Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009. I listened to the member for Aston saying all those things criticising the government in relation to this policy. You would think that he was going to vote against this bill, but, in fact, as is so often the case with the coalition, you have to look at what they do, not what they say, because I can guarantee the Australian public who are listening to this broadcast that, when it comes to the vote, the coalition will support this measure—and so will the member for Aston. Having denounced our policies with respect to the changes concerning tax law and superannuation, his side of politics will actually vote for them. That is what will happen.

From 1949 to 1972, we had dark days of conservative rule in this country; and did we see any superannuation law changes that helped low- and middle-income families? We did not. It took a Labor government, the Hawke-Keating government, to bring in a superannuation scheme that helped low- and middle-income families. That is the reality of the superannuation industry in this country and what Labor governments have done to ensure fairness and justice in terms of retirement savings. It is a Labor government, this government, that is doing so much to ensure we have a fair and sustainable retirement income system in this country. It is a Labor government that has actually increased pensions, fulfilling what we told pensioners we would do by raising the single and the couple pension rates. For the first time, we will see the single pension rate at 27.7 per cent of male total average weekly earnings in Australia. It is a Labor government doing this, not the coalition. Labor governments support low- and middle-income families.

It is a bit rich for those opposite to have a go at us about the superannuation industry, because we are the ones who have supported working families across the country, including those in my electorate, to ensure that they have a decent retirement income and are able to support their families as they go. For example, the budget changes—and the changes with respect to tax and superannuation here that support them—ensure that 23,505 people in my electorate will receive a pension increase. Now, they would not have got this if the coalition acted in accordance with what they say. The reality is that we are getting this through the parliament with the support of the coalition. The coalition is supporting this legislation. The member for Aston continually denounces what we are doing here, but the truth is that there is an inconsistency from those opposite.

This law which we are about to pass has three schedules. The first schedule will better target the general exemption with respect to foreign employment income of those Australian residents for income tax purposes. It ensures a degree of fairness and integrity in our tax law system. It means that Australian residents who are working in low-tax jurisdictions will pay the same rates as their fellow Australians who pay tax in this country, and that is a fair thing to do. There is an exemption from 1 July 2009 with respect to aid workers, charitable workers and those involved in disaster relief, and also in relation to employment. We are also making some significant changes in relation to schedule 2 with a temporary reduction in the co-contribution matching rate to 100 per cent for eligible contributions.

In relation to schedule 3 the bill implements the government’s response to a finding of the Australia’s Future Tax System: The Retirement Income System report. That report recommended a number of things. It recommended that there be changes to ensure that superannuation contributions were more fairly distributed and that the current cap on concessions should be reconsidered. The changes with respect to this are directly as a result of the response to the report. We are doing what is being recommended for us to do. It is ensuring that we have, with respect to the budgetary measures, savings of about $5 billion over the forward estimates. That $5 billion over the forward estimates makes a big difference locally as well as nationally.

What would those opposite have to say about the 663 projects totalling $74 million in my electorate under the Economic Stimulus Plan that we have instituted? There is about $30.5 million in funding for 84 schools in the Building the Education Revolution. Where does this money come from? It comes from savings and it comes from borrowings as well. The government has acted in a very responsible way with respect to this matter and those opposite are not telling the true situation with respect to their position.

What do we say then? Do we say that the schools in my electorate, and the roads in my electorate, which need urgent funding should not be funded? Is that what those opposite are saying? What about the Black Spot Funding Program of $5.153 million or the Community Infrastructure Program of $2.249 million? Does the coalition say that these should not be funded in my electorate of Blair in Queensland? Is that what they are saying? They have certainly said that by their actions today, and previously with respect to our Nation Building and Jobs Plan. But in terms of funding that we are saving, this will go a long way towards meeting our commitments.

In relation to schedule 1, there is an amendment to section 23AG. That particular section limited the scope to foreign employment income derived by Australian residents only in specific instances. Foreign earnings derived by an Australian resident individual engaged in continuous foreign service for not less than 91 days was only eligible for exemption from income tax if the foreign service was directly attributable to any of the following: issues concerning charitable humanitarian work, disaster relief, situations with respect to a disciplined force, and other kinds of activities specified in the regulations. The existing conditions for exemption will continue to apply but there will be changes, as I said. This is necessary in the circumstances because we think that Australian residents should pay tax at the same rate whether they are overseas or whether they are here in Australia, with very specific exemptions.

The government has had to make some pretty tough decisions in the budget, and in the circumstances it is important that we do what we have had to do. The new measures in schedule 1 will provide an additional $675 million over the forward estimates and, in circumstances where $210 billion has been stripped from tax revenue by the global recession it is important that we take measures like these.

It is also important to save $1.395 billion over the forward estimates with respect to the changes we are undertaking in government co-contributions for low-income earners. It is a temporary measure, as we have said, and the scheme remains quite generous in all the circumstances. At the lowest matching rate of 100 per cent the government will still be making a dollar-for-dollar co-contribution for all eligible contributions made by a person contributing below the lower income threshold.

Schedule 3 is a very important change. We know that it is very high-income earners who have taken advantage of the very generous concessional tax breaks instituted by the Howard government. It is important that we sustain the pension system and we know that about 80 per cent of the residents—and certainly as many as that in my electorate—need to survive on the age pension to give them dignity and financial security in their senior years. It is important that we ensure that tax concessions are similar for all people regardless of their income, and the current system of concessional contributions is very generous to predominantly high-income earners.

The proposed changes in the circumstances will affect some income earners. Overall it is estimated that reducing the super tax breaks will affect only 1.8 per cent of individuals who make concessional contributions in 2009-10. If you listen to the mutterings of the member for Aston you would think that that was at least 18 per cent or 58 per cent, but in reality it is 1.8 per cent. The average income of those involved would be over $220,000 a year. I do not know what most Australians elsewhere think, but I know that in my electorate of Blair the majority of people would believe that a person earning $220,000 a year is on a high income. Superannuation earnings are taxed at the concessional rate of 15 per cent, and that is why people put these large sums of money into superannuation.

For the 2007, 2008 and 2009 financial years, the concessional contribution cap is $50,000. We are making changes to this. There is also a concessional tax contribution of up to $100,000 annually for those older until the end of the 2011-12 financial year. We are making changes to reduce that to $25,000 and $50,000 respectively. We think that brings in some degree of equity and justice. If someone is earning those kinds of figures, they certainly are on a very high income, by average standards. The Australian Taxation Office estimates that, in 2006-07, five per cent of the population making concessional contributions accounted for 44 per cent of concessional contributions. So, in these circumstances, the changes we are making will make an impact, but the reality is only on very high income earners.

This budgetary measure will save $2.81 billion over four years. It is important for us to do this in the circumstances to ensure the integrity and fairness of the tax system; to make sure that we can sustain the kind of income into our government which ensures that our health system provides decent and appropriate health care for young and old; to ensure our young people are educated to the best of their ability; to ensure our election commitments, and what we are doing with respect to the Building the Education Revolution, are funded; to ensure that our infrastructure programs are funded, particularly the $3.4 billion Network 1 road freight corridor, which is Australia’s largest freight corridor and which links Melbourne to Cairns—and includes the Ipswich motorway in my electorate; and to make sure that we can do what is necessary to ensure our metropolitan rail network upgrades and funding investments are completed, to the tune of $4.6 billion. These are infrastructure priorities, and they cannot be achieved unless we fund our system and ensure that we close off some of these concessions, that we raise our revenue base and we do what is necessary in all the circumstances to cushion the impact of the global recession upon our people. We cannot invest in the greatest school modernisation program in Australia’s history and invest in roads, rails, ports, hospitals, broadband and solar energy without these types of measures and these tax changes.

It is important for us to stimulate our economy. It is important that we support our jobs, support our small businesses and support our farmers in rural and regional Australia, particularly in Queensland where I come from. So these changes are important to the tax system. It is important that we sustain our superannuation scheme and our tax scheme and their integrity for years to come. It gives me great pleasure to support this legislation, because I know that those of us on this side of the House are casting consistent votes. We are casting votes consistent with our position taken to the Australian people every day in our electorates. What we do here is the same as we do in our electorates. We do not say one thing here and say one thing back home. We say the same thing regardless. It is important for us to be confident about the future and for our people to be confident about the future. Ensuring the integrity and fairness of our tax system means that this government can invest in the future and in Australia’s economic prosperity, both nationally and locally. I commend the bill to the House.

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