperwork and red tape, is not easy. For this reason tax reform is an ongoing process. By 'tax reform' I refer not only to the major reforms, such as the mineral resources rent tax, but to the ongoing patient work of improving the taxation system to make it clearer and easier for taxpayers to comply. But beyond these aims we must always be conscious of the effects of taxation systems on important social objectives and, for example, there is a constant focus on making sure that the taxation system does not create disincentives, to moving on from the welfare system, by minimising the unintended high effective rates of taxation that can occur.

It was a little over a year ago that I ran my own small business, so I know very well the stresses that come with owning and running a small business, a microbusiness. I know the burdens that tax and red tape can impose on the operations of smaller microbusinesses. In my case, I was a sole trader so I had no-one else to help me in dealing with my taxes and with my obligations, apart from my wonderful tax agent, so I always welcome measures that make it easier for small business and microbusiness owners to comply with their taxation obligations and to be able to do it themselves, rather than having to be constantly on the phone to a taxation agent.

The Labor government has made many such reforms and improvements to benefit microbusiness and small business owners and all taxpayers. We have made changes to the PAYG system to reduce the PAYG instalments for the 2011-12 income year for taxpayers, who pay quarterly instalments on the basis of the GDP adjusted notional tax method. This frees up some $700 million in cash flow from Australia's 2.7 million small businesses. We have also increased the instant write-off for assets bought by a small business to $6,500 and have introduced an immediate $5,000 deduction for motor vehicles. While these are not big-ticket items like the mineral resources rent tax, which captured the headlines and public debate, they make a big difference in the everyday lives of Australians and in the everyday lives of microbusinesses and small businesses.

Another reform passed by the House this morning and opposed by those opposite will take the tax-free threshold from $6,000 to $18,200 in 2012. This will increase to $19,400 in 2015. I am greatly encouraged by this because I think it will greatly encourage women to re-enter the workforce, particularly those who are at home at the moment with babies or small children. It gives them more encouragement to participate in part-time work. This reform that we passed today in the House of Representatives, again resisted by those opposite, will mean that some 100,000 Australians will no longer have to lodge a tax return. That is an amazing achievement. This reform also means that all Australians earning up to $80,000 a year will receive a tax cut. However, this is not the end of the discussion, and I do not think there can ever be an end to a discussion on tax reform. It may never be possible to build the perfect tax system, a system that fairly shares the burden of a civilised society, but I believe this government has the courage to—(Time expired)

Kate Ellis (Adelaide, Australian Labor Party, Minister for Employment Participation and Childcare) Share this | Link to this | Hansard source

I was really pleased to be able to attend last week's tax forum and to see firsthand this government working to continue to engage with the community on the important issues before us. As we have seen today, we have a proud record of taking on reforms, and it was refreshing to engage with such a broad cross-section of different organisations to talk about some of the big issues of the future. I want to briefly address a couple of the issues which did feature prominently in the sessions that I attended. We saw quite a large discussion about the impact of mature age participation in our workforce. We saw contributions from Everald Compton, who was celebrating his 80th birthday on the day and I pass on my birthday wishes as well, from Ian Yates, the CEO of the Council on the Ageing Australia, and from Judith Sloan, the Chair of National Seniors Australia. We know that these important organisations have been working to address these challenges, which are challenges this government takes very seriously. We are well aware that this year the first of the baby-boomer generation becomes eligible for the age pension, so the time for talking about the future ageing of our population and workforce is over. It is happening right now and our government is responding right now to these challenges. It is perhaps a little-known fact that, whilst the unemployment rate for mature age people is low at 3.5 per cent, when older Australians do happen to lose their job they are at much greater risk than young people of experiencing long or very long-term unemployment. A loss of dignity and income through forced early retirement is not something this government is prepared to accept. We are serious about removing the barriers that prevent older Australians who want to work from participating in the workforce, including the barriers presented by negative employer and community attitudes. We saw just recently the government's appointment of an Age Discrimination Commissioner in order to address some of these issues.

We know that the willingness of Australians to work for longer is a strength, and it is an opportunity that we need to harness. We need to ensure that these mature age workers are properly supported. This is central to the challenge of the ageing population that we all face. Our economy is strong, unemployment is relatively low and the demand for skilled workers is unprecedented. So last week's forum did provide a positive discussion in relation to mature age workers and how we can increase the number of mature age people taking advantage of the growing opportunities in the job market.

We know that these challenges and barriers remain—employer attitudes, individual expectations—but the fact is that mature age workers bring opportunities and benefits to the workplace, including a strong sense of loyalty and of reliability, and insight built up over many years in the workforce. Our government is working hard to break down those barriers and we have announced our Delivering for Seniors package, which includes $100 million in new commitments for mature age people. It includes $30 million to provide up to $4,400 in grants to employers to help mature age workers aged 50 and over who have trade skills but no formal qualifications to undertake skills assessment and gap training. This builds on our Experience Plus program, which benefits mature age workers, job seekers and employers by allowing up to $4,950 for employers to train their mature age workers to supervise or mentor apprentices or trainees and to provide practical help to support and retrain mature age workers whose jobs are at risk due to a health condition, an injury or a disability. It helps to support and retrain mature age workers who are in priority employment areas and in physically demanding roles or who have been made redundant, and it also provides a free telephone based career advice and resume appraisal service for all Australians aged 45 or over.

I am pleased to report that the take-up of the Experience Plus programs continues to grow, with over 4,700 people now participating in programs since it commenced and some of the programs booked out up to two weeks in advance. The government will continue to work with the Consultative Forum on Mature Age Participation to work with the stakeholders who made their views clear at the tax forum last week and to ensure that we continue to work hard to place jobs as a priority of this government. That includes making sure that no-one gets left behind and that we look after the interests of mature age workers and mature age job seekers, who have so much to contribute.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to contribute to this debate because what we saw in the last fortnight, in almost complete contrast to a lot of the public debate that has gone on over the last nine months, was the Australian government, the capital and many of those who comment on it focusing on the core issues at the centre of Commonwealth government—that is, economic management and the importance of the system of taxation to economic management, and I for one welcomed the opportunity to be involved in those discussions.

The tax forum was able to have a mature debate around some of the long-term challenges that we face in our tax system. Our system of tax is not only the means by which we raise revenue for the important government services and programs that Australians elect Australian governments to deliver but also an important way of regulating behaviour. We have seen that in the area of smoking and energy use, but we also see that in this government's determination to ensure that our tax system creates incentives to work and incentives to generate wealth through business. I am very pleased to be part of a government which has had tax reform at the heart of its agenda. Since the start of 2010, the government has announced over 32 reforms that deliver on directions that have been identified in the Henry review of taxation, including ensuring that we as a nation get a better return on our non-renewable resources through the minerals resource rent tax; providing cuts in business taxation to help struggling firms with a company tax and a $1 billion tax break for small businesses; preparing for the challenges of an ageing population, principally by boosting superannuation but also by putting in place record increases to our pension system; and, finally, by promoting participation through increasing the tax-free threshold, initially from $6,000 to $18,200—although at the conclusion of the tax summit the Treasurer indicated a clear intention from this government to further increase the tax-free threshold to $21,000.

That issue alone is one that will have an enormous benefit for the workers within my electorate because, on my analysis, there are over 49,000 people who have an annual income of less than $21,000, and the increase in the tax-free threshold from $6½ thousand to $18½ thousand and then further to $21,000 quite simply means more money in their pockets, so it is an incredibly important reform for us and one that we surely welcome. It adds to the three rounds of personal income tax cuts worth over $47 billion that we have already been able to deliver in our first three budgets. Quite simply, this means that people have more money in their pockets to assist them to put their kids through school, put food on the table, pay the rent or the mortgage and deal with cost-of-living pressures.

If there is one threat to all of this, it is the threat presented by those opposite in their plan to recklessly roll back the Clean Energy Future legislation, which has included within it a record increase in the low-income tax threshold. As I said earlier, there are over 49,000 people in my electorate who will avail themselves of this, and what those opposite are proposing is a direct hit to their livelihoods and it should be rejected with great vigour. I welcome the opportunity to have made a brief contribution to this debate.

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

I would like to thank all of the speakers who have commented on the tax forum thus far. Last week, the Gillard government convened a forum of almost 200 people here in our Parliament House in the nation's capital to discuss the next steps in tax reform. It proved to be a sophisticated, level-headed, constructive dialogue. It showed we can have a gentler form of debate about our economic future when the belligerent political cynicism and negativity is out of the way. It confirmed that we should be optimistic about our future, even while being realistic about some of the considerable challenges which lie ahead.

We drew together representatives from across our nation and we heard views articulated from the perspectives of the boardroom and the factory floor, small business and the not-for-profit sector, academia and the kitchen table. No topic was off limits for attendees and the conversation covered a broad range of ideas. We did not all agree with each other—it would have been pointless and sterile if we had—but I have to report that we did find areas of common ground across longstanding political and ideological divides. We will progress a number of these issues coming out of the forum as part of the second wave of tax reform.

Tax reform has been a central part of the Labor government's economic agenda since we were elected in 2007. After those long years of conservative neglect, we have a plan and it is being implemented. Certainly Australians had seen largesse, bankrolled by the windfall gains of repeated revenue upgrades from mining boom mark I during the Howard years, but Australians had not seen anything approaching real tax reform, I suppose, since the GST for all those long years until we were elected. It was Labor who commissioned Australia's Future Tax System Review, chaired by Ken Henry, to reinvigorate the tax reform debate, to give us a good economic story and theory of direction and purpose. Having received the tax review, we set about a broad and ambitious agenda of tax reform. Of course, one of the key issues is our response to the pressures of a multispeed economy. We have adopted several of the thrusts of the tax review. One is that we get a better return for Australia's non-renewable resources through a profits based tax. Another is cutting business tax to help every incorporated enterprise in the country with a lower rate of corporate tax, and a billion-dollar tax break for our hardworking small businesses. Thirdly, we have saved some of the gains to prepare for an ageing population by boosting superannuation and making the concessions fairer. Fourthly, in very recent times we have been promoting participation by tripling the tax-free threshold from $6,000 to $18,200, and the Treasurer has said that we will look at increasing this further in the years ahead. Fifthly, of course, we have implemented significant tax cuts, which see the person earning $50,000 today paying $1,750 less tax than they were paying when the Howard government was in. Indeed, even with the flood levy, which is very important, we are seeing people on $80,000 who are paying $1,400 less tax than they would have been paying back in 2007.

We have implemented a tally of 32 of the Henry review reforms already. We are doing this at the same time as keeping tax, as a share of the GDP, well below those high levels that we inherited. This year tax is expected to be 21.8c in every dollar of our GDP, well below the 23½c that we inherited from the other side.

In conclusion, at the forum we were focused on the future. We recognised that parts of our economy are under significant pressure and that responding to the forces of an economy in transition has to be our priority. There were different ideas on how to respond. There were different views about what should be the form of tax changes, but there was consensus, such as targeting measures improving the tax treatment of losses, and consensus about the best way to develop these ideas through a collaborative working group.

At the end of the forum, the Treasurer announced a business tax working group chaired by Chris Jordan. We will look at the losses of business and we will fund changes from within the business tax system. We will look at equity deductions and compare them to alternatives like changing the rate. We have a plan for the states to work together. We have discussed reform for the not-for-profit concessions, the rules governing superannuation annuities and a new centre of research excellence, and we will be establishing our tax system advisory board. This forum showed that when we gather people of goodwill, even if they have differing ideas, we can accomplish far more, and we encourage the opposition to join the reform locomotive. (Time expired)

Main Committee adjourned at 17:48