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

by leave—I move amendments (1) to (3) together:

(1) Schedule 1, page 13 (line 15), omit the heading.

(2) Schedule 1, item 12, page 13 (line 16) to page 14 (line 29), omit the item.

(3) Schedule 1, item 14, page 15 (lines 6 to 8), omit the item, substitute:

14 Application

The amendments made by this Schedule apply to income years starting on or after the day this Act commences.

As I have previously outlined, the coalition are opposed to the retrospective application of this bill and we do not believe that the government has a strong enough justification for its implementation.

The coalition are opposed to retrospective tax changes as a matter of principle. I would have thought that members such as the member for Kennedy and the member for New England would have been opposed to retrospective tax going back seven years. That sort of uncertainty just adds to the sovereign risk the nation is facing under a Treasurer that is addicted to sovereign risk.

The coalition understand that it can change the substance of bargains struck between taxpayers who have made every effort to comply with the prevailing law as at the time the agreement was entered into. Retrospectivity can expose taxpayers to penalties in circumstances where taxpayers could not possibly have taken steps at the earlier time to mitigate the potential for penalties to be imposed. It may change a taxpayer's profile, which in turn can materially impact the financial viability of investment decisions and the pricing of those decisions. Most importantly, the retrospective application of the change will heighten Australia's level of perceived sovereign risk. Therefore, the coalition will not support any attempt by the government to create further sovereign risk in this environment. We do not support going back seven years to obtain tax in agreements that people entered into in good faith at the time that they were entered into.

Our amendments give the bill prospective effect from the date the act commences. The Commissioner for Taxation and the government have refused to identify how much revenue is going to be claimed by this bill. I would like to know from the Assistant Treasurer how much revenue is at stake. The Commissioner for Taxation did not have the number before him and he said it was insignificant, but you tell us: how much revenue is at stake that would justify breaking a core element of policy principle, that is, that the law should be prospective, not retrospective?

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

The shadow Treasurer has come forward and said that as a matter of principle those opposite do not support retrospective laws. The first point to make is that these laws are not retrospective; they are about confirming the application of laws in the way in which they have been understood, in terms of both the way the law has been expounded and administrative practice.

The second point that I would make and that I draw to the attention of the member for North Sydney is: so much for his suggestion that they do not support retrospective tax laws! I just want to name a handful of them: the Tax Laws Amendment (2006 Measures No. 3) Act 2006, the Taxation Laws Amendment Act (No. 3) 2002 and the Franchise Fees Windfall Tax (Collection) Act 1997. They say they do not support retrospectivity, but do not look at what they say; look at what they did in government.

Honourable Members:

Honourable members interjecting—

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! I remind members that this is still a debate, and it will occur in silence.

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

I also just point out one simple fact. The shadow minister indicates that seven years is an outrageous period to go back. I simply make the point that in relation to the Tax Laws Amendment (2006 Measures No. 3) Act passed in 2006, the commencement of that act was 1 July 2000. So six years was okay on that occasion.

The case has been very strongly put in relation to these measures. We are opposed to this amendment and we wish to commend the bill in an unamended form to the House.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the amendments be agreed to.