Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Superannuation and Corporate Law, Senator Sherry, representing the Minister for Finance and Deregulation. Can the minister update the Senate on any major initiatives to help secure a strong economic future for our nation by attracting international capital to Australia and establishing Australia as a major regional financial hub? Are there any mounting threats to such important measures?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I thank Senator Hutchins for this important question. As part of the budget that we presented to the Australian people, the Rudd Labor government has provided a long-term vision for the Australian economy. That vision is one of productivity, wealth generation and capital investment and one based on international best practice.

One of the commitments we have given is to secure Australia’s place as a financial services hub in the Asian region. To deliver on this commitment we announced a most significant step which will improve the export capacity of Australia’s $1.4 trillion managed investment trust industry. The Rudd Labor government has listened to the business community and it has passed through the House of Representatives a provision that replaces the existing 30 per cent withholding tax with a new internationally competitive withholding tax regime. Once the measure is fully implemented, in a staged process, it will reduce withholding tax—and I emphasise ‘reduce’—from 30 per cent to 7.5 per cent. This tax cut has been widely welcomed by the business community and particularly the finance sector. Mr Jeremy Duffield, the Managing Director of Vanguard Investments, said:

This single initiative delivers a vital fillip to Australia’s credentials as a regional investment centre …

The IFSA CEO, Mr Richard Gilbert, said the decision:

… is critical to the maintenance of high levels of long-term offshore capital inflows to Australia.

But, unfortunately, like with a number of other budget measures, a new threat has emerged to this tax cut to assist the development of the investment industry in Australia. The threat has emerged in the form of the shadow Treasurer, Mr Turnbull, the next Leader of the Opposition, the member for Wentworth. Mr Turnbull, the shadow Treasurer, without any consultation with his Senate colleagues, is going to seek to delay this measure in the Senate. Mr Turnbull, the shadow Treasurer, could not even be bothered getting up in the House of Representatives to speak on the measure. He did not say one word about this particular measure. Instead he wants to refer it off to yet another committee inquiry to examine this tax cut. Not only was this an election promise made by the Labor government; it was also a promise, a commitment, made by the now Prime Minister Kevin Rudd in his address-in-reply to the budget last year. So there has been well over a year’s notice that we were gong to proceed with this tax cut to assist the funds management industry. Here we have the shadow Treasurer, Mr Turnbull, attempting to put it off to yet another Senate committee. In the House of Representatives he took no interest at all in this particular measure and now he is seeking to shove it off and delay this tax cut.

Interestingly, Mr Turnbull has a background in the financial services sector. He could have asked Senator Watson to ask a few informative questions at estimates—Senator Watson, one of the few Liberals who knows anything about this area. But Mr Turnbull said nothing about this up until today and now it is to be delayed. This is yet another example of Mr Turnbull behaving in a somewhat strange— (Time expired)