Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

Labor supports the Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014. The bill has four schedules, each implementing different measures. The first three implement minor amendments to previously announced Labor government measures. Schedule 4 is a necessary change in response to the increase in the fuel excise rate that was required to prevent an arbitrary change in excise subsidies.

Schedule 1 removes tax impediments to business restructures. Business restructures are complex processes designed to increase productivity and efficiency. To assist in this process, rollover tax concessions have historically been awarded to business to allow eligible businesses to defer income tax consequences of restructures. This amendment seeks to extend the availability of these concessions to suit a broader range of business restructures, thus reducing compliance costs and delivering greater certainty to business. The specific amendments contained in this bill were previously announced by the then Labor government as part of the 2012-13 budget. The changes to the announced measure are minor and not controversial.

Schedule 2 makes amendments to the managed investment trust withholding tax. The managed investment trust withholding tax regime provides a reduced rate of withholding tax for foreign investors in Australian managed funds for the purpose of attracting greater foreign investment in Australia. Currently, however, the concession is not awarded in circumstances where the ultimate beneficiary of the fund payments cannot be established. This is often the case where fund payments are made to trusts without entitled beneficiaries. Accordingly, foreign pension funds which receive such fund payments are not entitled to claim the MIT tax concession. The amendment will ensure that foreign pension funds can access the MIT tax concession by treating foreign pension funds as the ultimate beneficiary of fund payments.

Schedule 3 implements an income tax exemption for force posture initiatives. The force posture initiatives were first announced by Labor in 2011. These initiatives were designed to enhance the strategic and defence cooperation between Australia and the United States. The program involved annual rotational US Marine Corps deployments and enhanced aircraft cooperation activities with the US Air Force in Northern Australia. In August 2014, the Force Posture Agreement was signed between Australia and the US. As part of this agreement, an exemption was granted from Australian income tax for income derived by US contractors in connection with the force posture initiative. Such exemptions are already in place for 'approved projects' involving cooperation between Australia and the armed forces of the US. This amendment simply adds the force posture initiatives to the list of 'approved projects' to ensure that the income tax exemption also applies.

Perhaps the most significant element of this bill is schedules 4 and 5 to make changes to fuel tax credits and grants. Fuel tax is levied on all excisable fuel and petroleum products whether domestically produced or imported. The fuel tax credit system was established in July 2006 to ensure that fuel tax only applies to fuel used in private vehicles and for certain other private purposes. Since the cessation of fuel indexation in March 2001, the real value of fuel tax has declined with inflation. In order to bypass parliamentary approval, the Abbott government increased the rate of excised duty on fuel through a tariff proposal which, in effect, re-indexed the fuel tax rate with inflation.

The Customs Act 1901 and Excise Act 1901 allow for a variation of customs or excised tariffs to be made by the government initially without a bill, but validating legislation must be passed by both houses at a later date. This validating legislation can be a considerable time after the original proposal comes into effect but conventionally falls within three to 12 months of this date. However, tariff changes do not have a flow-on effect on tax concessions or subsidies which are linked to the nominal amount of the excise. As such, without this amendment, the real value of the fuel tax credit will fall, creating additional costs for eligible business.

On the subject of fuel tax, let me regale the chamber with a quote used by the shadow assistant Treasurer, Dr Leigh, when he began his contribution to the debate on this bill in the other place:

It is an absolute principle of democracy that governments should not and must not say one thing before an election and do the opposite afterwards. Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election and do the opposite afterwards.

I wonder who might have said that? Could it be a member of this side of the House? Those words were uttered on 22 August 2011 as part of a litany of statements by the now Prime Minister in the lead-up to the last election. He made statements such as: 'We want taxes going down, not going up,' and statements such as:

The one thing that people will never have to suffer under a coalition government is an unnecessary new tax, a tax that could easily be replaced by savings found from the budget.

That was what the Prime Minister said in parliament on 10 February 2011 when speaking about the flood levy to rebuild Queensland. The coalition opposed the flood levy. They thought those savings could be found from within the budget. But they do support the fuel tax. That is despite the statement by the Prime Minister on 10 May 2012, when he said that people who work hard should 'not be hit with higher taxes'. On 16 August 2011, he said:

A very clear message is going out from the Australian people to this government: there can be no tax collection without an election. If this government had any honesty, any decency, that is what we would have: an election now

That was repeated in this parliament on 14 September 2011:

I say to this Prime Minister: there should be no new tax collection without an election.

If the Prime Minister is to stick to his pre-election claims, then, apparently, Australia should be going to the polls, because that is exactly what has been foisted on the Australian people—an increase in the fuel tax in direct contravention of the Prime Minister's pre-election promises. Before the election, on 19 September 2012—September 2012 was the lie-athon: there was lie after lie after lie—the Prime Minister said:

The time for big-spending, big-taxing, big-fibbing government has gone.

I am afraid the Australian people do not see it that way. They see a government that is raising their taxes and fibbing to them all the way. Worse than the promise breaking is that the government is trying to mislead the Australian people. Let us not forget that it was the communications minister who called out the Prime Minister for his farcical statement that he had not broken his 'no cuts to the ABC' promise because he was actually implementing an efficiency dividend. How foolish the Australian people were to listen to the Prime Minister when he was campaigning before the last election, when what they needed to do instead was to look at the carefully crafted words of the communications minister beforehand.

Clearly, when the Prime Minister told Australians on 9 August 2013 that the only party that was going to increase taxes after the election was the Labor Party he was misleading Australians. It was another Liberal lie. On 14 March 2012 he said:

What you'll get under us are tax cuts without new taxes.

We are debating today a measure which arises directly from yet another broken promise among the litany of cuts to health and education to the tune of $80 billion and of cuts to the ABC. We are seeing great ABC workers losing their jobs, and cuts to production in Adelaide. But, as they have gone about trying to break this election promise, the Government has blundered yet again. The once shiny Treasurer is not so shiny after he drove directly into a fuel tax blunder. Let me quote very clearly what the member for North Sydney told ABC radio in regard to the fuel tax:

What we’re asking is for everyone to contribute, including higher income people. Now, I’ll give you one example: the change to fuel excise, the people that actually pay the most are higher income people, with an increase in fuel excise and yet, the Labor Party and the Greens are opposing it. They say you’ve got to have wealthier people or middle-income people pay more. Well, change to the fuel excise does exactly that; the poorest people either don’t have cars or actually don’t drive very far in many cases. But, they are opposing what is meant to be, according to the Treasury, a progressive tax.

Let us step through those claims that the poorest people either do not have cars or do not drive very far, and that the fuel excise is a progressive tax. In the other place, Dr Leigh referenced an ABC Fact Check, updated on 28 October 2014, which rates this claim overall as 'misleading'. First of all, the claim that poor people do not have cars: in a media release accompanying this extraordinary claim, Mr Hockey published a chart showing that 35 per cent of the lowest income households did not have cars. That is somewhat surprising, because there is an Australian Bureau of Statistics publication called Car Nation, which finds that only 15 per cent of those in the bottom income range do not have cars. That is 35 per cent in one publication and 15 per cent in the other

; there are slightly different measures of low income, but that is a big difference. So ABC Fact Check looked into it, and it turned out that the way in which Treasury had boosted the share of households that did not have a car was by assuming that if you answered 'not stated' or 'not applicable' to the question, then you did not have a car. They contacted the ABS, the Australian Bureau of Statistics, about this and the ABS frankly said that they would not make those sorts of assumptions. They would not try to inflate statistics on the share of Australians without a car by assuming that, if you did not answer the question, you did not have a car. But, even if we take the government at face value, their own statistics show that in the poorest income group two-thirds of households had a car. It is probably an underestimation; it is probably more like 80 per cent of those in the bottom-income groups have cars. Clearly, any way you cut the data, poor people drive.

What about the claim that they do not drive very far? We turn to Professor Graham Currie from the Institute of Transport Studies at Monash University. He conducted research in 2008 on average travel distances for people who live on the urban fringe of Melbourne and for inner-city area residents. It is not a perfect measure of low and high income, but we do know that inner-urban residents tend to have higher average incomes than those on the urban fringe. The typical travel distance for those in the inner area is 6.4 kilometres a trip and for those in outer fringe areas it is 16.4 kilometres a trip. The implication, as Professor Curries puts it, is that:

They have higher costs for travel and longer travel times.

Professor Currie also points out that people on the urban fringe are more likely to be travelling by car because there is very little public transport, so on the inner fringe a much higher share of trips are by public transport than in the inner areas. Again, poor people have cars and poor people drive further.

What about this extraordinary claim that the petrol tax is a progressive tax? What is the definition of a progressive tax? As any economist will tell you, it is a tax where the share of total income is higher for those at the top of the distribution than for those at the bottom of the distribution. Is that the data that the Treasurer produced? No, I am afraid not. The data that the Treasurer produced was dollar expenditure. He showed that higher income Australians spend more on fuel. This is absolutely true.

But that is not what we are talking about here. Of course, higher income Australians spend more on fuel; higher income Australians spend more on just about anything. In the 2009-10 Household expenditure survey, there are 593 items, and for 580 of the 593 items the rich spend more than the poor. There are only 13 items for which the poor spend more than the rich. The point of a progressive tax, as any Treasurer who knows his economics would know, is that the share of income is higher for the top than for the bottom. This is very clearly a tax whose burden falls more heavily on the bottom than the top.

If you look carefully at household expenditure statistics, petrol accounts for a higher share of spending among low-income households than high-income households. A fuel tax is therefore a modestly regressive tax. So on all three counts: poor people drive cars, they drive further and they spend a larger share of their income on fuel. It might be reasonable if the Treasurer were to say, 'Well, I know it's a regressive tax and I know it'll hit the poor hardest. But I've put in place a compensation mechanism to look after the most vulnerable and to protect them from the impact of my regressive fuel tax increase.' But that is not what this budget did. This is one measure amidst an extraordinarily regressive budget, which is probably the most regressive budget that Australia has ever seen.

This is entirely unlike what happened when a carbon price was introduced in Australia, when a household assistance package ensured that nine out of 10 Australian households received household assistance. This is a regressive fuel tax accompanied by a regressive budget. A NATSEM analysis, looking to 2017-18, analyses the change in disposable income from 18 different budget measures. That does not include the GP co-payment, but it does include the changes in family tax benefits, the clean energy supplement freeze, the changes to Newstart, the pensioner education supplement and senior supplement removal, the dependent spouse tax offset removal and the changes in fuel tax indexation.

The poorest couples with children, those in the bottom fifth of the income distribution, lose 6.6 per cent of their disposable income. This is a huge whack to these households, losing more than $1 in $20 out of their incomes. The poorest single parents, who are the single parents in the bottom fifth of the income distribution, lose 10.8 per cent of their disposable income. What an extraordinary government it is that would think that it is all right to look at the poorest single mums in Australia and take $1 out of every $10 out of their wallets. No government in Australian history has ever been so brutal to Australian low-income single parents as has this government in taking $1 in $10 from the pockets of these households. Think of a single parent family on $65,000 a year. They are losing something in the order of $6,000. That is a massive whack to the most vulnerable Australians.

We are not going to support the change in indexation to the fuel excise that was snuck in behind the back of the parliament. It is because it is a broken promise and one of a number of broken promises by this government. We as an opposition are opposing arbitrary increases in fuel taxes, but we are not a wrecking opposition. We are working constructively with the government to ensure that eligible businesses are not unduly punished. (Time expired)