Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Hansard source

Once again it's clear that a member of the government has not read Labor's policies and doesn't comprehend what Labor is proposing. The member for Corangamite—who is no less than the chair of the Standing Committee on Economics as well—said that Labor is proposing to abolish negative gearing. That's not true at all. If you had read the policy, you would know that is not the case. What Labor is proposing is to cut back negative gearing, to restrict it in relation to new investment properties only. So anyone who is currently in the system who negative-gears will still be able to in the future. But we'll cut back for new investment properties, and that will take a bit of the heat out of the housing market. The member for Corangamite says that she thinks that house prices in her electorate will fall by over 10 per cent. She's got a different view to the minister for revenue, who thinks that house prices are going to go up as a result of Labor's policy. So, once again, there is utter confusion, chaos and division from this government, particularly on economics policy. One would think that the chair of the economics committee would know better and would have read Labor's policy before coming in and commenting on it.

They raise the issue of cash dividends for self-managed super funds. It's clear that they don't understand the policy history behind this as well, because when dividend imputation was originally introduced, by Paul Keating as the Treasurer back in the 1980s, the cash refund was never part of the policy. It was never part of the policy to give people a cash payment from the government at the end of the year when they had no income in that year and they had paid no tax. This was another great example of pork-barrelling that introduced by the Howard government in the early 2000s. When they introduced the cash refund for unused dividend imputation, it cost the budget about $600 million. Like many of the policies that were introduced by the Howard government, it was unfunded. It was unfunded, just like the 50 per cent discount on capital gains tax, which was unfunded in the budget when they introduced that.

Have a guess who's paying for all the profligacy of the Howard government in those years when we were running big budget surpluses because of the mining boom. We're paying for it now. The Australian public are paying for it now. This was another one of those policies that was introduced that was unfunded. It now costs the budget $6 billion, growing to $8 billion in future years. It's unsustainable.

If you're going to talk about properly managing a budget and ensuring that our government lives within its means, one area that you would look at is an area where no other government throughout the world provides a cash refund, a tax rebate if you like, and that's dividend imputation, but Australia continues to do so in years when we've got rising debt and we've had a big budget surplus. The responsible thing to do, and that is what Labor is doing in planning this, would be to cut back on that.

I want to raise some questions regarding taxation of the digital economy. Reading between the lines, it appears that the government is considering a digital-firm equalisation levy, or something similar to what's proposed in the European Union, with a six per cent withholding tax in India. Media reports suggest that the government is using the levy as a bargaining chip with crossbench senators, particularly as they seek to win support for their corporate tax giveaway to the banks and multinationals. The Treasury indicated on budget night that it would release a discussion paper on taxation in the digital economy. We're still waiting for that, and we have no idea when it will be released. We don't know if the paper canvasses options for digital, such as an equalisation levy, withholding taxes or turnover tax. We don't know the names, locations and dates of the Treasurer's meeting with US digital firms in the past 12 months, despite the fact that he was boasting that he met with Amazon in Seattle. We don't know how long Treasury has been considering and consulting with stakeholders on a digital tax or levy or which stakeholders they've met with in the last 12 months. We don't know what issues, such as loopholes or potential tax avoidance strategies, Treasury and the ATO have identified in the digital sector as a risk in this economy. While we know that the Multinational Anti-Avoidance Law and, particularly, the diverted profits tax were colloquially known as the Google tax, we don't know why the multinational anti-avoidance levy and the DPT are insufficient to collect a fair share of tax from digital firms. We know that in the last year the government and the ATO have modified their language. My simple question to the minister is: does the ATO or Treasury have concern that digital firms may use contrived arrangements to make deductions to avoid paying tax on extra sales booked in Australia? (Time expired)

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