Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 has eight schedules dealing with: first, effective life provisions of mining rights and their depreciation treatment; second, the taxation of boating activities; third, expenditure on research and development activities; fourth and fifth, the donation of listed shares to deductible gift recipients and the listing of new deductible gift recipients—these are in this bill, including a valuable listing for a body in Bunbury; sixth, the deduction for contributions relating to fundraising events; seventh, technical amendments and corrections; and, eighth, venture capital.

This bill was sent to the Senate Economics committee. Schedules 4, 5, 6, 7 and 8 attracted no submissions. The other schedules raised timing issues. Some wanted the provisions to be made retrospective, but I agree with the committee chair that their case was weak and should not be supported. This is a reasonably lengthy bill, but you would describe it as a cleaning up bill and a more technical bill with relatively minor, but helpful, changes. In tax terms, it will not cost very much. My quick addition of the cost of the various schedules in 2010-11 is about $40 million, so it is not exactly costly.

The bill does cover some areas which are of interest in a policy sense—they are to do with research and development and venture capital. One of the debating points that were raised by the shadow minister, Senator Carr—and no doubt it will be responded to by the minister at the table—is the issue of whether previous and present governments have paid enough attention to long-term investment by the public sector. There is also the issue of the commitment of the public sector to these areas, as opposed to leaving it to the market.

Economics is quite accurately described as an art rather than a science. It can be quite arcane and complex in its reasoning and deductions and so on. At the heart of economic theory is a very useful and simple summation of those things that contribute to productivity and the health of the nation-state. Those are known as the factors of production: land, labour and capital. The interesting thing about those three is that both the previous Labor government—long distant now—and the present Howard government have paid a great deal of attention to the factor of production known as capital. Capital is highly mobile and it is the least important of the nation-state’s elements in the sense that the nation-state is built on its land and its people, but it is very important to the nation-state in terms of its facility and efficacy. Both the previous Labor government and the present Howard government have paid a great deal of attention to ensuring that capital is well attended to, and to making Australia as competitive, modern and efficient as possible.

There have been very significant changes to regulatory mechanisms, corporations law, finance law and tax law, all of which have given us an extremely dynamic, flexible and modern capital market which contributes very significantly to Australia’s wealth and health—both from the public sector institutional side, which includes the Reserve Bank, APRA, ASIC and so on; and in the functioning of the market, which includes the ASX, the Takeovers Panel and other such bodies.

So, by and large, I would give the previous government, who initiated the Wallis review, and the Howard government a tick for advancing our commitment to modern, progressive and continuous updating of our ability to facilitate capital. However, with respect to land and labour, I think the criticisms of the Howard government are real. It would be facile to remark that the Howard government has paid no attention to land; obviously they have in a number of respects. But in key matters, investment in land—in the broader economic sense—is long term and requires the long term to show benefits and to generate returns.

If we wanted to secure the future wealth, prosperity, productivity and sustainability of our land, we should have paid far more attention far earlier on the issues of water, energy, infrastructure, the environment and areas like that. There has been a very strong debate about a very slow, tired, sceptical and delayed response by the Howard government to those issues. It is true that they are catching up, but the underinvestment in those areas is a real problem. You cannot point the finger solely at the Howard government; you have to remember that the state governments have had their parts to play in this. Those state governments which have been sucking out dividends, capital and cash from their water and energy utilities to prop themselves up have done a disservice to future Australians because of the underinvestment in sewerage works, updated modern recycling capacities and the ability of our energy suppliers to compete effectively and provide what is necessary.

The other area of concern with respect to the factors of production is labour. Again, it would be facile to believe that the Howard government have not paid any attention—by way of law change—to that factor of production, but it is undoubtedly a strong criticism of the Howard government that they failed to invest sufficiently and early enough in education and training, and in motivating and incentivising the research and high-level capacity of the Australian population. This chamber has heard me say in debates on other matters, with respect to the mistreatment, abuse or assault of children, that if you harm a child you end up with a harmed adult. If you harm a child at age 10 that harm is still exhibited at age 70. In other words, it has decades of effect and generational consequences. The same applies to underinvestment. An underinvestment in a child who has been in training or education systems for the last 10 years will have a lifetime effect and will have a consequence which is long term.

That is why people like Fiona Stanley, former Australian of the Year—I think she is a Companion of the Order of Australia—has always insisted on the importance of preschool education and training. Many others share that view—including me and my party—and of course they support a continued investment in the public and private sectors of education and training. There again you have split responsibilities between the states and the federal government, but in international and competitive terms the view is that there has been insufficient investment for the last decade or so in that area, with the consequence that we will be underperforming in terms of our capacity for productivity, competitiveness and wealth creation over the long term, in contrast with some OECD countries which are far better at education, training and other matters.

I have previously in this chamber said to both the government and the opposition—of course there are people from all parties who have this view—that we should look as much at the Scandinavian countries as we do at the Anglo-Saxon countries for initiatives which contribute to world-beating performance in competition and employment measures and their general ability to advance their countries. The Scandinavian countries lead the world in many areas with respect to global competition, open markets and the development and fulfilment of their people. We should draw from as many sources as we can to get ideas which maximise the future productivity of our people and guarantee that our nation-state will be as competitive and well ranked in the future as we think it is now.

Those are broad comments on the wider debate in this chamber and in the community at large between the government, which says it has been doing plenty and that we should look at what good work it has been doing, and the opposition, which says, ‘You haven’t been doing enough.’ My own judgement is that there has been gross underinvestment in the land and labour factors of production, but I would give a tick to the government in its efforts with regard to the factor  of production of capital. Having been prompted to those remarks by the broader approach of the shadow minister Senator Carr, with respect to venture capital and the expenditure on research and development activity, I should conclude by saying that the Democrats support this bill fully without amendment.