Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Tax Laws Amendment (2011 Measures No. 1) Bill 2011 is primarily about ensuring that the subsidies and grants given to victims of the floods and Cyclone Yasi are tax deductible, and the coalition of course supports the tax deductibility of these subsidies and grants for people who suffered such a terrible start to 2011. We are debating this bill on the day that this government is going to deliver its next budget—the fourth Labor budget, the fourth deficit budget, the fourth budget that no doubt in the great Labor tradition will deliver more wasteful spending, more taxes, more debt and yet another deficit—and of course the government will again use the floods and the cyclones as excuses for the budget being in such a disastrous position.

Floods, cyclones and bushfires are a sad part of the Australian reality. Good govern­ments ensure that the budget and the economy are resilient enough to be able to deal with these sorts of tragedies if and when they occur, because as sure as night follows day they will occur, and a good government budgets for those sorts of contingencies. But this government has so mismanaged our public finances and so mismanaged the budget that there is no flexibility in the budget anymore. There is no resilience at all and we are now of course in a situation where, as a result of Labor's waste, mis­management and reckless spending, our budget is already in record deficit territory yet again for this financial year.

The government for the last couple of weeks has been talking about how this is going to be a tough budget. Yet over the last five months, the budget deficit for this financial year alone has blown out by another $8½ billion. Five months ago when the government released the MYEFO, the deficit was going to be $41.5 billion. Now we are being told that it is going to be more than $50 billion. Next year's budget is going to blow out by more than $8 billion and last year we were told that the deficit would be about $12 billion plus and it now looks as if it is going to be more than $20 billion. There is no suggestion that the government is in any way, shape or form capable of ever delivering a tough budget. I draw to the attention of the chamber that, as we speak, the government is borrowing $135 million every day to fund the deficit for this financial year. When we have a cyclone or when we have a flood, like we had earlier this year, the government cannot help itself but go for yet another ad hoc tax grab—which was the $1.8 billion increase in income tax, also known as the flood tax. So here we are: it is borrowing $135 million every day. Next year the government will spend $6 billion on interest payments to service the debt that it has now accumulated. Six billion dollars worth of interest payments! Just imagine how much a prudent government, how much a good government, how much a government that spends taxpayers' money wisely, could do with $6 billion. That is six world-class public hospitals. Just imagine how many roads or how much infrastructure could be built. Imagine how much could be done in the reconstruction effort in Queensland if the government had not mismanaged the finances to the extent that it has.

Wayne Swan talks about the budget tonight as a tough budget. As I have already mentioned, this is not going to be a tough budget. I noted the description of the budget by Senator Wong earlier this week. I think it was in the Sydney Morning Herald. Senator Wong said that this will be 'a Labor budget'. I took that as being a bit of a threat to the Australian people—that the budget tonight is going to be a Labor budget. If it is going to be a Labor budget, we sure know that it is going to be a budget full of wasteful spending, full of more taxes, full of higher deficits and more debt, and full of ideological attacks on those Australians who are not seen to be part of the Australian Labor Party voter support base. It will be a tax on those Australians who take additional responsibility for their own health care by taking out private health insurance. These are the sorts of things, no doubt, that we are going to see in a good old-fashioned Labor budget.

Here we are, in a circumstance where we have a budget that is an absolute mess. This is, of course, a very bad tradition of the Labor Party. This will be the ninth con­secutive deficit budget of a federal Labor government. It will be the fourth consecutive deficit budget of this Labor government—four out of four. Of course, there were five consecutive deficit budgets under the previous federal Labor administration. So deficit budgets are part of Labor's DNA. Mismanaging the economy, mismanaging our public finances, is part of Labor's DNA. People across Australia know that, whatever happens, the Labor Party in government messes things up and it is the coalition that has to come in and fix it, through a sound approach to better financial management and by restoring good government. Labor always talks tough before a budget and then goes on to deliver yet another deficit. Labor does not know how to live within its means. This is no doubt going to be the way it is going to play out yet again tonight.

The other part of this legislation is an attempted fix of another Labor Party stuff-up. Remember the First Home Saver Accounts, which the Treasurer, Wayne Swan, announced back in 2008 with much fanfare? We were told as part of the budget then that the First Home Saver Accounts initiative would see 730,000 home saver accounts opened over four years. Just 24,000 people have taken it up because it is such a low-value offering, due to the way it was structured by the government back in 2008. This bill will make some changes which will make the offering slightly more attractive. In particular, the changes that will be made by this bill will allow savings to be paid into a mortgage at the end of the minimum qualifying period rather than requiring them to be transferred to a superannuation or retirement savings account. We support that change, but we make the point again that the government do not know how to manage any program competently. They do not think things through before they press ahead. Wherever you look there is failure, waste, mismanagement and incompetence. There is weakness, there is indecisiveness and there is budget mismanagement. So this is yet another fix for what was an example of Labor Party incompetence in Wayne Swan's first budget. With those few remarks, on behalf of the coalition, I indicate that we will be supporting this bill.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

I also want to make a few remarks on that part of the Tax Laws Amendment (2011 Measures No. 1) Bill 2011 that deals with making exempt from income tax the disaster income recovery subsidy payments made to victims of the recent floods and Cyclone Yasi. Both events were traumatic for those involved and there was loss of life in both instances. Regrettably, both happened in my home state of Queensland. I want to emphasise to anyone who might be listening to this debate that, whilst there were those disasters, they are a matter of course—that is, nature occurring. Indeed, Queensland is open for business and always has been. We know how to deal with cyclones, particularly in the north. They cause great trauma to those directly involved, but for the rest of the North Queensland area life continues as usual. Holiday destinations along the north coast of Queensland are certainly open and very welcoming to people around Australia, and indeed the world, who may want to experience a great holiday in the North Queensland sunshine as we approach the southern winter.

I also wish to address the aspect of the bill where recovery subsidy payments are made to victims. I think it is appropriate that they are exempt from income tax. This has always been something that various governments have looked at. I think the Howard govern­ment set the scene some years ago when it declared tax exemption for payments to victims of a cyclone in Western Australia whose name I cannot recall. I think that was the first instance when the Howard govern­ment dealt with this particular problem that arises from disaster subsidy payments and set the scene for subsequent governments to follow and apply income tax relief to these payments. While I am on my feet I also want to congratulate the Greens political party for their support of legislation which effectively provided a tax on all Australians to assist with the flood recovery in my state of Queens­land and elsewhere but which imposed its burden only on individual tax­payers and not upon those companies that the Greens are always railing against—those multinational mining companies that are ripping the lifeblood out of Australia. That, I mention for the benefit of the Hansard, is a summary of the approach the Greens political party have always made. They always look at these international investors in Australia and say how awful it is that they are digging up Australia and exporting the profits overseas. It amazes me then why the Greens supported the Labor Party in imposing a flood tax on individuals but allowed those multinational profit-taking companies, that the Greens are always so keen to talk about, to be exempt from any payment of that flood tax which would go towards recovery in Queensland and elsewhere.

I simply cannot understand, with all the rhetoric you hear from the Greens as we approach the budget on how we need to increase taxes on these mining companies and other international companies, why they exempted those very same companies from the flood levy, from the flood tax. If the Greens were genuine—and you know my view on that I do not think the Greens are genuine about too much at all except personal publicity and promotion of their ultra left-wing agenda within the Australian political scene—one would wonder why they would tax Australian individuals but let off all of those companies which make substan­tial profits in Australia.

I do not want to rehash the debate on the flood levy but I always thought that rather than having a flood levy it would have been better to take the money needed for the recovery from cyclones and floods from the general revenue in which case companies would pay company tax towards it, the extra wealthy would pay a higher level of contribution towards it and those with lower incomes would barely contribute at all. That is appropriate in a nation with a progressive tax system. But no, the Greens did not support that. The Labor Party and the Greens, the alliance, got together and taxed individual Australians but let companies go.

It has been brought home to me as I have toured the cyclone devastated parts of North Queensland that the local butcher and the local baker are paying the flood recovery tax but Woolworths and Coles, their competitors in the bread and meat markets, are not paying a cent towards the flood recovery levy. How could the so-called party of the worker, the Labor Party, and the Greens, who are so keen on their left-wing agenda, possibly penalise local small businesses in North Queensland and indeed elsewhere by imposing a flood tax on them but exempt Coles and Woolworths, who compete with them in their businesses?

As we approach the budget tonight you will find a lot more of that sort of hypocrisy coming from the Greens. I say to the Greens: good on you. You are supporting a govern­ment that believes in the Pacific solution. I thought the Greens were opposed to the Pacific solution for boat people who come here without permission. I thought they were violently opposed to that and yet here they are supporting a government which is now having—

Senator Xenophon interjecting—

Senator Xenophon interjects and says, 'It is not the Pacific solution; it is the South China Sea solution.' You are accurate as always, Senator Xenophon, but tell me the difference. If it goes to Manus Island, it will be again adopting the Pacific solution and I would not mind having a bet with you, Senator Xenophon, that eventually—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I do not bet.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

You only bet up to a limit, I know. I would not mind betting that it will not be too long before our current Prime Minister, in spite of all of her promises, will actually do what Mr Abbott has suggested and pick up the phone to the president and have the boat people also dealt with at other places in the Pacific.

Here you have another example of the hypocrisy of the Greens and you are going to get a lot of that in the next couple of days as the Greens—they talk about how they oppose these things—support when the crunch comes their mates in the Labor Party to adopt the Pacific solution, if I may call it that. What confidence can anyone have in the Greens? I just cannot wait until the new Senate starts and we have Senator elect Rhiannon in the Greens little group here. Unfortunately you do not bet, Senator Xenophon, but I would not mind betting that she will be making a leadership bid very soon after she gets here and who would discourage her from attempting to do that and give a bit of real exposure to the Greens as to what they really stand for. I do not think Senator elect Rhiannon tries to hide where she is coming from, where she is going to or what her goals are, and that might be a refreshing change even if it is a change that is totally abhorrent to particularly those of us on this side of the chamber.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Macdonald, for some time now we have been straying a long way from the question.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

You have anticipated me wonderfully, Mr Acting Deputy President. The next words to come out of my mouth were to be: 'But I think I have strayed a little from the debate before the chamber on the exemption from income tax of disaster income recovery subsidy payments.' I will conclude my remarks; I do not want to delay the chamber. I will simply say that with the victims of Cyclone Yasi this sort of legislation is well received. It is certainly supported by the coalition and, as I say, it follows an initiative started by the Howard government some time ago. There are anxieties, if I might put it that way, with the recovery effort. I was told recently that the number of suicides in the town of Tully, which was one of the towns that received the direct brunt of Cyclone Yasi, have increased. That in itself is a tragedy.

I know a lot of small businesses in Mission Beach, Cardwell and Tully will not reopen. People had put their life savings into small businesses in those areas affected by the cyclone. In terms of being able to take advantage of the generosity of other Australians in making voluntary donations to various appeals and also of the Australian people as a whole through the flood tax—not Australian companies, I might add, but Australian people who will be contributing through the flood tax—the way that has been administered is causing some real concern and the rules relating to that have also caused some anxiety. I think it is not the time today or on this bill to go into that. Suffice to say that, as with so many things with the Labor Party at both federal and state level, the idea is good and the principle is correct but the administration of those relief schemes leaves a lot to be desired. Never is sufficient thought given to them. Never is sufficient thought paid to the importance of small business in those areas and of the small business people who create the jobs in all parts of Australia but particularly in regional Australia. As I say, I am distressed to hear that a number of them will not reopen their doors. But insofar as this legislation is concerned, as Senator Cormann has said, the coalition support the exemption from income tax of those subsidy payments and we urge support for this bill.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Mr Acting Deputy President, I will try not to be admonished by you. I will stick to the terms of the bill.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Very wise!

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I indicate my support for this legislation, the Tax Laws Amendment (2011 Measures No. 1) Bill 2011. It seeks to implement the recent disaster related initiatives and changes to Australia's tax laws. My principal concern that I explored at the Senate Economics Committee inquiry into the flood levy legislation was for those individuals who have suffered from lesser-known disasters, such as the Stockport floods in South Australia, who have also lost their homes and whether they would be liable to the levy. I am satisfied with the response I have received from the government that those areas of South Australia that have been the subject of a declaration made under the NDRRA, the natural disaster relief and recovery arrangements, so long as one of the following conditions were satisfied: whether an individual was seriously injured; an Australian was killed, and that Australian was an immediate family member of the individual; or the individual's principal place of residence was destroyed or sustained major damage; or the individual was unable to gain access to their principal place of residence for at least 24 hours; or they were stranded in their principal place of residence for at least 24-hours. They would be fully covered—in other words, they would not be subject to any income tax levy. They would need to apply for that, so there is an administrative process, but they would clearly be eligible to be exempt from any levy.

I note that in my home state there were floods in Stockport, Riverton and Rhynie areas in early December 2010. There were also floods in the Barossa Valley in February 2011 which affected Eudunda, Swan Reach, Nuriootpa, Kapunda, Tanunda, Stockwell and Ebenezer. For the Clare and Gilbert Valleys Council the damages bill was in the order of $15 million. The Regional Council of Goyder had a damages bill of $10 million, the District Council of Peterborough had a damages bill of $2 million and as well there were damages for councils in Orroroo, Carrington and the Flinders Ranges and for the Northern Areas Council.

I believe that the natural disaster relief and recovery arrangements cover those individuals and businesses that have been affected and I think it is entirely appropriate in the context of the administrative arrange­ments in this bill. Therefore, I indicate my support for the government's bill as being necessary administrative arrangements to the tax act to implement the effect of the flood levy.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

Firstly, I would like to thank those senators who contributed to this debate. Schedule 1 to this bill, the Tax Laws Amendment (2011 Measures No. 1) Bill 2011, amends the Income Tax Assessment Act 1997 to exempt from income tax the disaster income recovery subsidy payments to victims of the recent disasters that devastated parts of Australia during the 2010-11 summer. The amend­ments also exempt from income tax ex gratia payments made to certain New Zealand visa holders affected by the disaster in 2010-11 where the Australian government disaster recovery payment has been activated. Exempting these disaster relief payments from income tax is consistent with the gov­ernment's response to other disasters such as the Black Saturday bushfires in Victoria—your home state, Mr Acting Deputy President Marshall—and alleviates the financial hardship being felt in affected communities.

Schedule 2 exempts from income tax category C payments made under the natural disaster relief and recovery arrangements for small businesses and primary producers affected by the 2010-11 floods and Cyclone Yasi. This measure recognises the hardship suffered by small businesses and primary producers in affected areas and provides certainty for recipients in terms of tax treatment at a time when they should not need to worry about tax matters. Schedule 3 increases the flexibility of the first home saver accounts. Individuals who purchase a home before meeting the minimum release conditions will now be able to put the money towards their new home. This change amends the tax laws to allow money in a first home saver account to be paid to a genuine mortgage, after the end of a minimum qualifying period, should the account holder purchase a dwelling in the interim. Currently, this money would go towards their superannuation balance. First home saver accounts are designed to encourage individuals, through tax concessions and government contributions, to save for their first home over the medium to long term and have been available since October 2008. This measure applies to houses purchased after the bill's royal assent. The bill deserves the support of parliament and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.