Joe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

I rise too to speak on the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015. There is a good reason that it is No. 3. This government has been trying—not that they are really trying—to put this bill through this chamber for some time. Quite frankly, they have not got the message at this point in time, but they ought to get the message that the Senate does not accept this bill. It does not accept the two provisions contained in this bill. These two provisions have been sliced and diced into a bill that this side of politics does not agree with and does not think they do the work they are supposed to do. There are much better ways of doing it—such as, firstly, leaving the current policies in place.

The two measures are: Schedule 1 repeals the Seafarer Tax Offset with effect from 1 July 2015—and I will come to that shortly—and Schedule 2 reduces the rate of R&D tax incentives with effect from 1 July 2014. Certainly, we have gone past that date. The government has put a lot of effort into trying to explain their policy intent, but it is a failed policy intent. The government says that both measures are being taken to achieve budget savings. These savings over the forward estimates in respect of the Seafarer Tax Offset are about $12 million and a reduction in R&D tax incentive rates of about $620 million from 2014-15. I am never one to say that these are small amounts. They are significant amounts, but the policy intent behind them—which is to create a saving out of what is effectively a reduction in R&D expenditure and in Australian seafarers around our coastline—are failed policy directions by this government.

In fact if you look at the Seafarer Tax Offset, you would have to wonder whether it is another slice of WorkChoices being served up in another way to attack the Maritime Union of Australia, to attack seafarers who ply Australia's coastal waters. When you look at the work that the government has done, you would be surprised to discover that it has not only provided briefing notes on the MUA for politicians to try to understand how the policy intent of Seafarer Tax Offset would work, but it has done a lot of groundwork to try to convince politicians, the MUA and many others that this is a good outcome. It is a poorer outcome. The approach that this government has taken to regulating coastal shipping in Australia is a disaster. It is not the end of it, if it remains in government too much longer.

The government has a range of attacks on coastal shipping which it is intent on producing, but this bill does not do it. I do not wish to correct Senator Rice that it will create a double-D trigger for the government. That is not the case, but it does not lessen the impact of this bill. Why would this government continue to push this bill forward? The only logical reason is, as Senator Rice did say, that the government does not have much legislation. It has no policy formulation measures and no legislative agenda. In fact, the government's plan is very hollow; it is paper thin; a plan with a title and not much else. The abolition of the seafarers tax offset—which effectively reduces the rate of tax offset available for the seafarers—will ultimately have a disastrous impact on the opportunity which the Labor government put in place. What the Labor government put in place was the opportunity for coastal shipping companies to improve the lot of seafarers, to create a level playing field—or as near as practicable as you can—and to encourage the industry to grow and to employ Australian seafarers on coastal shipping.

The government, as part of the truer reason and as part of their attack on workers—their salami slice of Work Choices that they are not game to serve up again—is found out here. The refundable tax offset originally started from 1 July 2012 for employers of certain Australian seafarers. A company employing Australian seafarers on prescribed overseas voyages made by certified vessels may be entitled to claim the seafarers tax offset. The government makes much ado about there not being many claimants. With any policy it should be allowed to run its course and to develop the opportunity for companies to see the benefit of employing Australian seafarers.

When the Howard government was in power they wanted to destroy Australian coastal shipping and this government is following that same rulebook. They wanted to ensure that they could have foreign-flag vessels, that they could have foreign crews on ships plying our coastal waters, with no opportunity for developing the Australian coastal shipping industry. The Maritime Union noted that there were six international voyaging ships and each ship would employ approximately 34 seafarers—approximately 204 seafarers in total. The industry saw the benefit and supported the policy of ensuring that the tax offset would remain. In its submission to the Senate Economic Legislation Committee’s inquiry into the previous bill, the ASA, which is the major employer body in the industry, stated:

The Seafarers Tax Offset provides a rebate to the employer of Australian staff for part of the income tax withheld while working in international trades, thereby making the employment costs more comparable with international seafarers.

The industry saw a significant benefit from this outcome. The industry saw that this was a government policy that would benefit and create certainty for their industry. I suspect what this government has done is a reflection on Mr Abbott's tin ear. He did not listen to industry and he did not understand that industry wanted to maintain a policy that would encourage this outcome. But it is not surprising at the end of the day that this industry was not listened to by Mr Abbott. In fact, the list of industries that Mr Abbott has not listened to is more telling of the position. The major area, when you examine it in more detail, is the benefit that will flow. We are talking about $12 million over the forward estimates—it is a significant amount but not a crucial amount for Australian jobs and the Australian coastal shipping industry.

This bill also includes the R&D tax offset. This is again one of those staggering issues where ultimately you have to think the government has lost its way. Rather than promote research and development, rather than look at how you can ensure companies can have good outcomes in R&D, this government has relinked it back. Implementing this provision—which Labor opposes—will reduce overall the outcomes that companies will utilise in research and development. The current R&D system came in on 1 July 2011. The R&D tax incentives assist businesses to offset some of the costs of doing R&D and fundamentally aim to promote innovation. Labor believes that ultimately we need to promote innovation in business if they are to continue to grow and to prosper in the Australian economy. This government does not agree with that statement. The program is to be administered jointly by AusIndustry on behalf all Innovation Australia and the ATO. The R&D tax incentives replace the previous R&D tax concessions. Fundamentally that is where this government is at. You can have an alternative policy position on this issue, and I think Mr Bowen summarised it very well when was speaking in the House about this $620 million cut to the research and development tax concession. He said:

I will say a number of things about this. Firstly, 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.

I think that is by far the better way to go. This government does not agree with that and wants to effectively go back to the old system. I think business also wants certainty about R&D development. This bill does not provide that certainty.

This government has taken the approach of relinking the corporate tax rate for research and development incentives, and that is an alternative argument. I just do not think it is the right argument, Labor do not think it is the right argument, for corporate businesses who want to invest in innovation and in research and development. The area which is of most concern underlines, I think, the government's position: on research and development, this government has been shown to be missing in action. Their treatment of research and development corporations in the agriculture field, their attacks on the CSIRO—these underscore the government's approach to research and development. Fundamentally, they think it is a matter for business and that the government should not play much of a role. In this area I think government does play an integral role in supporting innovation so we can meet the challenges of the 21st century in research and development.

The rates of the refundable and non-refundable tax offsets will effectively be reduced by 1.5 per cent from 1 July 2014, from 45 per cent to 43.5 per cent for companies with an annual turnover of less than $20 million and from 40 per cent to 38.5 per cent for all other companies. This will preserve the value of the R&D tax incentive relative to the company tax rate, which will be cut by 1.5 per cent from 1 July 2015. All of this tells us that this government is about reducing the outcomes in this field.

More can be said about this tax position that the government has taken, but I want to touch again on the abolition of the seafarer tax offset. Opposing this offset shows the government's view of employees. The original seafarer tax offset was about revitalising Australian shipping to ensure that we would have a shipping industry in Australia in the next 10, 15, 20 years. The object was to stimulate opportunities for Australian seafarers to be employed or engaged for overseas voyages and to acquire maritime skills. These skills do not come overnight. You cannot train someone to be a seafarer overnight. There needs to be a policy to encourage employers to invest in skills acquisition by allowing employees to acquire those skills over time so that they become worthwhile contributors to the maritime industry. This government decided to take a short cut and simply say, 'We'll import the skills for coastal shipping.' So, before the seafarer tax offset is even two years old, the government has moved to abolish it. The offset should be given the opportunity to develop and to run its course, because Australia needs to maintain and expand its maritime skills base.

This tax initiative is one of several that arose from the lengthy industry consultation that led to Labor's shipping package. I applaud the then minister for the foresight he showed and for the work that he did in bringing forward a good shipping package that was the subject of wide consultation and met the approval of the industry. That is because what this industry wants is certainty, not reform after reform after reform. What this industry needs is the ability to revitalise the Australian shipping industry, an industry in its own right. It is not, as the coalition would say, 'just the cost of doing business'.

The coalition should stand up for Australian shipping rather than continue to do what it has done over the past year—that is, walk away from the practical aspects of supporting Australian jobs and defending Australian skills. We know the coalition will soon try to walk away from supporting Australian coastal shipping because it wants to open the coast to increased numbers of foreign vessels, with crews on Third World wages, which is bad both for the environment and for safety, but it is unsurprising coming from this government.

The Australian Shipowners Association oppose this policy. So, not only do shipowners oppose this policy; the companies that are affected by the R&D change oppose it as well. You wonder who the government were listening to when they wrought these changes. The Australian Shipowners Association believe the seafarer tax offset was a key element of the 2012 reforms and that it helped to reduce the operating costs of Australian vessels, increase the competitiveness of Australian shipping and provide a significant opportunity for employment of Australians in the international trade, and that its abolition will have a severe impact with regard to future opportunities. That is the industry itself saying directly to this government that these changes are bad, are unsustainable and should not be implemented.

But this government, hell bent on ripping money out of everywhere, has not looked at the policy objective and has not considered how the policy will impact negatively on Australian workers. It just decided to do this. You wonder who is in charge of the show—and, until later tonight, no-one probably knows the answer to that.