Scott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | Hansard source

I cannot let the contribution by Senator Cameron go unremarked, given that today really is a special day for Senator Cameron and all those opposite, because earlier today the final budget outcome for Labor's last year in office was released, and of course the final budget outcomes showed that the Labor government left a $48 billion deficit for the 2013-14 financial year. Let us remind people that this was the year where we were originally about to have a $5 billion surplus—a $5 billion surplus under eight successive budget updates offered by the Labor Party. We were going to have a budget surplus, but, like every other promise about financial management, that just disappeared. It is always a mirage—the closer you get, the faster it disappears. They always had excuses: the excuses of massively inflated and soaped budget estimates, with forecasts of massive revenue growth. That was always the problem: those forecasts never came true. But Labor never talked about their spending problem The Labor government never, ever talked about its spending problem and the rapid, unprecedented and record rate of increased government spending that occurred on their watch.

Let us look at the last 12 months. In May last year, in his last budget former Treasurer Swan forecast that this was going to be a year where there was only—and I know Labor say 'only' when there are small budget deficits—a $14 billion deficit. By the time Prime Minister Gillard had been replaced by Prime Minister Rudd and we had an economic update from the new Treasurer, former Treasurer Bowen, the $14 billion deficit in about eight weeks had become a $25 billion deficit—a blow-out of nearly 50 per cent in only a matter of weeks since the budget was presented. What we see today is the final budget outcome—a $48 billion deficit. The budget deficit increased by a factor of three, because you can never trust what a Labor Treasurer says at the dispatch box about financial management. You can never trust their observations about this sort of legislation.

I turn now to some of Senator Cameron's observations. The Labor measures referred to by Senator Cameron that the government is not implementing are simply not able to be implemented. They would not deliver the revenue that Labor claimed or they would have caused severe disruption to legitimate Australian business activity and they would have imposed dramatic compliance costs. They were, again, one of these landmines that Labor leave in a budget.

The last 12 months of Labor in office was the most profoundly irresponsible period of financial budgeting this country has ever seen. They left financial cliffs for program after program. They kicked the can down the road and gave programs an extra year of funding. With the record budget deficits that were forecast, it is amazing to know the number of programs that were still left unfunded. They attempted to confect budget surpluses in the forward estimates, as they had for the previous six years since they went on their spendathon. When the GFC hit North America and Europe, Labor went straight back to base and found any excuse to just throw the money out and permanently increase government spending. Remember: government spending increased by more than $100 billion a year between 2007 and 2013. What the Labor Party did was propose measures they knew they would never have to implement, that they knew could never be implemented, merely to pad their misleading budget forecasts. This government has taken responsible action and not progressed with Labor's proposals, particularly because of the costs they would have imposed.

Schedule 1 to this bill amends the income tax laws to protect Australia's tax base by tightening and improving the thin capitalisation rules. This bill amends the thin capitalisation statutory debt limits to bring them more closely into line with commercial debt levels or to regulatory requirements in the case of banks and non-bank financial entities. It provides additional flexibility with the introduction of a new test for inbound investors to allow gearing of the Australian operations up to the level of gearing of the worldwide group. In line with the government's commitment to reduce compliance costs for business, this bill increases the de minimis threshold from $250,000 to $2 million of debt deductions. Taxpayers below this threshold are not required to comply with the thin capitalisation regime.

Schedule 2 contains improvements to the tax exemption available to Australian companies for their foreign non-portfolio dividend income. The changes allow broader access to the exemption and allow it to flow through interposed trusts and partnerships. The changes also improve the integrity of the tax system, in particular the thin capitalisation rules by ensuring the exemption only applies to returns on instruments treated as equity for tax purposes.

Schedule 3 to this bill amends the taxation laws to improve the integrity of the foreign resident capital gains tax regime by preventing the double counting of certain assets under the regime's principal asset test. Schedule 3 also makes a technical amendment to the regime's reference to a permanent establishment definition to ensure the regime applies where assets are used in carrying on a business through a permanent establishment in Australia.

Schedule 4 to this bill amends the income tax laws to require that the Australian Taxation Office send every eligible Australian taxpayer a tax receipt. This tax receipt will detail how the total amount of tax assessed to that taxpayer for that income year was notionally used to finance different categories of Commonwealth government expenditure.

Schedule 5 makes a number of minor amendments to ensure the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes. Making periodic minor amendments to the tax and superannuation laws furthers the government's commitment to deregulation, reducing compliance costs for taxpayers.

I commend this bill to the Senate.

Question agreed to.

Bill read a second time.