Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Hansard source

First of all I would like to thank those members who contributed to this debate on the Tax Laws Amendment (2010 Measures No. 3) Bill 2010. In particular I appreciate the contribution of the member for Pearce. The amendments contained in schedule 1 will freeze indexation of the superannuation co-contribution income thresholds for a period of two years. They will also permanently maintain the co-contribution matching rate at 100 per cent and the maximum co-contribution payable at $1,000. These changes will generate budgetary savings while at the same time maintaining a generous dollar-for-dollar incentive for low- to middle-income individuals to make additional voluntary contributions to superannuation. These changes should also be seen in the context of the new low-income earners government contribution, which will directly boost the retirement savings of individuals on incomes of up to $37,000 through a contribution of up to $500.

Schedule 2 amends division 820 of the Income Tax Assessment Act 1997 to adjust the thin capitalisation calculations for authorised deposit-taking institutions. In January 2005 Australia amended its accounting standards by adopting the Australian equivalent to International Financial Reporting Standards. This had flow-on tax and prudential consequences for authorised deposit-taking institutions. Transitional provisions have applied to insulate authorised deposit-taking institutions’ thin capitalisation calculations from these changes by allowing such entities to elect to use the accounting standards that applied immediately before January 2005.

These amendments effectively continue that transitional treatment for three types of assets. They are treasury shares, the business insurance asset known as the EMVONA asset, which is the excess market value over net assets, and capitalised software costs. This measure formed part of the government’s 2009-10 budget announcement and achieves the government’s specific objective of clarifying the operation of the law in this area and more generally reducing compliance costs and improving the tax law.

Schedule 4 amends the Taxation Administration Act 1953 to empower the Director-General of Security and the Director-General of the Australian Secret Intelligence Service to declare that Commonwealth tax laws do not apply to specified transactions in relation to specified entities if they are satisfied that is necessary for the proper performance of their agency’s functions. These amendments remove the possibility of conflicts arising between Australia’s national security interests and obligations imposed by Commonwealth tax laws.

A declaration has the effect of preventing tax liabilities, obligations and benefits from applying in relation to the specified transactions. Therefore, there will be no obligation to provide information about those transactions to the tax authorities and no requirement for tax authorities to seek that information. Consequently, information that bears on the operational activities of Australia’s security and intelligence agencies will not be disclosed. Exercise of this power will, of course, be overseen and validated by the Inspector-General of Intelligence and Security, who will report on an annual basis to the Parliamentary Joint Committee on Intelligence and Security.

The amendments in schedule 4 deliver on the government’s commitment to help support people with severe disabilities, their families and carers. This measure will help families and carers to provide financially for the care and accommodation needs of people with a severe disability. Under the new arrangements, the unexpended income of a special disability trust is taxed at the principal beneficiary’s personal tax rate rather than automatically at the top personal tax rate plus the Medicare levy. These amendments are part of the government’s broader response to the treatment of special disability trusts. I note that the member for Pearce was talking on a range of matters concerning this legislation, not all to do immediately with this schedule but to do with her general concerns that not enough is being done to improve the operation of special disability trusts. I personally have some sympathy for her observations, and I thank her for her contributions in the past to improve the workings of these operations. I also note that she wrote to the Walter family, and I too thank the Walter family for the work they have done. I recognise that more needs to be done in this area to improve the operation overall of special disability trusts.

However, some of the other parts of the government’s response include broadening the eligibility requirements for beneficiaries, extending the allowable uses for the trust and granting a capital gains tax exemption for main residences. With these measures we want to make it easier for parents, friends and carers to support a person with a disability. We are aware of the enormous burden carried by families and carers in this country and how heavily our social obligation to care for people with a disability falls upon this dedicated group. Carers, particularly those who look after an adult child with a disability, are often described as ‘saints’ or with the phrase ‘I don’t know how they do it’. I would like to suggest that they are not saints. They are just ordinary people who do an amazing job out of a DNA-hardwired love and out of the knowledge that, if they do not do it, it will not get done.

This government has increased the amount it pays to carers, but I acknowledge that this is still just an early improvement and that the desperation and need is still out there. In fact, the 2005 Australian Institute of Health and Welfare analysis of the Commonwealth, State and Territory Disability Agreement funded services revealed a high level of unmet need. Noting that its estimate of community access to services was conservative, the analysis found that unmet need for accommodation and respite services was 23,800 people and unmet demand for community access services was 3,700 people. I do believe that they are conservative numbers. I also believe that it is appropriate to continue to try and improve the operation of special disability trusts to reward people who choose or who have the capacity to invest in the future of their adult child with severe or profound disabilities and that action in itself actually supports the distribution of the remaining funds available for disability services to those whose families are not in the same position to assist their loved ones themselves.

The vast reservoir of goodwill and love possessed by carers has helped Australia cope up until now, but I do recognise that there is a limit to human endurance. There are 1.5 million people in Australia with a severe or profound disability and there are nearly 500,000 people who are full-time carers of a person with a disability. Demographers predict that the number of people with disability will rise to 2.3 million by 2030, while the number of carers drops. Our current systems are a scattered patchwork and are too often constrained by rationed budgets rather than the actual needs in the community. I recognise the work of the previous government and former Minister Patterson in creating special disability trusts, but this government did also recognise upon election to office that the take-up had been very small. We have made some modest changes, which were the source of considerable debate, and the schedule will reflect some of those changes.

I also happen to believe that a national disability insurance scheme, which the Rudd government has asked the Productivity Commission to investigate, may offer the hope for a better system which intervenes earlier, which provides services when they are needed and which gives long-term certainty to parents and carers of a person with a disability. That anxiety which ageing carers and parents face of wondering who will look after their adult child with significant needs is not a question which can be satisfactorily answered at this stage by the nation. We are currently spending, at all levels of government, over $22 billion on disability services, payments to carers and the Disability Support Pension. I do not believe that we are getting sufficient value for the money. We are paying a lot of money for an inefficient system. Whilst I do not believe that amount of money should be reduced, I do believe we can do better with it. We need to see whether more timely interventions can be made to improve the quality of the lives of people with a disability and their families. It will be up to the Productivity Commission to independently crunch the numbers on this scheme to see whether it is indeed feasible or possible, but I do believe the principle of some kind of insurance scheme for people with a disability is the best chance. We have to improve a system that will provide real support for the growing number of people with disability in this country.

Of course a disability trust, as I have said earlier, is not an appropriate solution for all families but, for those who can take advantage of them, this bill is important. One of the most difficult aspects, as I have said, for a parent who is caring for an adult child with a serious developmental delay is not knowing what will happen to their child, whom they love, when the carer dies or when the carer is no longer able to provide the care required. It is not to our credit as a nation that we cannot guarantee the answer to that question. To make it easier for families to provide some stability and some certainty for the future through a disability trust is one of the good things which is achieved by this bill. We will certainly study very carefully the contribution of the member for Pearce and those families who have worked hard to improve the operation of the special disability trust to see what further work is required.

Turning to schedule 5, it amends the definition of a managed investment trust, or MIT, to more closely align the definition of withholding tax with the definition of the MIT capital account treatment. This measure extends the definition of an MIT to cover certain wholesale managed investment schemes and government owned managed investment schemes, commonly referred to as wholesale funds. The definition will apply for the purposes of the MIT capital account election rules recently passed by this parliament. The amendments will ensure that the rules apply appropriately to both retail funds and wholesale funds that are widely held collective investment vehicles undertaking passive investments while ensuring that any changes to the definition for withholding tax purposes do not unfairly disadvantage existing investors and funds. These amendments will support the Australian funds management industry by limiting the operation of the MIT withholding tax rules to funds that carry out their investment management activities in Australia. The changes made by this schedule are in line with the government’s objective to secure Australia’s position as a pre-eminent financial services centre. This bill deserves the support of the parliament. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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