John Watson (Tasmania, Liberal Party) Share this | Hansard source

There is a lot of suffering out there, Senator O’Brien. If you had gone down to the public meeting at Levendale the other day, you would have heard of the difficulties in that particular area. I applaud the decision of the Minister for Education to keep that school open because it is a signal that at least somebody is a little bit interested in a remote community that is suffering tremendously at the hands of drought and where people feel they are disempowered. I think it is regrettable for that program.

Unfortunately I am losing valuable time. People in the bush and in small business have become the forgotten people of Australia. That is the tragedy for Australia. A wonderful opportunity to drought-proof much of our nation has been lost, an opportunity that this huge budget surplus would have provided to overcome some of the problems of the worst drought in living memory. I remind honourable senators that 70 per cent of agricultural country is still in drought. It seems ironical that, while the budget provides extra skilling for certain industries, the government took away the training programs for those involved in agriculture. I think it is sad for the forgotten people of Australia.

There are lots of inconsistencies in the federal budget. We now have all sorts of different thresholds in relation to families. And then we have got the question of interest dividends and royalties in terms of a withholding tax. Where that money is remitted overseas, it is subject to a 30 per cent withholding tax. The government had an initiative—which I do not necessarily disagree with, because it is going to help build up the finance sector export opportunities and help make Australia a hub—which is going to create enormous problems for the Taxation Office because a new industry is going to emerge. A lot of overseas residents who receive interest dividends and royalty income will try and transfer that to other income to attract the 7.5 per cent rate. So certainly the tax office is going to have a big job watching and oversighting that sort of issue. Then there is the case of ordinary Australians who, if they receive this money, pay top marginal rates on that, whereas somebody overseas—maybe in the Canary Islands or somewhere—pays 7.5 per cent maximum.

Senator Sherry, this is an issue for you: a lot of lower income earners have used salary sacrifice to access the government’s co-contribution. Your industry funds have acknowledged the value of this co-contribution as a means of helping lift their aggregate superannuation investment. You have signalled that this is going to be challenged and changed next year. You have indicated that, where they use salary sacrifice, there are going to be problems where you put it into a co-contribution. But that opens the door—we have seen that—of changing— (Time expired)