Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

I rise to continue my remarks in relation to the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016. Labor recognises that some of the sure-fire ways of helping small businesses, which comprise over 90 per cent of all of Australia's firms, include quick and easy-to-navigate licensing and regulatory processes and a mix of legal and competition policy that protect their rights and do not disadvantage them by favouring established players. That is why when we were in government we gave small businesses taxation benefits in the form of the instant asset write-off tax reforms and the tax carry-back reforms. That is why we support the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016, with the proviso that there is a review in two years to ensure its effectiveness.

We are glad to see that the government is looking into this matter of the capital gains tax, as this is a key area of reform that needs to be addressed if we are to address inequality. We recognise that this bill will not make a large dent in the necessary tax reform. But it is a relief to find at least one positive decision from the coalition in the sea of contradictions, vacillations, errors, corrections and avoidance of issues that have marked this government's recent performance. In sharp contrast, Labor has a range of ideas for budget repair. These include tackling the issue of tax avoidance by multinational companies; putting an excise on cigarettes to help defray the drain that tobacco-related diseases has on our health budget; changing the high-end superannuation tax arrangements in the interests of equality; and scrapping the Emissions Reduction Fund, which has taxpayers subsidising windfalls for big polluters. We see no sense of fairness in that. We have done the sums, and the revenue saved by our proposals would be enough to cover needs-based school funding over the decade.

There is no doubt about the need to do something about the housing crisis, and Labor's policies to allow negative gearing in the future only for newly constructed dwellings but to grandfather existing negatively geared properties until those investors' loans are paid off are well considered and responsible proposals that will provide powerful incentives for new construction and increasing housing supply. Leading economists such as Chris Richardson, Saul Eslake and John Daley have endorsed the policy. When speaking on the ABC's AM program on 16 February, Mr Richardson congratulated the Labor Party on a policy that 'has the potential to help provide better outcomes for all Australians'. I note also that former RBA director Mr Warwick McKibbin said:

The question is do you want to avoid the problem now or do you want to wait until the thing just bursts?

We also know that, in the government's own inquiry into the financial system, the report brought down in November 2014, under the heading of 'Major tax distortions', found:

The tax treatment of investor housing, in particular, tends to encourage leveraged and speculative investment in housing.

And we know, of course, that in 2005 the Prime Minister himself acknowledged that Australia's negative gearing settings are amongst the most generous in the world, and we also know that 70 per cent of the benefits of capital gains tax concessions go to the top tenth. We know that these are tax distortions that burn a hole in the budget. Capital gains subsidy cost $4.2 billion in 2014 and is projected to double to $8.6 billion in 2019.

But this government is involved in a scare campaign on Labor's policy to reform negative gearing and the discount on capital gains tax. The Prime Minister forswore that type of behaviour, but now he glibly says, 'Vote Labor and be poorer,' proving that his rhetoric is hollow. Just like the GST muddle, when the Prime Minister and the Treasurer were sending out conflicting messages, they are in such disarray that they cannot even explain what voters should be scared of—rising house prices or falling house prices. Once again the government appears to be hopelessly divided about what action to take on negative gearing, and we note media reports today that government backbenchers are extremely concerned about the inaction and the lack of direction of the government.

While you yourself, Mr Acting Deputy President Bernardi, and other backbenchers want to hold off any action on negative gearing and to concentrate instead on the desperate smear campaign against Labor's proposal, the Treasurer, Mr Morrison, appears to want action on negative gearing—especially on what he calls 'the excess'. But we are not sure exactly what he means by 'excess'. The Abbott government introduced retrospective tax changes which hurt small business, and it appears the coalition is once again flirting with retrospectivity in relation to the capping of negative gearing. That would not be a source of revenue from future investors, as they would have no motivation to buy multiple investment properties, but of course it would impact investors who have acquired property under one tax regime only to find the government has shifted the goalposts to their detriment.

The obvious question is: would the government's policy apply retrospectively to those who currently invest in housing? Labor has asked that question repeatedly, but the Prime Minister has refused three times to tell the Australian people—to confirm or deny as to whether the government will change negative gearing and reduce the capital gains tax discount and, if one of these plans is introduced, whether it will apply retrospectively. How can Australians feel any sense of assurance amidst this arrogant barrage of confusion from the coalition? Good economic leadership requires facing up to issues and making decisions, not contradicting and overriding and otherwise obfuscating. When Mr Turnbull launched his leadership campaign against Mr Abbott last September, he seemed to realise this and said:

Ultimately, the Prime Minister has not been capable of providing the economic leadership our nation needs … We need a different style of leadership.

So I would say that that is an extremely ironic observation.

Just in closing, we note that this is a small and positive step by the government. We support the measure that is before the Senate and note that it complements Labor's comprehensive plans of helping Australian small businesses thrive. However, the government needs a bigger-picture approach to tax reform. Successive prime ministers in the Abbott-Turnbull government have a patchy record on small business policy and on tax policy. Their actions are contradictory and, in conjunction with the continual delay in delivering the tax white paper they promised, all they do is create uncertainty. Perpetual uncertainty will permanently damage any claim the coalition has to being a friend of small business.