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

Never mind—on zero or whatever; I take the interjection of Senator Sherry. The point that I want to make is that Treasury has not provided the real figures to the coalition, to the crossbenches or to the official opposition. There are no costings available to us. The assumptions they have made and the costings basis they have provided are inadequate to say the least. In fact, they denied us the opportunity to get those figures. Therefore, Treasury is asking us to take on trust the cost or gain to revenue that we would look for—in this case it is a cost of $100 million. I think extremely highly of Treasury officials. The people I have met are people of great capacity, but I remind the chamber that these same Treasury officials got the surplus wrong in 10 out of 11 budgets and the average error they make on the surplus is $4.5 billion over the budget estimate. Their ability to estimate costs is not infallible, and, frankly, I will not accept that $100 million figure as valid until such time as I am able to see the assumptions, the workings and the base figures. Unfortunately, neither Senator Ronaldson, Senator Sherry nor I have got these because Treasury refuse to give them to us.

The question was raised as to whether we are subsidising foreign treasuries. Certainly, the IFSA people are not recommending subsidising anyone and nor is the property institute. The question of attracting investment does sometimes mean that you have to incur a cost. Senator Sherry was quite right in reminding the chamber that Senator Ronaldson, Senator Sherry and I have voted many times to give a cost advantage to foreigners where it is in Australia’s interest or where we conceive it to be in Australia’s interest. So that is not a very good argument. The question is: would you be reducing the rate to produce a cost unnecessarily? In other words, would you generate the level of investment that we are now generating and get the higher tax return anyway—which would be to your benefit? That is a good argument, but the evidence put to us is that the way in which the market is moving means that Australia must anticipate that it is going to lose the power to pull in investment if it retains the figure of 30 per cent. That is why the 15 per cent is considered to be a reasonable target; it is at the upper end of the competitive rates which are operating worldwide. The economic theory, as people would understand, behind the behavioural responses you are seeking in these matters is that, if you lower the tax rate, you then produce higher investment and you will get a greater tax return. It is a matter of judgment as to whether this would occur.

The last point I would make with respect to double tax treaties is this: the difficulty with the double tax treaties that are already in law is that they do not all cover this particular field. They might not cover off this field, so you might have to go back and renegotiate these elements of the tax treaty to accommodate this particular policy. I am not sure how many tax treaties cover off this field or how many prospectively do. I think we have two more tax treaties coming in. It would be interesting to establish—and perhaps the parliamentary secretary could take this on notice because he might not have it to hand—just how many of the double tax treaties that are in existence already accommodate the proposition that a lower rate for the withholding tax in investments will pertain. I suspect not all of them do, but I just do not know, and I would like to have the answer to that question.