Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance (Senator Cormann) to questions without notice asked by Senators Brown and Ketter today relating to tax policy.

I would like to start with the response that Senator Cormann gave to a question that I asked in question time today. In response to my quote from former Treasurer Joe Hockey, it does appear that Senator Cormann threw Mr Hockey under the bus again. He is leaving the chamber smiling, but he could not even bring himself to agree with his former friend, his former smoking partner, that negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property.

The responses by Senator Cormann were pathetic, to say the least. His response on behalf of the government basically had no relevance to the questions that I was asking. He also fell in line with Mr Turnbull in whipping up a scare campaign—something that Mr Turnbull said that he would not lower himself to do. They have failed to see what economists in Australia are saying about the Labor Party's policy on negative gearing.

We had in The Examiner today a column written by Saul Eslake, a nationally acclaimed economist who lives in Tasmania. He wrote:

So let's not kid ourselves that negative gearing is something that is widely used by 'average Australians' to secure their retirement. It's something that is used by Australia's wealthiest households to reduce their tax debts.

There is no doubt that people up and down the income chain utilise negative gearing, but the simple fact is that surgeons get 100 times the tax benefit from negative gearing that cleaners do. They are the simple facts.

Saul Eslake's opinion piece in today's Examiner is based on fact; it is not based on the furphies that now seem to be part of the scare campaign that the government is running against negative gearing. Economist after economist, as well as the former Victorian Premier Jeff Kennett, is dismayed about the tack that this government is taking. The simple fact is that surgeons get 100 times the tax benefit from negative gearing that cleaners do.

Another question that was asked in question time today was about bracket creep, and, of course, we have differing views from Senator Cormann and Mr Morrison on it. What that demonstrates is that this government is all at sea on its plan for the economy and for tax reform. They have no plan. They have been in government for 2½ years and they have no plan. We have Mr Morrison so at sea that he had to blame Mr Abbott of doing nothing, but, of course, Mr Abbott had to give him a slap over that and deservedly so. They only started to look at their plan five months ago.

Mr Morrison's inept performance at the Press Club was excruciating—I felt bad for him, but I can tell you that Senator Cormann was sitting in the audience and his face told the whole story. He was just appalled by the lack of substance in Mr Morrison's performance. Mr Morrison rightly got the rounds of the table when he went out to the media—and no-one backed him in—because Mr Morrison started talking about unicorns and pixies. It was very hard to follow what Mr Morrison was trying to convey to the community. What he managed to convey was that this government has no plan—(Time expired)

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to take note of answers to questions raised by Senators Ketter and Brown to the Minister for Finance. It is like being hit by a heated lettuce leaf, isn't it?

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Or savaged by a dead sheep.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

This government is taking a very intellectual approach to a very difficult transitioning economy—an economy which is transitioning out of the mining boom with nearly 300,000 new jobs added in the new last 12 months. We are attempting to have a sensible conversation, and I am very pleased that Senator Ketter is joining me in the chamber to join in this. In our economics committee we are dealing with the issues of superannuation and fairness—whether it be the inequality of retirement incomes of men and women or corporate tax avoidance or the plethora of other issues we are dealing with. I can tell you that the opposition is playing catch up when it comes to these issues, because we already have introduced multinational corporate tax avoidance legislation into this place while the Labor Party and the Greens are still talking about it. We are the ones who are looking at superannuation. As I travel the length and breadth of this country, there are people with large superannuation funds who are saying, 'I think it is thoroughly acceptable that the government have a look at the way in which superannuation funds are taxed.'

I think it is thoroughly appropriate that the Treasurer of this country has the conversation with people of Australia as he heads towards the budget in May. Even the workers in these multinational companies are now looking at higher wages, wage growth and bracket creep and the drag on the economy that bracket creep is. As people progress through the 30, 32, 37 cent bracket, it is a drag on growth in this country.

All the Treasury modelling shows that high-taxing and high-spending governments are a recipe for disaster. The Australian people understand what $100 million a day of borrowings are—36,500 million is what we are faced with over the forward estimates. That is what we borrow—$100 million a day. The other side think it is sustainable to continue borrowing and spending. Every minister in this government is looking at ways in which they can create efficiencies, but that does not mean non-delivery of service. That is what prudent governments do; that is what we do—it is in the DNA of this side. That is what the commentators are seeing: a rational approach to the way in which this next budget is framed—one which transitions from the windfall benefits of a mining boom and one which transitions from a time where people expected governments to hand out money. We all know the days of pink batts and cash for clunkers have gone, but we are still paying for them and we cannot do it anymore. The revenues have gone. Every time iron ore drops a dollar, it is a $10 million hit on the economy. Anybody who thinks that we can keep the trajectory of spending going at those levels is not quoting from Saul Eslake. These people are lobbying the government. Big business will always want their bit, small business will want their bit, the unions will want their bit, and we will traverse a path methodically and intelligently through that.

If you look at negative gearing carefully, every Australian aspires, whether or not they own a home, to own an investment property—every Australian. I do not know why those on the other side play the politics of envy and why they deny people the same opportunity that they have had. I do not know why they are being mean. I do not think these things are lucrative; I do not think it is keeping anybody out of the Adelaide market and I do not think it is keeping anybody out of the Whyalla market—(Time expired)

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

I rise to speak on the motion that the Senate take note of the answers Senator Cormann gave to the questions I asked him. On the general issue of the quality of the economic leadership of this government, I think any objective observer of material put before the parliament today and of the responses we received would form the view that, instead of the quality of economic leadership improving since Prime Minister Turnbull took the top office, it has deteriorated quite alarmingly, to the extent that we now have a shambolic approach in the very important area of tax reform. The first question I put to the Minister for Finance related to the disparity between his response on bracket creep and that of the Treasurer. The Treasurer identified bracket creep as a job killer and a growth killer, so one could be forgiven for forming the view that this was the government's top priority. But nobody sent the memo to the Minister for Finance, because his response on the issue of bracket creep was that it is not the problem it has been in the past, or words that effect. The minister's response to my question was to divert and say I was not quoting him completely, and he made the comment that there was a drag on growth with respect to bracket creep. The fact remains that we have a Minister for Finance and a Treasurer singing from two different hymn sheets, highlighting the fact that the economic leadership being provided is appalling.

My first supplementary question went to the issue of whether or not it had been only since last September that they had started looking at issues like superannuation and the GST. We see a government and a Treasurer basically trying to indicate that nothing has been done for the past 2½ years on issues such as tax reform, but we know that in September of last year the most senior bureaucrats identified that one of Mr Turnbull's first acts after becoming Prime Minister was to halt the release of the green paper, which had been expected within the next six weeks, pending a full rethink of tax reform. They were told at that point to put everything on ice. A reset on tax reform was taking place, according to one senior executive. This is after the fact that we had a reform process in place.

At least the former Treasurer put out a press release in March 2015 identifying what on the surface appeared to be an understandable process that would be followed, including a conversation with the nation on tax reform which would involve a green paper and a white paper following the discussion paper. We were all taken in by that because major corporations, industry bodies and interest groups then spent hundreds of millions of dollars getting taxation advice and legal advice to make submissions to Canberra for the white paper. The Business Council of Australia submission went to 75 pages, and the process cost Australian industry hundreds of millions of dollars, and there is speculation about how much mining companies and banks spent preparing their submissions. The Tax White Paper Taskforce had more than 700 public submissions uploaded to its website from companies such as ANZ, BHP Billiton and British American Tobacco. We were all involved in a journey only to find that, with the assent of the Prime Minister, Mr Turnbull, to his new role, we had the pin being pulled on it and instead of the economic leadership that Mr Turnbull promised at the time, in September, we have an absolute descent into a shambolic situation.

Senator Cormann talked about the fact that the budget was on an improving trajectory, but we have a doubling of the deficit. So, we have a very poor quality of economic leadership on display here.

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

I am pleased to be talking on the motion that the Senate take note of the answers given by coalition ministers to Senator Brown and Senator Ketter. If you had been paying attention to the national debate since Prime Minister Turnbull's ascension to the leadership of the Liberal Party, you would know that the coalition is interested in a better tax system, you would know that the coalition was not interested in a bigger tax burden on ordinary Australian families and businesses. It is revealing that in the contributions this afternoon a particular quotation has not been referred to, and that is a quotation of former Prime Minister—indeed, former Labor Treasurer of this nation—Paul Keating, who said just three weeks ago that what this country had was a spending problem and what it did not have was a revenue problem. I will come to that in a moment.

The Labor Party has zero credibility on the issue of tax. We know that from the experience we had to endure with Labor's minerals resource rent tax; we know it from the misery that many Australian families and businesses had to endure as a result of the carbon tax. I will come back to the mining tax and carbon tax issues, but in the short time available to me I thought I might start by refuting some of the falsehoods that have been put out by Labor specifically in regard to negative gearing.

I am going to refer specifically to comments made by the Leader of the Opposition, Bill Shorten, on the Sunrise program of 14 February; to comments made by the shadow Treasurer, Chris Bowen, on Sky Newson 13 February this year; to Labor media releases; and of course to comments that Mr Bowen made in the Australian Financial Review on 14 February and in the Australian newspaper on 15 February.

Let me turn first to the shadow Treasurer's contribution to Sky News on 13 February, where he said that 50 per cent of house purchases at the moment are investments—false. In fact, according to Australian Bureau of Statistics housing finance data, the value of financial commitments by investors as a share of total financial commitments has never reached 50 per cent throughout the history of the series, which began in January 1985. Over the last three months of 2015, the share of investor housing finance commitments remains steady at 35 per cent.

Let us then turn to what Labor's media release says on the issue of Labor's negative gearing. It says that 93 per cent of new investment loans go to people purchasing existing housing stock—false; not true. In fact, according to the same ABS housing finance data, the average proportion for the past two years is around 93.4 per cent, with the proportion in December 2015 falling to 91.4 per cent.

Let us turn to the comments of Mr Bowen, the shadow Treasurer, made in the Australian newspaper of 15 February. He says that the top 20 per cent of income earners receive about half of all the benefits of negative gearing—not true; not accurate. He goes on to say, in Labor's media release again, that the top 10 per cent of earners capture nearly 70 per cent of the total subsidy of the CGT discount. That comment was also made in Labor's media release. It is not true. So we have a catalogue of comments and assertions being made by the Labor party in regard to negative gearing which are not true or cannot be substantiated.

Let us turn briefly to the issue of the carbon tax and the minerals resource rent tax. We know from Labor's previous commitments, when they made calculations of the revenue this would draw into the Commonwealth's coffers, those revenue projections were wrong. In fact they were so inflated—

Senator Conroy interjecting

Senator Conroy, perhaps you would like me to remind you that Prime Minister Kevin Rudd suggested there would be $50 billion in revenue from the mining tax. How much revenue was there from the mining tax? There was just $400 million of an expected $26 billion. (Time expired)

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to take note of answers given by the Minister for Finance to questions asked by senators Ketter and Brown. Just last September, Innes Willox, the CEO of the Australian Industry Group said:

So we would hope the Government will be able to put together a coherent narrative around the sort of principles that we talked about at the reform summit …

He must be very disappointed. Poor Mr Willox! He must be very disappointed with the last five months, because what we have seen instead is not a coherent narrative—not even a coherent set of proposals. In fact we have seen no coherence. We have seen no narrative. We have not even seen any principles by which the debate around tax ought to be conducted. And we certainly have not seen any ideas.

We are in the most strange position of having an opposition that, well before an election, has a fully costed set of policies on the table and a government with no policies at all. Most people who are watchers of Australian politics will understand that this is a most unusual situation. It is not ordinarily how Australian politics is conducted, but it seems that there is a very strange set of apparently deliberate decisions made by this government not to put anything on the table whatsoever. They are essentially an opposition in exile. Perhaps to misquote the Prime Minister, 'There has never been a more exciting time to be a small target government,' because this is a group of people who are completely unwilling to put anything on the table at all.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

No target.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Not only not a small target, as my colleague points out, but no target whatsoever.

It is not even clear anymore that we have a budget problem. People will recall the rather hysterical and urgent commentary about a budget emergency that greeted the commencement of the Abbott government. Spending now, in the words of the Treasurer, Scott Morrison, is over 26 per cent, which is where it was at the height of the GFC. He said:

This is not something that we believe is sustainable and there are plenty of people out there who want to raise taxes and have a new idea for a tax every single day of the week.

I would say to the Treasurer: 'I would be grateful for new ideas,' because this government would be very lucky to have even a single new idea, let alone a new idea every single day of the week. We are not seeing the kinds of economic leadership promised by the current Prime Minister when he removed the last Prime Minister, calling at that time for renewed purpose in our economic debate.

What is the debate that we are having at the moment? We started out by saying that the urgent debate under the new Prime Minister Turnbull would be a debate around tax, and we were going to have a mature conversation around tax at which all options would be on the table. What has become obvious is that there was only ever really one option on the table and that was the GST, but it was the option that dare not speak its name, because they did not have the courage to go out and prosecute the case themselves. They did not have the courage to name the option that was in fact their preferred option. They left it to a whole range of third parties to roll out the ideas, which is not the way you lead an economic debate. And of course all the while, they were busily beavering away on secret modelling that nobody was ever allowed to see because this national conversation was to take place in the complete absence of data or facts. Of course when they really looked at it, what was there in the modelling was the thing which the Labor Party, which the opposition had been pointing out all along—that a GST would be a killer on economic growth. Not only would it be an unfair and regressive tax but it would be a tax that would actually hurt the economy.

So now where are we? We are back to square 1 because we have got no ideas on the table for the national economic conversation that is supposed to be taking place with all ideas on the table. So we do not have any changes to superannuation on the table despite the fact that the Labor Party, for at least a year, has had a concrete costed proposal to address the most unfair elements of the superannuation system that deliver benefits to the very top income earners in our economy.

We have no plans to deal with negative gearing or with capital gains tax. In fact, all we see is an attempt to mislead the debate by introducing the idea that this is a benefit that helps ordinary people when in fact the modelling by NATSEM, which Senator Smith ought to be aware of, demonstrates that the benefits from both negative gearing and capital gains tax go to the very top cohort of income earners in this country.

I would say this to the government: if there was ever a time to get your ideas on the table, it would be now in the lead up to the budget and not wait until— (Time expired).

Question agreed to.