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

by leave—I move amendments (1) and (2) as circulated in my name:

(1) Clause 2, page 2 (table item 2), omit "Schedules 1", substitute "Schedules 2".

(2) Schedule 1, page 4 (line 1) to page 9 (line 19), omit the Schedule.

Schedule 1 of the Tax Laws Amendment (2012 Measures No. 6) Bill 2012 deals with changes to native title benefits and seeks to classify such benefits as non-assessable, non-exempt income so that they are not subject to income tax or capital gains tax. Amendments (1) and (2) circulated in my name seek to excise this schedule from the bill. The coalition is opposing schedule 1 because it introduces a tax exemption for payments made to an individual that if received in comparable circumstances would be subject to tax. I am not talking about compensatory payments for extinguishing native title. Treasury, in its 2010 discussion paper, noted that these payments would be exempt under the current law because the payment is compensation for the loss of a pre CGT asset. Treasury noted that payments received for the suspension of native title could be regarded as receipts in the nature of a return on a capital asset. Therefore, these would normally be regarded as ordinary income. There would be equivalent treatment of a payment where received by a landholder for granting access rights over their property.

The coalition does not support a change to the law that infringes the taxation principle that money received by one person, regardless of derivation or from what activity, should be given the same tax treatment as if it had been received by another person. That is, the coalition is concerned that schedule 1 violates this key principle of horizontal equity. These amendments are likely to act as a disincentive for an individual to invest their native title benefits to provide intergenerational wealth creation as tax will be payable on the investment income earned and the distribution of moneys to future generations. The coalition believes that there is the potential for unsound policy outcomes arising from this particular change. Taxation systems drive behavioural outcomes. The changes put forward by the government have the potential to greatly impact how future payments from industry are made to native title communities and their future generations.

The coalition is disappointed that the government is pushing ahead with this policy in its current form. The government is displaying complete disregard to warnings that have been raised by various stakeholders in relation to this fundamental matter. I would have thought, given that the member for Lyne passed judgment on us, that he would be listening to this. But no, he has other priorities. I note that the government's Attorney-General has written to my Senate colleague Senator Mathias Cormann seeking support from the coalition to pass the bill. The Labor Attorney-General acknowledged that this legislation 'may create unintended incentives for native title payments to be disbursed rather than to be used to benefit communities and help close the gap'.

The member for Lyne said that this may well be used by the coalition to try and generate debate at the front of the pub. I find that extremely offensive, but as it comes from the member for Lyne it does not trouble me at all; he is obviously dealing with his own issues in relation to this matter. But I am troubled by his suggestion that somehow he consulted with the coalition. He did not consult me; he did not consult my office. He lives in his own little vacuum. But he just seeks to justify his own position—no matter what, he grabs it. But the bottom line is that he was the one who said that we need to let sunlight in on these processes. The sunlight from the government's own pen shows that this 'may create unintended incentives for native title payments to be disbursed rather than to be used to benefit communities and help close the gap'.

You know what the government has done? It has set up a working group—a working group to 'identify the best next steps to strengthen governance and sustainability in the management of native title payments'. This working group is just like the great idea that the member for Lyne had of a business tax working group. That went well! It was disbanded because it went nowhere. Or the idea of a summit. That went well, too! The establishment of a government department-led group to work out what to do next is from our perspective simply not good enough. We have higher standards in relation to the treatment of taxpayers. We have respect for taxpayers, unlike the government and the Independent member for Lyne.

If the government has acknowledged in writing that the coalition's concerns are in fact legitimate, why rush the legislation? I will tell you why: because the government is busy chiselling away on its grave in the lead-up to the next election. We are opposing this schedule because we believe that the arguments put forward by the Attorney-General and the government are simply not good enough. Therefore, we are seeking to have this schedule removed from the bill on the basis that it is a further example of a flawed process undertaken by this government in collusion with the independents. They have not properly thought it through. The government has admitted that there are major issues to do with and concerns about this piece of the bill. But they do not want to act on it. They simply want to have more monuments to their incompetence.

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

The member for North Sydney has raised a number of matters that require some response. He made the bald assertion that the position under common law, in going back to first principles under taxation law, is clear. The very fact that the position is unclear is why we are in the situation we are now in, where we are seeking to provide greater certainty and clarity.

For the benefit of the member for North Sydney, who I am sure has not taken the trouble to read the explanatory memorandum, I draw attention to paragraphs 1.10 and 1.11, which read:

1.10 The High Court has counselled against using traditional common law concept categories in the native title sphere. Instead it indicates native title should be considered on the basis of its uniqueness—

and—

1.11 When applying the current rules of the income tax system based on traditional common law concepts, it is unclear whether benefits provided under a native title agreement would be assessable income.

The EM also goes on to point out that submissions that were provided in relation to a government discussion paper on these matters supported the notion that clarity and clarification would be provided. So the amendment that is being moved by the member for North Sydney is an amendment that will, if passed, ensure that uncertainty continues to prevail in relation to the tax treatment of various payments made in relation to native title rights.

The government believes that it is important that we clarify these matters so that recipients of these payments are left in no doubt that the receipts that are in their hands will not be assessable. That is why we are taking the legislative action that we are taking. I make the point that the member for North Sydney has jumped up and down and spoken about the great haste with which these amendments are being brought. I remind him that there was a consultation paper entitled Native Title, Indigenous Economic Development and Tax that canvassed these very issues. It was released back in 2010. This is not something that someone decided to have as a thought bubble—as prone as the member for North Sydney might be to producing the odd thought bubble himself. This is the product of reasoned policy over a period of time.

I conclude my remarks by making the obvious observation that it does not surprise me that members opposite would seek to play politics with distributions, payments or moneys in the hands of individuals in relation to native title matters. It is a matter of public record that those opposite vehemently opposed the native title regime when it was introduced in the first place. That will forever be a very black stain on their contribution to these matters as they have been dealt with in the past.

If we were to go back to the Hansard of the scaremongering that occurred from those opposite at the time that native title was first introduced we would see that they have never supported native title. They have come to the party a long time after everybody has left, but they are now seeking to mire these payments in ongoing uncertainty. The question has to be asked: on what possible basis could they be arguing that we should consign these payments to ongoing uncertainty? There is no justifiable public policy reason. We have set out a process for looking at a potential vehicle that might help deal with these matters into the future. But there is a real, pressing and urgent need that needs to be addressed—and that is, are these payments assessable at present? We are seeking to resolve that and to bring some clarity to the situation. That is what I would commend the House to do.

Ms Anna Burke (Speaker) Share this | Link to this | Hansard source

The question is that the amendments moved by the member for North Sydney be agreed to.

The House divided. [17:45]

(The Speaker—Ms Anna Burke)

Question negatived.

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

I move amendment (3) as circulated in my name:

(3) Schedule 3, page 12 (line 1) to page 18 (line 29), omit the Schedule.

This amendment seeks to excise schedule 3 from this bill which extends the immediate deductibility of exploration expenditure provided to mining and petroleum energy explorers. The coalition opposes this measure because it is linked to the government's mining tax. This measure was flagged by the government as part of the final design of the minerals resource rent tax, and the Treasurer has linked over $15 billion worth of expenditure to a mining tax that is hardly raising a dollar, which is quite an achievement! It now looks as though he has no money to pay for this. Prudent economic management would say that it should be opposed. I encourage all members of the Labor Party to join with us in seeking to have this excised from the bill.

Ms Anna Burke (Speaker) Share this | Link to this | Hansard source

The question is that amendment (3) moved by the member for North Sydney be agreed to.

Bill agreed to.