Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

Firstly, in schedule 1, this bill seeks to abolish the mature-age tax offset. Labor will support this measure. This was a process started by Labor in government. It is a sensible saving. The government have their own measures that they have put in place to replace this measure, and we will not stand in the way of the passage of this particular schedule. It represents a considerable saving, and Labor is always prepared to support sensible savings put forward by the government. Of course, unfortunately, 'sensible' and 'savings' are two words that are not often associated with this government. But this is an exception, and we will support this measure.

To be clear: Labor is in favour of measures that support older Australians who want to work, but wage subsidies are not enough. Labor knows that a comprehensive mature-age employment agenda needs a comprehensive suite of measures. That is why we established the seniors work bonus, increased the superannuation guarantee, established an Age Discrimination Commissioner, reformed the age pension to make it strong and sustainable, and set up the Advisory Panel on Positive Ageing. By contrast, this government has slowed the strengthening of the super system, has scrapped seniors concessions and wants to cut pensions.

The Abbott government announced in the 2014-15 budget that it was abolishing the mature-age-worker tax offset. The previous Labor government had commenced the phase-out of MAWTO in the 2012-13 budget, limiting it to taxpayers born before 1 July 1957. That measure had an estimated $255 million gain to revenue over the then forward estimates period. At the time, the then Labor government stated: 'The MAWTO is a high-cost method of facilitating mature-age workforce participation. The government will be investing in better-targeted workforce participation programs.' We believe that encouraging mature-age workers to participate in the workforce can be done more effectively through direct payments or incentives.

The government claims to have replaced the MAWTO with the Restart program, which provides a payment of up to $10,000, which will be available to employers who hire a mature-age job seeker aged 50 years or over who has been receiving income support for at least six months. Labor will continue to fight for older Australians—for their rights to work and participate in society, for their pensions and for appropriate aged-care services.

Labor will oppose schedule 2. This is the government's proposed abolition of the seafarer tax offset. The seafarer tax offset commenced from 1 July 2012. This measure was part of the then Labor government's shipping policy reform Stronger Shipping for a Stronger Economy, announced in the 2010 election, and was designed to stimulate employment opportunities for Australian seafarers to gain maritime skills. The offset provides a refundable tax offset for qualifying companies employing eligible seafarers. Currently, companies are eligible to claim the seafarer tax offset—a refundable tax offset linked to the concept of withholding payments paid to Australian seafarers for overseas voyages—in certain circumstances. The overseas voyage must be made by a certified vessel and the seafarer must be employed by the company claiming the offset for at least 91 days in the income year.

It is possible the government does not understand the impact of its policy here or, alternatively, perhaps it has thought it through and it does understand the negative impact of its policy. Either way it has got it wrong. The shipping trade is important for Australia. One-tenth of the world's sea trade goes to or from Australia, and Australia has the fourth-largest shipping task in the world. It stands to reason as we are a maritime trading nation. It is in our national and security interests to revitalise Australian shipping.

As I indicated, the previous Labor government did considerable work in this regard. The former Deputy Prime Minister and Minister for Infrastructure and Transport, Mr Albanese, has very passionate views about this and was the leader of reform when Labor was in government. One of the reforms introduced by Labor was this tax offset back in 2012, following lengthy industry consultation. The object of the offset is to stimulate opportunities for Australian seafarers to be employed or engaged on overseas voyages and to acquire maritime skills.

There is a straightforward principle here. Under our tax system, if you are an Australian citizen and you are working elsewhere in the world, you are covered by the tax system of that country. We are not like America, under whose system an American working anywhere in the world is regarded as being subject to the revenue task of the United States government. In Australia there is a different approach. But we say that, if you are working on a ship which is not in Australian waters, that should apply as well. This was an offset introduced by the previous government, designed by the Treasury—not by others—to achieve that policy aim. The policy is supported by the Australian Shipowners Association. They said:

The Seafarers Tax Offset was a key element of the 2012 reforms which helped to reduce the operating costs of Australian vessels, increased the competitiveness of Australian shipping and provided significant opportunity for employment of Australians in international trades … the impact—

of the abolition—

is severe with regard to future opportunity.

I will be interested to hear if those opposite acknowledge this point. The Australian Shipowners Association have called them out. Labor will defend the seafarer tax offset and we have circulated an amendment to be debated in the committee stage that will remove schedule 2 from this bill because we do not agree with the government's position on this matter. This is not for a large saving; we are not talking about billions of dollars. It is a quite modest measure but it is an important one. I ask the government to reflect on this measure, maybe to consider the views of the Australian Shipowners Association, and to acknowledge that it has got it wrong. If it acknowledges it has got it wrong, then it will have our bipartisan support on its back-down.

Labor will also not be supporting the schedule which goes to the changes to research and development. In relation to research and development, we have seen a disappointing pattern from the government. It is a government which is prejudiced against science, research and development, and important measures to encourage innovation in the Australian economy. Almost everybody knows that innovation, science and technology are important key drivers for future economic growth. I say 'almost everybody' because it seems that everybody except the government knows that. Remember, this was a government that belatedly added a minister for science to its line-up in December last year. Seriously! Tony Abbott, science, December last year—15 months after they took office. It is a tribute to the pressure that many organisations and, might I say, the Australian Labor Party, principally through my colleague Senator Carr, that they finally acknowledged science was important enough for it to be included as a ministerial title. I know Senator Carr is looking forward to making a contribution in the debate on this bill a little later on. This could be one of your finer moments, Senator Carr—through you, Mr Acting Deputy President Whish Wilson. I am sure the whole chamber will be looking forward to hearing from Senator Carr on this—and do not think we do not know who wrote the speech!

But, of course, real support for science and innovation goes beyond having a title on a letterhead. Unfortunately, the government has been severely lacking in this area. It is a government which cut research and development spending and cut science research spending quite considerably in its heroic 2014 budget. We have seen the CSIRO cut by $115 million. We have seen the Defence Science and Technology Organisation cut. We have seen the Australian Nuclear Science and Technology Organisation, the Australian Institute of Marine Science, and Geoscience Australia suffering cuts of $51.4 million. One that I had some association with previously, NeCTAR, has been gutted. We have seen co-operative research centres, which have been so important over many years for the Australian innovation task, have their funding slashed. We have seen important government programs when it comes to commercialisation and innovation abolished and replaced by a new program, which has roughly half the amount of funding that was previously in place and has a vague and ill-defined mandate. In many ways, the government has just been playing catch-up and trying to cover the fact that it is making cuts in this important area.

Why does Labor say this is so important? It is because these are the drivers of future economic growth. We have condemned the government for its budget because it is unfair. We have condemned the government for its budget because it represents prejudice against working Australians. We have condemned the government for its budget because it represents fundamental breaches of promise and a web of deceit that the Liberal and National parties engaged in at the last federal election. We also condemn this budget because it represents an attack on future sources of economic growth.

This is in great contrast with Labor. Time and again Labor has demonstrated that it is the party that looks to the future, with a vision for tomorrow's Australia. By contrast, the current government looks only in the rear-view mirror—not in an Australian-built car of course—because it has only a backward-looking policy. It represents an approach to policy which does not recognise the importance of innovation in Australia.

The fact is that high-growth technology companies currently generate less than 0.2 per cent of our GDP. PricewaterhouseCoopers have estimated that, with the right policy environment, this sector could contribute four per cent of our GDP, generating more than half a million jobs by as early as 2033. In order to achieve this Australia needs a government which embraces innovation, commercialisation, research and development, start-ups and the spirit of entrepreneurialism. The government are happy to talk about these things, but their policies, as in so many areas, go in exactly the opposite direction. We have a Prime Minister and a Treasurer who think that if they say something it makes it so. But it is actually their policies that make it so—and their policies do not reflect the rhetoric.

A measure before us here is a $620 million cut to the research and development tax concession. I will say a number of things about this. First, the support given to research and development through the incentive in the tax system has been very important in Australia's research and development efforts. What the government is doing here is relinking the concession to the corporate tax rate. The previous Labor government explicitly delinked the corporate tax rate and the research and development incentive. We did that to provide certainty so that Australian companies investing in risky research and development ventures knew the sort of support they would receive from the government when they were undertaking the difficult decision about how much to invest. Some of these ventures will not pay off for the company but, if they do pay off for the company, most of them will have spillover effects for the entire economy. That was the approach taken by the previous government.

This government has taken the approach of relinking the corporate tax rate with research and development incentives. I accept that there is a legitimate debate to be had about that and that there could be good arguments put on both sides, but the approach taken by the Labor Party in office that we continue to defend, protect and promote is that it is important that firms have certainty when it comes to investing in research and development.

The government is so incompetent that, even if you accept its arguments, it has actually been quite tricky with the Australian business community. Firstly, this bill seeks to reduce the research and development tax incentive because the government wants to relink it with the corporate tax. The government is proposing to cut the corporate tax rate to 28.5 per cent from 1 July next year, but this change applies not from July next year but from before then. If there is to be any justification for the government to implement this measure, it should apply from the same date as the corporate tax rate which the government intends to introduce comes into effect. I urge the Senate to support Labor's amendment to remove schedule 3 from this bill.

We will support schedule 4, which relates to the introduction of new deductible gift recipients. In the tradition of both Labor and Liberal governments, this is the normal process. As the bill explains, a deductible gift recipient is an entity to which gifts may be claimed as tax deductions by taxpayers. Subdivision 30-B of the Income Tax Assessment Act 1997 sets out general categories of purposes or activities within which funds, authorities or entities are able to receive tax deductible gifts. Such entities are known as 'deductible gift recipients' or DGRs. Whether or not an entity falls within one of the general categories is determined upon application by the Commissioner of Taxation. The deductibility of any gift is subject to any conditions or limitations set out in subsection 30-15(1) of subdivision 30-A of the Income Tax Assessment Act 1997.

Where a certain fund, authority or entity is not eligible to receive deductible gifts because its purposes or activities do not fall into one on the general categories of deductible gift recipients, it has been the practice of governments to propose to the parliament that a certain fund, authority or entity be listed by name in the tax laws. There are no coherent guidelines, criteria or principles guiding when the government will propose to the parliament that an entity should be specifically listed. Once listed, entities are known as 'specifically listed deductible gift recipients'. Subdivision 30-G gives an index to all the specially listed deductible gift recipients in subdivision 30-B.

There are three organisations that schedule 4 will insert into the Income Tax Assessment Act 1997 to enable them to receive gifts that are tax deductible for the donor. These are: Australian Schools Plus, an organisation which supports the education of students by collecting donations from the public and distributing these funds among disadvantaged schools; the East African Fund, which promotes the education of children in rural communities in East Africa and runs the School of St Jude located in the Arusha region of Tanzania; and the Minderoo Foundation Trust, which was founded by Andrew and Nicola Forrest and supports programs to combat Indigenous disadvantage, both within Australia and across the world. These are worthy organisations and, accordingly, schedule 4 will attract our support. Labor look forward to the support of the chamber for our amendments and, if schedules 2 and 3 are removed, we look forward to supporting the bill.