Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. The memorandum was circulated in the chamber on 18 October 2006.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I move Democrat amendment (1) on sheet 5061:

(1)    Schedule 1, item 1, page 4 (after line 26), at the end of section 118-75, add:

        (3)    This section applies to separations in same-sex relationships.

        (4)    For the purposes of this section, the question whether partners in a same-sex relationship have separated is to be determined in the same way as it is for partners in a de facto marriage.

In moving this amendment, I want to draw on some remarks I made in my minority report to the Senate Standing Committee on Economics, and these are they:

Schedule One extends the operation of the marriage breakdown roll-over provisions to an additional three situations:

• a financial agreement binding under the Family Law Act;
• an arbitral award made under the Family Law Act; or
• a written agreement that is binding because of a state, territory or foreign law relating to de facto marriage breakdowns.

As the Bills Digest notes—

that is, the Bills Digest of 15 August 2006, No. 16, page 4—

Parliament may note that the measure will make no changes to availability of the roll-over relief: only heterosexual couples, married or in de-facto relationships, will benefit from the expansion of the relief. It will continue to be unavailable to same-sex couples.

This represents the continuation of on-going tax discrimination against homosexuals, and is thus a violation of equity.

That is what I said—not what the Bills Digest said.

It is one thing to take time to phase in changes to laws that are explicitly discriminatory, but which are costly and/or complicated to unravel. It is quite another thing to introduce new or extended discrimination, which this bill does. I can think of only one of three reasons for this to have occurred:

• it was an oversight;
• there are (as yet) unexplained (and justifiable) reasons why this is necessary; or
• the Government is homophobic.

I hope the first reason is the one. As for the second possible reason, I cannot see any possible justification which would merit extending discrimination through this legislative action—certainly not the Minister’s …

The minister I refer to is the Hon. Mal Brough, then Minister for Revenue and Assistant Treasurer, in answering question on notice No. 243 on taxation and capital gains tax from Mr Michael Danby on 9 December 2004, Hansard page 193.

As for the third possibility—if the first two possible reasons fall away, then this third reason remains.

I recognise that recent legislated changes to the Australian federal definition of marriage may mean that same-sex couples may find it difficult to seek to be on the same statutory basis with respect to CGT events as married couples. However, Schedule One also covers de facto relationship breakdowns, so same-sex couples are entitled to seek to be on the same basis with respect to CGT events as de facto heterosexual couples.

This is what my amendment intends to do.

My question on notice on this matter was addressed by Treasury as follows:

My question is a very simple one: to address the issue of providing the same marriage breakdown rollover provisional law changes proposed in this bill to de facto same-sex couples, would that require a change in law? Would that actually require an amendment?

Answer: Yes to both questions.

This continuation of official discriminatory behaviour is frustrating because this is a new rule, and rather than extending discrimination, this legislation should be used as an ‘engine of change’. As I understand Coalition Government policy, including as enunciated by the Prime Minister, the Coalition do not support continued discrimination against gay and lesbian Australians with respect to property matters.

My minority report then quotes from a transcript of a press conference at the Commonwealth Parliamentary Offices in Sydney on 22 December 2005:

Prime Minister Howard has said that he is

Strongly in favour …of removing any property and other discrimination that exists against people who have same-sex relationships.

The report continues:

One of the few witnesses to the Inquiry, The Institute of Chartered Accountants, had no taxation objections to this discrimination being overturned.

           …         …         …

The Human Rights and Equal Opportunities Commission is conducting a National Inquiry into Discrimination against People in Same-Sex Relationships. They note that same-sex couples do not attract the tax concessions available in relation to property transfers following family breakdowns that are available to heterosexual families.

Let me recap. I do not consider the Minister for Finance and Administration to be homophobic. I consider him to be an excellent finance minister, and I say so on the record, even though at times he and I clash on policy matters. I would be surprised if the Treasurer or the Prime Minister were homophobic. The Prime Minister has specifically said that he wants to do away with this sort of discrimination in real property laws.

I fully understand those members of parliament who have real concerns about marriage. I have listened to their arguments and I understand them, but I know that, if a free vote were taken in this parliament on the issue of real property matters with respect to same-sex couples, it would pass. Labor Party members support ending that discrimination, Liberal Party members support ending it and I think that The Nationals support ending it, so what are we doing extending it? I understand that the costly arrangements with superannuation may take time to unravel. The minister and I have had a discussion on that and I understand it—I do not like it, but I understand it.

When I was a young teenager I confronted discrimination, which resulted in many fist fights. That discrimination was against black people. I abhor racism because it has no regard for somebody’s ability or for issues of equality, rights or decency. It is contrary to every value to which we should ascribe. In the end, when racism in southern Africa eventually went the way it should have and was taken out of statutes, people were so relieved at no longer having to live under a rule of law which was perverted by that doctrine. I think that most parliamentarians in both houses, even if they might be homophobic in their personal relationships, are absolutely not supportive of homophobia with respect to statutes. I am not suggesting that most parliamentarians are homophobic, because I absolutely think that they are not.

I am deeply disturbed and unimpressed when any extension of discrimination occurs. That is what this bill does. I know the minister, because he has no authority to do otherwise, will stand up and say that he cannot accept my amendment, but I ask him to go away before we get much of the way through next year’s legislative agenda and make some progress on this issue. Even if they are minor steps, let us at least advance this issue. This continuing discrimination genuinely does upset me. I do not see why Australians who are in intimate relationships that happen to be of a same-sex nature should be discriminated against in real property issues in the way they continue to be in this country. There are many other discriminatory areas, I understand that, but in this bill we are dealing with real property issues. I repeat: I accept and recognise that the law affects the way in which married relationships shall be dealt with; I am addressing only de facto relationships.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

I indicate on behalf of the Labor opposition that we will be supporting the amendment moved by the Australian Democrats removing the discrimination against same-sex couples in the area of property rights that this government continues to maintain. There are a number of reasons for supporting the amendment. Firstly, it is Labor policy to remove such discriminatory provisions. In that respect, we are in accord with the approach of the Australian Democrats. Senator Murray is right to draw to the attention of the chamber the specific promise and commitment given on this area by no less than the Prime Minister about 18 months ago. Why are we dealing with a piece of legislation today that specifically cuts across the commitment and the promise given by the Prime Minister? I think it is yet another example of a very arrogant government that is, in this case, trying to walk down both sides of the street at once. On the one hand, it accepts that discrimination against same-sex couples in property rights should be removed, as was promised by the Prime Minister some 18 months ago. On the other hand, we get a piece of legislation that does not reflect his or his government’s commitment.

I know Senator Murray is well aware that a promise and commitment given by the previous Assistant Treasurer, Senator Coonan, to remove discrimination in superannuation has not yet eventuated. Senator Murray would also be aware that it gets worse because Senator Coonan gave a specific promise in writing to the previous shadow minister responsible for this area, Senator John Cherry—not to be confused with Senator Nick Sherry—on the removal of discrimination in superannuation. I know the government has this ‘under consideration’. I think that is the term and approach that Senator Minchin has used in Senate estimates when Labor has raised this issue.

Earlier in my contribution I touched on secrecy. The government keeps costings secret in defiance of its own Charter of Budget Honesty. Regarding the superannuation matter that is still supposedly under consideration by the government, I sought the costings and was refused them by Senator Minchin and the government. I then placed a freedom of information request for information on discrimination against same-sex couples regarding superannuation and that was refused. That is another example of cover-up and refusal to provide information that is a matter of fact—in this case the costings of the superannuation measure.

Labor will be supporting this amendment. There is no good reason for this discrimination to continue. We are very pleased and proud to support the removal of discrimination in property rights. After all, this is the property of the individual—or in this case the same-sex couple. What right does a parliament or a government have to discriminate against a person’s own property by continuing to apply discriminatory tax provisions in this way? It has no right.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Senator Joyce interjecting—

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

It will be interesting to see whether Senator Joyce is going to cross the floor on this matter, because it will come to a vote. We have heard a lot about schedule 4, which we will get to in due course, but we will be interested to see whether Senator Joyce has the strength of character and consistency to cross the floor and vote against the government on this issue.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

The government is not able to accept this amendment for reasons that have been set down on many previous occasions. The Income Tax Assessment Act does not treat same-sex relationships in the same way as marriages or de facto relationships. Whether that general treatment changes in the future is a matter still to be determined. It is a wrong characterisation to say that we are extending discrimination by this amendment. These amendments to the capital gains tax arrangements are consistent with the current treatment of capital gains tax issues and tax issues generally in the Income Tax Assessment Act. As and when there is a change overall, that will apply to taxation arrangements overall. The government is not going to change those arrangements in a piecemeal fashion.

I think it is well known that the Human Rights and Equal Opportunity Commission is conducting an inquiry right now into the entitlements of same-sex couples, including entitlements in tax legislation. Once that HREOC report is received by the government we will consider its recommendations. Prior to that we will not be seeking in some ad hoc fashion to alter the current treatment. It is a fact that there is a very long tradition in Western society of treating marriage as a special relationship, and indeed discriminating in favour of marriage. That is a very long tradition and one that virtually every Western country has had as part of its history. Now that is breaking down and there is a move to treat de facto relationships in the same way as marriage, which much of our law does. Of course that begs the question: why not same-sex couples? I understand that and I respect Senator Murray’s motivations. With great respect, I do not think it is right to characterise the long tradition of discriminating in favour of marriage in law in Western society as somehow the same as the appalling racial discrimination practised in parts of Africa. With great respect to Senator Murray, I do not think that is fair or proper. I am sure that is not what he really meant. I respect where he is coming from but I do not think it is right to characterise the discrimination in favour of marriage, which has been a feature of Western Christian society for a very long time, in that way.

It is well known that the government is very alive to the movement of public opinion on this matter. With great respect also to Senator Sherry, I do not think it is a matter of being arrogant. We are sensitive to the fact that there remain millions of Australians who believe that the country should continue to discriminate in favour of marriage as a bedrock institution in our Christian Western society. There are many others in the ranks of the coalition who think that same-sex couples should be treated in the same way as married or de facto couples. We understand that but we are not as a government going to deal with it in any ad hoc, random fashion. We will deal with it by way of due process. We will receive the HREOC report, we will consider its recommendations and we will make comprehensive decisions accordingly. We are not in a position to support this amendment.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

For the record I wish to make it clear that my amendment seeks to say that, with respect to taxation on real property matters, same-sex de facto couples shall be dealt with in the same way as de facto heterosexual couples. It does not address the issue of marriage.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Likewise I was going to draw to the attention of the minister, despite his somewhat misleading response to Senator Murray’s and my comments, that we are not dealing with matters relating to the Marriage Act. We are dealing with property rights and property owned by individuals. In this case the amendment is appropriate. As to my reference to the Prime Minister being arrogant, I certainly do regard it as arrogant—I could use a stronger word—when the Prime Minister announces principles of government policy in this area and then 18 months later we get legislation that does not reflect his announcement. Senator Murray read out the terms of the Prime Minister’s announcement. I could be a touch stronger about this government’s arrogance in this regard. That is where my comments went to. This has nothing to do with the Marriage Act.

Question put:

That the amendment (Senator Murray’s) be agreed to.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

by leave—I move:

(1)    Schedule 4, item 2, page 17 (line 30) to page 18 (line 7), omit subclause (3), substitute:

        (3)    The first element of the ^*cost base and ^*reduced cost base of a ^*CGT asset on 10 May 2005 is the ^*market value of the asset on that day if, on that day:

             (a)    the CGT asset was a ^*membership interest you held in another entity; and

             (b)    you were a foreign resident, or the trustee of a trust that was not a ^*resident trust for CGT purposes; and

             (c)    the CGT asset was a ^*post-CGT asset; and

             (d)    the CGT asset did not have the necessary connection with Australia (within the meaning of this Act as in force on that day) disregarding the operation of paragraph (b) of item 5 and paragraph (b) of item 6 of the table in section 136-25 (as in force on that day).

(2)    Schedule 4, item 38A, page 33 (after line 1, cell at table item 28, 2nd column), omit the cell, substitute:

                      On 10 May 2005, a foreign resident holds certain membership interests

As Senator Sherry mentioned, these are amendments to the capital gains tax and foreign resident measure. The amendments provide for a cost base of market value for certain assets that would not have been subject to Australia’s CGT regime prior to this measure being introduced. This will ensure that all such assets held by foreign residents on the date of announcement of the measure, 10 May 2005, and which subsequently become subject to Australia’s CGT regime receive a cost base of market value as at that date—10 May 2005. I am advised the amendment has no financial impact, so I commend the amendments to the committee.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

For the reasons I outlined in my second reading contribution, Labor will be supporting the government amendments.

Question agreed to.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I note for the record that, although I lost that previous amendment, I am aware that many of those who voted against it actually support the ending of discrimination against same-sex couples, and I look forward to the government making rapid progress in that area—I am ever hopeful, Minister; I am a hopeful person. The Democrats oppose schedule 4 in the following terms:

(1)    Schedule 4, page 14 (line 2) to page 45 (line 12), TO BE OPPOSED.

As I did for the earlier amendment I want to refer to my minority report, or part of it. In that minority report I said:

Much fuss has been made about the supposed fact that this—

change in this bill—

brings Australia into line with international and OECD standards and guidelines.  The EM for the Bill ... contends that the changes will:

further enhance Australia’s status as an attractive place for business and investment by addressing the deterrent effect for foreign investors of Australia’s current broad based CGT tax base.

I did not say in my minority report but I should add: will it or what! People are certainly going to jump on the bandwagon. Back to my minority report, which states:

I have seen no empirical evidence produced that a deterrent effect exists for foreign investment in Australia. To the contrary, my impression has been that foreign investment has been at a high level. The Investment and Financial Services Association Ltd (IFSA) obviously disagree with me. IFSA commented:

Historically, there are number of reasons why the flow of funds from non-resident investors into Australia has been relatively low. In this regard, any significant enhancement to the international tax regime, such as the proposed changes to capital gains tax and non-residents, are a step in the right direction.

‘Relatively low’ implies some credible form of benchmarking, and I would like to see that before I accept this proposition. I am not aware that Australia has had a problem attracting foreign investment – indeed many Australians have expressed concern at a high level of foreign investment and ownership of Australian assets.

Interestingly, there is evidence to support the capital gains tax is an unimportant or even irrelevant consideration for investors when choosing their investment or business location.

As an authority I quote H Wunder, 2001, ‘The effect of international tax policy on business location decisions’, 24 Tax Notes International 1331, which sets out the results of a survey which confirmed this. The survey has been recently cited with approval in A Eason, 2004, Tax Incentives for Foreign Direct Investment, Kluwer Law International, The Hague, page 57. My minority report further states:

In their ‘Comment’, the Bills Digest says:

Foreign investors holding shares in Australian companies will gain significant benefits from this measure—

and the Digest refers to a 30 June 2006 Legal Update from Corrs Chambers Westgarth Lawyers saying this will provide a good stimulus for mergers and acquisitions ...

Yet reforms to Corporations Law and Tax laws (particularly the ‘consolidations’ measures), all supported by the Democrats, have in 2005/6 produced the highest level of merger and acquisition market activity in Australia’s history, of which a very high percentage is foreign. Current reports indicate that 2006/7 will prove even stronger.

I go back to the obvious question that arises: why then the need for a further tax concession that may give foreigners tax advantages that Australian residents and citizens do not share? My minority report says:

In the same ‘Comment’ section the Digest also quotes from law firm Minter Ellison’s legal update of 20 July 2006 which envisages far more activity by [foreign] non-residents. Reforming tax law for foreigners resident in Australia is a different matter, but the case or justification for this tax concession for foreign non-residents is not made, based on the material before us in this Inquiry.

In the same section of the EM quoted above, the EM goes on to state that:

... the amendments will encourage investment in Australia by aligning Australian law more consistently with international practice. This results in greater certainty and generally lower compliance costs for investors.

Whilst it is true that a significant degree of foreign investment in Australia continues to be desirable, lowering or removing foreigners’ potential CGT liability may also mean that we are giving foreigners an advantage over Australian citizens. This is another equity consideration, that the Government has seemingly failed to address adequately.

Why do I use the word may? Is it possible for the Government to show that foreigners will not be advantaged over Australians as a result of these changes? Or that some will and some won’t? CGT regimes differ across countries. Raising this matter at the Inquiry Hearing resulted in an allegation by Mr Ali Noroozi, Tax Counsel at the Institute of Chartered Accountants in Australia ... that it reflected an attitude of “economic xenophobia”.

I took the opportunity to remind Mr Noroozi that what is at issue is a matter of equity and basic principle—namely that Australian law must not have the effect that Australians are treated less favourably than foreigners under our tax laws, or that non-Australians are given an unjustifiable competitive advantage over Australian citizens and residents.

At the Hearing I did not find the assurances of Treasury persuasive—they assert that Australians will not be treated less favourably than foreigners under our tax laws, and that non-Australians will not be given an unjustifiable competitive advantage over Australians. Treasury had no evidence, modelling or cameos that could justify their assertions.

At the very least the Treasury could have provided illustrative sets of cameos showing how these provisions affected citizens and residents from our five largest countries sourcing foreign investment in Australia.

A number of journalists who specialise in these matters of finance and taxation have examined this issue. One of them, a very credible and highly regarded journalist for the BRW, is Adele Ferguson, who, in the BRW, 9 November to 13 December 2006, said:

If the recent bout of takeover activity by overseas companies and private equity funds is putting more Australian brands and assets into overseas hands, a bill removing capital gains tax (CGT) from most forms of foreign investment in Australia will make Australian companies even bigger sitting ducks.

There are those who applauded any tax reform that makes Australia more attractive for direct overseas investment, but the problem with this line of thought is that it is too focused on the short term. It fails to take into account the long-term tax implications for Australia, as well as the implications of creating an uneven playing field for overseas investors at the expense of Australian investors who still have to pay CGT.

To be specific: overseas investors will no longer have to pay CGT on Australian shares or businesses that have less than 50 per cent of their assets in property.

If takeover activity continues at this rapid pace, Australia will end up owning only banks, toll roads, an airline and a few mines. Besides being a dull place to invest, there will be little tax revenue coming in.

Overseas private equity firms are already playing round with Australia’s corporate tax revenue. For starters, they leverage a business to at least 70 per cent, which means they have higher interest costs and lower profits. It also means they pay a much lower corporate tax rate than Australian listed companies, which have far more modest gearing.

The new bill will further reduce the amount of tax that overseas private equity firms pay in Australia because it eliminates CGT on most forms of overseas investment. When any investor looks at an investment proposition, costings such as tax are always factored in. This puts Australian investors at a distinct tax disadvantage.

I have quoted Adele Ferguson at length and you are welcome to look at the rest of the article, which I thought was on the button. She has highlighted the two fundamental concerns that arise from this. Firstly, there is the issue of equity: Australian investors are at a disadvantage in tax terms to foreign investors. Secondly, there is the issue of revenue and, as you would recall, I have described the Treasury estimates as an educated thumb-suck but a thumb-suck nevertheless. She indicates a sense that I find in many of those opposed to this provision that the revenue losses will be long term and much more significant than the explanatory memorandum outlines.

Before closing off on my motivation, I want to draw your attention to another area where I have concerns, and that is the massive investment bubble/boom being induced through private equity funds not only in Australia but worldwide. I was most interested recently in an ASIC media release of Monday, 4 December 2006, No. 06-418, headed ‘Former Gribbles CEO charged’. I rather like the fact that this man has been charged because I believe that he used to be a tax barrister who used to give the ATO a going-over for their ‘dreadful’ behaviour. It is rather nice to see a little bit of payback by the authorities with respect to his own dealings. This man—and I should not presume his guilt because he is entitled to be seen as innocent until he is found guilty—is subject to 35 charges following an investigation by the Australian Securities and Investments Commission.

However, that is not my main interest. My main interest in drawing this to your attention is that one of the charges is that he dishonestly failed to inform Gribbles bankers of his interest in the Gribbles shares when asked, with an intention to gain an advantage for himself by keeping secret the true nature of his interest. On page 2 of the press release it says:

As part of its application, ASIC sought that ECMI’s Gribbles shareholding be vested in ASIC in the event that the ultimate owners of the shares were not disclosed to the market.

Now why have I brought that to your attention? A fundamental principle of the equity market of the ASX is that the beneficial owners shall be identified. As you know, Corporations Law requires the top 20 investors to be identified, and here is a man who disguised where the shares were held and by whom and who is therefore having those shareholdings vested in ASIC as an immediate penalty for doing so.

I turn to the question of private equity funds. I asked a question, No 257 on 19 October 2006, of the Treasurer. Item 2 of my question said:

(a) As media is formally determined a ‘sensitive market’, and as major media can be bought by foreign private equity funds under the new media laws, will investors in such funds, in particular beneficial owners, appear on a register and be readily identifiable.

(b) Can the Minister outline what powers under the Foreign Acquisitions and Takeovers Act 1975 allow the Treasurer to identify the beneficial owners of private equity funds.

(c) If it is not possible to identify investors or beneficial owners in private equity funds, can the Minister assure the Senate that none of our media could end up controlled by funds that are influenced or backed by criminal money, money sourced from anti-democratic groups, from theocratic or fundamentalist groups, or from proscribed organisations: (i) if the Minister is unable to give that assurance, then what does the Minister intend to do about this matter, and (ii) if the Minister can give that assurance, can details be provided of the means or measures available to identify beneficial owners or investors.

The answer to that question was:

(2)

(a)

As with all different types of foreign entities that invest in Australia, this will depend on the regulatory framework in the entity’s home jurisdiction.

(b)

Section 36 of the Foreign Acquisitions and Takeovers Act 1975 allows the Treasurer to serve a notice on any person requiring that person to furnish information or documents relevant to the exercise of the Treasurer’s powers under the Act.

(c)

See response to (2)(b).

Now, why I am I drawing this to your attention? This provision will give tax advantages to the private equity fund boom and will accelerate their activities. On the one hand, we have Corporations Law stressing that we need to know who the beneficial owners behind private equity funds are and, on the other hand, we have the Treasurer unable to spell out in public who the beneficial owners of private equity funds are. He might do so in private; he might not. We have no protections.

I believe that most funds tied up in private equity funds are perfectly legitimate and proper. They are tied back to superannuation funds and so on. So I do not infer that all or most private equity fund sources have an improper background, but I do state clearly and on the record that the beneficial ownership of private equity funds is not going to be known to the Australian people, yet these owners are capable of taking over our very largest corporations and giving them away to foreign investors and at the same time getting a foreign tax benefit which would not be available to Australian investors if they had such an investment. So these are issues that need to be considered when we are discussing these matters. The Democrats oppose schedule 4 in the following terms:

(1)

Schedule 4, page 14 (line 2) to page 45 (line 12), TO BE OPPOSED.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

I want to make a few comments about the contribution of Senator Joyce from the National Party. Firstly, as I outlined in my contribution to the second reading debate, Labor will on balance be supporting schedule 4, despite our concerns over the failure to provide the costings that were requested—indeed, costings that were part of questions placed on notice before the committee hearing. But, on balance, we believe schedule 4 should be supported. We will obviously be opposing the proposal moved by Senator Murray to delete schedule 4—that is what the amendment does. I point out that that is a blunt approach and it would remove what I think are the uncontentious areas of schedule 4 which actually improve the collection of tax revenue.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Senator Murray interjecting—

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Yes; and I understand, Senator Murray, the constraints in terms of drafting a particular amendment. But it is a blunt approach to omit schedule 4, because it contains matters that are not contentious and that actually improve the collection of tax revenue, as opposed to contentious issues that are for consideration in this debate.

Let me come to Senator Joyce’s remarks. I remind the chamber and those listening to this debate that Senator Joyce is a member of the National Party. He is a member of the Liberal-National government, and it is their legislation that we are considering. Senator Joyce launched into a fierce critique—an incorrect critique, in my view—of the Labor Party’s position on this legislation. But he did not criticise the Prime Minister, Mr Howard, and he did not criticise the Treasurer, Mr Costello, or indeed the finance minister, Senator Minchin.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

You’re supporting it.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

It is their legislation, Senator Joyce. It is your own government’s legislation. This is not Labor government legislation. We are in opposition, if you have not noticed—I certainly notice it! But you are in government. It is your own party room that supported this legislation and it is your own Liberal government that is supporting this legislation.

In his comments, Senator Joyce referred to forks in the road and challenged the new Labor leader, Mr Rudd, to reverse Labor’s position and policy on this matter. The sad fact for Senator Joyce and the National Party is that they have been buried under that road. The poor old National Party—they come in here and grandstand occasionally, but the fact is that they are nothing more than doormats for the Liberal Party. They are nothing more than doormats. Senator Joyce might have the occasional verbal outburst, attempting to differentiate himself and the National Party from the Liberal government, but the reality for poor old Senator Joyce and his party is that they are members of a government that long ago buried the National Party in this coalition and is gradually burying the National Party electorally throughout Australia.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Senator Joyce interjecting—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator Joyce, could you please refrain from yelling across the chamber.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

The sad fact for Senator Joyce is that the National Party are slowly being absorbed by the Liberal Party; long ago, the National Party was squashed and became the doormats of the Liberal Party in this federal parliament. It is a sad fact of life, Senator Joyce; face up to it.

The Temporary Chairman:

Through the chair, Senator Sherry.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

That is the sad fact of life for him. I looked at the report on the bill by the Senate Standing Committee on Economics because I thought it would be interesting to see an outline of Senator Joyce’s views on schedule 4 of this bill. I thought, ‘Senator Joyce is so concerned about schedule 4’—in a very muddled economic critique, but I will get to that shortly—‘that I should read, hopefully with greater consideration, the arguments that he would have set forth.’ So I went to the report. Surprise, surprise: unlike Senator Murray, who at least did provide us with a minority report, there is a blank page. I looked for Senator Joyce’s minority report but, despite all Senator Joyce’s grandstanding, there is a blank page. There is nothing there. So Senator Joyce dashed in today, expressing concern in a very muddled economic, populist critique. If Senator Joyce was so concerned, why couldn’t he outline, in a considered way, his position via a minority report from the committee considering this legislation?

Senator Joyce also said in his comments that the bill was going through ‘on a wink and a nod’. For Senator Joyce’s information—he obviously does not know, because he does not pay attention—this particular measure was announced not in this year’s budget but in last year’s budget. This particular proposal has been around for almost two years, Senator Joyce, and you have only just come in here now, grandstanding, with your concerns on this particular measure. It has been around for almost two years. Senator Joyce appeals to the fourth estate: ‘I want some publicity on this issue.’ But the measure has been around for almost two years. Yet here we have him dashing in at the last minute, grandstanding and attempting to drum up some publicity when the measure has been around for almost two years. He suddenly discovered it and suddenly wants some publicity on the matter.

Let us go to his economic critique. The issue we are dealing with today is a matter of capital gains tax application. It is not about private equity funds. It is not about foreign investment. It is about the application of capital gains. We had a very rambling economic critique from Senator Joyce about the horrors of foreign investment, the horrors of private equity funds coming in gobbling up the country and buying everything in sight, and the horrors that workers face as a consequence of this activity, but schedule 4 is not about the set of rambling economic issues that Senator Joyce went on about.

Senator Joyce was so concerned about the impact on workers, which is not the issue under consideration. We had another illustration of grandstanding when he expressed public concern about the government’s so-called Work Choices legislation. But how did he vote when it came to the crunch in this chamber on that fundamental issue of fairness and protection to Australian workers? He did not vote with the Labor Party. He did not cross the floor on that fundamental issue to which he referred and on which he expressed such grave concern in his very rambling contribution.

In terms of foreign investment, I agree with Senator Minchin that the country needs foreign investment. That is the reality. With a minor correction to Senator Minchin, we have needed foreign investment I think for all but one year of the last 200 years of our history. There is a fundamental reason for that: we have to import capital because we do not save enough and we need overseas capital. We particularly need foreign investment because at the present time our household savings rate is negative and has been in negative territory for a couple of years—another failure of this government—but that is an issue for another time.

One of the reasons, Senator Joyce, that we are attracting foreign capital aside from the fact we need it is that our interest rates are higher than most other advanced economic countries. The interest rates are higher because we need to attract the capital in competition against other advanced economies, so we have higher interest rates in part as a consequence of our own low savings rate and the need to draw that capital in. Again, I think that goes back to some failures on economic policy by this government. One of reasons, frankly—aside from other factors—why the government could not meet the promise that they made at the last election that interest rates would not go up under a Liberal-National party government was the need to attract foreign capital. Therefore, to attract it, you have a higher dollar and a higher interest rate environment.

It was a pretty rambling old critique from Senator Joyce about a whole range of issues, frankly, that are not of contention with respect to schedule 4. He is doing his best to ramp up interest by the fourth estate —fine; that is all part of politics—but I think, for the record from the Labor Party’s point of view, we should confine ourselves to the issue at hand. There is a legitimate debate about the issue at hand—about capital gains tax treatment. As I said, this matter was announced in the budget last year. It has been around for almost two years. It is hardly a matter of sneaking it through. I would accuse this government of trying to sneak things through on occasions, but this is not one of them. It has been around for almost two years.

There has been a committee hearing on the bill, albeit we were not satisfied with the level of detailed financial information that was provided at that hearing, and I have criticised the government for that and its behaviour. But, at the end of the day, Labor considers that schedule 4 on balance is worthy of support when considering the passage of this legislation. Labor will be supporting the bill and we will be opposing the amendment moved by Senator Murray.

I should say, unlike Senator Joyce, I do not question Senator Murray’s motivation. I respect his contribution. I respect the fact that he goes to these committees, goes to Senate economics hearings and asks a whole range of worthwhile and considered questions, and participates actively in a highly knowledgeable way in matters of economic and tax law in this country. I congratulate him for that. That is unlike Senator Joyce: he dashes in; dashes out; does not write a minority report; gives a whole swathe of economic critique which is not central to this issue; grandstands; and tries to differentiate the National Party from the Liberal Party.

A fact of life, Senator Joyce, is that your party was buried long ago. Until you face up to that, you are buried by the Liberal Party. You are just a minor distraction in the context of this government. You are a minor attraction to deliver votes to the Liberal Party. You are the doormats of the Liberal Party and the sooner you realise that the better, rather than dashing in here trying to claim some credit, some knowledge, of this particular issue. Stop misleading the people of Australia. Get on it with it. Just own up: the National Party is useless, worthless. Give up. Just merge with the Liberal Party and get it over and done with.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

It is good to see the Labor Party venting their spleen to try and cover up the fact that today they are the doormats of the Liberal Party because they are voting with them. They are doing it to try and curry favour with a certain group of mates through a whole heap of palaver about and ridicule of the National Party, one member of which is actually going to try and protect Australian investors and Australian workers from being broken up by the overinvestment, the overindulgence, of overseas equity funds. They have to rely on us today because they cannot rely on you. All you could deliver was a whole heap of palaver.

Senator Sherry came out with the statement: ‘on balance’. On balance of what, Senator Sherry? Because there are no relevant figures. If you had actually had a look and seen the numbers delivered for the costing of this, you would realise they are a heap of rubbish. But you do not care about that. Let us go through the economics committee report. I was actually in the economics committee this morning, Senator Sherry. I do not remember seeing you there.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Joyce, you may be kind enough to address your remarks through the chair.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Sorry, Chair. I was at the Senate economics committee this morning and Senator Sherry was not there. He is grasping at straws to try and cover up the fact that today the Labor Party are the doormats of this piece of legislation and they do not have the courage or the conviction to be relevant. They have a chance today to be relevant. There are few times that come up where they have a chance to be relevant. Today they have one, and they are terrified of it—absolutely terrified of getting a win. They said it had nothing to do with overseas equity funds. A summary of the new law says that it ‘narrows the range of assets which may be subject to Australian capital gains tax to Australian real property held directly by foreign residents’. That means that for everything else, they do not pay capital gains tax. It has a hell of a lot to do with foreign ownership and overseas equity funds.

As I was saying before, there is a $100 billion bid at the moment for Home Depot in the United States. I will show you what that would buy in Australia today. If that $100 billion were in Australia it would buy Boral, Coles, Qantas and Westpac. I think the Australian workers might want to know about that. I think they might be interested in the fact that an overseas equity fund could come in, break up all those companies and cut costs. How are they going to do that? By moving jobs overseas and selling for a profit. Alternatively, with a change of legislation, they could buy a couple of banks. That could be on the shopping list. There is an abundance of money around and the Labor Party is completely hiding from reality.

I know they find it an affront, because they have put themselves in their own wedge. Today they had the chance to be relevant. Today there was a chance for Senator Sherry and Mr Rudd to go to the front door and say, ‘Today we stood up to stop discrimination against Australians.’ They just gave, in the previous amendment, a relevant argument on why you should avoid discrimination, but they are about to vote now for discrimination against Australia as a nation. The only people who will pay tax on a lot of these assets after this is finished will be Australian citizens—not overseas citizens, Australian citizens. So if you want to invest in Coles and you do not want to pay tax, the smartest thing for you to do is to move to New Zealand, because as a foreign investor you will not have to pay. Little old Mr and Mrs Smith in Cabramatta or Ipswich will have to pay, but you will not if you are from overseas. What sort of genius devised that idea?

To try to cover this up with a whole range of venting of the spleen and a whole raft of rhetoric about the National Party and all that just says absolutely clearly that you know you are in the wrong—you know this is a bit of a sticky situation. When you are in a sticky situation, instead of saying: ‘Yes, we are discriminating against Australians when we pass this; we acknowledge that. We acknowledge that today we are going to be the doormats of this policy. We’re quite happy to roll over and let you tickle our tummy because it makes us feel good. To cover that up, what we are going to do is launch an attack on the National Party and start saying how they are the doormats because they stood up.’ They stood up when you rolled over. It defies logic.

I cannot work it out. Every time the Labor Party gets a chance to be relevant, they just run for cover. They are terrified of relevance. They are terrified of being strong. They are terrified of identifying an issue and standing behind it. They live in this void of rhetoric and waffle of ‘bridges too far’, ‘forks in the road’ and ‘ladders of opportunity’. They cannot work out why the Australian people have not grabbed onto them—it is because they think they are nothing. They are a mystery wrapped up in an enigma inside a riddle. That is the policy framework of the Labor Party.

Today the Labor Party have a chance to be relevant. Today they have a chance to make a clear statement that Australians should not be discriminated against. Today they have a chance to protect against the overt, as they say, ‘barbarians at the gate’—that is on the front page of the Fin Reviewand what is happening with these overseas equity funds. They have a chance to make a statement that will definitely protect Australian jobs. And it is their own words. With the possible sale of Qantas, they came out and said, ‘All these jobs are going to be moved overseas; we must stop it.’ And one of the major investors is an overseas equity fund. So they had to stop this overseas equity fund. Today, what absolute hypocrites they are. Today they are turbocharging the problem. You have to be held to account.

My appeal to the fourth estate is not for me—goodness gracious me: I am quite happy, looking forward to a holiday—it is to get coverage on this issue. And you know that. It was an issue brought up by Senator Murray. We need coverage of this issue. It has been completely devoid of proper explanation in the media. I think that is unhelpful. I think a lot of Australians would like to have a comment on this, would like to be brought into the loop. Today the Labor Party could have brought the Australian people into the loop. Today the Labor Party could have taken the Australian people into their confidence and brought them into the loop on this subject. But they are not. They are hiding it from the Australian people. But for what reason? That is the question: for what reason? The question that we always have to ask is: what is in it for them today? There is the real riddle, mystery and enigma. It stands against logic. It stands against everything else they say.

I have no problems if you want to give foreigners capital gains tax exemption. But there is one absolute caveat on it: you must give it to Australians as well. You cannot have one rule for one and another rule for the other. You must look after Australians first. You acknowledge—and you should acknowledge—and I know that in your heart of hearts you understand absolutely the ramifications of an overheating of the market with these overseas equity funds, who are not interested in investing in building up assets; they are investing in breaking assets up. They are investing in apportioning and breaking up the assets.

If we were to have that $100 billion investment in Australia today, just think of the ramifications for our share market and of the items that could be removed from our own share market. This is something that we have to address, and this is why I am waving a flag on this issue and saying: have a good think about it before you go down this path.

It could have been done today. We could have made a difference today. The last thing that is going to happen before this Christmas break is that the Labor Party are going to say that, at the fork in the road, they chose to follow, not to think. The fork in the road is no more than a roadside diner at which the first item on the menu is curried favour. That is what this is about.

I do not know how the Labor Party are going to explain this. I put this challenge out: I look forward to Mr Rudd or Senator Sherry going out and explaining to someone in the local bowling club what the relevance is of discriminating against Australians. Why would that make them believe that the Labor Party are a reasonable alternative government? People are just going to see you as hypocrites. They are going to see you as pathetic and as not having the spine to stand up. People are going to see you as not even being able to get the proper facts.

When Senator Sherry said ‘on balance’ that suggested that he had the facts from Treasury, but he does not. Senator Sherry is flying this spaceship of his blind. You do not have the facts. No-one has the facts. The Treasury cannot provide the facts. In fact, to our own questions they cannot provide the facts, so you certainly do not have them.

I will just help you out with some simple maths. I will take the top two companies, Coles and Boral. If Coles is worth $16 billion, they will get about a 20 per cent mark-up, so I suggest that to make it worth while there would be about $3.2 billion on the break-up. If it is worth $3.2 billion, times 30 per cent—that is what we compromised on—$960 million would be compromised in that transaction. And the Labor Party are willing to swallow the $50 million or $65 million argument.

Let us take the next company. Boral is worth about $4 billion or $5 billion. Let us say it is worth $5 billion and you get a 20 per cent mark-up—say, $2 billion. That would mean $300 million is going to be compromised on that one. I do not understand how the Labor Party get around the numbers. I do not think you have even looked at them. I do not think you have considered them. I do not think that you have sat down with a pen and, on the back of an envelope, worked out what the hell you are talking about.

This is a flow of money that is just going to wander off—possibly to the US treasury. What do we do then? What do we do when, just in those two transactions alone, we have $1¼ billion? Are we going to go over and knock on the door and ask for help or maybe get a loan from them? Is that what the Labor Party is intending to do? Is that part of the brilliant economic plan that Mr Rudd is going to announce to us from the fork in the road?

Is this the sort of vestibule of genius that we now have laid out before us in this brave new plan? There is a chance for the Labor Party to make a statement and to be relevant. You know this is cutting through and you know, deep down in the pit of your stomach, that this stinks. But the Labor Party are about to vote for it. So your numbers are wrong, your facts are wrong, your analogy is wrong, your rhetoric is useless and your vision is stupid. And we are about to see, in front of all of Australia, the sort of delivery that we can expect from new Labor.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Yes, I was fierce in my critique of Senator Joyce but he was fierce in his critique of the Labor Party’s position, and he has just returned fire. I make the fundamental point—it does not seem to have got through to Senator Joyce yet—that this is Liberal-National Party legislation we are dealing with. It is Senator Joyce’s own mates who drew up the legislation. It is your own mate the Prime Minister, Mr Howard; your own mate Senator Minchin, the Minister for Finance and Administration; and your own mate, the Treasurer, Mr Costello, who have presented us—

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Sherry, it is a bit confusing when you refer to them as my mates. They may be, but I think you really mean to refer to them as being Senator Joyce’s mates. It is a little bit confusing.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Thank you, yes. They are Senator Joyce’s mates. They are his own working colleagues, as part of this Liberal-National Party so-called coalition. I do not even know whether Senator Joyce got up in the party room. Senator Minchin might like to tell us whether Senator Joyce got up and railed against the Treasurer, the Prime Minister and Senator Minchin about this particular piece of legislation. I suspect he did not. And I suspect he did not rail against it in the National Party meeting room.

The sad fact of life for Senator Joyce is, as he well knows, that the National Party is just the doormat of the Liberal Party, the dominant party in the coalition. That is a sad fact of life for him. He has to convince his own colleagues but he cannot even do that. He cannot even convince his own colleagues, if he took the argument up with them. I would be interested to know whether he did that.

Briefly, on the activity of private equity funds, particularly overseas private equity funds, it is true that there has been significant and growing activity in terms of foreign investment from overseas private equity funds. There is significant and growing activity in this area—as there is worldwide. And there are some legitimate issues about the activities of private equity funds, particularly around transparency, who is effectively making decisions, share ownership and compliance. I think there are a whole range of issues and our own regulator has identified some concerns about those types of issues.

There are some legitimate economic issues in a capitalist economy about whether too much money is paid in terms of purchasing assets. I think I read that Mr Morgan, the head of Westpac bank, expressed concerns about some of this activity. They are all legitimate issues for debate, but they are not the issues that we are dealing with in this bill. We are not dealing with improving compliance or transparency in respect of foreign equity funds.

I point out that, fundamentally—as we all, I think, acknowledge—there is an increase in activity in this area in terms of foreign equity. It is occurring without this bill having been passed, Senator Joyce. At the end of the day, with the passage of this particular piece of legislation at schedule 4, will it decrease or, as you argue, increase the activity of foreign equity investment in Australia? I do not think it will. That activity is already occurring, anyway, without the bill and without the capital gains provision. For the reasons I have mentioned, Labor will support schedule 4.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Normally I am the first to leap in and join in any attack on the Labor Party, but on this occasion, I must say, I must distance myself considerably from the attack which Senator Joyce has launched upon the Labor Party. I dissociate myself from that attack. I welcome the Labor Party’s intelligent, reasoned and sensible support for these measures, which, as Senator Sherry rightly pointed out to were announced by the government more than 18 months ago. So the opposition has had due time to consider these amendments properly and sensibly and has reached the right conclusion that, on this occasion, it should support these amendments. I applaud the Labor Party for reaching that position and, in so doing, strongly disagree with Senator Joyce’s attack upon the Labor Party for so doing.

I should also point out that, in contradiction to what Senator Sherry may think or assert, Senator Joyce, to his credit, has made it clear to the government that he cannot support this schedule. He has not just come in latterly to do so. He has made it clear in private conversations with relevant ministers that, for reasons he has explained, he is not in a position to support this schedule. While that is disappointing—we would like to think that we can have unanimous support on the coalition side for all coalition bills, and we will always endeavour to achieve that—it is a fact that in the proud tradition of our parties we understand that, on occasion, and this is one, there will be the odd member of the coalition who finds it is not possible to support the government on a particular measure. So I must be fair to Senator Joyce in that regard.

I agree with Senator Sherry that the attacks on this schedule by both Senator Murray and Senator Joyce seem to bear witness to a preoccupation with private equity activity, which is rather odd, with great respect, because this bill does not deal with that per se. The bill is entirely neutral with respect to the nature of the foreign investment involved; it does not bias the regime one way or another. It does seem that this schedule is a vehicle for those currently concerned about private equity activity to launch an attack on that private equity activity.

As Senator Sherry has pointed out, there has been some increase in private equity activity. I would draw the attention of the Senate to what the RBA has recently said about this matter of private equity, given that it seems to be the subject of this debate, albeit that it really has almost nothing to do with this schedule. But, as they note, LBOs—leveraged buyouts by private equity firms—account for about 15 per cent of corporate merger and acquisition activity, compared with five per cent in recent years. So, yes, it has increased from a very low base but is still relatively small—15 per cent. They note that most of the increase is attributable to an increase in the average deal size rather than the number of deals that are occurring.

As the RBA also notes—we should keep this in perspective—private equity LBOs account for less than one per cent of the value of the corporate sector as a whole. So, while Senator Sherry said there are commentators who say that this is a matter we should keep an eye on, I think we have to keep this whole issue of private equity investment in some perspective, as the RBA quite properly has noted.

We should also keep a proper perspective on this matter in relation to the fact that at the end of the day Australia is master or mistress of his or her own destiny—whichever way you like to look at a nation. We have in this country a foreign investment review regime which preserves our ultimate authority and sovereignty in this matter. The Foreign Investment Review Board mechanisms ultimately allow the government to act in the national interest with respect to any foreign investment that the government of the day believes to be contrary to the national interest, and the Treasurer, quite properly and with the full support of the cabinet, exercised that authority not very long ago with respect to the proposed Shell takeover of Woodside. That is demonstrable evidence that, at the end of the day, there is that ultimate sanction and preservation of the national interest. There are also, in respect of a range of companies operating in Australia, specific shareholder restrictions, as is the case in our national airline, Qantas, which, as everybody knows, has a 49 per cent cap, one that the government has no intention of removing. So perspective is important to keep in mind in relation to this matter.

I do not think there is anything else I would like to add. I just want to say that I think it is important to remember that what we are doing is aligning our tax regime with virtually all of our principal trading partners and OECD partners. I point out that the argument about discrimination is somewhat misplaced, given that what we are seeking to do is to ensure that foreign investors here are treated in the same way as Australian companies investing overseas. We should not ignore the tremendous, wonderful fact that there are many Australian companies active overseas—something we encourage.

There are something like a thousand Australian companies active and having invested in the United Kingdom and, through the UK, in Europe. There are hundreds of Australian companies active in the United States. What Westfield is doing in the United States, and what Macquarie is doing, is magnificent and something that all Australians should be proud of. The Australian companies active in those foreign markets benefit from CGT regimes like the one we are proposing to implement in Australia through this schedule. So in fact it will end a discrimination by ensuring that foreign investors are treated in the same way. I think that is the prism through which this must be seen. We want Australian companies investing overseas. We want them to be able to invest overseas. We want them when they invest overseas to be treated properly. They are treated by the United States and the United Kingdom in the same way that we now propose through these amendments to treat foreign investors investing in Australia.

Senator Sherry is quite right to say, and I have also pointed this out, that it is a constant responsibility of Australian governments and alternative governments to ensure that this country’s policy framework is established in a way which continues to attract foreign investment. Foreign investment is much more important to this country than I think most people realise. It does bring higher rates of economic growth, higher rates of employment, higher rates of innovation and R&D, higher employment conditions, and technological transfer, which is becoming even more important as every day goes by.

I know this is not an easy issue for some, and I respect the positions that Senator Joyce and Senator Murray bring to this debate. But I ask them to keep the private equity issue in perspective. If they wish to bring proposals to the government as to the way in which private equity as an issue should be dealt with, our doors are open. But I do not think consideration of this proposal should be warped or biased or seen through the prism of any concerns that may be held about private equity per se.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

In closing the debate on my motion to oppose schedule 4, I will make some short remarks. I value, as a member of the Senate, the opportunity to debate at some length a bill which forecasts or anticipates a revenue loss to Australia of a third of a billion dollars over four years. It is proper that we take some time to do that.

Apart from the entertainment value of the robust exchange, through the chair, between Senator Sherry and Senator Joyce, there are serious issues that needed to be ventilated. To summarise them briefly, the allegation from me, Senator Joyce and Senator Fielding is that foreigners are going to be advantaged with respect to capital gains tax in comparison to Australians. The government and Labor disagree, and we have had the opportunity to put that point of view forward.

The second issue, of course, is that there is a revenue consequence to this. I agree that private equity was a tangential issue which was raised during the debate. But there are two aspects which give it merit. The first is that it is an example of those who invest in Australia, and they will get a tax benefit arising from this bill. So in that respect it was relevant. But the other point is that this is about the only opportunity we have had so far to raise the issue of private equity funds. I think the minister is alert to the matters summarised by the shadow minister—that is, that there are issues surrounding this area of transparency, of proper disclosure of the way in which gearing occurs and so on and so forth.

The area I am most concerned with, I say to the minister through the chair, and that I think government should examine, is the area of identifying beneficial ownership to ensure that, with respect to very large acquisitions, particularly those in sensitive markets—and you understand the relevance of that—we know who lies behind these funds. I have no concern at all with superannuation funds or any body of that nature. But I want to be assured that there is no-one lying behind major acquisitions of major Australian assets who we as a community might want to know about. I am not at all against foreign investment in Australia, and neither is my party, but I sure as hell want to know who those foreigners are if it is a big acquisition. I will wrap it up on that basis. I thank the participants in the debate on my motion to oppose the schedule.

Question put:

That schedule 4 stand as printed.