Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

It is my great pleasure to be speaking to this Tax Laws Amendment 2011 (Measures No. 5) Bill 2011 on behalf of the coalition and to say at the outset that we will not be opposing this bill. We will seek to move a second reading amendment which has been circulated in the chamber and which I understand the government has agreed to support.

I will make some comments upfront. This is a government which has completely mismanaged our public finances. This is a government which has inherited a very strong fiscal position and a budget which was $22 billion in surplus. This is a government which inherited a net asset position of $70 billion and which has taken us to a position where we had a $55 billion deficit last year and a $50 billion deficit this year, and where we are on track to go to a net debt position of $107 billion over the current forward estimates. This is a government which is borrowing $135 million a day just to fund its day-to-day expenses. It is a government which will pay $26 billion just to pay the interest on the debt that it is accumulating over the current forward estimates. It is a government that has completely lost control of our public finances, which is why it always has to look around for another tax grab, for another way to raise more money.

The budget in May was no different. Senator Wong, the finance minister, said the day before the budget that it was a typical Labor budget. It was a high-spending, high-taxing budget with more debt, more deficit and of course it was sprinkled with some ideologically driven attacks on those Australians that aspire to improve their station in life.

This bill includes a number of revenue measures, and I just want to make the point here that when the Treasurer delivered the budget on budget night he talked about the tough decisions that had been made and how the government had made $22 billion of savings. The government knew very well that, when he talked about $22 billion of savings, in the media the next day it would be sold as $22 billion worth of spending cuts. Sure enough, the media played along with the government. The front page of the Financial Review, even, had a big headline stating there was $22 billion worth of spending cuts. Of course, the biggest single spending cut, so-called, was the $1.7 billion flat tax. In this bill there are a number of other tax and revenue measures which are part of the $22 billion of so-called savings.

There are a number of measures in this bill that are not controversial and that the coalition supports. There are in schedule 1 some changes to trust laws regarding income averaging and farm management deposits. There are some changes in relation to trust income streaming in schedule 2; some changes to the National Rental Affordability Scheme in schedule 3; and, of course, the two significant revenue measures, which relate to the phasing out of the dependent spouse tax offset and the changes to the car fringe benefits tax rule.

Turning to the schedule 5 changes for a moment, the changes that the government is proposing in this legislation are changes to the current statutory formula method for determining the taxable value of car fringe benefits by replacing the current statutory rates with a single rate of 20 per cent, which would apply regardless of the distance travelled. This measure increases govern­ment revenue by about $961.9 million over the forward estimates, so it is a sizable increase in revenue as a result of this measure. These changes were announced in the 2011-12 budget, as I have mentioned. It will mean that those who drive less than 15,000 kilometres a year will now pay less fringe benefits tax; those who drive between 15,000 and 25,000 kilometres a year will pay about the same; and those who drive more than 25,000 kilometres will pay more fringe benefits tax. This measure will have a negative impact on those Australians who rely on their motor vehicle to earn their income and have to travel long distances, including tradespeople, salespeople, couriers, primary producers and small business people—the sorts of people that Labor always targets when it is in government to pay the price for the consequences of its mismanagement of our finances.

The official figures also show that there are 570,000 cars operating under the existing statutory formula and, according to evidence given at Senate estimates, of the users of those 570,000 cars some 60 per cent will be worse off, about 15 per cent will be better off and 25 per cent will experience business as usual. But 60 per cent of the users of the 570,000 cars operating under the existing statutory formula will be worse off. So those figures mean that 342,000 individual Australians will be worse off as a direct result of these changes which the government is making to the FBT rules for cars.

The people most affected by this measure, of course, will be those Australians and small businesses that are located in outer metropolitan and rural areas, because they need to drive longer distances. So this is yet another Labor Party tax grab which will punish people who live and work in outer metropolitan and rural areas through no fault of their own. It is just one more example of a government that just does not understand the cost of living pressures on Australian families and is not prepared to assist Australian families to deal with these pressures.

There is also the change, of course, in relation to the phasing out of the dependent spouse tax offset. It will mean that the dependent spouse tax offset will no longer be available for spouses of 40 years old or younger. Over time it will mean the rebate will be phased out as fewer and fewer people are left claiming it. These changes, as I am advised, do not affect dependent spouses who are invalids or permanently unable to work or those currently eligible for the rebate because of geographic isolation or other location issues. The rebate was never available to those claiming family tax benefit part B or if the income test for family tax benefit part B was exceeded. This schedule is expected to increase government revenue by $755 million over the forward estimates.

What we have here is a government that has been very bad in managing our public finances. We have had waste and mis­management right across government. We have a government that has taken a strong and sound fiscal position and turned it into a position where we are now looking at record levels of government net debt, where we had the biggest deficit in the history of the Commonwealth last year, where we are going to have the second biggest deficit in the history of the Commonwealth this year and where we are going to have a significant deficit of about $22.3 billion next year, a deterioration of about $10 billion just compared to the figures that we were given seven or eight months ago in the Mid-Year Economic and Fiscal Outlook for the 2010-11 budget. Of course, we are supposed to believe that the following year, miraculously, on the back of the mining tax, the budget is going to experience a significant turnaround.

The coalition will not be opposing this legislation, not because we are happy with what the government is doing or because we support it but because, in the circumstances, it would be irresponsible to add to the fiscal pressure that this government has created. However, people across Australia need to understand that they are paying the price for Labor's mismanagement of our budget. People across Australia, whether Australians with private health insurance who are about to lose their private health insurance rebate or people that are caught up in the measures in this legislation here today, are paying the price—and Labor wants them to pay the price—for Labor's mismanagement of the budget.

As I flagged, the coalition does intend to move a second reading amendment, and I now move the coalition's second reading amendment to the Tax Laws Amendment (2011 Measures No. 5) Bill 2011:

At the end of the motion, add:

and the Economics References Committee is to undertake a review of the operation of the amendments made by Part 1 of Schedule 5 of the bill 12 months after the commencement of that Part and report to the Senate on that review no later than 12 months after commencing the review.

With those few remarks, I conclude the contribution on behalf of the coalition.