Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister representing the Treasurer. Minister, I refer to the Qantas takeover. How does the government explain to Australian families and to workers fearful for their jobs that allowing the takeover deal of debt ridden Qantas will mean $200 million of income tax is lost to the Australian public each year?

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

That question in a sense goes to the individual taxation arrangements of a particular company and, of course, I am not at liberty to discuss the individual tax arrangements of any individuals or companies. But what I think Senator Fielding is raising is the general question which could be addressed apart from any issues associated with Qantas: the matter of private equity purchases of publicly listed companies, whether that is by foreign or domestic entities or whether it is of wholly or partly Australian owned companies. The issue you raise is a general issue which really, in effect, might be exemplified by Qantas, if what you say is true—and I am not necessarily saying so. But you are raising a general issue as to the taxation consequences for public companies that are acquired by private equity groups that acquire the entity by borrowings, which you assert then results in the entity paying less tax than it otherwise would have.

That is a very big issue and not one that is necessarily Qantas specific, but I guess every polity around the world may need to address it in due course. I am not seeking to diminish the importance of the issue Senator Fielding raises, but I do draw to his attention what is involved in any attempt by any government to deal with that. Is the proposition that governments—politicians and bureaucrats—should be somehow arbitrarily setting limits on the borrowings of companies in order to preserve certain taxation arrangements with a company? I think that is quite an extraordinary proposition. I would be very interested to hear if Senator Fielding has any particular policy proposals he wants to put forward on this matter.

The general position in Australia and most other countries in the world is that taxation law is set in order to derive fairly, equitably and efficiently sufficient revenues to meet the outgoings of the government of the day. Companies and individuals are then free within the law to organise their affairs so as to meet their tax obligations—but, I guess, as Kerry Packer once famously said: ‘There is no obligation on any company or individual to pay the maximum rate of tax under the law.’ Individuals and companies of course are free within the law to arrange their affairs according to the way they seek to meet their tax obligations.

In summary, yes, you have raised a general question about the taxation consequences, at least in the short term, for the private equity investment in private companies that may, to the extent that there is a greater level of debt than the company otherwise had, lead to less revenue to the government. On the other hand, to the extent that the company is even more successful as a result of the new ownership, which grows, expands and repays that debt, it may well be that in the end there is greater revenue available to the company concerned. I acknowledge the importance of the general issue you raise, but I take you to the point that what you are contemplating in response involves very significant issues.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, Australian taxpayers over a five-year period stand to lose $1 billion in tax revenue and their workers stand to lose their jobs, while some high-flyers will reap a windfall. What is in it for the people who carry all the risk and who cannot afford to lose—workers and their families?

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

The facts are that the former Labor government, with the coalition’s support, decided that governments should not own commercial airlines. That was a decision made over a decade ago. The airline was sold to a whole range of Australian and foreign shareholders. Those shareholders will now decide, as the owners of that company, whether or not they wish to accept an offer that has been made to them by a majority Australian equity consortium. At the same time, the Australian government, through the Foreign Acquisitions and Takeovers Act, is examining the proposal to ensure that it does comply with the FAT Act and, of course, the airline must continue to comply with the Qantas Sale Act. So, while I understand Senator Fielding feels emotional about this matter, our job is to ensure that the current laws are complied with—but at the end of the day it is a matter for the owners of that company, the shareholders, to decide whether they want to accept the bid that has been made for their shares.