Chris Bowen (Prospect, Australian Labor Party) Share this | Hansard source

The Tax Laws Amendment (2006 Measures No. 3) Bill 2006 is an important bill. It is a pity that the government has guillotined debate on the bill so that, as I understand it, about half the speakers who had indicated a willingness to make a contribution will not be able to do so today. The government will be forcing the bill through without further debate.

This bill contains a range of tax measures which are important in their own right. The first to note is the extension of the beneficial tax offset to small business people and farmers in receipt of Cyclone Larry income support payments. Of course, this proposal would enjoy the support of all honourable members. We were all touched and moved by the devastation that Cyclone Larry wrought, particularly to the towns of Innisfail and Babinda—both of which I have spent some time in—which was there for all to see. As it happened, I was able to be with General Cosgrove on the night that he was appointed to head the relief effort for victims of Cyclone Larry. He was good enough to come and launch a film that I was putting on in my electorate. The public reaction to him and the warm feelings for his work in Northern Queensland on the night before he flew there were palpable. I am sure that everybody in my electorate would join with me in endorsing these tax changes to ensure that people are not taxed for income they receive as part of the Cyclone Larry relief effort.

As well as extending the beneficial tax offset to those in receipt of Cyclone Larry income support payments, this bill provides tax-free status for certain Australian government payments to businesses affected by the cyclone. These payments are of $10,000 each, and those businesses that are able to demonstrate significant losses can receive up to $25,000. Any excise paid on diesel or fuel used by businesses for generating their own electricity until normal services are restored is to be reimbursed by the government. This excise should not be taxed, and this proposal makes eminent sense.

There is of course another national and natural disaster facing us, one which has been with us for a long time but which no longer gets the sort of media attention that an event like Cyclone Larry does. I refer of course to the drought, which has been with us for a very long time. We need to remember that, although the drought has cleared for many farmers, others are still in its grip. We cannot let the drought slip from the national consciousness, and we must consistently ensure that we are giving appropriate support to those struggling with drought.

This bill appropriately extends the beneficiary tax offset to interim income support payments. Welfare support for drought-affected farmers in areas declared to be in exceptional circumstances is mainly provided through exceptional circumstances relief payments, which are a rebatable benefit to which the beneficiary tax offset applies. This will be extended to interim income support payments made to farmers as a temporary payment and paid under the general category of emergency and general assistance payments.

It is a pretty basic principle that government grants paid to reimburse expenses under various programs should not be taxable. You should not be taxed if the government is simply reimbursing you for expenditure which the government has decided you should not have to bear. This bill removes doubt for some schemes, such as the M4 and M5 cash-back rebate which operates in New South Wales. This is particularly important in my electorate as it is between those two freeways. I must say that I presume it is to remove doubt; it is largely commonsense. I cannot conceive that the Australian Taxation Office would really contemplate taxing a reimbursement allowance such as the M4 and M5 cash-back, which refunds money that people have spent on tollways, or the Sydney airport noise insulation project, which reimburses people for money they have spent insulating their homes because of unexpected airport noise from the third runway at Sydney airport.

Other clauses are included in the same schedule. The bill exempts the Unlawful Termination Assistance Scheme and the Alternative Dispute Resolution Assistance Scheme. On the face of it, this seems sensible. However, I am always cautious when it comes to the government’s extreme industrial relations agenda and their extreme and pernicious workplace relations changes. We do need to be extra cautious. For this reason I support the referral of this schedule to a Senate committee for consideration.

One of the more important schedules to this bill is schedule 4, which relates to share capital tainting rules. Shareholders receive preferential tax treatment on distributions of share capital. On the other hand, shareholders are generally taxed at their marginal rate on distributions of profits. Of course, the Hawke government introduced dividend imputation, an important economic reform which is available in cases such as this. It is important that companies are not able to disguise the distribution of profit dividends as the distribution of capital. The share-tainting rules meet with the Labor Party’s approval, and we support the changes proposed in this bill.

In this bill, the government has taken the opportunity to correct an anomaly in the existing share-tainting rules. This anomaly relates to the treatment of demutualised companies. The bill introduces a regime which covers not only capital returns made at the time of demutualisation but also subsequent returns of capital made by demutualised companies to ensure they are treated comparably to other companies. This is simply sensible and, as I say, meets with the ALP’s support. I note that no relevant stakeholder has criticised this amendment, as its purpose is largely to remove doubt and clarify the existing regime.

I was interested in schedule 8 of the bill, which excludes the taxation of the provision of personal security as a fringe benefit. This is eminently sensible and meets with our support. I must say that I had never thought of the provision of personal security as a fringe benefit. In these days of heightened security concerns, it is appropriate for companies to provide increased security to employees, particularly those who have prominent or perhaps controversial positions. Similarly, it is appropriate for government departments to provide increased security. It is not appropriate for a firm to be taxed under the fringe benefits regime for increases in security provision to an employee’s home or to other personal security measures that need to be put in place, so this measure meets with the opposition’s support. I note that the measure is predicted to cost the Commonwealth $3 million over the next three financial years in forgone revenue. That the Commonwealth is forgoing this revenue is appropriate.

Much more financially significant is schedule 9 of the bill, which makes changes to the taxation arrangements of pre-1988 superannuation contributions. This represents an extra $600 million in government revenue over the next four years. The amendments provide that funding credits can only apply to reduce tax on contributions that accrued prior to 1 July 1988. In addition, any new or outstanding objections or requests for amendment to past assessments will only be able to be amended to fund credit use until that date and up to the amount that can be claimed under the new law.

This is a very substantial change. It involves increased revenue of over half a billion dollars and should not be rushed through this parliament. It is a shame that the government has chosen to guillotine debate on this bill. Far from guillotining debate, the government should be referring this matter to a Senate committee. It will be a pity if the government rams this legislation through the parliament today, as it has indicated it will do, when you consider that we are talking about $600 million of increased government revenue—if you like, a half-billion-dollar tax increase. It behoves the government to allow a proper debate of this measure, and it certainly behoves the government to allow this measure to be referred to a Senate committee for full consideration.

Instead, the government has chosen to gag the Labor Party by allowing only four opposition members to contribute to the debate and not the nine who had indicated that they wish to speak on this matter. Clearly, the government is rejecting Labor’s suggestion to refer this bill to a Senate committee. This is where Senate committees work: in examining complex and difficult pieces of legislation. This is where Senate committees really add value to the work of the parliament by devising alternative mechanisms. This morning we saw the government also reject the Labor Party’s move to refer the very substantial and complex changes to the fuel taxation regime to a Senate committee. These changes have met with opposition from the government’s own backbench, but the government refuses to allow proper parliamentary scrutiny and consideration. It is a particularly arrogant move by this government to guillotine debate on this bill, which represents $600 million of increased government revenue, in such a cavalier fashion today. I call on the government not only to allow a Senate committee to properly examine this bill but also to allow a proper parliamentary debate today.

The other fiscally significant aspect of this bill is schedule 14, which allows each wine producer or group of producers to claim up to $500,000 in WET rebates each year. The cost of this measure is $93 million over the next three financial years. Again, this measure deserves support. The wine industry has become very important to Australia’s external trading position. With the current account deficit at its current huge level and after 49 current account deficits in a row—the worst result in 20 years—measures such as this, which support the wine industry, are to be welcomed. This month will see the government’s 50th current account deficit in a row, which is the worst result in Australian history. I welcome this measure. It will, in a small way, help the wine industry, which is currently facing a very tough set of circumstances. Labor supports this measure.

I see that the time is approaching 1.30 pm and I am about to be sat down, so I will not address the range of other measures included in this bill or detain the House by talking about them in detail. The Labor Party supports the bulk of them, although there are one or two that we think should be referred to a Senate committee for further consideration. These matters are not urgent, although the government has arrogantly chosen to guillotine them today. The contributions of the member for Hunter and others have shown that these matters should be referred to a Senate committee. I reject the government’s guillotining of this bill today. (Time expired)

See this speech in context