Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

I withdraw and simply state the fact that the Prime Minister, in the days leading up to the election, stated, 'There shall be no carbon tax under a government I lead,' and, as the record demonstrates, then promptly introduced a carbon tax. I will let those matters speak for themselves when it comes to the electorate and others judging whether that was a truthful statement by the Prime Minister or an untruthful one. What is clear is that on a whole range of fronts—as they did in the last election—the Labor Party are simply trying to con and dupe and lie their way into office.

Turning to the bills before us tonight, there are a range of matters in these bills. I will deal with some of them—not all of them, because a number are minor and technical and would enjoy broad support. But I want to touch on a few particular areas, things that the coalition supports and things that we have some concerns about. The coalition, as Senator Cormann and Senator Bushby have outlined, have some concerns with the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, and particularly with schedules 5 and 6, which relate to the loss carry-back measures linked to the mining tax. There are foreshadowed amendments in relation to those.

Firstly, I will touch on schedule 1, which relates to interest and unclaimed money. It ensures that income tax is generally not paid on the interest paid by the Commonwealth on unclaimed money from 1 July 2013. Late in 2012, the Gillard government announced this measure as part of its MYEFO. Back then, we were living in the illusory land of budget surplus and Mr Swan, the Treasurer, and indeed all members of the government were still proclaiming that the government would be delivering a surplus this year. That MYEFO, released in October, outlined a surplus—a wafer-thin surplus, mind you—of just over $1 billion. And indeed three-quarters of that promised surplus was expected to come from schedule 1 of this bill. Over the first six months of this year, the government expected to raise from this measure over $760 million in additional revenue, including $555 million from lost super, with the rest from lost bank accounts of either individuals or companies to the tune of around $100 million from each.

Under pressure during the consideration of the unclaimed money bill, the government advised the Senate Standing Committee on Economics of its intention that this interest would in fact be exempt from the tax. With the government finally realising that their surplus was a mirage, to say the least, they have changed their minds on the approach here. The rushed implementation of these changes and the way in which sums were counted and not counted were driven by nothing more than the government's desperate need to plug their then budget black hole, before they realised that the black hole was of such a scale and size that it was completely unpluggable. The financial impact of this measure is nil, as the government claim that they never budgeted on tax from interest payments, despite earlier statements to the contrary, which of course demonstrates the rushed, thought-bubble approach. Nonetheless, the coalition, noting the history of that measure and where it now stands, supports schedule 1.

Schedule 3 is a particularly important one dealing with the Sustainable Rural Water Use and Infrastructure Program, an area related to my portfolio responsibility of the Murray-Darling Basin. It is notable that the changes contained in schedule 3 of the bill were announced in February 2011. Here we are in June 2013, in the final sitting week of this parliament before the election, with the Senate operating under guillotine to ram through some 53 bills that the government wants to get in place, and we are asked to deal with something the government promised to do in February 2011. There surely can be no greater demonstration or example of the complete incompetence of this government when it comes to managing its own policy reforms and legislative agenda. Why on earth this was not done promptly, why on earth it was not done soon after its announcement, why on earth it was not done some time in 2011, or sometime in 2012 or even earlier in 2013 is a mystery—one that I suspect that the government will refrain from ever explaining properly, because it comes down to its own incompetence.

But this is an important reform. In fact it is a change that the parliamentary committee processes had identified and advocated be made to how our water infrastructure programs work. Water infrastructure programs are very important to how we can sustainably recover water from the Murray-Darling Basin to provide for the necessary environmental flows to give us a healthier river system into the future and yet do so in a way that maintains the productive capacity of river communities, retains the capacity to produce the food, fibre and produce we rely upon for so much of our economic output and in doing so continues to underpin not just the economic fabric but also the social fabric of those communities.

One of the concerns that some of those who have received and been awarded grants under the Sustainable Rural Water Use and Infrastructure Program had identified was the tax treatment of those grants and the issues that that tax treatment had for their own cash flow operations. Those concerns were outlined through the parliamentary committee processes of the House and the Senate, which identified the problems and recommended that government take action. It was pleasing in February 2011 when Minister Burke announced that he would enact changes in that regard. It is just so disappointing that it has taken so long for the legislation to come before the parliament.

This schedule will allow participants in the Sustainable Rural Water Use and Infrastructure Program to choose to make payments received under the program free of income tax, including capital gains tax. If the choice is made, then expenditure related to infrastructure improvements under the program is non-deductible. Alternatively, participants can decide to stay under the current rules. So it provides a level of flexibility, allowing them to choose the circumstances that will work best for their financial arrangements and cash flow management. This program provides funding to irrigators to improve water efficiency, with the resulting water savings to some extent being transferred to the government for use for environmental watering, as part of and consistent with the Murray-Darling Basin Plan.

If chosen by the taxpayer, by the grant recipient, the new arrangements remove a cash flow gap currently between the timing of tax liabilities and tax deductions. The financial impact of this measure is around $45 million over the forward estimates, noting that the infrastructure package itself is a multibillion-dollar package of grants and assistance to recover this water as part of the Murray-Darling Basin Plan.

It is not just in relation to tax laws that the government is synonymous with dragging its heels and poor approach to implementation. There have been so many other areas of the Murray-Darling Basin Plan, as well, that have been of grave concern in terms of the government dragging its heels in implementation. If we date right back to the first election of this government, in 2007, it took an inordinate period of time just for the membership of the new Murray-Darling Basin Authority to be appointed and for it to be properly established. Then we had multiple delays that saw the commencement date for the Murray-Darling Basin Plan drag out from 2014 to 2019 and now an ultimate finalisation time frame of 2024. Little wonder then that a couple of years slippage in terms of legislation coming to the chamber is seen as being of little consequence, when you see such significant delays of a decade in relation to a significant policy reform like that.

When Minister Burke released the final Murray-Darling Basin Plan in November last year, the government promised it would sign an intergovernmental agreement with all of the basin states in the following month, last December. We still see that only two of those states have been signed on: Victoria and the Australian Capital Territory. Only two jurisdictions have signed on. Even our home state of South Australia, despite all the bleating and posturing of Premier Weatherill and his government, has not managed to come to terms with the intergovernmental agreement to actually help facilitate the implementation of the Murray-Darling Basin Plan. It is just another example, like this measure within this bill, of the constant failure of this government to do anything in a timely and proper process.

Schedules 5 and 6, which my colleagues have addressed at some length, in relation to measures that are linked to the mining tax, are areas that do cause the coalition particular concern. Schedule 5 implements the loss carry-back for small and medium sized businesses, linked to the mining tax, and schedule 6 includes the necessary consequential amendments. The new rules give a corporate tax entity the choice of carrying back all or part of a tax loss from the current income year or from the preceding income year against an unutilised income tax liability for either of the years before the current year. The measure applies to assessments for 2012-13 and later income years. A transitional one-year carry-back period applies for the 2012-13 income year. If the loss carry-back conditions are satisfied, a corporate tax entity can get a refundable tax offset for the losses it chooses to carry back. The financial impact of this measure is around $700 million over the forward estimates.

The coalition's grave concern is that this measure is allegedly funded by the mining tax, and the coalition has opposed all elements of government activities that are allegedly linked to the mining tax, with the exception of the increase in compulsory superannuation. We have opposed them because, quite simply, this government cannot afford to implement measures paid for from a mining tax that is failing terribly to generate the revenue promised. It has failed on all fronts, as have so many areas of this government's policymaking.

In the time available, I will not dwell on the other aspects of our concerns or support but return to my opening remarks and simply reflect that this government's capacity to mismanage money, to mismanage our tax laws and to mismanage our superannuation laws is doing a grave disservice to the economy overall, to the confidence of personal investors, to the confidence of business investors and to the confidence of those seeking to invest for the long term in their retirement savings. The sooner we can return a level of confidence to the Australian people the better. (Time expired)