Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

As I did last year, I seek the support of the House to pass a motion that, in the upcoming budget, a separate document be attached to the budget papers that provides a 10-year road map on comprehensive tax reform and on how the budget is talking to those mid-term structural issues that the economy faces—not just the four-year forward estimates, as is the tradition, but more focused on the 10-year agenda, where so much of Australia's story lies. I hope that the House once again supports this motion. Because the House supported it last year, a document was attached to the budget papers. It was a very skinny document. It highlighted the need for more of that 10-year story to be told and for executive government to be encouraged to do more focused work on sharing the 10-year story. Really, the only item of any significance in last year's 10-year road map was the timetable on the transition from nine per cent superannuation to 12 per cent superannuation and the staggering of that transition over time.

Whether you like that policy or not, it is a good example of what Australia and this place need to do on a number of fronts. I continue to emphasise the need for comprehensive tax reform and for a 10-year story to be told as to how we are going to transition from 125 local, state and federal taxes in our country, where only four of them do 90 per cent of the lifting, to a more efficient tax base and away from the many, many inefficiencies in-built in our tax system, which will, if unaddressed, have a material impact on our standard of living as Australians. Up till now the comment has been, 'Oh, we can't afford this,' or, 'We can't afford that.' It really is getting to the urgent point where it is less about what we can afford and more about the point that we cannot afford not to do it. It will start to cause material damage to our standard of living.

This parliament has done many good things and much good work. Despite the comments of the member for Riverina, when I entered the room, about climate policy, I think that that is one of the important steps that has been taken in this parliament. It is a market based scheme that is a direct lift from the Henry tax reform work. It is a step in the right direction on tax reform as it is on responding to climate policy. Not only is it a market based mechanism responding to many of the science questions, but directly attached to that is a significant lift in the tax-free threshold from the middle of this year from $16,000 to $18,200. Again, it is a significant step along the journey of the Henry tax review recommendations, whilst he did recommend lifting the tax-free threshold through to $25,000 and removing even more people from the tax system altogether and all the inefficiencies that go with that both for individuals and government. We have taken in this parliament—to this parliament's credit—a significant step in moving along that journey of lifting the tax-free threshold and removing many people from the burden on participating in the tax system on an annual basis at all.

I would hope that, as this place starts to move into election mode, both major parties start to put their cards on the table with regard to the lift to the $25,000 tax-free threshold. At the moment the position of government is not clear on that and the position of the opposition is not clear either, nor in public commentary is it clear on whether the $18,200 will be maintained or whether we return to the non-Henry recommendation, which is going backwards in the tax-free threshold and bringing nearly a million more Australians back into the tax system. I hope that can be corrected.

Some of the other good things this parliament has done are in the information communication technology and regional equity coming through on that. I am personally of the view that, so far from what I have seen, the differences in policy from either sides, whilst on the surface look like a fight between cat and dog over the NBN, when it gets down to the differences in detailed policy, they are not great. I would also say, likewise, that I hope on the big push on education policy with regard to secondary education funding and the delivery of regional equity on that front that we can make room for that to happen in the next six months. I hope that has bipartisan support when it happens.

All of those pressures make the point that there are big demands coming down the pipe in a policy sense and we have to make our tax system talk more to some of these challenges and talk more between local, state and federal considerations. It will, as I emphasised before, have a material impact on our standard of living if we leave this issue unresolved.

I think it has been a great disappointment that this parliament has not been able to get executive government to negotiate either through COAG or other means to put some meat on the bones of comprehensive tax reform and get some agreements happening on a whole range of inefficient tax issues whether in superannuation, housing or any of the 130 recommendations made by the very good work of the Henry tax review. Some of it has happened—the loss carry-back work with small business is excellent. The tax free-threshold lift coming in the middle of this year is excellent. The establishment of the Tax Institute for furthering the research base in some of these tax problems is excellent. The removal of low-income superannuation tax payments and the regressive nature of them is excellent, but they are cherry picking the nature of what is meant by comprehensive tax reform. It is sitting down with those state governments and working through in a negotiated environment the many issues of overlap, double-up and inefficiency that are frustratingly accepted by governments and to the direct detriment of the standards of living of all Australians.

I mention the ACT as a bit of a shining light in what they have done with stamp duty and housing, and the transitioning that happened there. What a great example for other states to consider, and for us as a parliament and hopefully for a government to consider as to how to facilitate that work for other states. They have a road map in place for the removal of stamp duty on property as a really good example and a challenge to other states to do likewise.

The mining royalties issue remains outstanding and could be a flagship for negotiation between the Commonwealth and states; we have GST payments now proving to be a point of conflict between the Commonwealth and the states; we have horizontal fiscal equalisation as a point of conflict between states like Tasmania and Western Australia and causing confusion to many and we have vertical fiscal imbalance that is putting pressure on both the policy and political points between the Commonwealth and states. We cannot just leave these as unresolved. They are great opportunities to bring everyone in the room and nut it out. Unfortunately, for some reason we cannot get governments to get there.

Once again, I put the call on the table for the road map in the budget papers and that all of us pressure whomever it is we need to pressure to get comprehensive tax reform dealt with between the Commonwealth and the states; that we get a reduction in these 125 taxes that are currently in play; that we work the efficient taxes harder—four of them are doing 90 per cent of the lifting, so let us focus on those. Let us build an efficient tax system and let us lift the standard of living for all Australians.

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

I rise today to speak on this motion by Mr Oakeshott and I thank him for drawing this matter to the parliament's attention. The fact is, in the words of the member, it is clear that the Labor Party has presided over a tax shambles. During its time in government, we have seen more than 27 new or increased taxes brought into effect, and this is despite the fact that this government is already receiving more in revenue than was received during the last year of the coalition government. Why has it done this? It has done this because its view is very simple on the Australian economy. Unlike the Liberals and the coalition, who understand that you need to grow the economy in order to increase the living standards of all Australians, this government believes that you need to increase taxes. Not to grow the pie but simply to increase taxes.

The government needs to increase taxes because it has significantly and dramatically increased spending. This government is spending more than $90 billion more than previously spent by the coalition government each and every year. That is money that has been borrowed in order to fund the government's spending. It has not just been borrowed, but Australians are paying increased taxes in order to fund it. And to fund what? We know the list is long, and includes such things as the pink batts scheme and the $6 billion which has been the cost of the government's failure when it comes to border protection. These are just two examples.

But it is true to say that there needs to be a different way on tax. Let me hark back to the coalition's record when it comes to tax. The coalition was able to pay back Labor's $96 billion of debt and was able to provide for the future with a $70 billion Future Fund and a $6 billion Higher Education Endowment Fund, and it was able to provide in the last year of government a $20 million surplus. In doing all of this, it was able at the same time to deliver significant company tax cuts in order to help and encourage business to grow and to employ. We saw during that time wages increase in real terms of over 20 per cent. At the same time the coalition also delivered individual tax cuts in almost every budget year. This meant that Australians were free to choose to spend their money in the way that they saw fit. The government takes a different view. It wants to tell Australians how it is that they should spend their money, and we fundamentally disagree.

Who can forget that before last election the Prime Minister and this government made a firm and solid commitment that it would not introduce the very regressive carbon tax? It promised this most faithfully, and within days of coming into government it reneged on that promise. We are seeing the implications already for Australian manufacturing and Australian industry. It goes to our ultimate competitiveness, and we are competing not only in our region but also throughout the world and we need to ensure that we can be as competitive as we need to be. A carbon tax does not assist us in this. The chief economist of AMP recently said that a carbon tax is clearly taking a toll. This comes off the back of business leaders who have warned that it is having a direct impact on business. Figures that were recently released show that 900 Australian firms are currently being placed in administration each month. This is indeed a record high and it is 12 per cent higher than during the GFC. There is no doubt that the carbon tax is making a bad situation even worse, even more difficult.

In addition to the carbon tax, this government has also introduced a mining tax that it linked to increased spending, $15 billion worth of increased spending. We were told that the mining tax in this year was going to deliver $2 billion. Yet this government is so ineffective when it comes to introducing legislation, including taxes, that the revenue raised is only $126 million. We say it was a flawed tax. It clearly is a flawed tax and it should be gone.

Coming back to the motion before us today, it is clear that there is much more to do on tax reform. The Henry tax review, a multimillion-dollar review instituted by the government, made 138 recommendations but less than a handful of those recommendations have been implemented. In fact, some recommendations—for instance, not to make any changes to the superannuation guarantee—were implemented, which is rather surprising. We live in a global world and we need to be globally competitive. Being globally competitive with our tax system is critical. The tax review recommended a reduction in the company tax rate to 25 per cent over time, and a commitment to minimise the rate of company tax is one that in broad terms we accept. But from this government we have seen no progress, with the government scrapping its own long-promised company tax cut in last year's budget. We have seen the government's latest efforts in the previous budget to increase the effective tax rate for many companies by moving to monthly tax collection, which again was not one of the 138 recommendations. This increases companies' effective tax rates through funding costs to cover working capital requirements and compliance costs. Far from making Australia's tax system more competitive, we have moved backwards.

PwC recently provided a report on this subject, Paying Taxes 2012. It analyses the significant ground that we need to make up in Australia. Australia is ranked 52nd of medium-sized companies paying taxes and government-mandated contributions. Competitor economies in the region rank far higher, with Hong Kong third and Singapore fourth. But company tax is not the only area where the government's response to the Henry tax review has been found wanting. We have seen no progress on removing inefficient state taxes, with the government refusing to consider a proposal prepared by the states to reduce stamp duty, nor will it consider one on removing distortions in the taxing of savings.

With the Asian century white paper, we have clearly not learnt some of these lessons, and these are lessons which are very salutary and ones which we need to institute as a matter of urgency. We need tax reform that is efficient and fair. We need to ensure that we can, through our tax system, have people take home as much of their pay that they have earned as is humanly possible. The government can do this by managing the economy well and by refusing to implement new taxes. We have already heard in the Prime Minister's Press Club address that she plans on introducing potentially new tax imposts on superannuation in the upcoming budget. This would be a significantly regressive step and one that we would argue very strongly against.

Tax reform should be a priority. Tax reform has not been a priority of this government. If the coalition is given the opportunity to govern again in September this year we will ensure that tax is placed at the top of the agenda. (Time expired)

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

I take great pleasure in speaking on this motion moved by the Independent member for Lyne, which recognises the need for comprehensive tax reform to maximise the standard of living of all Australians over the next 50 years. That is something that this government has been very committed to for a very long time, not only in government since 2007 but also when we were in opposition. He also encourages the Treasurer to release a 10-year road map for comprehensive tax reform as a stand-alone budget paper including reform considerations beyond the four-year forward estimates.

This is something we support. This is something we are currently doing. This is something that this government is committed to. It is a good idea and an idea that comes forward on a similar motion that was supported prior to last year's budget where a road map was produced—I have that here with me today and, hopefully, I will have enough time to say to a couple of things specifically contained in that road map. I am happy to speak on these matters because it gives government members an opportunity to highlight all the good things that have been done. If you listen to the opposition you would think that nothing had been done and that it was all negative. That is very far from the truth; it is just not the case. In fact, there are many things that this government has done in terms of a proven track record on tax and transfer reform. We understand the importance of a stronger, simpler and fairer system, without question, and that is why we commissioned a root-and-branch review of the tax system so that we would have a document that we could all go to, done by an eminent Australian, that would give us some guidance, as well as come forward with our own road map of where, as a government, we believe we need to move forward.

Since that time we have progressed nearly 40 measures advancing the recommendations of the tax review—not just a handful, but 40—40 significant measures that make an enormous difference to ordinary people. Many of those important reforms were detailed in the 10-year road map that we published after the last budget. Last year's reform road map provided a vision—a vision to the country—and it was a vision that promoted investment and productivity growth, where we simplified tax arrangements for small business and introduced loss carry-back to spur adaptation and innovation. We are encouraging investment in infrastructure over time and we are lifting the nation's savings by boosting the superannuation guarantee. These are not small matters. These are monumental reforms—reforms that have come after a generation of, perhaps, change and languish. It is a great thing that this Labor government was able to bring that forward. We have also tripled the tax-free threshold which means there are a million more Australians now that do not even need to fill in a tax return. I remember for a very long time ordinary Australians at the lower end of the income scale saying, 'Why shouldn't it be that there should be a higher tax-free threshold?' Well, guess what? This Labor government agreed. We shifted the tax-free threshold from just over $6,000 a year to just over $18,000, and we will progress that through to $19,500 in following budgets. That is significant. If you did just one thing out of the 100-plus recommendations and it was just that one, you would be doing pretty well as a government, and we did it.

We have also phased out a whole range of outdated barriers to participation, particularly workforce ones. So our vision for a fairer, more sustainable tax system is not just rhetoric. It is not just talk and reports. It is delivered. It is already there—including $47 billion worth of income tax cuts in the first three budgets of this government, at a time when we, like the rest of the world, were facing one of the most difficult global financial situations that anyone has ever faced, at least since the Great Depression. But this is a government that stumped up and did the right thing. We did the reviews and we followed through with significant reforms, because that will set up Australia to be a stronger and fairer place for all Australians.

We are going to do it again in this budget. As all budgets are, this is going to be tough. But we are going to do the right thing. We have also managed to pass the clean energy future package and a compensation package—something that the opposition when in government never did. When they increased a tax, they never compensated people or adjusted, particularly for people on lower incomes.

For Australia's 2.7 million small businesses, we introduced an instant asset write-off for each and every asset worth less than $6,500. This was a significant reform and makes a huge difference to small business. We also did the loss carry-back, which is extremely good for companies, and we have simplified small business cash-flow tax arrangements to make it easier for them. Also, the release of the tax review in 2010 was the start of a national discussion on tax reform that we have continued with the tax forum and ongoing consultations. Labor has always been committed to tax reform and helping business, ordinary people and companies alike. (Time expired)

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Lyne for this motion on tax reform and the opportunity to talk on this important issue. Whilst I understand the member's motive, there is a fundamental flaw in this motion and, as a result, I will not be giving it my support.

Reading between the lines, this motion recognises that the government's tax policy is a mess. This position I agree with. There has been the failed carbon tax. There has been the failed mining resource rent tax that has raised virtually no money at all after administration, implementation and advertising costs are taken into account. There was the failed tax reform in October 2011. There was the government's extensive and expensive Henry tax review, but only 3½ of the review's 138 recommendations have been implemented—so much for following through. There was the failed business tax working group, with rumours that the government will still seek to use the discredited measures resulting from the working group. There are 27 new or increased taxes this government has implemented since coming into power. There is the $8 billion in company tax receipts the government brought forward in the 2012-13 MYEFO, and there is the $8 billion that this government has ripped out of superannuation since coming to power in November 2007. All of these points lead to one undeniable fact: that this government's tax policy is a mess. I agree with the member for Lyne that our government needs and deserves a much stronger quality of planning to form the foundations of reform in our taxation system and that this reform will help to maximise our constituents' standard of living over the long term.

However—and this is where I diverge from the member for Lyne—the solution will not be achieved with the request to this Treasurer to release yet another aspirational addendum to the budget papers. History has shown us that the words and numbers printed on these documents are often not worth the paper they are written on. My constituents in Bennelong will remember the government's promise in the 2010-11 MYEFO to commit $2.1 billion to the construction of the Epping to Parramatta rail link. Two and a half years later, not a penny has been spent, not a sod of soil has been turned.

It should be noted that our Prime Minister had the gall to return to this very location recently and make more promises to win these seats in Western Sydney, including a promise to fund roads in the region to $1 billion. Sound familiar? Well, if you con me once, shame on you; if you con me again, shame on me. People of Western Sydney, do not be shamed. This government has shown time and again that it is simply not up to the task and that it simply cannot be trusted.

The solution to this problem is not to tinker with this government's reporting obligations. The solution is to change the government. Regional communities like those represented by the member for Lyne can benefit greatly from tax reform; but, as we saw with the Henry tax review, this government is simply not fit for the job. The constituents of Lyne must question whether their member's decision to support this government was the right one.

One hundred and fifty years ago, the United States government, under President Lincoln, used 30-year government bonds to build the Transcontinental Railroad. Fifty years ago, the Japanese government built their first bullet train through a combination of low-interest loans and government bonds. There are many ways that tax policy and good governance can be used to build Australia and to increase the standard of living for our constituents. However, all this government can do is to make promises that get broken and then they fight each other over who is going to sit in the leader's chair. The government of a young country with great potential must have vision and the capacity to make long-term plans and then commit to the course to fulfil this potential. This course must not be changed on a daily basis to gain a favourable headline. Direction must remain steadfast. This government has lost direction by their own admission. They are constantly distracted on the bridge, and that puts us all in peril now and in the future. Strong policy requires leadership and long-term planning, and this will only be achieved through a change in government.

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

I see this motion as an opportunity to debunk some of the myths put by the other side to our being a significant reforming government when it comes to tax. Our government has been working very hard to reform the tax system. In fact, many of the reforms that we have made have directly benefited people in my electorate, and they have particularly benefited low-income earners—and I will go through some of them later. In terms of the myth that we are somehow a high-taxing government, I think the 'facts' are wrong there. It is actually the previous coalition government, the Howard government, that is the greatest taxing government on record. In fact, the tax-to-GDP ratio will be lower than 22 per cent in 2012-13—that is significantly lower.

If we had kept the tax regime of the Howard government, we would have collected $30 billion in extra tax. But we believed when we came to government that tax reform was a must and that tax should be given back to the people who deserved it. Our first action was to give $47 billion worth of tax cuts. This was a significant reform and it came soon after we were elected to government. We delivered those cuts to low- and middle-income earners—to those people who needed tax relief the most.

But we did not stop there. Indeed, we took one million people out of the tax system by increasing the tax-free threshold to $18,200 on 1 July 2012, and then from 1 July 2015 it will be increased to $19,400. No-one can underestimate the impact that this will have for many low-income earners. It is not only that those in the workforce are able to pocket more money but that people are encouraged to get into the workforce because they are not being penalised. That is only the case under this government, because we know through slips of the tongue by the shadow Treasurer that the Liberal Party, if they were to ever get elected, will put those million people back into the tax system. They will make them pay tax. They will discourage them from entering the workforce and from participating in the workforce. This is very short-sighted by those opposite. We are proud of this particular reforming aspect—and not only that, we have also made a significant change to the effective tax paid on superannuation by low-income earners. Indeed, at the moment there is a flat tax rate for superannuation concession contributions. As a result, that flat tax rate has led to low-income earners receiving little or no concession. It is this government that is addressing that and that will provide a superannuation contribution of up to $500 annually for individuals on adjusted taxable incomes of up to $37,000 to improve the equity of the superannuation taxation arrangements. These two measures together say clearly to low-income earners, 'We are going to help you now, provide you with tax relief now, so that you can participate in the workforce; but we will also provide you with tax relief and tax help when it comes to superannuation, when it come to saving for the future.'

Those two incredibly important measures were opposed by those opposite. The shadow Treasurer has also said that he will put the tax back onto low-income earners when it comes to superannuation. It was very interesting to hear the previous speaker talk about tax on superannuation. It is those on the other side that have a plan to put tax back onto superannuation—indeed, onto those who have the most difficulty in earning.

These are two very significant tax reforms. Time does not allow me to get to the many, many others. We have certainly enabled people to have better cash flow in their small businesses through the loss carry-back and the instant asset write-off. These two measures help with the cash flow that is so important for small business. It is something that the previous government ignored but that we have allowed. Indeed, it encourages investment. There is a plan for the future. (Time expired)

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

I thank the member for Kingston for her contribution, trying to sing the praises of this government’s tax policy. Let me enlighten her on a couple of facts. Firstly, in relation to the tax-free threshold, the low-income tax offset that we had prior to this meant that there was an effective tax-free threshold of $16,000. So there has only really been a small increase to $18,000, and the government also increased the base tax rate from 30 per cent to 34 per cent for those earning more than $18,000. So it is the usual pea and thimble trick of this government; it just highlights where this government really is in terms of tax policy.

I would like to thank the member for Lyne for his motion, the intention of which is well made. However, given that he has been in a position for the past 2½ years of holding the reins of power, so to speak, I find it quietly strange that he has not used the opportunity in the past 2½ years to advance the points that he sets out in his motion. I think it is quite hypocritical that, not having used that opportunity, he now puts this motion before the House. That is especially the case if we have a look at his voting record on some of the key taxes we have seen over the past 2½ years. He supported both the mining tax and the carbon tax. I wonder why is he putting this motion before the House when his track record in voting for new or increased taxes is pretty much unblemished.

At the end of the day, Australians need real action to get things done. In the past five years we have seen a great deal of focus on ways to achieve tax reform. One of the first acts of the Rudd government following its election in 2007 was the so-called root and branch review of the Australian taxation system, the Henry review. The review cost in excess of $10 million, received over 1,500 submissions, consisted of a panel of five experts and produced more than 1,300 pages. In the end, it contained 138 recommendations, of which the government claims to have progressed less than a handful. In the fallout from the 2010 election, the government made a major tax reform promise to the Independents. It promised to hold a summit. Imagine that—this government holding a summit! Of course, at this stage we had previously ruled out a carbon tax and the fourth iteration of the mining tax. The million-dollar tax forum subsequently held in October last year led to a major new tax initiative, the Business Tax Working Group. This new group was charged with doing the government's work to find savings to pay for a company tax cut. Reviews, forums, summits, working groups: it is all talk and no action—other than introducing new or increased taxes. In the past five years, we have seen 27 of those coming from the Labor government, the most notable being the carbon tax and the mining tax, with one, the mining tax, mentioned in the Henry tax review.

The motion goes on to talk about having the government release 'a 10-year road map for comprehensive tax reform as a stand-alone budget paper'. We cannot go six months without this government's budget blowing up. In the past nine months, we have seen countless examples of a government without a stable and consistent approach to tax, and we have seen poor judgement time and again on the implementation of tax legislation. At the end of the day, there is no doubt that Australia needs a much higher standard of planning to underpin reform in our tax system.

We as the coalition can confirm that we will not support this motion. As we have seen more than enough, this government is not up to the task. So the solution is not to call on the government to lift its game; the solution is a change in government.

Debate interrupted.