Steven Ciobo (Moncrieff, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

I thank those members who have contributed to this debate. Schedule 1 of the Tax Laws Amendment (Implementation of the FATCA Agreement) Bill 2014 amends the Medicare Levy Act 1986 to increase the Medicare levy low-income thresholds in line with the consumer price index.

The families' threshold will increase from $33,693 to $34,367 and the threshold for each dependent child will also increase from $3,094 to $3,156. The amendments to the Medicare levy low-income thresholds apply to the 2013-14 year of income and future income years. The Medicare levy low-income thresholds for individuals and pensioners have already been increased by more than the growth in the consumer price index between 2011-12 and 2013-14. Full detail of this measure is contained in the explanatory memorandum.

Schedule 2 of this bill introduces an important measure to protect taxpayers who have self-assessed on the basis of particular announced taxation measures the government has decided not to proceed with. This protection measure arises from this government's decisive action to restore integrity to the taxation system by clearing the large backlog of announced but un-enacted measures left by the previous government. This backlog created considerable uncertainty for affected taxpayers and their advisers. The protection provision will provide ongoing certainty for taxpayers that were impacted by an un-enacted announcement for which protection is provided. Full detail of this measure is contained in the explanatory memorandum.

Schedule 3 of this bill amends the tax law to deny an entity the benefits of any additional franking credits that an entity receives as a result of distribution washing. To distribution wash, an entity sells an interest shortly after becoming entitled to receive a fully franked distribution in respect of that interest, then shortly after purchases a new and substantially identical interest that also provides a second entitlement to another fully franked distribution. The imputation system contains integrity rules to ensure franking credits only benefit the true economic owners of shares and to ensure franking credits are only available to shareholders in proportion to their shareholdings. Distribution washing contravenes both these principles by enabling sophisticated shareholders to effectively trade their franking credits and by enabling some shareholders to receive two sets of franking credits for effectively the same parcel of shares. It effectively allows foreign shareholders who cannot use franking credits to sell their franking credits to domestic investors.

Since the announcement of this policy, there has been a significant decrease in activity that could be perceived as distribution washing. Of course, this only affects a small portion of the market. Overall trading activity has continued to grow, with the value of trading increasing by five per cent since this policy was announced. Addressing distribution washing by closing the loopholes will support investment by improving the efficiency and integrity of the tax system. It will also help ensure the long-term sustainability of the imputation system for all Australians. Full detail of this measure is contained in the explanatory memorandum.

I note that the shadow Assistant Treasurer has once again moved an amendment in relation to legislation before the Health and take this opportunity to advise that the government will not support the amendment that has been moved by the opposition.

Dr Leigh interjecting—

I hear the shadow Assistant Treasurer say it is groundhog day. We continue to see silly amendments being put forward by the opposition, but it is entirely consistent with the silly approach Labor adopted to economic policy in Australia.

I note in the amendment that the Labor Party attempts in some way, shape or form to make reference to the government's co-payment by referencing, to use the words of opposition, 'the government's attack on universal health care through its introduction of the GP tax'. The extraordinary thing about this is that the shadow Assistant Treasurer, the person who has moved the second reading amendment, is indeed the one person who it would appear at first blush on the opposition benches least able to meet this amendment. I wonder whether the actual reason this amendment has been moved by the shadow Assistant Treasurer has less to do with a belief in policy or more to do with an attempt by the shadow Assistant Treasurer to earn some stripes with respect to his credibility amongst his Labor brethren.

In particular, the fact that the shadow Assistant Treasurer would attempt to, in some way, insinuate that a co-payment for a GP consultation is not an appropriate policy tool is slightly strange, given that the shadow Assistant Treasurer has put forward his strong support for a Medicare co-payment in the past. In fact, in 2003, in The Sydney Morning Herald, the shadow Assistant Treasurer wrote:

As economists have shown, the ideal model involves a small co-payment—not enough to put a dent in your weekly budget, but enough to make you think twice before you call the doc. And the idea is hardly radical.

He also said:

At the heart of the problem is that in health care, as with other goods and services, free provision leads to overconsumption.

So you can understand, I am sure, Mr Deputy Speaker, my slight bemusement at the amendment that has been moved by the shadow Assistant Treasurer, and you can understand the reason that not only I and other members of the coalition but also, no doubt, members of the public wonder about the true rationale for the amendment that has been moved by the shadow Assistant Treasurer—because clearly, given the shadow Assistant Treasurer's academic background in economics, and given the writings that I have just quoted from The Sydney Morning Herald, which the shadow Assistant Treasurer provided, I assume, as an op-ed, you can understand that the shadow Assistant Treasurer is in fact a devotee of a co-payment when it comes to medical consultations.

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