Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise to address the amendments I foreshadowed in my speech in the second reading debate, the effect of which is to restrict the application of the improved depreciation arrangements to those companies which implement the energy efficiency initiatives identified in the mandatory energy efficiency audits that went through the chamber earlier this year. I seek leave to move amendments (1) and (2) on sheet 4956 together.

Leave granted.

I move:

(1)    Page 2 (after line 11), after clause 3, insert:

4  Application of improved depreciation arrangements

The improved depreciation arrangements specified in Schedule 5 of this Act apply when findings of mandatory energy efficiency opportunities assessments required by Part 6 of the Energy Efficiency Opportunities Act 2006 are implemented as specified in item 3A of Schedule 5 of this Act.

(2)    Schedule 5, page 13 (after line 1), before item 3, insert:

2A  After section 40-70

Insert:

40-71  No entitlement to improved depreciation unless energy audit findings implemented

        (1)    The provisions providing for improved depreciation arrangements in Schedule 5 of the Tax Laws Amendment (Personal Tax Reduction and Improved Depreciation Arrangements) Act 2006 do not apply to a corporation required to register in accordance with Part 3 of the Energy Efficiency Opportunities Act 2006 unless that corporation has implemented the findings of an energy efficiency opportunity assessment required by Part 6 of the Energy Efficiency Opportunities Act 2006.

In speaking to these amendments, I would first like to comment on the statement that the Howard government have been good economic managers. Senator Kemp urged us to look at the statistics. By way of interjection, I was trying to draw his attention to the current account deficit in particular. When the Howard government came to power, it was around three per cent. It has now doubled in that time. When they first came to power, Treasurer Costello could not stop talking about the current account deficit. Now it is about as unmentionable as climate change for Treasurer Costello. So the statistic that I particularly see flashing up in front of me in terms of the government’s economic management is the current account deficit.

What I am proposing here is a measure of tax reform. Much of the debate that has constituted the notion of reform is not actually tax reform; it is merely giving tax cuts and handouts from a surplus. In fact, it reduces the revenue base from which we can have the capacity to deliver improved services into the future. The point of my earlier remarks was simply that, if we have an economy which is based solely on corporate profits generated from a minerals boom, and we narrow the tax base by giving tax cuts on the back of that, when the minerals boom ends and there is a collapse in our ability to sell coal overseas in particular, where are we going to generate the revenue at that time if we have permanently reduced our revenue base? I do not think that is a particularly clever way of managing an economy into the future. The issue is the narrowing of the revenue base through these permanent tax cuts on the basis of what, in my view, is a somewhat shaky idea that we are going to be able to continue in surplus for a long time, on the back of a minerals export boom.

In terms of genuine tax reform, my view is that we should be recognising the major challenges threatening both the Australian community and the world in this century. They are, as I said, related to climate change, energy and natural resource use. We are finding that the planet is finite, in that the commodities that are traded around the world are finite. We have a population of six billion using those resources. We are getting to the point where it is completely unsustainable and we will have conflict generated as a result of that resource use. The conflict in Bougainville, the conflict in the Solomons and the conflict in West Papua—the conflicts all around us—are because of communities being brought to the brink of armed conflict as a result of excessive resource use. We have seen that with the logging companies in the Solomons. We have seen it with mining companies in Bougainville and West Papua. We are seeing it in New Caledonia with Inco’s Goro nickel mine.

What we are going to find is that all over the world, in African countries as well, when multinational corporations come in, take resources from local communities and leave them with ecological destruction without the means to provide themselves with the necessities for survival such as water and food, we will see resource conflicts. We are seeing it with water already. Genuine tax reform would recognise that scarcity of natural resources on a finite planet with an increasing population is what should generate the relationship between people, and between people and the environment.

Genuine tax reform would see us taking tax away from income altogether and shifting it to resource use. That is what some of the progressive economies in Europe are now doing. Over a period of a decade, they are shifting the taxation away from human capital and the capacity of a brains based, service based economy to generate wealth so that there is an incentive for people to use their brains and their capacity to generate wealth. They are taxed on the nature of their resource use. Whilst the tax is being taken off income, it is being put onto pollution, energy use and resource consumption use. That is driving the kinds of changes that we need in terms of people recycling, reducing pollution levels and lessening the ecological footprint of six billion people on the planet.

If you want to talk about genuine tax reform in Australia, that is what we should be looking at. We should be moving away from the taxation of incomes and towards taxing the bads—that is, the processes threatening ecological systems. You would be starting to look at the way that you deal with the threats to our economy that are coming in terms of, for example, water shortages, food capacity and energy use.

That is the sort of genuine tax reform that we are seeing in countries like Sweden. They have set themselves the task of being oil free by 2020. They have implemented a range of fiscal measures to make sure that happens. The Germans are also moving to ecological taxation and away from income taxation. So you have significant shifts. That is what I call genuine tax reform—looking at the long-term threats. If you consider what taxation is all about, it is essentially an economic tool that governs the relationship between people, and between people and their environment. I would argue that the current tools do not work because they encourage unsustainable consumption and resource use. They encourage large gaps between the rich and the poor. Both of those things destabilise communities and actually reduce the capacity of civil society to be sustainable in the longer term.

So, if you want genuine tax reform, that is where I think you should look for it, and that is the context of the amendments that I have moved. The amendments say that the idea of driving companies, businesses, to become more efficient in their use of energy, which is a scarce resource that has a substantial ecological imprint, is a good thing to do, and we should use tax measures to do that. To give business accelerated depreciation, with no responsibility on their behalf to do anything about what they do, just to get a windfall gain, to me is irresponsible.

In the debate on the Energy Efficiency Opportunities Bill 2006, Senator Ian Campbell argued that a mandatory audit of a company’s energy efficiency opportunities is all that is required because, by osmosis, the company will see the light and want to implement those changes. My argument was that, if there is a payback period of one or two years, that is a very short payback period. It is not onerous to ask those companies to implement the initiatives that have been identified in the mandatory audit. We should take the phase-in period of one or two years out to five years over a period of time so that it becomes an increasingly higher hurdle. We should do that at least in the short term.

I know that Senator Ian Campbell took this measure to cabinet himself—not only the idea to identify the energy efficiency measures but also the idea that companies would be required to implement them. The measures were rejected, and that is why I say that the government does not have a vision about tax reform driving particular outcomes, particularly on climate change or energy. I am here providing the government with another opportunity to link accelerated depreciation in business to an energy efficiency outcome, which is basically just saying that the provisions apply to everyone except the companies that are caught under the provisions of the Energy Efficiency Opportunities Bill. Around 200 companies in Australia use in excess of 0.5 petajoules of energy, and we should say to those companies: ‘You are already required to do your mandatory energy efficiency audit. Now let us see you implement those changes in order to qualify for accelerated depreciation.’ That would give them an opportunity to achieve both outcomes, and I have moved the amendments accordingly.