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

The Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015 contains seven schedules, and I should say from the outset that Labor will be supporting the bill. But the context of this debate provides an opportunity to go to some of the issues raised within this bill which go to the cessation of the first home saver accounts scheme and the government's commitment to housing affordability; to the abolition of the dependent spouse tax offset and the government's view, somewhat inconsistent, on this scheme; and to offshore banking units and the government's frankly lacklustre approach to tackling multinational profit shifting.

On the issue of housing affordability we have seen a great deal of talk from the government, but unfortunately much of that talk has managed to put much of Australia offside. It was only last week that we had the Treasurer telling a press conference that if housing were unaffordable in Sydney no-one would be buying it. As has been pointed out, one can easily take 'housing' out of that sentence and replace it with any noun you like. If diamond encrusted iPhone covers were unaffordable, no-one would be buying them, you might well say. But of course such a statement would be ridiculous. We have had clear statements now from the Treasury Secretary, John Fraser, who said:

When you look at the housing price bubble evidence, it's unequivocally the case in Sydney.

We have heard from the head of the Reserve Bank, Glenn Stevens:

What is happening in housing in Sydney I find acutely concerning for a host of reasons …

Then, going further still, he said:

Yes I am very concerned about Sydney and some of what is happening is crazy …

When central bank governors use words like 'crazy', sensible policy makers sit up and take notice. But the only response of the Treasurer to these statements from his chief economic adviser and from the head of the Reserve Bank was to say that Australians should go out and 'get a good job that pays good money'. Frankly, that is a little hard to do when you have people like Senator Abetz arguing there is a wages break-out in Australia, effectively arguing for wages to be lower, not higher. We have seen wages growth languishing under this government—perhaps unsurprising given that it is led by a Prime Minister who, in Battlelines, defended the economics of Work Choices, arguing only that the politics was bad. So, when you have got a government of Work Choices, it is going to be pretty tough for Australians to get a good job that pays good money.

Many Australians are concerned about the prospects of those on five-figure earnings being able to afford houses whose prices run into seven figures. Debate about housing affordability is an important debate for Australia to have. Yet, when the question was put to the Prime Minister from this dispatch box as to how he would respond to the Treasury Secretary's concerns about a house price bubble, his first thought was to go to his own house price—not to think about how this was affecting young Australians trying to break into the market, not to think about the fact that the homeownership rate for 25- to 34-year-olds has fallen from 51 to 41 per cent, but instead to think of his own house price.

Australians want more than a Prime Minister whose response on housing responsibility is to talk about his own home. Frankly, we need a serious debate over housing affordability. That is why Labor, through work carried out by Chris Bowen and Jan McLucas, has been engaging with the experts. That is why we have been looking at questions of infill, of making sure that greenfields development is affordable. That is why we believe that urban public transport really matters. It is why we are deeply proud that the Rudd and Gillard governments invested more in urban public transport than every other federal government going back to Federation put together. Where you have got serious investment in urban public transport, you are able to have those medium-density developments which foster housing affordability. But all this government has done on housing affordability is to abolish the first home saver accounts.

The government has no plan for housing affordability. It will not even admit that there is a problem with housing affordability. Instead, you get statements like this from the Prime Minister:

As someone who, along with a bank, owns a house in Sydney, I do hope that our housing prices are increasing.

It is cold comfort for young doctors, nurses, teachers, police officers and firefighters looking to break into the housing market in Sydney to have a Prime Minister whose chief concern is the price of his own home. The government's plan for housing affordability so far is to abolish the first home saver account.

Another part of this bill scraps the dependent spouse tax offset. In office, Labor phased back the dependent spouse tax offset, initially restricting its operation to those born before 1972 and then, in a further measure, restricting its operations to those born before 1952. It is important to note that those decisions had an impact on workforce participation because those born in the cohorts to which I have referred were of prime working age. This change is not one which can be defended in terms of labour force participation. Those affected, born before 1952, are of course aged 63 and over.

It is timely to go back to statements made by the coalition when Labor made decisions to phase back the dependent spouse tax offset. In a speech on 23 November 2012, Joe Hockey, the now Treasurer, described Labor's decision to restrict the dependent spouse tax offset as a 'tax grab'. The now Treasurer referred to phasing it back as a 'tax grab' and yet has now brought forward, in his own budget, the complete repeal of the measure. It is hard to see how this is consistent with statements such as that from the Prime Minister in August 2013 that 'taxes will always be lower under a coalition government' and:

… there will be no overall increase in the tax burden whatsoever.

Yet, if we look at the government's own budget papers, it is absolutely clear: the tax-to-GDP ratio in this year's budget is higher than in any year under Labor.

Labor is prepared to take a sensible approach to ensuring that the budget over time moves back into surplus. We have proposed a package which reduces excessive superannuation taxation concessions for high-income earners, a package which raises $14 billion over the course of the decade. If one looks at budget numbers, it is very clear—indeed, from the government's own Intergenerational reportthat pensions as a share of national income will sit at about the same level mid-century as they do now, but that cannot be said for superannuation tax concessions. They are growing extremely rapidly, forecast to double in size over the course of just four years and soon to outstrip the total cost of the pension. That is why Labor has put forward a responsible plan to tackle superannuation tax concessions for high-income earners.

We have also passed more than $20 billion of savings and backed billions of dollars of savings in this budget, including savings which were put forward in a way that Labor would not have suggested. Our support for the approximately half a billion dollars in savings in this bill is emblematic of the approach that Labor have taken to working with the government. Where measures are unfair, we have opposed them. We do not support the idea of taking $6,000 away from sole parents on $60,000, stripping one dollar in 10 out of their wallets and purses. We do not support cutting the wages of the cleaners who clean this office—and I was proud to be out the front of Parliament House yesterday with some of those cleaners, taking industrial action in order to stand up for being paid a decent wage. But we have supported the government on various savings measures.

In this bill are some tentative steps to address the issue of multinational profit shifting. When the coalition were in opposition, they voted against Labor's sensible measures to get multinationals to pay their fair share. They voted against transparency measures. And, when they came to office, they refused to follow through in enacting Labor's multinational tax package, effectively giving $1.1 billion back to multinationals.

Part of the measures that the government failed to proceed with is around offshore banking units. Offshore banking unit changes are timely in ensuring that multinationals cannot take advantage of tax concessions that are unavailable to small businesses. This government claims it is a friend of small business, but, if you want to stand up for small business, you need to stand up for making sure that multinationals pay their fair share, because an Australia in which multinationals are able to access tax loopholes not available to small businesses is an Australia without a level playing field. Labor's multinational tax package, which raises $7 billion over the decade, is a pro-small-business measure because it acts to level the playing field. These measures on offshore banking units raise $41.8 million. That is less than half the amount that would be raised under the package on multinational tax avoidance brought forward by Bill Shorten, Chris Bowen and me.

We have also seen today clear statements from the Assistant Treasurer as to why the government wants to wind back tax transparency. Previously, the government had been suggesting that it was doing so because it was concerned about kidnap risk. It then emerged that the government had sought no advice from the Australian Federal Police about tax transparency increasing kidnap risk. So now we have the Assistant Treasurer writing in The Australian that his real concern about reporting the tax paid by some of the largest firms in Australia is that it might lead to 'envy'—that Australians might be envious when they realise that big firms are not paying their fair share. There was no concern about the feelings of the cleaners in this building when their wages were cut, but, when it comes to cutting the tax transparency for big firms, suddenly the government goes all Dr Phil. Suddenly it is time for inviting them into the office, putting them on the couch, giving them a foot rub and seeing how they really feel. Firms who are doing the right thing have nothing to fear from tax transparency laws. They enable us to have a sensible public debate about our tax laws.

When organisations such as the Tax Justice Network and United Voice bring forward reports which outline how much tax is being paid, the government is quick out of the blocks to try to discredit those reports, claiming they are based on inaccurate data. There is an answer to that: we need to get accurate information into the public domain. We are not asking for everyone's tax affairs to be reported; we are arguing that for firms with a turnover in excess of $100 million, it is appropriate for the Australian Taxation Office to report their total income, their taxable income and their tax paid.

As Justice Brandeis said, not the Brandis of the other place but Justice Louis Brandeis, 'Sunlight is the best disinfectant.' If we are to let the sunlight in on the tax affairs of big companies, we can have a sensible debate around multinational tax avoidance. And it is a timely debate because at a time when inequality in Australia is at a 75-year high, after a generation during which earnings have grown three times as fast for those in the top decile as the bottom decile of wage earners, we have a government that is trying to take $6,000 a year away from the poorest single parents.

NATSEM modelling—done by the organisation which is the Prime Minister's favourite modeller—finds that nine out of 10 of the poorest families in Australia are made worse off by decisions of the coalition. One of the impacts of that of course is to increase inequality, but another impact is to hurt consumer confidence. High-income earners save about a quarter of their incomes. Low-income earners spend it all. So when you transfer resources from the poorest to the richest, you take money out of retail sales. That might help explain why Westpac's consumer confidence index is still seven per cent lower than when the coalition took office. That fall in consumer confidence demonstrates what Australians already know, that the government does not have a plan for confidence, does not have a plan for jobs and lacks a plan for the economy.

In February 2013, Tony Abbott said:

I am confident that should there be a change of government later in the year, there will be an instantaneous adrenaline charge in our economy. There will be an instantaneous surge of confidence because of an incoming government.

The tide has gone out on the surge of confidence. It is seven per cent lower than when the coalition took office. What has been the response of the government to this? Has it been to begin talking the government up, to begin talking about how we can develop a long-term plan for jobs and growth? No. Instead, their plan has been to spend more on promoting the budget and the Intergenerational report. We now know Treasury has allocated $36 million to spend on the budget and promoting the Intergenerational report. Dr Karl Kruszelnicki has now said of his participation in advertisements around the Intergenerational report:

I deeply regret that I didn't get to see the full and final version.

I am sure many Australians deeply regret that $36 million of their money, more than a dollar a person, is being spent on propaganda for the government trying to sell its budget. I have a simple message for the government: if they are concerned about the way their unfair budget is going down in the community, fix the budget; don't start spending money on TV ads.

As respected economist Saul Eslake noted in a budget forum that was run in Parliament House, there have been a number of tricks in the budget papers in order to try to improve those numbers. He notes a footnote on page 3-6 of Budget Paper No.1, which says that from 2020-21 onwards earnings from Australia's Future Fund will be counted towards the surplus and that by 2024-25 that will account for more than half the projected surpluses. Mr Eslake made an interesting statement in that forum. He said:

I point to the influence of a change in accounting policy hesitantly because the last time I was critical of a government for the way it accounted for things in the budget the then treasurer, Peter Costello, rang up the chief executive of the bank I was working for, John McFarlane, (of ANZ) and said that he would take regulatory action that ANZ did not like if I repeated those kinds of criticisms.

(But) I don't think Joe Hockey is as glass-jawed as Peter Costello is, so I am not really worried about that in this context.

But he does go on to say that he is concerned about the fact that more than half of the projected surpluses in a decade's time will come from an accounting change not from policy change.

Saul Eslake also raised his concern about the government's claim that it was offsetting its spending decisions through making savings. As he pointed out, the way the government was able to back up that claim was because they had to put in the contingency reserve $10.4 billion for their unfair Paid Parental Leave scheme. Then when they decided not to proceed with their unfair Paid Parental Leave scheme, they took that money out of the contingency reserve. Why didn't we think of that? Why didn't we think of announcing an unfair policy, throwing the money in the contingency reserve, not going ahead with the unfair policy and then saying we'd made a saving? Frankly, deciding that you are not going to implement a bad policy and calling that a saving would not pass the pub test in Australia.

What we see from this government is that it is at odds with one another. We have seen cabinet leaks, the likes of which we have not been seen in this country for over a decade, and infighting between frontbenchers. And if you want to know what is going on in cabinet, you simply need to read the newspapers. Peter Hartcher's expose of the internal workings of the Abbott government clearly reveal a government that is willing to leak against itself. We saw Christopher Pyne on The Bolt Report on the weekend saying that as a result of the Abbott government leaking like a sieve, he cannot speak candidly in cabinet anymore. That is how dysfunctional the cabinet has become.

The government has no plan for housing affordability, no plan for anything but driving up the Prime Minister's own housing price. We need a government that is able to seriously act on the challenges of the future, challenges like investing in infrastructure such as making sure that more Australians get the coding skills they need at school and the science education they need at university. That plan for the future was laid out in Bill Shorten's budget reply and it is a plan that we will continue to build on over the time up to the election.

Peter Hendy (Eden-Monaro, Liberal Party) Share this | Link to this | Hansard source

I rise to support the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015. As the Assistant Treasurer said in his second reading speech, the bill amends various taxation and superannuation laws to implement a range of improvements to modernise Australia's taxation system. As I understand it, this bill includes a number of amendments that relate to issues lodged on the tax issues entry system, a platform for members of the community to raise issues regarding the care and maintenance of the Australian government's tax and superannuation systems. Indeed, I myself have some concerns to raise about the superannuation system.

As this is a bill for an act to amend the law relating to taxation and superannuation and for related purposes I am allowed to address a burning issue in my electorate, which is the threat to the superannuation and other retirement income of people in Eden-Monaro. Their retirement savings are threatened by a multipronged attack by the Australian Labor Party. At the latest census there were some 43,984 people over the age of 55 in my electorate. That is 32.5 per cent of the population of Eden-Monaro and compares to only 25.6 per cent for the nation as a whole.

So what is the threat? The Labor Party are determined to attack the retirement savings of everyday Australians in a desperate attempt to plug their growing budget black hole. Firstly, Labor want to double the tax that Australians pay on their superannuation contributions if they earn over $250,000 a year. I strongly doubt that Labor can be trusted to stop there. In addition, Labor's other recent policy announcement is to ensure that superannuation earnings of more than $75,000 during the retirement phase are taxed at a concessional rate of 15 per cent instead of being tax-free. And Labor have stated that there would be no indexation of the threshold. The fact that they would not index those thresholds is of great importance. It means that the changes would affect thousands more Australians as the years pass by and inflation brings the effective threshold down every year in real dollar terms.

Why is this all very alarming? A short history lesson will help explain. Before the 2007 election Kevin Rudd said that there would be no change to super, 'not one jot, not one tittle'. In fact, they increased taxation on super by just short of $9 billion, including cutting super benefits for lower income earners by more than $3.3 billion. What we actually saw was no fewer than 12 tax grabs for the superannuation of ordinary Australians. In May this year the shadow Treasurer said at the National Press Club:

… what we have flagged is that we are still doing work on other aspects of superannuation policy.

So there is obviously more to come. Let us dissect the Labor argument to so-called fixed superannuation. Let us also assume for a moment that Labor see a genuine need to fix superannuation rather than indulge in a grab for cash. Let us assume that they seek to because they believe superannuation is lightly taxed. Let us look at that proposition.

Highly regarded economist Henry Ergas has previously examined the issue. In this case he has noted that the headline tax rate on superannuation of 15 per cent is not an accurate indicator of how heavily superannuation is taxed. According to his analysis, the effective tax rates on long-term superannuation savings are close to or even above the top rate of income tax. We need to look at the difference between nominal and effective tax rates on long-term investments. In an article published on 15 October 2012 Mr Ergas noted that superannuation allows savers to defer consumption. Mr Ergas wrote:

Assuming a real annual return of 5 per cent and an inflation rate of 2.5 per cent, the effective income tax rate on a dollar invested today and withdrawn in 35 years is 40 per cent.

He went on to say:

Effective tax rates on long-term savings in our "concessional" regime are therefore more than twice the nominal 15 per cent rate.

And that ignores the impact of volatility in returns and the fact that income from super reduces saver's entitlements to the aged pension.

When those are factored in, effective rates are likely at or beyond the top income tax rate of 46.5 per cent.

But that is not all. As I have previously said, policy makers cannot simply ignore the fact that the superannuation system we have in Australia today is a classic case of a social contract. It is a social contract where people were effectively given a deal whereby they would accept compulsion to mandatorily put money into super and to lock it away for decades in exchange for lower levels of taxation. To then subsequently turn around and remove those taxation concessions is a blatant breach of that social contract.

When Labor want to hike superannuation tax, they get the numbers all wrong. What about the numbers of people affected by their policy? Modelling for Senator David Leyonhjelm by the Parliamentary Budget Office has shown that Labor's attack on superannuation could affect more than twice as many people as they claim. The proposed $75,000 threshold policy would affect more than 125,000 taxpayers by 2027—more than double the number those opposite claim will be initially affected. Further, the high-income super surcharge of 30 per cent would affect more than 300,000 people, not the 110,000 claimed by Labor.

However, that is not all the Parliamentary Budget Office exposed. Not only will the tax hike affect more than twice as many people as Labor claims; Labor's tax hike on superannuation will hurt low-income earners. How? The Parliamentary Budget Office analysis found that substantial additional compliance and administration costs would be incurred. Those extra government administration costs alone would be more than $20 million a year. It is not difficult to see that super funds will pass these additional costs on to members, including low-income earners.

I know that devising tax policy is hard work—I have been turning my mind to it for three decades—but this degree of economic illiteracy is unacceptable. As I said, Labor have launched a multipronged attack on the retirees of my electorate of Eden-Monaro. So what might Labor also be planning? We do not have to go far, as they have been doing media interviews to float their impending policy. Only last week, on 10 June, it was reported in the Australian Financial Review that the shadow minister for finance, the member for Watson:

… told ABC radio that capital gains tax concessions for investors would also be on the table for consideration, along with stamp duties and negative gearing.

"All of these play into a mix which means when somebody's going to buy a property, they're not simply competing with other home owners, they're competing with a disproportionately high number of investors," he said.

Labor have made a calculated gamble, based on an appeal to the politics of envy, to target retirees to fund the vote-buying spree that the Leader of the Opposition announced in his budget in reply speech. It is not about good policy.

Just a little economics lesson for these people: negative gearing is not some special tax subsidy for housing investors, as they want to propagandise. It is in fact a legitimate business expense model incorporated in the bedrock of our taxation system to reduce double taxation on investment and therefore encourage the investment that sustains our economic prosperity. It is not a subsidy or a tax dodge; it is integral to our tax system. And it is perverse to think that any proposition to raise effective taxation levels on investment in housing in some way assists in dealing with the supply issue we face in providing affordable housing.

And let me also note that the so-called unfair tax competition, raised by many people who should know better, between housing investors who have negative gearing and first home buyers who do not have negative gearing is a false comparison verging on outright lies. It wilfully ignores the fact that home owners get a huge capital gains tax break with a complete exemption on the principal residence. To compare apples and apples, that huge tax break available to homeowners compared to what landlords get needs to be taken into account. In my view, over time you may find that it is an even bigger tax break. I would like to know whether Labor, in all their talk about capital gains tax, are planning to remove the tax exemption for principal residences, because the logic of their rhetoric would lead to that conclusion.

Lastly, can I just say that, while the Reserve Bank governor can say that the housing market in Sydney is a bit 'crazy', the tax debate in this country at the moment is completely crazy. People who are completely ignorant about tax design are pontificating on something that they have no idea about, and in addition there are many people who should know better who are being swept along in a river of make-believe. To massively increase taxation levels on investment by slashing into superannuation, negative gearing and capital gains tax is perverse given the wider economic challenges facing the nation. Everyone should just step back and think what the economic and financial challenge facing the country is. As clearly outlined in the Intergenerational report, Australia's big mega-trend economic challenge is an ageing population, going from 7.3 working-age people for every person aged 65 and over in 1975 to a projected 2.7 workers per retiree in 2055. That has massive economic and financial implications.

One of the absolute givens in responding to this challenge is to increase people's savings for retirement to take the pressure off the taxpayer to meet the massive future demand. Instead the Labor party and the Greens are ignoring the big picture and simply seeking ways to fund increased government expenditure by ironically hitting private savings through attacking superannuation, negative gearing and capital gains. It is cock-eyed economics at its worst.

For short-term expediency they are justifying their tax grab as some sort of solution to a so-called housing bubble in Sydney. Let's be clear: we should not be setting our taxation system simply based on the property market in Sydney. Paul Keating acerbically once said, 'If you're not living in Sydney you're camping out.' It appears that the Labor leadership still holds to that outrageous sentiment. Well, I can say most Australians do not live in Sydney, and I will be standing up for the people of Eden-Monaro in their fight against this threat from Labor.

Lastly, can I say that the solution to Sydney's housing issues is not taxation measures designed to impact on the demand side of the equation. There are numerous studies, including from the Productivity Commission, over the last two decades that show that a major part of the problem is planning rules and costs imposed on developers in the Sydney market that restrict the amount of supply. We should be looking at addressing these problems directly. State and local governments have the most to do to handle these issues.

However, I think Australian policymakers need to come to a realisation that the world has changed in the last few decades. Sydney is now truly a world-class city on par with London, New York, Los Angeles and Tokyo, to name a few. We cannot keep thinking that in an international city, with all its associated expenses and population pressures, you can expect to have the same level of owner occupiers as in other cities. Today, Sydney has an owner occupier ratio of around 65 per cent, compared to around 67 per cent for the nation. However, according to the latest statistics I could find, in London it is less than 50 per cent, while for the UK as a whole it is 64 per cent; in New York it is 32.2 per cent and in Los Angeles 49 per cent, compared to 65 per cent for the US as a whole; in Paris it is less than 30 per cent, compared to just over 50 per cent for France as a whole; and in Tokyo it is 44.6 per cent, compared to 61 per cent for Japan as a whole.

Australian lawmakers cannot ignore this fact of life. The Sydney levels of owner occupation will probably fall to match those of other international cities. It will necessarily be dictated by the constraints on urban transport and other infrastructure provision. As a result, we should also be looking at other innovative ways to deal with this problem. I have advocated high-speed rail as a development solution that would massively open up regional New South Wales and Victoria for residential development, which would be a way of dealing with our overcrowded mega cities of Sydney and Melbourne. This part of the answer is staring our political leaders in the face, and they should just get on with it.

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

I rise to provide a few brief remarks on the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015, which makes various amendments to taxation and superannuation laws. The Assistant Treasurer and subsequent speakers have comprehensively canvassed the contents of the bill, so I will not do so in detail on this occasion. Briefly, the bill abolishes Labor's failed first home saver account scheme. It abolishes the dependent spouse tax offset, which has outlived its usefulness and has been substantively replaced by the dependent (invalid and carer) tax offset. Changes are made to tax law concerning offshore banking units. The Global Infrastructure Hub announced as part of Australia's G20 presidency is to be made tax exempt, and various other tax law changes of a technical nature are made.

However, I particularly wish to focus on schedule 5 of the bill, which relates to tax deductible gift recipient extensions. Schedule 5 extends the specific listing of two entities as deductible gift recipients, or DGRs—namely, the Australian Peacekeeping Memorial Project and the National Boer War Memorial Association. This will require an amendment to the Income Tax Assessment Act 1997 to update the list of specifically listed deductible gift recipients. The listing will be extended to 1 January 2018. Consequential amendments will also be made to extend the automatic repeal date of the deductible gift recipient listings. The listings will now be automatically repealed on 1 July 2022.

The Australian Peacekeeping Memorial Project Incorporated and the National Boer War Memorial Association Incorporated are seeking donations to build memorials on Anzac Parade in Canberra. The extension of the deductible gift register listing of these organisations was announced by the Treasurer in the 2015-16 budget. In introducing this bill, the minister made mention of the fact that both the Australian Peacekeeping Memorial Project and the National Boer War Memorial Association have fallen short of their fundraising targets. He explained that the extension of their deductible gift recipient status will help these organisations attract public financial support for their activities, as taxpayers can claim an income tax deduction for certain gifts to deductible gift recipients. Income tax law allows tax deductions for taxpayers who make gifts of $2 or more to deductible gift recipients. The financial impact of the amendments contained in schedule 5 will be $1.4 million over the forward estimates.

The fundraising efforts by the National Boer War Memorial Association for a memorial in Canberra are an issue that is particularly close to my heart. My great-uncle, Major Edmund Righetti, served in Victoria's first contingent to go to the Boer War in 1899. He was severely wounded but recovered and returned to South Africa to serve again. His revolver from that time is in the collection of the Australian War Memorial. More than 16,000 Australians served in the Boer War, and more than 500 Australian soldiers lost their lives in the conflict. I should declare here that I am a founding member of the National Boer War Memorial Association. In 2013 I received a petition, delivered on horseback at the front of Parliament House, of more than 10,200 signatures, calling on the then federal government to support a national Boer War memorial on Anzac Parade. It was a petition that I was honoured to receive and a cause that I wholeheartedly support. The Boer War marks the birth of the Australian Defence Force and the emergence of a new nation after Federation. Unfortunately there is currently no national memorial in the capital to honour the soldiers, nurses and trackers of this conflict, who were the first to fight under the Australian flag.

The site for the memorial was selected in 2006. A design competition was conducted in 2013, the winning design being a spectacular scene depicting four larger-than-life-size mounted troopers in action, to be erected in bronze. The first of the statues has been completed and, as of April, was in the process of being shipped to Canberra. A total of $1.8 million has been raised to date, with organisers hoping to raise an additional $2.7 million in time to complete the memorial by Boer War Day, 31 May, in 2017. At this point I would like to acknowledge Miles Farmer and Queensland Committee Chairman Ron McElwaine from the Sherwood/Indooroopilly RSL sub-branch for their ongoing fundraising efforts towards this very worthy project.

The cost to the budget of extending the deductible gift recipient status of the National Boer War Memorial Association will be minimal—less than $1 million over the forward estimates. But what it says about the commitment of the Australian government to the memory of those men who lost their lives in the Boer War conflict is so much greater. As a nation we need to remember those who came before us and those who died fighting in our name. The way Australians have come together this year to commemorate the Centenary of ANZAC is testament to our willingness to remember. This bill, in its own small way, allows us to better preserve the memory of the fallen in the Boer War as well as Australians who have died in peacekeeping missions abroad. I commend this bill to the House.

Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015. As the Assistant Treasurer in his second reading speech mentioned, schedule 1 of this bill abolishes the first home saver account scheme. Schedule 2 of the bill abolishes the dependent spouse tax offset with effect from 1 July, as announced in the budget. Schedule 3 to this bill amends the taxation law to modernise and improve the integrity of the offshore banking unit regime. Schedule 4 adds the Global Infrastructure Hub to the list of named income-tax-exempt entities in division 50 of the Income Tax Assessment Act 1997. Schedule 6 makes a number of amendments across the tax and superannuation law to provide certainty for taxpayers. Schedule 7 amends the income tax laws to implement the final stage of the investment manager regime.

But, like the member for Ryan, my particular focus is on schedule 5, which extends the specific listings of two entities—the Australian Peacekeeping Memorial Project and the National Boer War Memorial Association—as deductible gift recipients for a further three years. We have just recently celebrated Boer War Day, which commemorates the first war in which Australia fought as a nation and the first war in which we fought alongside New Zealanders. The 31st of May is the anniversary of the signing of the Treaty of Vereeniging, which ended the South African War in 1902. Services were held this year in both Hobart and Launceston, at the very beautiful memorials in the Domain in Hobart and in the City Park in Launceston.

This amendment bill will be of particular interest to many people in my electorate of Lyons because of a section deep in the bill which honours the memory of those Tasmanians who have served so bravely both in war and on peacekeeping missions for their country. I am pleased that one of the things that we are debating today is the proposal to extend the specific listings of the two entities I mentioned as deductible gift recipients for a further three years. This is a most worthy inclusion for Tasmanians and their fellow Australians from the colonies, as they were at the time, who fought so long ago during the Boer War and for those who served much more recently in Australia's peacekeeping missions.

Five Australians were awarded the Victoria Cross for acts of bravery during the Boer War, including two Tasmanians, Trooper John Hutton Bisdee and Lieutenant Guy Wylly. Trooper Bisdee also has the distinction of being the first Australian born soldier to be awarded a Victoria Cross. The conflict which became known as the Boer War, or the Second Boer War, involved two independent Boer republics in South Africa, the Orange Free State and the South African Republic, also known as the Transvaal Republic, who saw British interests in South Africa as a threat to their independence. The discovery of gold and diamonds in the Boer Republics in the 1880s intensified rivalry and British imperial ambition. Boer independence resulted in fiction, which in 1899 provoked the Boers to attack in order to forestall what they saw as an impending British conquest.

As part of the British Empire, the Australian colonies offered troops for the war in South Africa. At least 12,000 Australians and New Zealanders served in contingents raised by the six colonies, and then, after Federation in 1901, the new Australian Commonwealth. About one-third of the men enlisted twice, and many more joined British or South African colonial units. At least 600 Australians died in the war, about half from disease and half in the course of action.

My home state of Tasmania, which has always punched above its weight in terms of serving its nation, contributed four contingents of soldiers, totalling 558 men, to serve in the South African War. Twenty-two Tasmanians died during the war, with 11 being killed in battle or dying of their wounds and another 11 dying from diseases contracted in the conditions under which they served. Soldiers from Tasmanian contingents were also awarded Distinguished Service Orders and five Distinguished Conduct Medals for services performed during the Boer War, and another three were made Companions of the Order of the Bath.

As I mentioned before, two Tasmanians were awarded the Victoria Cross. Trooper John Hutton Bisdee was a trooper in the 1st Tasmanian Imperial Bushmen unit. He was born on 28 September 1869, at Hutton Park, Melton Mowbray, in Southern Tasmania, in my electorate. He was a student at the Hutchins School in Hobart and worked on his father's farm after finishing school, before enlisting for service in South Africa in April 1900. He saw action in both the Orange Free State and the Transvaal before he was wounded and forced to return home. But he returned to South Africa in March 1901 as a lieutenant with the 2nd Tasmanian Imperial Bushmen.

On 1 September 1900, a group of eight Tasmanian Imperial Bushmen, including Bisdee, formed an advance scouting party on horseback under the command of fellow Tasmanian, Lieutenant Guy Wylly. Bisdee became the first Australian-born soldier to be awarded the Victoria Cross for his actions in the following incident. It was reported that Bisdee and other members of an advance scouting party were ambushed by Boers in a rocky defile. Six of the party of eight were hit, including two officers, Major Brooke and Lieutenant Wylly. Brooke's horse had bolted, so Bisdee dismounted, put the officer on his own horse and, despite being seriously wounded himself, ran alongside, mounted behind him and withdrew under heavy fire.

Bisdee continued to serve in South Africa until the end of the Boer War. He returned to Hutton Park in Tasmania to resume farming and to marry Georgina Theodosia Hale. In 1906, Bisdee returned to service when he joined the 12th (Tasmanian Mounted Infantry) Australian Light Horse Regiment, and by 1910 had risen to the rank of captain, then becoming commanding officer in the 26th Light Horse. He is also the second cousin to the current mayor of the Southern Midlands, Mayor Tony Bisdee.

Guy Wylly was born in February 1880. He was the son of an Indian Army major and spent part of his childhood in India before his family moved Tasmania, settling in Sandy Bay. Like Bisdee, he was a student at the Hutchins School, but he completed his final years at St Peter's College in Adelaide before returning to Tasmania. He joined the 1st Tasmanian Imperial Bushmen in 1900 and on 26 April left for South Africa as a lieutenant. On 1 September 1900, Wylly was part of the same advance scouting party as Bisdee and was awarded the Victoria Cross for the following action. Wylly was one of two officers present at the same action as John Bisdee. Wylly, himself wounded, saw that one of his men, Corporal Brown, was badly wounded in the leg and was dismounted. Wylly, despite his own wound, went to his aid, giving his horse to Brown and, at the risk of being cut off, opened fire from behind some rocks to cover the retreat of the others in the party. Our Tasmanians, as usual, were valiant in action so long ago, and we are indeed proud of them.

As I mentioned before, I am pleased to say that this bill we are debating today, the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015, honours the memory of those Tasmanians and their fellow Australian soldiers who fought so bravely in the Boer War. Schedule 5 of the bill extends the specific listings of the deductible gift recipients for a further three years. Both of these memorial projects have fallen short of their fundraising targets, so the extension of their deductible gift recipient status will help these organisations attract public financial support for their activities because taxpayers will be able to claim a tax deduction for certain gifts to deductible gift recipients such as the ones we are discussing today. This is entirely appropriate so close in time to the commemoration events held recently around Australia over the past couple of weekends to mark the end of the Boer War, on 31 May 1902.

It will also help those working on the National Peacekeeping Memorial Project, such as Phil Pyke from my electorate of Lyons and the beautiful town of Lachlan. Phil is now heavily involved in Tasmania's flourishing fruit and berry industry, but the former policeman also served as an Australian in United Nations peacekeeping operations. He told me that this year will be the 68th year of Australia's enduring mission to support the United Nations peacekeeping operations. Australia has been actively and continually involved in peace operations for all those years, although our military and police contributions have increased significantly in the past decade.

In 1947, four Australian ADF officers were the world's first ever peacekeepers when deployed to the Dutch East Indies, under the UN Commission for Indonesia. In the past few years, a proposal has been developed for a peacekeeping memorial to be built in the nation's capital, Canberra, to honour all those who have served and will serve on peacekeeping opportunities. These include officers from the Australian Defence Force, the federal, state and territory police forces and government agencies who have served and died on peacekeeping operations commanded or authorised by the United Nations or sanctioned by the Australian government.

Australia's enduring mission in peacekeeping has not been widely recognised, and so the memorial project has not attracted the necessary corporate funding to complete the project. Retaining the deductible gift recipient status for the Australian Taxation Office, which this bill allows, will allow the memorial committee to continue fundraising—and that is welcomed by Phil Pyke. Once completed, the memorial will be a reminder of the hard work undertaken by more than 66,000 Australians on more than 70 United Nations peacekeeping missions in troubled areas such as Rwanda, Cambodia, the Middle East, Mozambique, East Timor, the Solomon Islands, Iraq and Afghanistan.

I commend the bill to the House.

Josh Frydenberg (Kooyong, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

Let me begin by thanking members who have contributed to this debate. This bill is part of the government's plan to modernise and update Australia's tax and superannuation laws. The bill removes uncertainty from our tax and superannuation laws and removes laws that are ineffective and outdated. It will make our laws more relevant and provide incentives for investment so that Australia can better compete on the global stage. This government, with the release of the tax white paper earlier this year, is demonstrating its ongoing commitment to Australians to modernise our tax laws and make genuine reforms. The amendments today are a step towards that.

Schedule 1 to this bill will abolish First Home Saver Accounts. First Home Saver Accounts have failed to live up to the promises that were made during their introduction. Rather than the $6.5 billion in total combined savings promised by the previous government, at the beginning of last year there were fewer than 50,000 open accounts containing total combined savings of only $540 million, or less than 10 per cent of what was initially predicted. Abolishing First Home Saver Accounts will save more than $130 million over the years to 2017-18. We know that owning a home is an important goal for many people across the country and we know that rising house costs mean this goal seems further and further out of reach every day. But First Home Saver Accounts do not address the underlying reason for rising house costs in Australia, one of which is that the supply of housing is failing to keep up with strong growth in demand. As part of the government's wider deregulation agenda, we are working with state and territory governments to reduce the regulatory barriers currently holding up the supply of housing and construction. This will increase land release for new homes, leading to an improvement in housing affordability for all Australians.

Schedule 2 to this bill will abolish the Dependent Spouse Tax Offset with effect from 1 July 2014. This will make our tax system more equitable and return $320 million to the budget over the years to 2017-18. When the Dependent Spouse Tax Offset was introduced in the early 20th century, its purpose was to provide a concession to taxpayers who maintained a dependent spouse. Our welfare system has developed markedly since then, with a wide range of more tailored support available. With changes in our society, as well as in our economy, this offset is now outdated. Given the support now available through the welfare system, as well as the need to promote workforce participation, this concession is no longer needed and, in the current budget situation, it is simply not sustainable. This measure is an important step towards repairing the budget and it is also part of the government's broader agenda to encourage participation.

Schedule 3 to this bill amends the taxation laws to modernise and improve the integrity of the Offshore Banking Unit regime. This bill includes changes that include key recommendations arising from the 2009 report Australia as a financial centre, also known as the Johnson report, aimed at improving Australia's position as a leading financial services centre. The Offshore Banking Unit reforms will better target the Offshore Banking Unit tax concession by updating the list of eligible activities encouraging genuine mobile financial activities. Alongside these changes, we will also improve the integrity of the regime to ensure that this concession is not subject to abuse. The government believes that this bill strikes an appropriate balance between encouraging Offshore Banking Unit activity and maintaining the integrity of the tax system.

Schedule 4 to this bill adds one organisation to the list of named income tax exempt entities in division 50 of the Income Tax Assessment Act 1997. The new listed entity is Global Infrastructure Hub Ltd. Global Infrastructure Hub Ltd was established to implement the G20's multi-infrastructure agenda. The Australian government, along with several other countries, has pledged a financial contribution to Global Infrastructure Hub Ltd. Without the amendment to the act, the contributions made to Global Infrastructure Hub Ltd would be assessable and would be taxed accordingly. It would be inappropriate for the Australian government to tax assistance provided to Global Infrastructure Hub Ltd under an arrangement agreed to as part of Australia's G20 presidency.

Schedule 5 to this bill extends the specific listings of two entities as deductible gift recipients for a further three years—the Australian Peacekeeping Memorial Project and the National Boer War Memorial Association. Both the Australian Peacekeeping Memorial Project and the National Boer War Memorial Association have fallen short of their fundraising targets. The extension of their deductible gift recipient status will help the listed entities attract public financial support for the activities as taxpayers can claim an income tax deduction for certain gifts to deductible gift recipients.

Schedule 6 to this bill makes a number of amendments across the tax law to provide certainty for taxpayers. These amendments make sure that the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes. This furthers the government's commitment to restore simplicity and fairness to the Australian tax system. It also demonstrates the government's commitment to the care and maintenance of the tax law. By clarifying the law and repealing unnecessary provisions, these amendments also further the government's deregulation agenda. A number of the amendments relate to the issues lodged on the Tax Issues Entry System, a platform for members of the community to raise issues regarding the care and maintenance of the Australian government's tax and superannuation system. These include ensuring that life insurance companies are not inappropriately liable for franking deficit tax; correcting inconsistent wording in the definition of 'in-house residual fringe benefits'; and updating a diagram intended to provide guidance on when an entity is required to, or may, register for the goods and services tax.

Schedule 6 to this bill also clarifies the operation of other areas of the tax law, including how employee share ownership schemes are intended to be taxed in the context of a demerger. Additional amendments fix a defect in the law preventing the Commissioner of Taxation from revoking access to certain tax concessions due to past periods of non-compliance by the entities seeking to rely on the concessions.

Schedule 7 to the bill amends the income tax laws to implement reforms to the Investment Manager Regime. This bill represents the final stage of changes to give effect to a new regime, as envisioned, which the Johnston report has referred to earlier. The IMR will promote Australia as a financial services centre by encouraging foreign investment in Australia from foreign managed funds that are widely held and encouraging foreign investment through Australian fund managers. The IMR does this by providing greater clarity and certainty regarding the tax treatment of foreign investors including foreign managed funds. These reforms have been carefully designed so that they strike an appropriate balance between encouraging foreign investment and ensuring the integrity of the regime.

Additional parliamentary amendments have been made to schedule 7 to address concerns raised with the Senate Economics Legislation Committee. These changes are intended to clarify the operation of certain provisions to give the funds management industry confidence that they can take advantage of the IMR concession as intended. Full details of each of these measures are contained in the explanatory memorandum.

In conclusion, this bill is very much a part of the government's overall plan to update and modernise our tax system. Our tax system must adapt to the changes that are happening around us. These changes today lay the groundwork for our continued efforts to ensure our tax system is efficient, modern and well targeted. The dialogue we are having with Australians through the tax white paper process is part of our strategy to improve our tax system. An effective and relevant tax system is the foundation of any healthy working economy. Our commerce and industries are more connected internationally today than ever. We are confronted with new business models through the increased use of the internet and business operations which are increasingly borderless and posing challenges for tax systems globally. Our tax system has to evolve to stay current. We must continually adapt to our changing environment and ensure our tax system is one that is sustainable, efficient and relevant. I commend this bill to the House.

Question put.

Bill read a second time.