Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

We will see. For the hundreds of thousands of people facing the prospect of higher tax, it is not particularly safe—as they will discover—no matter who is in government. I certainly believe the tax office, on all the evidence to date, are doing their very best to minimise this problem, but it is going to be a significant issue. That is my prediction.

The amendments also improve the readability of provisions rewritten as part of the simplified superannuation reforms and clarify the intended operations of the reforms. These are important changes around the edges of the new regime. The current superannuation regime is built on Labor’s superannuation policy of compulsion, which we introduced back in 1987, starting at three per cent and rising to nine per cent through the SG. The measures that we are presented with are sensible, and Labor support them.

Schedule 8 claims to provide more flexibility to family trusts by allowing family trust election to be varied or revoked in a broad range of circumstances, and expands the definition of a family to include lineal descendants. Also, distributions to former spouses, widows, widowers and former stepchildren will be exempt from family distribution tax. These measures come at a cost to revenue of $8 million per annum.

Schedule 8 reflects an out-of-touch government with a strange idea of priorities in tax reform. The measures simply make the family trust rules more generous. It is hard to see how it benefits the average taxpayer or the economy as a whole. I find it particularly hard to see how the lineal descendants of nieces and nephews can be appropriately described as family members for taxation purposes. The shadow Assistant Treasurer, Mr Bowen, moved an amendment in the House of Representatives which sought to remove schedule 8 from the bill. I will not be moving such an amendment in the Senate this afternoon. Time does not permit this to happen; we are under enormous time constraints. But Labor believes that the $8 million per annum that this schedule will cost taxpayers could be better spent on other projects.

Labor supports the measures contained in the Tax Laws Amendment (2007 Measures No. 5) Bill. I will turn first to schedule 1 of the bill, which reforms sections 51AD and division 16D of the 1936 tax act. It is reform which is vital in facilitating private sector investment in infrastructure, and it is long overdue. It has been a long wait—seven years, in fact—since reforms to these provisions to encourage infrastructure investment were first recommended by the Ralph review. We have seen three different Assistant Treasurers in that time. Gosh, doesn’t time fly when you’re having fun in opposition—three different Assistant Treasurers! And each of them successively has promised to introduce this legislation.