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

The coalition is deeply unhappy with the government's chaotic handling of this bill, the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. The bill was introduced last Wednesday, and the coalition sought to have the bill referred to the Parliamentary Joint Committee on Corporations and Financial Services. That request was denied. Instead, the government sent it to the House Economics Committee. Then the House Economics Committee last Friday refused to hold an inquiry into the bill.

The government is now asking the parliament to consider an incredibly complex taxation bill with significant changes, with no committee consideration, and the bill was only introduced last week. There has been no community consultation. There has been no committee consultation. The bill has been drafted. We hear the government itself is amending the bill which it only introduced last week. The government thinks it is giving this parliament the chance to have an appropriate process for the deliberation of something so significant. Fair dinkum!

They wonder why their government is chaotic, and here is their taxation bill, and it is the largest taxation law amendment bill on record. It has 11 schedules dealing with a range of different taxation issues. The government introduced it a week ago and have prevented any consultation by any committee. Then the government cannot understand why they keep screwing up policies. This is exhibit A. We are trying to deal with this bill in good faith. We are trying to deal with all these taxation issues in good faith, because they go to revenue collection, and they go to stability in the economy. But this is not the way to run taxation policy. This is not the way to run the parliament: introducing a complicated taxation bill last week, refusing to hold any committee inquiry at all and now trying to rush it through on the eve of an election without consulting those people who are most affected. I thought the mining tax was a warning and then I thought the carbon tax was a warning. What is it with these guys? This is not the way to run a country, it is certainly not the way to run a parliament, and it is most definitely not the way to run a taxation system.

In particular, schedules 3, 4 and 5 of this bill deserve considerable additional scrutiny. We will be moving amendments to excise these schedules from the bill so that can happen. I will explain the impact of those schedules further down the track. Schedule 1 of this bill deals with the 2012 Mid-Year Economic and Fiscal Outlook measure that sought to bring forward $8 billion of company tax revenue by requiring companies to pay income tax instalments monthly rather than quarterly. This is all about trying to get the surplus. Companies currently pay tax on a quarterly basis. The government said: 'Don't worry about the paperwork; don't worry about any of that. And we're going to make you all pay it monthly.' That brings forward money.

The government did not consult with the business community about this; this came out of left field. They did not ask anyone about the paperwork implications; they did not do any of that. They are doing this because they need to bring forward money to try and create a paper surplus. The first step, starting on 1 January 2014, is for companies with a turnover of a billion dollars or more to lodge monthly returns. A year later, 1 January 2015, it is companies with a turnover of $100 million or more. A year later, companies with a turnover of $20 million or more will have to lodge monthly rather than quarterly payments with the tax office. Have the government thought about the paperwork implications of this? A billion dollars is a significant turnover, and there is probably more of an issue of cash flow for a company with this turnover. Companies with an annual turnover of $100 million or more could be companies with 200 or 300 employees. It is not hard to get to $100 million in turnover for a company that operates in every state. But then companies with a turnover of $20 million or more have to lodge monthly returns.

I thought, 'Twenty million bucks, that's not necessarily a big company.' If you think about the local news agency, it has a big turnover but probably small margins. I am not saying they would have a $20 million turnover, but they have a big turnover because they have a lot of cash go through the tills. Pubs have a lot of turnover. There would be plenty of individual pubs with a turnover of $20 million.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Service stations.

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

Service stations, as my learned colleague knows, having run a business. There would be plenty of service stations with a turnover of $20 million, even though the margins are very thin. Tourism companies would have big turnovers, even though their margins are small. If you pay $5,000 to have a tour of Australia, out of that maybe 200 bucks goes to the travel agent. All these businesses would now have to lodge monthly returns, because the government needs the money.

I have deep, deep reservations about this in particular. It is one thing for large companies, and I have reservations about monthly returns for them, but for businesses with a turnover of $20 million—fair dinkum, seriously, where do they pluck these numbers from? We are not allowed to ask, and even if we did we would not get any answers. Where did $20 million turnover come from? On what basis? Who is the genius that thought it up? Was it the Treasurer? Was it the tax office? Was it someone in the Treasury?

Who was the genius who picked $20 million for monthly returns?

Where was consultation? Did they speak to anyone in the business community? Did they speak to any chambers of commerce? Did they speak to any industry associations about the implications? The Service Station Association, or newsagents or the Pharmacy Guild—did they speak to them? Plenty of pharmacists might have a turnover of $20 million, with the PBS and prescription services. They could be two shops or three shops. But now they have to lodge monthly returns. Fair dinkum! What a chaotic government!

What we do know is that they claim this move is going to net $1.4 billion over the forward estimates. I see the member for—is it Werriwa—there?

Laurie Ferguson (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Yes.

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

Prophetically, he declared, 'The Labor Party is dead over boats,' and it is dead over tax too. I know that does not come to mind first.

Laurie Ferguson (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Who wrote this? Laundy?

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

But I would say to you, sir, that it is not just boats that Labor is dead on; it is dead on tax policy and it is dead in this parliament. Exhibit A is this bill, mate. You introduce a complicated taxation bill last week, no community consultation, no committee consultation, and ram it through the parliament, all because you are trying to get to a surplus that was never going to happen under Labor. And now you are introducing provisions that are going to have a huge impact in the community, but you do not want to speak to anyone about them!

I would say to you, Mr Deputy Speaker, that the total measures in this bill bring forward more than $10 billion worth of tax receipts—$10 billion. And it has been all about a surplus that Labor will never deliver. What a surprise! Even with all these measures in this chaotic taxation policy, the debt keeps growing. As we found out yesterday, the debt limit is going to have to be increased again. The Treasurer does not have any courage; he is a weak man. He does not have the courage to come into this place and ask for an increase in the credit card limit of the Commonwealth. And why? Because he has done it on four previous occasions and he does not want to have to do it on the fifth. He will leave it to whoever is there on 15 September. As he said to Neil Mitchell, 'It will be someone else's problem'. He does not even think that he will be there; it will be someone else's problem.

Do you know whose problem it is going to be? It will be that lady's, up there in the gallery. It is going to be your problem. And the gentleman next to you, and the gentleman to him. All of you—it will be your problem. Because there will be a mess left by this government again that someone has to clean up.

Schedule 2 of the bill makes various amendments to tax laws and the Infrastructure Australia Act to introduce a tax loss incentive for infrastructure projects identified by the Infrastructure Coordinator. Now, the government claims that this measure will encourage private sector investment in nationally significant infrastructure such as roads, rail and ports. I want to see that too. We want to encourage private sector investment in infrastructure. This is hugely important. Governments—state, federal, Liberal or Labor, whatever the case—do not have the money available for massive up-front investment in infrastructure, so we have to find ways to encourage that vast pool of money, particularly of superannuation, to go into infrastructure.

The changes within this schedule allow entities such as corporates and trusts that are carried on exclusively for the purposes of what is called a DIP—a designated infrastructure project—to uplift tax losses by the long-term government bond rate and carry forward tax losses, as well as plain bad debt deductions, even though that does not satisfy the continuity of ownership and same business test for companies and equivalent tests for trusts.

It is an enormous amount of power in the hands of the Infrastructure Coordinator. We would have liked to get more information about this in the committee process, but, again, we can only deal with what we have before us. I would like to know what the possible unintended consequences of this provision are, but we are not going to get any answers.

Schedule 3 and schedule 4 of this bill deal with the Tax Agent Services Act 2009. I stated from the outset that the coalition has a number of concerns in relation to schedules 3 and 4. We are going to move amendments to excise these two schedules from the bill. The Tax Agent Services Act was introduced in order to provide a national regulatory regime for tax agents and BAS agents:

… to ensure that providers of tax agent services to the public meet appropriate professional and ethical standards.

Now, the Tax Agent Services Act seeks to address the fine line between whether an entity is merely providing general information about the tax implications of particular products or giving tax advice that can be reasonably expected to be relied on, and therefore a taxation service.

The government took the decision to carve out the tax agent services provided by financial services licensees, and this carve-out is due to expire on 30 June 2013. So, with less than four weeks to go before its proposed implementation, schedule 3 of this bill seeks to create a completely new regulatory regime for financial services industry entities that give tax advice. So with less than four weeks to go—just think about this—anyone in the financial services industry who gives tax advice under the act is going to have a completely new regulatory regime start, and here is the legislation.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

The busiest time of the year!

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

The busiest time of the year in the lead-up to the end of the financial year, and some genius somewhere who is probably the same person who gave advice on the rest of the bill has said, 'Let's get on with it and give them four weeks notice.'

We have said this is a joke. The government proposes that a tax or financial advice service consists of two elements: the provision of tax agent service and the provision of a service in the course of giving advice that is of a kind usually given by a financial services licensee or representative. Seriously—these are new definitions. These are new rules with less than four weeks to go. People out there are trying to earn a buck, and you are changing the regulatory regime. The government has sat on its hands for three years on this and now it is doing it with less than four weeks to go—and, by the way, it is meant to go through the Senate in two weeks. It is not just going through this place; it actually has to go through the Senate in three weeks. The Senate only sits for two weeks, and Lord knows how many bills the Senate has itself.

The government are recklessly exposing all the financial advisers to the risk of being noncompliant with the relevant laws from 1 July 2013. There is no practical way for them to achieve compliance within the short time frame left before these schedules become applicable law. It is just impossible. It could change in the Senate in three weeks time. Then it has to be gazetted. So they are saying to the financial services industry, which as a percentage of GDP is the second largest in Australia after health and around 10 per cent of the economy, 'Guys, we're giving you less than a week for a new regulatory regime.' The Labor Party wonder why there is chaos. Here—look at this bill. They are wondering why consumer sentiment is poor. They are wondering why business confidence is poor. They are creating a new regulatory regime for a large part of the Australian economy, and they are giving them a week's notice at the busiest time of the year.

The Financial Planning Association, the Financial Services Council and the Association of Financial Advisers have all pleaded that they get time to assess this bill. This relates not only to the consultation process but to definitions in the act. It is unclear, for example, if stockbrokers, insurance brokers and mortgage brokers are covered. They are pleading for time to look at potential negative interactions and inconsistencies with the government's own bungled FoFA changes, which also come into effect on 1 July 2013. They are trying to work out any increases in compliance costs resulting from the changes and what the consumer benefit of these changes is. These poor buggers have a new pricing regime for their business that they build into for their accounts. They are trying to work out what the costs are for consumers and what the cost of this massive new compliance regime is to their business. I do not think that is unreasonable. Surely the Treasury gave advice that this is a mess. I just cannot believe it. I do not think any department could be so removed from the community that it is there to serve that it would suggest that this is going to work in a week's process. This is ridiculous. We are going to try to excise it. This is ridiculous. It has to be put off.

Schedule 5 we are, again, going to seek to excise. We have deep concerns about this. The first of these measures requires the commissioner to publish particular information obtained from tax returns of those corporate tax entities which have a total income of $100 million or more for an income year. What the Commissioner of Taxation is going to do—and this is the first time this has happened—is publish individual companies' tax. He will also have a duty to publish the final annual amount of an entity's minerals resource rent tax—we know that is not that much—or the petroleum resource rent tax payable as reported by the entity regardless of the total income.

I introduced a private member's bill on 18 March this year to amend the Taxation Administration Act to remove any doubt that taxation officers may disclose to the minister information about instalments in the MRRT. We had high farce. We had the government saying it was not able to give the Australian people an update on how much the mining tax was collecting because that might disclose individual companies. How that works I do not know, because it is a tax on an industry and even we assume that there might be more than one taxpayer. But, even if there were one taxpayer, so what? It would not be disclosed. No-one would know who it was. We just asked that there be information made available, as there is for capital gains tax, income tax and every other tax. We just asked that there be updates available on the amount of revenue being collected under a particular tax headline.

The government said they could not do it, so I introduced my private member's bill to say, 'Well, sure you can.' The government were so opposed to what we were trying to do that they do not want to just list the amount of revenue raised from the mining tax; they want to disclose who is paying it. They want to tell you the names of the companies. Again, this is exactly the same old story. What consistent principles do the government hold? What do the government actually believe in that can be considered the same today as it was yesterday? Is there any consistent bone in the aggregate of bones over there?

We support the publication of aggregate tax information, unless that information can be reasonably attributed to a single person. But the government has gone one step further and said, 'No, we think individual companies should have their tax disclosed. Okay—a number of companies already disclose the amount of tax they pay in their annual returns. But what does this mean for Australia? I think that is a question this government does not ask itself often enough.

Ernst and Young, one of the largest global accounting firms, said:

… it is premature for Australia as a small open economy to engage in this public disclosure proposal unless and until public disclosure of corporate tax is identified by a majority of the G20, G8, OECD stakeholders or countries in the Asia Pacific region … it represents a distraction from the much bigger task of adjusting the system for taxation of international business.

The only country in the OECD that requires disclosure of tax from large companies, including foreign companies, is Denmark. Denmark is not really in competition with us. When I think of the competition Australia faces in taxation, trade, resources and investment, I do not automatically think of Denmark.

So what is the implication of this? Australia should not make the mistake identified by the United Kingdom Secretary of State for Business, Innovation and Skills, who was recently quoted as saying:

There is mounting concern about where tax is actually paid … The danger at the moment is that this just spills over into a generalised anti-business, anti-multinational sentiment which is unhelpful because we do want successful businesses, we do want inward investment. We don't want people to be stigmatised on the basis of ad hoc little bits of research.

I understand where he is coming from. I have no problems with disclosure, and I certainly want companies that earn money in Australia to pay tax in Australia. But I am not sure that these things are being redressed. Again, I think the risk of this schedule is that the government is like a bull at the gate. It is just going down the process of taking on business—a war with business. For all of its years it has been at war with business. After the first 12 months of the Rudd government, Labor has been at war with business. But the worst part is that it then introduces legislation that has unintended consequences and then cries crocodile tears when we have business sitting on its hands for new investment—or, worse, pulling out.

Schedule 6 of the bill amends the petroleum resource rent tax, and this builds on the calamity of the recent decision of the full Federal Court in the case of Esso Australia Resources. I would just say to you that we have tried to deal with a number of these issues previously. We are not going to stand in the way of these amendments. We do support the clarification contained in schedule 6 relating to the deduction of legitimate project expenditures. Schedule 7 is about removing the CGT discount for foreign individuals. We will allow the passage of the measure, particularly given the budget emergency which clearly exists under Labor. We support the amendments in schedule 8. Schedule 9 is on the GST-free treatment of National Disability Insurance Scheme funded supports; we support that. We are prepared to support updating the list of deductible gift recipients. In schedule 11 there are a number of miscellaneous amendments to the tax and super laws as the government claims, removing some anomalies.

Finally, I just say again that this bill is an absolute calamity in terms of its aggregate impact. It just represents in so many ways the chaos of the government. So, whilst we recognise that revenue needs to be raised, we also will move amendments to make sure that it is properly dealt with by this parliament in a respectful way.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to follow the shadow Treasurer. I know firsthand that he has enormous small business experience and understanding and so comes to this House with a different set of skills that assist our nation in making tax law amendment decisions. As the shadow Treasurer pointed out, this is a poorly thought-out bill which defies most of the standing orders and procedures of this House. But, unsurprisingly, as I stand to speak on the Tax Laws Amendment (2013 Measures No. 2) Bill 2013, it is consistent with a lot of other bills that come into this House.

There are three commonalities to bills that come before this House from Labor. The first is that they normally give more power to a union mate. Second, somehow in there there is an increase in the Public Service. Third, there is an increased tax. That is what this one is. It comprises the largest number of taxation amendments in this term and contains 11 schedules. The coalition will move an amendment to this bill to excise schedules 3, 4 and 5, given the government denied the opportunity for this bill to be properly scrutinised before coming to the House.

I will explain for the benefit of Hansard and for the nation how the normal line of scrutiny would be applied. Deputy Speaker Georganas, let me start with a bit of history that I am sure you will find informative but not surprising. The coalition is deeply unhappy with the handling of this bill. When the bill was introduced the coalition sought to have the bill referred to the Parliamentary Joint Committee on Corporations and Financial Services. The House Economics Committee used its numbers to have the debate shut down. What happens is that such a bill, by definition, is referred to the Economics Committee, which then becomes the front door. It is the Economics Committee's role to look for public scrutiny. The Economics Committee would then go to the market, to the stakeholders and those that the bill would have implications for, and they would call a public inquiry. They would call stockbrokers, mortgage brokers—any interested party that would have a linkage and where this bill would affect their business. They would call them to a room. They would allow those stakeholders to give evidence, to ask questions of Treasury and to put their side of the story so that the bill could be properly scrutinised. It did not happen.

They shut that part of the procedure down by using their numbers in the Economics Committee so that this bill could not be debated and scrutinised. It is a single taxation bill with 11 amendments, which is unprecedented, but with no consultation with industry. If I am an Australian I am starting to get suspicious. Why would a government do that, especially a government that advocated earlier in its turn that we needed to open the window and let the sunlight in—that we needed to have transparency in this parliament?

But this is not an isolated case. When it comes to trying to hide the facts, we saw it only a couple of days go with the Education Bill. It was Labor's cornerstone policy, one of the jewels in the crown, but a measly 1,400-word document on nine pages was brought into the House. There were 71 amendments and then the debate was shut down. There is a pattern emerging between this bill, where they are trying to shut down scrutiny, and what we are seeing happening on a regular basis. It is happening on a regular basis because we are seeing the wake of a desperate government. These are the side effects and we are a poorer nation for it.

On Friday, 31 May 2013, the Labor majority of the House Economics Committee refused to hold an inquiry. That was a sad day. So we are now in the position of having the government asking the parliament to pass a bill with significant changes to the law within a week of its introduction to the parliament with no committee oversight. I said before that the bill currently before the House contains 11 complex schedules. Schedules 3, 4 and 5 in the bill particularly deserve scrutiny.

Schedule 1 speaks to monthly PAYG instalments. It deals with the 2012 MYEFO budget measure that sought to bring forward more than $8 billion worth of company tax revenue by requiring companies to pay income tax by instalments monthly rather than quarterly. The main driver and sole purpose of this measure seemed to be shoring up the future promise of a budget surplus. I need not take you too far back to when on over 300 occasions—some advocate 300, some advocate that in aggregate it was 500—claims were made that this government would return our nation to a surplus. When you hear that a government is going to return our nation to surplus you would think that they would be going to do it by stimulating economic activity in the market. You would think they would do it by increasing the pie. You know how these guys were looking to get to a surplus, Deputy Speaker? They were looking to do it by accounting trickery—by not actually increasing the pie but by simply taking the revenue that would have been generated in a quarter, breaking it down into months, and using it through an accounting procedure in the quarter before the budget to make the revenue numbers in Q2 look stronger.

And do you know who pays? It is the business sector that pays as a result of cash-flow limitations. They would normally have had their overdrafts and their cash flow through their business scheduled for quarterly payments of the PAYG. But, no, some genius decided that if they applied this accounting trickery they would be able to move towards their surplus. It used to be that the only businesses that would have to pay the quarterly instalment were businesses that generated over $1 billion worth of turnover. That did not seem to be generating too much coin and they thought that there was an opportunity for more tax to be raised if they dropped the amount to $100 million. Not happy with $100 million, it was then dropped down to $20 million. The reason I draw your attention to those numbers is that I want to show you how it is trending. It was from $1 billion to $100 million to $20 million. I will tell you where it stops: it stops next at mum and dad, or anyone—they will not stop until they have got it all.

The aim of the original MYEFO measure was to deliver a surplus, but that then ended up as a deficit. This move netted the government $1.4 billion over the estimates. If you remember, $1.4 billion was roughly what the surplus was going to be. That is what they were forecasting—about a $1.3 billion surplus. It came in at—what?—a $19.4 billion deficit. So it was nearly $20 billion out. But that was consistent, because they are normally about $20 billion out with their forecasts. In total, the measures within this bill bring forward more than $10 billion worth of taxation receipts and bolster the government's budget bottom line over the forward estimates. It is accounting trickery. As I say, nothing in this measure increases the pie. It does nothing to give business confidence.

The Treasurer comes into this House on a regular basis to say what strength our economy is in. The other day we had the Reserve Bank hand down its findings on the cash rate, which is staying where it was. An analysts' perception from Macquarie, which is on the public record, states:

They made a case for cutting rates further—and this is in an environment where this bill attacks the cash flow of businesses. They stated:

And the best thing this government can come up with is to say: 'Let's tax you more. Let's take your quarterly commitment away and go after you monthly.' That is the government's answer to recent comments from Macquarie Bank.

The alarm bells are ringing about the state of the competitiveness of our economy and the alarm bells are ringing in every business in my electorate of Wright as the debt and the deficit are reaching unprecedented levels. We have a budget emergency. The emergency started back in 2008. We had money in the bank when we were in government. In 2008 this government said we needed to increase our master card debt ceiling to $75 billion because that was what we needed to get us through the GFC. Yes, there is some economic rationalism on that stimulus government spend. Nothing is wrong with that $75 billion. That was their first forecast. A couple of years later they were back wanting to increase that master card limit to $200 billion. There is a vast difference between $75 billion and $200 billion. But that was not enough. Back in 2012 they were looking to increase the debt cap to $250 billion and not too long after they got to $300 billion. When you look at the expenditure in the forward estimates, from there on it will not be long before we are looking down the barrel at $400 billion.

The member for North Sydney, the previous speaker, raised the point that this government knows quite well that it is going to be somebody else's job to pay down that debt. Because guess what? We cannot pay this debt off in one generation. They say it is not a lot of money, but in the Howard era we would have had to have 18 of the biggest surpluses in a row to clear out the debt. So we are looking at a minimum of a couple of generations of working lives, when people are able to contribute taxes, and that is if we do not put on more debt.

Schedule 2 of the bill relates to incentives for designated infrastructure projects. This bill makes various amendments to taxation laws and the Infrastructure Australia Act 2008 to introduce a tax loss incentive for infrastructure projects designated by the infrastructure coordinator. The government claims that this measure will encourage private sector investment in nationally significant infrastructure such as roads, rail and ports.

The coalition have reservations about this schedule due to the discretion given to the infrastructure coordinator in approving tax concessions for individual projects. However, we will not oppose this measure, because we are going to have our own internal hurdles as a nation on how infrastructure projects are going to be funded in the future. The coalition have a plan on how we will fund those in partnership with the market combined with tax incentives. We will be keeping the implementation of this policy under watch, however.

Schedule 3 creates a regulatory framework for financial advice services and schedule 4 contains other amendments to the Tax Agent Services Act. These parts of the bill are unduly cruel. Schedules 3 and 4 of this bill deal with the Tax Agent Services Act 2009. It is another attack on small business. My office has received many emails from tax agents in my electorate sharing concern over this proposal. This is a bad tax. This one is the shocker. If we are going to get an amendment up, this has to come out.

It is unduly unjust. At two minutes before midnight, with no public scrutiny we will be implementing at the busiest time of the year for our tax agents another layer of regulatory burden. One can only assume from a cynical perspective that the intention of the tax office and this government is to trap small business so it can be seen as another source of revenue from implementing fines or to run people out of business. There is no sense. I do not believe for one minute that that is their intention. I believe this was an oversight, so I call on the government to let the sun shine in on this part of the bill, to let the sun shine in on these amendments. These are cruel. The rollout of this needs to be delayed from 2013 through to 2014 so more consideration can be given. There are too many unknowns around schedules 3 and 4. You have 100 days of government left. In that last 100 days do one thing right: fix this.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. I have had the opportunity to raise this matter on the handling of this bill in the chamber previously. I did so as the Deputy Chair of the House of Representatives Standing Committee on Economics. The shadow Treasurer and the member for Wright have touched on the journey we have gone on to arrive at this destination. It has been a convoluted journey, but it has been a relatively short journey because this tax laws amendment bill No. 2, which contains over $10 billion of additional receipts for the federal Labor government, has been rammed through this parliament without appropriate parliamentary scrutiny.

For a measure like this, which I am informed by the shadow Treasurer is the single biggest revenue item in a tax laws amendment bill that we have seen in the parliament's history, it is extraordinary to think that this Labor government is so bereft of any ability to conform to appropriate levels of scrutiny, with absolutely no desire to provide any adequate justification, no attempt to explain to the Australian people why it is doing what it is doing and, most concerningly, no regard for the consequent impact as a result of these changes on thousands, if not tens of thousands, of stakeholders across the Australian economy—indeed, hundreds of thousands, when you consider schedule 1 alone.

So what has been the journey for the Australian Labor Party? How have we reached this new low when it comes to their inability to make any of the big calls correctly? We know that the Australian Labor Party has world's greatest Treasurer over there, the member for Lilley—you would have to question the methodology about how they arrived at that conclusion but, that notwithstanding, he has got the gong and he is going to hold it with all his might. I suspect he will hold that gong with more resilience than any State of Origin player did last night with the ball, but he is going to hold on to that precious little gong that he has because, frankly, that is all he has. His track record does not attest to the fact that he is the world's greatest Treasurer. The tax record of the member for Lilley is to be up to his eyeballs in debt and deficit and to make one false promise after another, but that is entirely consistent with the Prime Minister, so we should not be surprised.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I remind the member to be relevant to the bill.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

The Australian Labor Party, as part of their attempt to pull the wool over the eyes of the Australian public last year, saw the Treasurer stand up and say, 'This will be the first year of surplus, followed by four years or three years of surplus thereafter.' That is what he said; those were his words on last year's budget. And we now know the truth: instead of it being a billion-dollar surplus—we knew Labor were never going to get there; we flagged it at the time—it has actually turned into, low and behold, a $19 billion deficit.

But as part of the grubby attempt by Labor to deliver a surplus on paper, even though there was absolutely no way they would deliver a surplus in reality, they introduced the initiative that is contained within schedule 1 of this bill. That initiative is to bring forward company tax payments from the quarterly approach to now being required to be paid monthly. That window of the first 12 months, the change from quarterly reporting to monthly reporting, with payments being made to the tax office as a direct result, saw an injection of cash into the federal government to make up for the fact that there would be a change from four times per year to 12 times per year, which saw a short-term injection of cash. And that, on paper, meant the Australian Labor Party were able to bolster their books and there would be just that little bit of extra cash sitting in there, which helped the Treasurer to fall across the line when it came to delivering his so-called billion-dollar budget surplus.

They made this announcement with no consultation, no forewarning, no attempt to determine what the compliance impact was going to be. Instead, the only thing that the Treasurer was concerned about was if that was going to help to prop up his pathetic billion-dollar paper surplus. And now, 12 months later, we know there was no billion-dollar surplus. Instead we have another $19 billion deficit—just the latest in a series of deficits as part of the $190 billion of deficits this government has run up since they were elected—as part of their inexorable march towards reaching gross public debt, a peak approaching $400 billion.

Here we are, 12 months later, and the government are ramming this bill through the parliament. And they are doing so, as I said, with no regard to the compliance cost on those businesses that now have to change to report monthly instead of quarterly. Part of the problem is that in making this change, given that we did not even have a surplus and we had another $19 billion deficit, there will not be a surplus next year, there will be an $18 billion deficit; there will not be a surplus the year after that, there will be another deficit. For as long as Labor are in power there will be deficits. But despite that, the entire policy rationale for making this change has evaporated because we are not in surplus anyway. And instead companies, trusts, a whole range of different individuals now have to put up with all the extra paperwork and the compliance to satisfy schedule 1 of this bill. We attempted to apply some parliamentary scrutiny and attempted to discern what the impact would be on business. The Labor Party shut it down; the executive arm of government shut down parliamentary scrutiny.

The coalition sought to say: 'What are the impacts of these TLA No. 2 bill? What will it actually mean in terms of compliance? In respect of schedules 3, 4 and 5, what will their impact be on tax agents? What will the impact be on financial planners, on tax advisers?' Those schedules, again, have not seen the light of day. It is not as if the government or the Department of the Treasury or others have been out there massaging the stakeholders, saying: 'Look, can you explain this to us? We want to make sure that public policy represents best practice. Can you tell us: how can we change the laws to help you do your job? Explain to us: what can we do in terms of public policy to make sure the Australian people are better off as a consequence of our changes?' No, that is not Labor's approach. That is not the approach of this government. Instead they shove these changes into this TLA bill.

We the coalition attempted to refer the bill off for parliamentary inquiry before the committee system, as should be the case. What does Labor do? They shut it down. They use their numbers to make sure there is no inquiry and instead they just push the bill through the parliament with the support, once again I expect, of the so-called puppet Independents—the member for Lyne and the member for Windsor and others who will just allow this to go through, again just washing their hands, as Pontius Pilate did, of any of the consequent impacts in terms of red tape, compliance and livelihoods on tax agents and in terms of the impact of the changes on those tax agents and the Australian people who rely on the financial advice they receive. They will just wash their hands of it and say, 'We want stability in government.'

There are absolutely no points for understanding that this is just another nail in the coffin of this government, another reason the Australian people do not trust a government that undertakes decisions like this, that runs scared from parliamentary scrutiny, that does not have the decency to talk to stakeholders whose livelihoods rely on this. It is a government that does not care about what the public policy ramifications will mean for the mums and dads who will go and see financial planners and make decisions about their financial security and their futures off the back of changes that are contained within these laws.

That is the reason the Australian people are fed up with the Australian Labor Party. They have good reason to be because Labor are just so arrogant when it comes to their approach to governing. Labor are completely obsessed with ramming through whatever they can in these final two weeks and one day of parliament without any regard for what the impact on the community will be.

We in the coalition will use the brief periods that we have to highlight all the shortfalls that we see contained within laws like this. When the Australian people hear that all the extra red tape and all the extra compliance contained within this bill are here for one reason only—because the Treasurer, the member for Lilley, needed to try to deliver a couple of hundred million of extra revenue, on paper, one financial year to try to prop up his pathetic attempt to reach a budget surplus—only to know that we have a $19 billion deficit and therefore there was no point to the change whatsoever, no wonder they will just say, 'They are a joke.'

The Labor Party is a joke and should be branded a joke because this represents the lowest form and the lowest approach to public policy that could possibly exist. There are no benchmarks here, no gold standard, no world best practice with the approach contained within this bill. That is not even with respect to tax matters. That is with respect to parliamentary scrutiny. Remember the days of 'let the sunshine in'. They have closed the curtains and drawn the blinds. That is what is going on. It is entirely consistent—I notice the minister at the table—with the approach that Labor also adopted with respect to Gonski, another multibillion dollar approach.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I ask the member to be relevant to the tax bill.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I am just talking about a pattern of behaviour by this Labor government. I do not intend to go through all 11 schedules in the bill, but I will also touch upon those schedules that the coalition is attempting to have segregated from the balance of the bill so that effectively the bill is split.

Schedules 3 and 4 deal with creating a regulatory framework for tax and financial advice services as well as other amendments to the Tax Agent Services Act. The carve-out was put in place sometime ago and it expires on 30 June this year. As I indicated already in my comments, the coalition sought to provide opportunity for the stakeholders—the people who inform the mums and dads of this nation about what they should be doing in their financial affairs—to have their feedback upon the approach that Labor was adopting. Labor said, 'We do not want the feedback, frankly, we are not prepared to listen, we will just what we want to do.'

The Financial Planning Association, the Financial Services Council and the Association of Financial Advisers have all raised concerns with respect to the changes contained within this bill. They are concerned about the fact that there has been a complete lack of consultation on the bill. They are concerned about the definitions used in the act. It is unclear, for example, if stockbrokers, insurance brokers and mortgage brokers are covered. There are concerns about possible negative interactions in relation to FoFA, the future of financial advice, reforms in this bill. They are also concerned about increased compliance costs resulting from the bill. That inevitably means one thing: extra compliance costs that are faced by tax agents, financial advisers and others will simply be passed through to consumers. We do not know what the impact of this is going to be. We know that all the peak bodies are concerned. We know that very good people like John Brogden are concerned, but we do not have the opportunity to discern what the impact will be because Labor will not enjoy the scrutiny.

This bill, in my view, represents one of the lowest points for the Australian Labor Party. The bill does need to be split so that the less controversial aspects can go through, although they should have gone through after parliamentary inquiry. In the absence of that, at least they can go through, but the more controversial aspects—schedules 3, 4 and 5—ought to be separated and the coalition attempts to do that with the amendments we have put forward.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. This 118-page bill contains a range of tax changes in 11 schedules. They are very complex changes that require careful consideration and proper parliamentary scrutiny, as outlined by my colleague the member for Moncrieff. However, at this stage this will not occur because the Labor government are ramming this bill through parliament before the election, irrespective of its incredibly complex consequences for industry and the Australian economy. We saw a similar process occur when this government rammed through the Future of Financial Advice (FoFA) legislation.

The bill was introduced just last Wednesday, on 29 May, after which the bill was appropriately referred to the Joint Committee on Corporations and Financial Services and then passed off to the House Standing Committee on Economics. That Labor dominated committee since decided that such complex changes do not warrant any scrutiny, declaring:

... due to the urgency of the bill and the need to resume the second reading debate there is insufficient time to undertake an inquiry.

It is the view of the coalition that this is simply not acceptable. As the coalition members of the House Economics Committee indicated in their dissenting report:

Coalition members of the committee recognise the importance of parliamentary scrutiny of executive government. The decision of the committee to reject an inquiry into the Tax Laws Amendment (2013 Measures No. 2) Bill 2013 due to "insufficient time" represents arrogance from Labor members.

This bill significantly increases government revenue (in other words—higher tax receipts) by nearly one billion dollars in schedule 1 alone.

The fact relevant government agencies, as well as the public and key stakeholders were denied an opportunity to inform the committee of the consequences of this decision by the Gillard Labor government underscores the shambolic and reckless approach to policy development by Labor.

Allowing the debate on the second reading today does not give important stakeholders any opportunity to consider and comment on the proposed changes, which could have huge ramifications in their industries.

First, I will address schedules 3 and 4 of this bill which respectively extend the regulatory framework for tax and financial advice services and make other amendments to the Tax Agent Services Act 2009. Schedule 3 amends the Tax Agent Services Act 2009, TASA, so that tax advice given by practitioners in the course of giving advice that is usually provided by financial services licensees falls within the regulatory regime administered by the Tax Practitioners Board, TPB. TASA introduced a national regulatory regime for tax agents and business activity statement agents to ensure that providers of tax agent services to the public meet appropriate so-called professional and ethical standards. TASA introduced this regulatory regime based on three elements: the definition of what constitutes a tax agent service, the registration requirements for the code of professional conduct that applies to registered tax agents, as well as civil penalties that could apply to unregistered tax agents. As outlined in the explanatory memorandum to this bill, TASA generally requires entities that provide tax agent services to register with the TPB.

At the time of that legislation, there was a recognition of the fine line between whether an entity is merely providing general information about the tax implications of particular financial products or whether it is giving tax advice that could reasonably be expected to be relied on and therefore a tax agent service. Therefore, it was decided to exempt tax agent services provided by financial services licensees and their authorised representatives from TASA. This is set to expire on 30 June 2013.

This means that there will be a new regulatory regime within TASA for entities in the financial services industry which give tax advice. It does this by creating a new type of regulated service—that of a 'tax (financial) advice service'. The definition of a 'tax (financial) advice service' would comprise two elements: that of providing a tax agent service and providing that service in the course of giving advice that is of a kind usually given by a financial services licensee or an authorised representative. Therefore, providers of tax (financial) advice services from July 1, 2013 would need to register with the Tax Practitioners Board and meet the requirements of the legislation.

There has already been strong feedback from the industry about these changes. The Association of Financial Advisers has called this legislation 'rushed and flawed', which has been brought forward 'without due process or adequate consultation'. As they have highlighted, 'there is a serious risk that the legislation will result in significant unintended consequences' because of the 'lack of detail and regulation or guidance'. The latter characteristics are symptomatic of most of the legislation put up by this Labor government

There are several other outstanding issues raised by these changes, including, but not limited to, the lack of clarity of which types of financial advisers will be captured under the act such as stockbrokers, insurance brokers or mortgage brokers. Questions remain about whether all financial advisers will have to be registered and, furthermore, what will this legislation mean in terms of further training for financial advisers and how will the interactions evolve between the registration of financial advisers with changes already passed in the rushed and highly complicated FoFA legislation? Lastly, what are the implications of this bill in terms of the interaction between the TPB and the Australian Securities and Investments Corporation, who are both regulators in this area, and who will take precedence where there are inconsistencies?

Those FoFA changes were debated in this House in March 2012 following an inquiry process which actually did occur. At that time, the Parliamentary Joint Committee on Corporations and Financial Services was advised time and time again that FoFA would result in huge additional costs, reduce employment levels in the financial industry and reduce the availability and access to quality advice. The Gillard government did not listen and passed that complicated legislation, which the coalition strongly opposed and voted against. Although they will not allow this legislation to be referred to a committee, I remind the Gillard government that the financial services industry is already trying its hardest to implement FoFA by 1 July this year, and these changes to TASA have the potential to further hurt the financial services industry.

Other constituents in my electorate who are financial advisers have also contacted my office to highlight the important work of financial advisers, who help 'workers, retirees and their families in Queensland achieve their financial objectives and be independent in retirement'. They have outlined their concerns about this 'costly duplicative regulation'. They are concerned that the TASA changes 'will make the cost of doing business prohibitive, meaning job losses and financial advice becoming more expensive and less accessible around the country'. These constituents and stakeholders deserve to have their voices heard and their questions answered during a parliamentary inquiry. Ultimately, all these unanswered questions mean the potential for uncertain increases in compliance costs for financial advisers.

The coalition therefore seeks to excise these schedules from the bill. We do not believe that the government should be proceeding with changes to TASA; instead, we should extend the transitional arrangements already in place—which exempt tax agent services provided by financial services licensees—to ensure consultation can be brought to a judicious conclusion.

If this means deferring these changes through the committee process and beginning anew after the next election, then so be it. The time line of an election of this parliament does not negate the need for proper parliamentary processes, nor should it impact on the passage of poorly designed legislation.

Further, schedule 5 involves amendments to the Taxation Administration Act 1993 to change the rules regarding Australia's business tax system. There are three primary changes. Firstly, there is the imposition on the tax commissioner to make public certain information obtained from the tax returns of corporate tax entities with a total income of $100 million or more in a financial year. This imposition will also involve the publication of an entity's final annual amount payable under the minerals resource rent tax or petroleum resource rent tax, regardless of its total income.

Secondly, the new law will allow the publication of aggregate tax information, irrespective of whether such disclosure is reasonably capable of being attributed to a particular entity, unless that entity is an individual. The third measure increases information sharing between government agencies, as the explanatory memorandum states, 'involving information to the Secretary of the Treasury, for the purposes of briefing the Treasurer in relation to a decision that may be made under the Foreign Acquisitions and Takeovers Act 1975 or Australia's foreign investment policy'.

As I previously mentioned, the coalition did attempt to refer this bill to the House economics committee, but Labor rejected that. Therefore, the coalition will seek to excise this schedule from the bill. We do so because of concerns particularly with the imposition on the tax commissioner to make public the tax affairs of corporate tax entities with reported total income over $100 million and the relation to payments through the mining tax and PRRT.

The intention for these amendments was announced in February 2013 by the Labor government—after the government attempted to hide the failure of its mining tax by refusing to release those revenue figures in the Mid-Year Economic and Fiscal Outlook. At the time, the government claimed it could not release the figures because it could potentially identify the tax information of specific corporate entities. The coalition did not believe this assessment at the time, which is why in the end the government indeed released the mining tax revenue receipts; because the Treasurer's confidentiality arguments could not be sustained.

So what is the government's legislative response? It is now actually imposing on the tax commissioner to release information about the liability of companies under the mining tax and PRRT and allow the publication of tax information, even if it does attribute that information to a particular entity. The coalition believes that is a massive overreach by this government; just as it would be if the government were to make public tax information relating to an individual.

Furthermore, schedule 1 of this bill amends the tax laws to require certain large companies to pay their PAYG, pay as you go, tax instalments monthly rather than quarterly or annually. Under current law, all entities are liable for PAYG instalments quarterly unless they are eligible to become an annual or biannual payer. Under the new law, entities will be liable for monthly PAYG instalments if they exceed certain thresholds, which are 'base assessment instalment income in a particular financial year'.

The threshold will begin at $1 billion for corporate tax entities from 1 January 2014 and subsequently lower to $100 million from 1 January 2015 and to $20 million from 1 January 2016. From that date, all other entities with a base assessment income threshold of $1 billion, including superannuation funds, trusts and individuals, will be required to pay monthly PAYG instalments, reducing to $20 million the year after.

The government claims that this change will not increase the overall tax burden on a corporation or other entity. However, for those entities affected, this change does amount to a very significant one-off bringing forward in their tax and could potentially result in perpetually tighter cash flows and slimmer operating cash buffers. I do note that the reduction in payments to monthly is intended to bring in $10.15 billion to the government over the forward estimates.

I do not have the time now to go through every single measure in today's bill. This bill involves extremely complicated changes which would be best left to be further considered by the oversight of a parliamentary committee, as the coalition has recommended. This would allow parliament to fully scrutinise the intended consequences and, more importantly, the unintended consequences of the measures and allow the relevant stakeholders to have their say about what these changes mean for them.

In relation to schedules 3 and 4, as I have highlighted, this opportunity is particularly important for the financial services industry, who are already struggling with the implementation costs of this Labor government's FoFA legislation. Complex changes require careful consideration. The failure of this government to put forward this legislation with full scrutiny is yet another reason why Australians simply cannot trust this Labor government.

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

I am pleased to rise to speak on the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. This bill contains 11 complex and highly technical schedules. As the coalition have made clear, we believe that schedules 3, 4 and 5 in particular deserve further scrutiny, and we will be moving amendments to excise these schedules from the bill.

In the brief time I have available to me this morning I wish to focus on schedules 3 and 4, which are intended to establish a new regulatory framework governing tax advice given by financial advisers, financial planners and others who are giving such advice on tax incidental to the course of giving advice on broader financial issues. The key issue which is addressed by these schedules is whether that advice should be subject to the regime in the existing Tax Agent Services Act 2009.

In the time available to me I want to make three points. The first is that there are complex issues here which affect a wide range of stakeholders. The second is that the government has rushed through these detailed and complex changes with very little consultation. Thirdly, therefore, the coalition does not support these changes to the regulatory arrangements governing the provision of tax advice without further scrutiny and consultation.

Let me turn to the first proposition, which is that these measures raise complex issues which affect many stakeholders. Indeed, these measures would affect many professionals who provide tax advice incidentally to the provision of advice on financial products. It is a fairly obvious proposition that it is difficult to untangle tax advice from financial advice. If we think about a financial adviser or a financial planner who is advising a client to increase his or her superannuation contributions, obviously, part of the rationale for such an increase is going to be that superannuation is a tax advantaged investment. Money which goes into a superannuation fund, subject to it being below the annual contribution limit, is taxed at 15 per cent as compared to the marginal rate if the money is taken in ordinary income. In those circumstances, for most taxpayers the marginal rate is well above 15 per cent. If someone is providing advice about extra superannuation contributions, inevitably they, as a financial planner or a financial adviser, will raise tax considerations in the advice that they give to their client.

Similarly, if someone were to advise a client, as a financial planner or a financial adviser, that that client should consider taking out a margin loan to buy a parcel of blue-chip shares, again, the tax considerations would necessarily form part of their discussion with their client. They would need to explain to the client the tax treatment of the interest on the margin loan. While the advice is given primarily as part of assisting the client to develop an effective financial strategy to maximise his or her wealth over time, in the provision of that advice there will necessarily be a discussion of the tax aspects of this particular structuring of the client's affairs.

A third example might be advice regarding the tax benefits of investing in shares which have franking credits. Again, the primary purpose of the provision of the advice is to recommend the desirability of investing in shares as a means of building up wealth over time. I hasten to add that I am not personally expressing a view as to whether shares constitute a good investment for that purpose or not. I am simply making the point that an adviser or planner might very well find themselves in the position of giving such advice to a client. Again, what would necessarily form part of that discussion would be advice about the way the dividend imputation system works. The fact is that shares, in companies which are themselves paying tax, carry with them franking credits, and when that is added into the overall mix that increases the after tax value of the returns from the shares.

The point I am making is that it is very difficult to disentangle advice on the financial affairs of a client from advice on the tax implications of particular financial options and choices that the client may choose to follow based upon advice from, for example, a financial planner or a financial adviser. It follows, therefore, that it is quite problematic if financial planners and financial advisers are not permitted to advise on tax issues. On the other hand, tax is clearly a very complex area. The consequences of getting tax matters wrong can be severe for taxpayers. It is therefore appropriate that the provision of tax advice should be carefully regulated.

These issues were weighed up when the existing Tax Agent Services Act 2009 was passed. That legislation established a national regulatory regime for tax agents and agents providing advice on business activity statements as part of the GST arrangements, so as to ensure that providers of tax agent services to the public meet appropriate professional and ethical standards. The legislation establishes the definition of a 'tax agent service', and the legislation seeks to establish that dividing line. Is the advice merely general information about the tax implications of particular financial products, or is it the provision of tax advice which could reasonably be expected to be relied upon and therefore a tax agent service?

As part of drawing that dividing line, in developing the regime that was legislated under the Tax Agent Services Act the government took the decision to carve out tax agent services provided by financial services licensees and their authorised representatives. In other words, the policy decision that was taken when the 2009 act was passed was to use that particular carve-out mechanism to establish the dividing line. Therefore, somebody who is providing advice to a client and who is a financial services licensee or the authorised representative of a financial services licensee is excluded from the regime in the Tax Agent Services Act, even though in the provision of financial advice—as I have pointed out—that person is inevitably, necessarily and naturally likely to provide advice about the tax implications of that particular financial instrument or structure that they are recommending that the client should invest in.

What we have before the House now is a bill which proposes a complex new regime, taking a different approach to establishing where that dividing line is. It will do so by creating a new type of regulated service: a 'tax (financial) advice service'. Let me briefly note the enthusiasm with which the Treasury and other relevant officials treat the bracket as a device in the naming of bills and other concepts. Under the regime that is proposed in the bill, the tax (financial) advice service will consist of two elements: the provision of a tax agent service and the provision of a service in the course of giving advice of a kind usually given by a financial services licensee or its representative. If you are to provide such services you will need to register with the Tax Practitioners Board.

These issues are complex and they affect many stakeholders. The Financial Planners Association, the Financial Services Council and the Association of Financial Advisers have all raised concerns in relation to the changes proposed in schedule 3 of this bill. Those concerns include the lack of consultation in relation to the bill and the lack of clarity in the definition which is proposed to be used in the bill. It is unclear, for example, if stockbrokers, insurance brokers and mortgage brokers are covered by the definition. Stakeholders have also raised concerns about the potential negative interactions with the very complex and extensive Future of Financial Advice reforms and of the increased compliance costs resulting from the bill that will inevitably be passed onto consumers.

I would like to quote from a letter from the Financial Planning Association of Australia dated 3 June. That association said:

In our view the Bill is far from finalised and does not satisfactorily relate to the taxation advice provided in the context of financial planning advice.

The most significant key outstanding issues include:

We are four weeks away from the existing deferral arrangements ending and we are still not clear on the exact requirements and obligations for financial planners in respect to complying with the Tax Agent Services Act, should this be required. … Considering that the Tax Agent Services Act will impact every one of our 9000 practitioner members, and likely more than 40,000 in total, the lack of consultation and the tight time frame is a real concern.

That brings me to my next point, which is that the government has sought to rush through these complex changes with very limited consultation.

When this bill was introduced, the coalition sought to have it referred to the Parliamentary Joint Committee on Corporations and Financial Services. That request was denied and the bill was instead sent to the House Standing Committee on Economics by the selection of bills committee. On Friday, 31 May 2013, the Labor majority of the House economics committee refused to hold an inquiry into this complex bill. So we now have the situation where this government is asking parliament to pass a bill with significant changes to the law and with significant impact on key stakeholders—with those stakeholders very uncertain as to its impact—within a week of the bill being introduced to the parliament, with no committee oversight. There is no word to describe this process other than atrocious.

It is quite difficult to understand why the government has got itself into this situation, given that the 30 June 2013 deadline has been there for a long time. Yet this government has left this important matter to the last minute. Also, the current arrangements have worked satisfactorily. So, even if there is a policy case to improve them—as to which I express no view—there is no particular reason to do it with effect from 1 July this year. It would be perfectly practicable to roll over the current regime for another year to go through a proper and considered process. It is further hard to understand given that these changes affect an industry—the industry of financial planning and advice—which has faced a relentless torrent of regulatory change in the last three years, including Future of Financial Advice reforms, the MySuper reforms, Superstream and a range of others, all of which involve complex changes to business processes, IT systems and client engagement models. And now this government is proposing to dump another burdensome set of regulatory changes on this industry at very short notice.

This brings me to my third and final point, which is that the coalition does not support these changes without extensive further scrutiny. The coalition have a simple choice this morning: do we support these changes as presented to us or do we reject them? We do not dismiss out of hand the question as to whether the dividing line is appropriately struck between the provision of tax advice on the one hand and the provision of financial advice, including tax issues, on the other. We simply say that there has not been adequate time to consider this important question. There are serious stakeholder interests at stake. Until a proper process has been carried out, we will not support these provisions.

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

I note that several of the speeches made on this bill, the Tax Laws Amendment (2013 Measures No. 2) Bill 2013, seem to be trying to build an element of division around the entire bill, when the truth is that most schedules in this bill have bipartisan support—and that is welcomed. Of the 11 schedules that are in this omnibus tax amendment bill, I understand that there are three that are in disputes—schedules 3, 4 and 5.

Dealing with those issues first, I think we are fundamentally talking about bringing financial planners under the Tax Agents Services Act, which are the schedule 3 provisions, backed up by some technical amendments in schedule 4, and then schedule 5, making the tax paid by large corporations more transparent. I am very surprised with that being at all controversial.

In fact, I will deal with schedule 5 first. This is a key part of the business integrity package as announced in the federal budget. I have a lot of time for the new tax commissioner, Chris Jordan, in particular, who I understand has done a lot of work with the business tax working group following on from the tax summit in 2011. Now in his new role he is implementing with government and with the Assistant Treasurer a business integrity package that I think deserves the support of this chamber.

There are reports from jurisdictions all round the world on this issue that Australia needs to start getting its head around and we need to participate in, in a cross-jurisdictional way, looking at how multinational companies are gaming sovereign tax laws to their own benefit and to the detriment of the communities they are doing business in. That is a noble starting point, that we start to address these issues in a substantive and coordinated way both within Australia and across jurisdictions. The key opposition to this, as far as I can work out, is that there is some belief that government is overreaching. On the contrary, I hope this is just the start of trying to address these issues, which are real and which have the potential to significantly erode the integrity of the tax base in Australia.

These laws do not impact the privacy of one single individual in Australia, even the wealthiest individuals. As far as I understand—and the minister may like to correct me—not one single individual, poor or rich, is impacted in regard to their own privacy. The legislation is starting to try and address, as far as I understand, the issues of large companies with significant turnovers and, I think quite rightly, people wanting to know what tax is paid by the very large corporations in Australia, most of them already reporting this information in their annual returns to their shareholders. In my judgement as a representative in this chamber, I do not view this as a layer of red tape or a further impost. This is allowing Chris Jordan and the ATO to do their job on behalf of all Australians and protect the integrity of our tax base and make sure we are not being gamed. This means that individuals may have to pay more tax, if we are being gamed by the top end of town who are happily doing business and selling products in our market yet not paying a fair and equivalent share of their contribution to the tax base.

I have no problem whatsoever with schedule 5. In fact—and this is a message to both sides of this chamber—I sincerely hope this is just the start of the journey of Australia dealing with issues around the integrity of our tax base and cross-jurisdictional tax issues. There are plenty of examples both within Australia and around the world of well-known multinationals, in particular, gaming those sovereign tax laws at the expense of countries, including ours. I welcome schedule 5.

In relation to schedules 3 and 4, I am really disappointed that they are being omitted. I accept the arguments, and I hope it is only for a short time. It is now four months until an election, so this is a message to both sides: I hope this is not some sort of win for my old mate John Brogden and financial planners or for Mark Rendall. I hope this is not just a cave-in to some pressure from the financial-planning industry and that it is being omitted with the noble intent of buying some time to do some further consultation. But the principles behind schedules 3 and 4 and the importance of consumer protection very much stay on the agenda.

I have heard all the arguments for and against from financial planners, accountants, tax agents, experts in the law and many, many others. Where real concerns have been raised, I have done what I could to get answers. Initially there was a legitimate argument about lack of consultation. The exemption for financial planners under the Tax Agent Services Act was a time limited extension that had expired in 2012. It was extended and it had always been the expectation that financial planners would be governed by this regime. There is still time for consultation on the regulations that will come beneath the act relating specifically to education and experience to achieve registration for financial planners. After having done a bit of homework, I think the lack of consultation question is relatively shallow. I hope once again that this is not a cave-in to some political pressure. Initially I thought there was a fair argument around unreasonably stopping financial planners undertaking their role, but the response has been that there is a three-year transitional period during which planners will only be required to register with the board. I am told the regulations are well underway and there will be plenty of time for educational requirements to be satisfied before the transitional period ends.

The other issue that I thought was legitimate, one I pursued with ministers involved, was that there was an inconsistency between these tax reforms and the very good FoFA reforms that have gone through this parliament as part of a broad reform agenda of this 43rd Parliament. I thought there was some legitimacy in the argument that these laws need to be talking to the FoFA laws and vice versa. That was of concern to the point where I was not going to support schedules 3 and 4 until there was some clear direction on that. I got that clear direction. I got a letter from Minister Bill Shorten, which I am happy to release after this. In the letter he said that the reform of the tax agent services regime does very clearly talk to the FoFA reforms and they work in parallel. Likewise, I received a similar letter from the minister at the table to the effect that creating a co-regulatory framework for tax advice services is actually the point of the exercise—getting the FoFA reforms to talk to tax reform is the narrative; it is the point. That we are now dropping that because of some political pressure is a step backwards. So I received both of those letters.

Importantly, though, I received a letter from ASIC, the Australian Securities and Investments Commission, that has said that ASIC is confident that the Corporations Act and TASA are consistent and that a financial adviser can comply with both. That is a relatively long letter that also provides comfort. And my good friends at the Tax Institute I think put it best of all—and the Tax Institute are hardly a friend of government. Arguably, they are the country's leading professional association in tax, with 13,000 members, including tax agents, accountants and lawyers. Fundamentally, they support the tax profession to work to continually improve tax law and administration. They are very passionate about schedule 3 and say that it is an important consumer protection measure in tax law. I think they will be bitterly disappointed that because of the lack of numbers in this chamber the government has had to omit schedule 3 at the expense of consumer protection in Australia today. I will also release that letter.

The Institute of Chartered Accountants in Australia have also passionately argued that the accounting profession supports schedule 3. They said, 'This has been in gestation for some 20 years, with concerted discussion and drafting of this particular element of the Tax Agent Services Act 2009 arrangements over the last three years.' But from the shadow Treasurer through, on one side of this House, we have heard that this has all been a mad rush by a disorganised government and that the sky is falling. Twenty years in gestation, in writing from the Institute of Chartered Accountants in Australia—a good friend, I would have thought, of the Liberal-National Party.

So what has gone on? The Institute of Chartered Accountants, the Tax Institute, ASIC and both ministers have providers letters of comfort to say that schedule 3 talks to the financial services reforms of the last couple of years. They say it is a really important reform for consumer protection in Australia, so who has folded? And why? I hope that the vote actually records who has folded and why.

I am a good friend of John Brogden; I will put that on the record. But I would hope that a lobbying campaign from John Brogden and Mark Rendall is not at the heart of vested interests getting in front of consumer protection and important law reform that has been in gestation for 20 years according to the Institute of Chartered Accountants. Why would our chamber get in the way of improving consumer protection, particularly in the last five years, when every community—mine as well as everyone else's in this chamber—has had superannuants and retirees have their money diddled by people who are working in this field, where there is $1 trillion of superannuation money. The Cooper review has stated that there are immature rules around that trillion dollars. We need to improve the regulatory framework with some urgency, yet some people in this chamber have folded their tent behind a bit of political pressure, a bit of lobbying and a bit of positioning for the next four months.

I think that consumers, who are voters, have a right to be angry. Their money remains exposed, with immature rules around some really critical reforms for our country that get the FoFA reforms talking to our tax laws, as clearly identified in letters of comfort from ASIC, from the Tax Institute, from the Institute of Chartered Accountants and from both ministers. I think it is really disappointing that the numbers are not in, and that we have had to omit schedules 3 and 4. I know there are financial planners who will run around and pop the champagne, but consumers should not. Retirees should not; retirees have had a loss today. Their money is still exposed by a regulatory regime that still needs further work.

As a chamber, I would hope that we are not bailing out for good. I hope that, as a compromise, this is just buying a window of time. I would encourage the minister to answer that. I would hope this gets revisited with some urgency, because the point of the exercise is in schedule 3 and 4, and that is to get FoFA talking to our tax laws and vice versa. We have bailed out today. It is disappointing. Consumers have had a loss, and I hope we can revisit it sometime soon.

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

I would like to take the opportunity to thank all members who contributed to this debate, in particular the member for Lyne for his contribution, which I think was a very worthy one.

Schedule 1 of the Tax Laws Amendment (2013 Measures No. 2) Bill 2013 requires large entities in the pay-as-you-go instalment system to make their instalments monthly instead of quarterly. Unlike the coalition's monster paid parental leave tax, no entity will pay more tax as a result of this change. In fact, not one extra dollar in tax will be paid. This merely changes the frequency with which instalment amounts must be remitted to the Australian Taxation Office.

In order to help reduce compliance costs, the commissioner will be granted a new power to develop alternative methods of developing instalment income. Earlier this year, I also announced a longer term review of the pay-as-you-go instalment system. As part of this review the government will consult with industry to identify longer term reforms to improve the pay-as-you-go instalment system for all businesses, large and small.

The member for North Sydney bleated that the $20 million threshold had been plucked out of thin air. Once again, the member for North Sydney is showing his ignorance of these matters and also, I think, is showing why he is unfit to be sticking his hand up to be the Treasurer. The $20 million threshold was chosen to align with the GST threshold for being a monthly GST reporter, so there is a very clear reason. The figure was not plucked out of the air; there is a very strong rationale for that. The whole purpose of the reform is to better align PAYG instalment payments with the GST payments for most large companies and to allow PAYG instalments to be more responsive to the economic conditions faced by their businesses.

Schedule 2 to this bill amends the Income Tax Assessment Act 1997 to introduce a new tax loss incentive for designated infrastructure projects. The tax incentive will promote private sector investment in infrastructure projects determined to be of national significance. Examples of these projects that could benefit include the Brisbane Cross River Rail, Sydney motorways and Melbourne Metro projects. I know firsthand how important the Sydney motorways project is to the people of Western Sydney. It is desperately needed, but we would of course like to see the extension to the M4 go all the way to the city and would like to ensure that, whatever the financing arrangements, a new toll is not imposed on an old road where motorists are forced to pay a toll for driving along a road that they currently drive on for free.

Mr Hockey interjecting—

The member opposite says it will never happen. Perhaps he should tell the people of Western Sydney that he is intending to make a false promise.

This is an important part of a broader package of reforms to build the—

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

Madam Deputy Speaker, I rise on a point of order. I am not going to have that misrepresentation. I said it will never happen without a toll. He verballed me and sought to misrepresent me.

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

The minister will stick with the matter.

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

And that was very much a part of the package of measures that we have before us. But this is an important part of a broader package of reforms to build the infrastructure Australia needs to compete in the 21st century. The tax incentive will promote private investment by preserving the value of accumulated losses over time. Further support is provided by removing the restrictions imposed on the use of carry-forward losses, which can prevent losses being claimed if there is a change of ownership of a project. The tax incentive will encourage private investment in nationally significant infrastructure such as roads, rail and ports. It is a clear demonstration that this side of the House is committed to improving the nation's infrastructure, which is so important for the long-term growth of this country.

Schedules 3 and 4 ensure the appropriate regulation of all forms of tax advice whether they are provided by a tax agent, a BAS agent or an entity in the financial services industry. Contrary to the misleading claims of those opposite, the bill contains a three-year transitional period to allow financial advisers to comply with the regime. All of this rubbish about people being required to come into compliance with the regime in a matter of weeks is precisely that. This is similar to the transition period that this parliament provided to accountants who provide financial advice. These amendments are designed to ensure that all entities that give tax advice meet appropriate professional and ethical standards.

That is what they would do, of course, if the coalition were not determined to block them as they are. The member for Lyne made the point very clearly that somebody has to come into this place and stand up for the protection of consumers. It is one thing, as one of the members opposite said, to talk about the financial planners in her electorate, and I am sure they are wonderful people doing a good job, but it is our responsibility to protect the consumers—the broader population—from the professional activities of those within the financial-planning sector who are engaged in providing advice that is of a taxation nature. These amendments would give consumers the confidence they need and they deserve. The government thinks that Australians who use financial advisers should feel secure knowing that the adviser meets appropriate professional and ethical standards. I think it seems hard to object to that.

The shadow Treasurer claimed that there has been no consultation. The truth is that there has been extensive consultation. If we have a look at what has been occurring, we can see that on 29 November 2010—that is right; back in 2010—the government consulted with the public on a discussion paper titled Regulation of tax agent services provided by financial planners. Then, throughout 2011 and 2012, the former Assistant Treasurer, my predecessor, held roundtable consultation with Treasury and with stakeholders. Furthermore, there was public and targeted consultation on the draft legislation. If the opposition are hiding behind claims of process to avoid the truth—that they are not willing to stand up for consumers—let me, in detailing that consultation, remove that fig leaf.

The government are committed to these reforms, and we will continue to advocate for the rights of consumers. If three rounds of consultation are not enough for the shadow Treasurer then we will allow parliament more time to scrutinise these amendments and ask that the coalition join with us in supporting these important consumer protection measures.

Schedule 5 provides important opportunities for the public to scrutinise the performance of Australia's business tax system and the contributions made by large and multinational businesses. Like the member for Lyne, I am surprised to see that the opposition is proposing to oppose this. There is growing concern not just here in Australia but right around the world that many of the key rules of international taxation have not kept pace with the evolution of the global economy. The apparent ease with which some large corporate entities can shift taxable profits and erode a country's tax base is a shared concern for this government, for the G20 and for, in fact, most OECD countries. I am surprised that it is not a concern of those opposite. Policymakers and the Australian public should have more transparency around the levels of tax being paid by large and multinational businesses in Australia to allow for an informed debate about the efficiency and equity of our tax system. By increasing the transparency of our business tax system the government will ensure that the public is well informed about the contributions made by large corporations. The amendments will also ensure that the government can be advised on and publish period aggregate tax collection information even where there may be few corporate entities paying a particular tax. In addition, schedule 5 facilitates increased information sharing between government agencies.

I pick up on the point that the member for Lyne made. We believe that the privacy of individuals in relation to their tax affairs should remain sacrosanct, and nothing in this schedule will alter that. But I make this central point: as we engage in a debate around base erosion and profit shifting, I hear plenty of stakeholders—in fact, some opposite—come forward and say, 'Show us the evidence that the corporate tax base is being eroded; show us the evidence that there is profit shifting.' In fact, these are the arguments that I have heard from those opposite when they have come into this place consistently to oppose measures that we have introduced to crack down on corporate tax loopholes—over $10 billion worth of measures in revenue protection that have been voted against by those opposite. Every single time, they come into this place and they say, 'Show us the evidence that big multinationals are not paying their fair share of tax.' We say, 'Okay, we need to amend the law so that you can see all of that evidence,' and they come in here and say they are opposed to it. What are you hiding? Why is it that you are so determined to hide the tax position of so many of these companies? It is outrageous. The net effect is that, if we do not crack down on these loopholes, individuals and small businesses—average, hardworking Australians out there—have to end up paying a higher burden of tax to pick up the slack when some of the most profitable companies in the world are not paying their fair share. You should be ashamed of yourselves.

Schedule 6 addresses issues arising from the full Federal Court decision in Esso Australia Resources Pty Ltd v Commissioner of Taxation in 2012. Without amendment, there would be significant financial implications for industry, with many taxpayers being unable to deduct legitimate project expenditures in determining the PRRT liability for their petroleum projects. The government recognises that such an outcome would be inconsistent with the policy intent underpinning the PRRT regime and the way it has been administered since its commencement in 1987. The amendments maintain the policy intent of the PRRT as a profits based tax and are broadly consistent with the ATO's longstanding application of the PRRT law in relation to the treatment of deductible expenditure. At the same time, they preserve the substance of the court's decision that a taxpayer cannot derive a tax advantage via contract arrangements with related parties.

Schedule 7 exempts from income tax payments made to individuals under the Defence Abuse Reparations Scheme. The establishment of the scheme forms part of the government's response to the DLA Piper report of the review into allegations of sexual or other forms of abuse in Defence. The payments made under the scheme are in recognition of the fact that abuse in Defence is unacceptable and wrong. Exempting these payments from tax will ensure that recipients receive the full benefit of the payment. Exempting the reparation payment from the income tax will also prevent it having an impact on people's social security payments, such as parental leave, family assistance and child support payments.

Schedule 8 implements the government's announcement of 8 May 2012 to remove the 50 per cent discount on capital gains accrued after that date for foreign individuals. Foreign and temporary resident individuals will still be entitled to the 50 per cent discount on eligible capital gains accrued prior to 8 May 2012 after offsetting any capital losses, provided they choose to value the asset as at that day.

Schedule 9 amends the GST law to establish the framework for providing that certain services and support provided to National Disability Insurance Scheme participants will be GST free when they are provided for in a National Disability Insurance Scheme plan. This will ensure greater certainty for National Disability Insurance Scheme participants and providers that supply services to those participants. These amendments will apply in relation to supplies made on or after the commencement of section 37 of the National Disability Insurance Scheme Act 2013. However, this is subject to state and territory agreement to the making of the necessary determination.

Schedule 10 amends the deductible gift recipient provisions of the Income Tax Assessment Act 1997. Taxpayers can claim an income tax deduction for gifts to organisations that are DGRs. Schedule 10 adds five new organisations to the act: namely, the Aurora Education Foundation Ltd, United Way Australia, the Australian Neighbourhood Houses and Centres Association Inc., the Australia Foundation in support of Human Rights Watch Ltd, and the Layne Beachley Aim for the Stars Foundation Ltd. The government will also move an amendment to add an additional organisation to the act: namely, Social Traders Ltd. Making these organisations deductible gift recipients will assist them to attract public support for their activities. Schedule 10 also extends the listings of two organisations in the act: the DGR listings for the Roberta Sykes Indigenous Education Foundation and the Charlie Perkins Scholarship Trust have been extended indefinitely. Extending the DGR listings for these organisations will assist them in continuing to attract public support for their activities.

Finally, schedule 11 makes several miscellaneous amendments to the taxation and superannuation laws. These amendments are part of the government's commitment to the care and maintenance of the taxation and superannuation systems. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Message from the Administrator recommending proposed appropriation announced.