Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

The Tax Laws Amendment (2006 Measures No. 3) Bill 2006 involves a raft of measures associated with extending concessions in some areas, modifying definitions, correcting errors and, in one case, actually overriding a major decision of the full Federal Court.

At the outset, I would like to indicate to the House that this bill was to be debated in the House when we last sat—a matter of just two business days after it was introduced. This is typical of the way this government is operating the legislative program in this House. We saw an even worse example this morning of the way the government is operating the legislative agenda in this House. On that basis, we decided to send a number of the provisions to a Senate committee to give us a better opportunity to fully scrutinise the propositions being put before us. I thank the government for agreeing to the Senate reference, and we look forward to having a more cooperative relationship with the Minister for Revenue and Assistant Treasurer than we had with the former minister, Mal Brough.

The first two schedules of the bill are important to the people in Far North Queensland who have been devastated by the effects of Cyclone Larry, which hit that area on 20 March this year. While, thankfully, there has been no loss of life, a significant number of homes and businesses in the area were affected and the region was declared a natural disaster zone by the Queensland government. Some businesses have not been able to trade due to the effects of the cyclone. As a result, some residents in affected areas have had to rely on income support from Centrelink. These measures ensure that such support enjoys a tax-free treatment. In considering some other areas of government grants and the tax treatment of those grants, I am sure the member for New England would be most interested in the point I have just made.

The first schedule extends eligibility for the beneficiary tax offset to farmers and small business owners who receive Cyclone Larry income support payments. The Cyclone Larry income support payments provide income support to farmers and small business owners whose income has been adversely affected by Cyclone Larry. The Cyclone Larry income support payments are equivalent to the maximum rate of the Newstart allowance and are administered by Centrelink. Businesses have also received cash grants to make up for loss in trade.

The second schedule provides tax-free status for certain Australian government payments to businesses adversely affected by the cyclone. Payments of $10,000 will go to businesses adversely affected by Cyclone Larry. Those businesses that can show significant losses can receive up to $25,000. Without this assistance, some small businesses would need to close down, and of course that has significant job loss implications. The opposition is firmly committed to assisting these small businesses and those whom they employ, and we give this measure our complete support. Labor also supports the reimbursement of any excise paid on diesel or petrol fuel used by businesses for generating their own electricity until normal services are restored.

Schedule 3 is a similar measure. It ensures that personnel affected by drought will also receive income support in a manner that does not attract tax. It extends eligibility for the beneficiary tax offset to drought affected taxpayers who receive interim income support payments.

Schedule 4 makes a correction to the share-tainting rules as they apply to demutualised entities. The simplified imputation system was part of the government’s business tax reform package, which applied from 1 July 2002. The share capital tainting rules are an integral part of the dividend imputation system. Accordingly, in this bill they have been redrafted and anomalies have been removed in order to integrate into the new imputation system. Shareholders are taxed preferentially on distributions of share capital. In contrast, shareholders are generally taxed at their marginal tax rate on distributions of profits, with imputation credits available, if appropriate. The share capital tainting rules are integrity rules designed to prevent a company from disguising a distribution of profits as a tax preferred capital distribution by transferring profits in its share capital account and subsequently making distributions from that account to shareholders.

The opposition supported the original share-tainting rules and supported the redrafting of the dividend imputation system. The new tainting rules remain there to act as an integrity measure. It now appears that there was an oversight in the design of those rules when the original share-tainting rules were introduced in 1998—namely, the treatment of companies that were mutuals but which had demutualised. The bill, therefore, introduces a regime which covers both capital returns made at the time of demutualisation and subsequent returns of capital made by demutualised companies to ensure they are treated on a comparable basis to other companies. This is needed to create certainty that the integrity provisions of the share-tainting rules will not adversely affect shareholders of demutualised firms.

Schedule 5 of the bill exempts the recipients of certain grants from capital gains tax. There are cases when the receipt of such grants can be assessable income or an assessable capital gain. This bill will simply clarify that this is not the case in the situation of the M4/M5 Cashback Scheme on Sydney tollways. In addition, some grants to mediation and dispute resolution schemes under the Work Choices laws are to receive this treatment. Labor has referred this to a committee to inquire whether tax-free status of the Work Choices scheme is warranted.

Schedule 6 will provide a tax offset to certain taxpayers who, in the year in which they have received a significant eligible lump sum payment in arrears, have become liable for the Medicare levy surcharge or, indeed, an increased Medicare levy surcharge liability due to the receipt of a lump sum payment in arrears. The amount of the offset will be the amount of the increased Medicare levy surcharge liability created by the receipt of the eligible lump sum. In cases where receipt of the lump sum payment in arrears alone results in the taxpayer’s spouse having a Medicare levy surcharge liability, the spouse will also be eligible for the offset.

Schedule 7 allows the commissioner to require superannuation providers to report prescribed information that is reasonably necessary to assist in the administration of the superannuation guarantee arrangements. The information that superannuation providers will be required to report to the tax office are details of employer and total contributions. Where amounts are transferred between superannuation funds or retirement savings accounts, the transferring superannuation provider must provide the receiving superannuation provider with equivalent information. This, again, is a measure that Labor has supported in the past.

Schedule 8 excludes from reporting fringe benefits provided to address certain security concerns relating to the personal safety of an employee or an associate of the employee arising from the employee’s employment.

Schedule 9 provides that funding credits can only apply to reduce tax on contributions that are used to fund liabilities that occurred prior to 1 July 1988. These amendments apply to the use of funding credits on or after 9 May 2006. In addition, any new or outstanding objections or requests for amendment to past assessments will only be able to amend funding credit use for the year or years up to the amount that can be claimed under the new tax law. It is not clear how the costing of this measure has been arrived at nor what the impact on state superannuation schemes will be. This is to be investigated by the reference we have given to the Senate committee.

Schedules 10 to 12 introduce some changes to the rules that apply to charities. Schedule 10 amends the definition of the word ‘enterprise’ in both the GST act and the ABN act so that non-charitable public ancillary funds and prescribed private funds can obtain an ABN and will, where applicable, be entitled to be endorsed as income tax exempt. This amendment will also ensure that the DGR status of non-charitable public ancillary funds and prescribed private funds is maintained and these entities can receive input tax credits for GST included in their acquisitions and importations. Labor supports this but would also add that the government is punishing some apprentices in relation to the ABN system.

I have put a series of questions on the Notice Paper to the Assistant Treasurer on this issue. While I have given him the opportunity to respond in writing, I would also extend to him the opportunity to respond to those questions when he provides his summation to this bill in the House today. In particular, I have asked the Minister for Revenue and Assistant Treasurer these questions. I will not go through them all. I will hit on the key points. I have asked the minister:

(1)

Was the Building and Construction Industry Forum (BCIF) informed in 2005 that, in order to clamp down on abuse of the contractor system, Australian Business Numbers (ABNs) would not be issued to apprentices or unskilled labourers.

(2)

At its meeting of 30 May 2006, at the Mercure Hotel, Sydney Airport, was the BCIF told that the policy referred to in part (1) had not been, and would not be, implemented.

(3)

In respect of the policy referred to in part (1), (a) why did the Australian Taxation Office (ATO) not implement it when industry participants were promised that it would be implemented, (b) who in the ATO decided not to proceed with implementation, (c) why was the decision to proceed with implementation changed, (d) what role did he, or his office, play in the decision not to proceed with implementation, (d) why were the members of the BCIF not consulted on the decision not to proceed with implementation, (e) why were the members of the BCIF not advised in writing of the decision not to proceed with implementation, (f) what is the expected cost of the decision not to proceed with implementation, and (g) who calculated the cost of the decision not to proceed with implementation.

Having said I would not go through them all, I have just decided that I will:

(4)

How can an apprentice qualify as a self-employed contractor.

(5)

How many apprentices currently claim to be working as self-employed contractors.

(6)

Will he supply a copy of the written advice under which the decision not to proceed with implementation of the policy referred to in part (1) was made.

What we seem to have here was originally, at least, an honest attempt to rein in, if you like, abuse of independent contractor status, but then a secondary decision was made, somewhat under the carpet, behind closed doors and without proper consultation, not to enforce that original policy decision. I do invite the minister in his summation to address those questions I have asked, and I do so as a great leap of faith because I cannot say he is in the habit of responding to these questions I pose to him in the House, but I give him an opportunity to redeem himself this afternoon.

The next schedule of the bill streamlines current DGR specific listing arrangements and provides a more consistent framework for assessing applications for DGR status—that is, deductible gift recipient status. Funds, authorities or institutions that meet criteria for the categories of war memorials, disaster relief, animal welfare, charitable services or educational scholarships will be eligible for endorsement for DGR status under one of these new general categories. Labor has consulted with major charities. It has been informed that this issue is generally supported. However, we do want the charities to have an opportunity to express their own views and again, on that basis and for that reason, we referred the provision to the Senate Economics Legislation Committee.

Schedule 12 of the bill amends the GST act to clarify that (1) the GST concessions available to an entity only because it operates a fund, authority or institution that has gift deductible status do not apply to the activities of the entire entity; (2) an entity that supplies a thing as a gift to an entity that operates a fund, authority or institution that has gift deductible status may have an adjustment under division 129 of the GST act if the gift is made other than for the principal purpose of the endorsed fund, authority or institution; and (3) charitable retirement villages must be endorsed by the commissioner in order to access the GST charitable retirement village concession under section 38.260 of the GST act. Although Labor understands that charities are not uncomfortable with this measure, the speed at which the bill has proceeded into parliament creates the need for this schedule to also be considered by a Senate committee.

The 13th schedule clarifies that the repeal of the six-year amendment period for general antiavoidance amendments only applies to assessments for the year 2004-05 and later income years. This is another infamous ‘Brough-up’, as we used to call them when Minister Brough was in the portfolio. The previous Assistant Treasurer was notorious for introducing bills with errors in them. Labor counted 13 such errors in a 12-month period. This, of course, makes No. 14 to the former minister. Labor supports the correction but asks the government to make all efforts to clean up its act and in future to resist from putting these faulty tax bills into the House of Representatives.

The next schedule is vital to the key industries in my electorate of Hunter. From 2006-07 each wine producer or group of wine producers will be able to claim up to $500,000 in wine equalisation tax rebates each year. This measure provides assistance to the wine industry at a critical time, and Labor of course supports it. However, there is a major problem in this measure in that it extends the measure and supplies more funds which will flow under the scheme to New Zealand producers. I have said it before but I will say it here again today: we would like to know what amount of funds under this scheme will flow to New Zealand wineries. Why is the minister, for example, not capping the grants that flow to overseas producers?

I was amazed to learn more than 12 months ago that a very good initiative—that is, the wine equalisation tax rebate—was going to flow on to New Zealand producers. As a matter of principle, I do not necessarily have a big problem with that, and as a former trade minister, Mr Deputy Speaker McMullan, I suspect you would not have a problem with that either. In fact, you were possibly the minister throughout the implementation period of the CER. I am not sure—I am relying on memory there. But the closer economic ties we have with New Zealand are important, and I do accept that the CER is a very different animal, if you like, to the free trade agreement with the United States in that the free trade agreement, as I understand it, is very specific in its measures. We agree to the courtesies we extend to one another in financial terms and in trade terms, but the CER is a more open relationship and one would expect and hope that all measures that have an adverse or distorting economic effect on trade would be addressed, and it is quite possible for the government to argue that extending this rebate to New Zealand producers ensures that we do not have those distortions in our trading relationship.

But what we have never had in this place, despite my best efforts to get responses in this House from former minister Brough, is any explanation as to how this extension of the rebate to New Zealand producers came about. Was there a submission from the New Zealand government or was there a submission from New Zealand wine producers? We do not know. We do not know what discussions took place or what agreements were made. There has been no public consultation with the Australian wine industry. I am sure you will find, Mr Deputy Speaker, that there are various views within the Australian wine industry about the appropriateness of extending that rebate to New Zealand producers. We do not know what it is costing. We do not know how much money is going to New Zealand wine producers. We do not know what additional funds, as I have already pointed out, will be going to New Zealand wine producers as a result of the change in this measure we are considering today.

So again I appeal to the minister, when he comes back in to wind up this debate, to tell us some more about the extension of the rebate to New Zealand producers: how it came into effect, what consultation if any was undertaken, how many New Zealand wine producers are receiving the rebate, how much money is going to New Zealand wine producers, how much more money will go to New Zealand wine producers as a result of this measure and what risk there may be in that rebate in turn being extended to producers in other parts of the world. I think the answer to that is that any FTAs we have entered into, or are likely to enter into, will not necessarily accommodate that flow-on. But I am not sure about that. I want some assurance from the minister about whether we are likely, at some time in the not too distant future, to be sending our rebate to producers in the Nappa Valley, for example, or in the south of France. These are not complex questions and I expect the minister to come in here and answer them.

Can I take the opportunity to briefly talk a little bit more about the wine equalisation tax rebate. It is a very important measure. When we discuss this initiative I never miss the opportunity to take some credit for it on behalf of the opposition. I will take members opposite back down memory lane to the time when the GST was introduced. Prior to the introduction of the GST, wine was taxed at a rate somewhere in the low 40s. I cannot remember the exact figure, but I think it was in the low 40s. If the excise on wine had been abolished and replaced by the GST, the tax on wine would have decreased from some 41c to 10c. Of course, that would have been a massive reduction in the tax on wine. There are some economic and indeed social arguments why that might not have been a good thing. It would have affected the relativities between alcohol taxes and could have had some social implications—you make alcohol cheaper and you run the risk of abuse of alcohol. So the government in its wisdom at that time decided to introduce the wine equalisation tax.

The purpose of the wine equalisation tax was to ensure that the net effect of the tax on wine did not fall. So the government struck a wine equalisation tax at a rate that was supposed to be revenue neutral. But it was never revenue neutral. My memory is that in the first year of the operation of the GST the government took some $180 million more in wine tax revenue than it had in the previous year under the old excise arrangements. The wine equalisation tax is 29 per cent. The government argued that, if you add 29 to 10, you only get 39 and therefore you have actually had a slight reduction in wine tax. But of course it is not that simple, because the 10 per cent goes on the 29 and there is a compounding effect. I do not remember the exact figure but it pushed the net effect of tax on wine to something in the order of 44c, where it had previously been 41c. So the government had actually applied a punitive tax on wine, and that had some significant implications for the industry.

At that time I moved amendments in this place exempting small regional wine producers from the wine equalisation tax. I did so on the basis that this would be an initiative that would promote growth in the wine tourism industry in regional areas. At the time the government rejected that proposition. But after some solid campaigning—and, I have to say, some support from the Democrats at the time—the government backed down. It did not accept our wine equalisation tax exemption but it did introduce the rebate that we are discussing today. That was to the great satisfaction of me, the industry and the many members on both sides of this House who are supporters—and indeed consumers—of the wine industry. The system has never been perfect; still too many people are being unfairly caught in the net of the wine equalisation tax and being disadvantaged relative to where they were prior to the introduction of the GST. On that basis we support the change, but I remind the minister again that I want some responses on the impact on overseas producers.

The final schedule of the bill deals with the GST treatment of residential properties. The amendments in this schedule: (1) ensure that supplies of certain types of real property are input taxed to confirm the policy intent that the words ‘residential’ and ‘residence’ are not limited to extended or permanent occupation; (2) confirm that residential premises which have only previously been sold as commercial residential  premises or as a part of commercial residential premises are still regarded as new residential premises; and (3) confirm that a supply of accommodation provided to individuals in commercial residential premises by an entity that owns or controls the premises remains subject to the GST. These amendments apply to net amounts for tax periods that commence on or after 1 July 2000. This is to override the decision in the case of Marana Holdings last year, where the full Federal Court essentially held that units in a strata title rented for a short period are ‘residential premises’ which are exempt from GST. This has thrown into confusion entitlements to input tax credits. The government’s response is to override the decision and impose a regime from 1 July 2000 that makes it clear that input tax credits could never have been claimed in those circumstances.

Labor has again referred this provision to a Senate committee for further consideration. We do not support retrospective tax legislation and we are always concerned about any retrospective tax legislation. While we support the approach in principle, we do retain the right to express greater concern in the Senate once that committee has run its course. This will hurt some investors. We are very conscious of that and we want to ensure that the policy intent has been struck, has been properly determined, and that there are no unintended adverse consequences. At this stage I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

condemns the Government for failing to invest in rebuilding our health system, including Medicare for the future, focused on prevention, early intervention and an ageing population;

(2)

condemns the Government for another technical error in a piece of tax legislation;

(3)

condemns the Government for failing to fully explain the expansion of the Wine Equalisation Tax rebate to New Zealand Wine producers;

(4)

condemns the Government for denying full and open debate on tax bills; and

(5)

condemns the Government for denying opposition parties the right to move technical amendments on tax bills”.

This amendment gives members of the House an opportunity to broaden the debate on the many issues that I have covered within those 15 or so schedules. It also gives me the opportunity to express my concern about what happened in the House of Representatives this morning, when the government took a decision to gag a number of bills, at least two of which are causing the government a high degree of political pain—the most obvious, of course, is the government’s attempt to change the migration laws of this country.

There was another very important tax bill in here this morning too, and that was the one which, amongst many other things, was going to force businesses in this country to adopt a new system to claim back their fuel tax credits. The government tells us that this is going to be a better system for business, particularly small to medium businesses. But that is not what the business community has been telling me and that is not what the business community has been telling the media of this country. It is fairly obvious that that is not what the business community has been telling the government backbench. To that purpose, Minister Dutton decided the last time we sat to withdraw the bill from debate in this place while he dealt with the crisis he faced on his own backbench and the pressure he was receiving from the Labor Party and, I am sure, the minor parties. Yesterday he brought the bill into the House and proposed his own government amendments, which would have provided a grace period for business—in other words, they would have been able to continue to operate under the current system for two years but after that time would be forced to use the new system.

Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Aviation and Transport Security) Share this | Link to this | Hansard source

After the next election.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

After the next election, the member for Brisbane rightly points out. I intended to move an amendment in the consideration in detail stage today. I foreshadowed this, importantly, during my contribution in the second reading debate for that bill. I intended to move an amendment such that businesses should be able to choose the system which suits them ad infinitum. The government’s argument is that this is a better system for business generally but particularly for small business. I say that, if it is about making it better for business, let business choose which system best suits them. It does not carry any financial implications. It is simply a timing difference. The government’s new scheme will deny business the right to claim the fuel tax back as soon as they have paid the account and force them to wait until they have lodged their BAS, their business activity statement. For some businesses this is a year, but more typically it is a quarter. You would have tens of thousands of businesses in this country carrying tens of thousands of dollars—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The member for Hunter is now debating the Fuel Tax Bill 2006, when we are now supposed to be debating the Tax Laws Amendment (2006 Measures No. 3) Bill 2006.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

In the normal course of events, that would be correct, but I think the amendment moved by the member for Hunter is of a general character about debate on tax bills. Therefore, he is in order for another 30 seconds.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I will get to the important point. The opposition and the minor parties this morning were outrageously denied the opportunity to move amendments to a tax bill and bills generally, because there were a number of bills on that list. This offends not only this House and the people who elect us to this House but also, in the case of the Fuel Tax Bill, the tens of thousands of businesses in this country that are going to be adversely affected by the measures put forward by the government. (Time expired)

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Aviation and Transport Security) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (2006 Measures No. 3) Bill 2006. Because of the limited time, I will keep my remarks mostly to the wine industry and the WET rebate. I represent in my electorate something like 43 per cent of Australia’s wine industry. I represent the grape areas. I notice that the member for Hunter did speak briefly on this matter, and he has a wine area in his own electorate but certainly nowhere near as large as mine. I have in my electorate the best-known wine area in the world, from an Australian perspective, and that is the Barossa Valley. I also represent the Coonawarra, the Padthaway-Wrattonbully areas, Mount Benson, Riverland, which on its own produces 25 per cent of Australia’s wine, and many other premium areas. So it is a pretty important industry to my electorate. I understand the taxation issues quite well. I can remember when there was no tax on wine. Then tax was brought in at 10 per cent on top of the 15 per cent excise. It then went to 20 per cent. It then went to 22 per cent. It then went to 24 per cent. It then went to 26 per cent on top of the 15 per cent excise. All those tax increases happened under Labor.

It is very easy for someone from the opposition to come into this House and say that they will reduce tax on this or that. I found it very interesting that the member for Hunter tried to take some credit for reducing the WET. Look at the history of how Labor applied taxes to the wine industry. The tax went from zero to 26 per cent. That is the Labor record. There were no rebates, no reductions, only increases. That is their history of taxing the wine industry in Australia. As I said, it is very easy for them to come into this House, move an amendment and say, ‘We’ll reduce tax,’ because they do not have to wear the consequences.

When I first came into the parliament in 1998 representing the seat of Barker, it was with great honour. At that time the regime was 26 per cent wholesale sales tax plus 15 per cent excise—that is, 41 per cent in total. As the previous member said, when we brought in the new tax system with a 10 per cent GST, which can be an input credit, we had to have a wine equalisation tax to represent something like that which we had before. The figure was struck at 29 per cent. So there was a 29 per cent wine equalisation tax on top of the 10 per cent GST. It was actually never meant to be revenue neutral, as was suggested by the member for Hunter. It was meant to put one to two per cent on the average bottle of wine, which it did. There were some arguments as to whether the taxation should be based on the alcohol or on the value of the wine. We came up with this system in consultation with the wine industry. They suggested that it would affect premium wines more—that you would have to pay more than two per cent for premium wines and that, if we did not use the system we did, it could drastically affect our lower priced wines and our cask wine, which are a very important part of wine sales and marketing. So we came up with the 29 per cent.

When I first entered parliament I was told that I had no hope of changing the tax regime. I continued to argue otherwise. In 2001 we made some initial changes and brought in a tax rebate on the first $1 million worth of sales. Even the larger wineries got a $290,000 rebate, whereas previously with cellar door sales it was something like $42,000. So there was an increase of $248,000 in rebates to the industry. That was important because I could already see problems on the horizon for the wine and grape-growing industries. Blind Freddie could have seen from the plantings then that we were going to experience an oversupply—which we have now. In this budget we have further increased the rebate to $1.7 million—from $290,000 to $500,000. That is important for the wine industry. The number of wineries in Australia has greatly increased. We have continued to increase the volume of our exports but we need to address the current oversupply. By ensuring that the wineries out there have a better chance of surviving this oversupply, we have a better chance of getting through the tougher problems. The more wineries there are to buy grapes from the grape growers, the more chance they have of selling their grapes.

I am pleased that again the government has decided to look after the wine and grape-growing industries because wine is an important part of our economy. Wine is now Australia’s third largest export commodity. Many people do not realise that. Wine exports are worth over $2 billion—a substantial amount. That is the result of a lot of hard work by the wine industry and the grape growers of Australia. Our exports have gone up from about half a per cent of our total production to about 65 per cent now. We are exporting more and more of our wine. If you go to the United States, to Asia or to the UK, you will see a lot of Australian wine on the shelves. Australian wines are the biggest sellers in the UK now. We have overtaken the French, who are only next door to the UK. The English love our Aussie wine.

The wine industry is a great industry. I am pleased that the government has made these changes. The wine equalisation tax means that well over 90 per cent of Australian wineries do not pay any tax at all on their wine. The argument that this might lead to people drinking more wine, which might be a health hazard, has fallen flat on its face. If wine is drunk in moderation, it is very good for you. There are plenty of studies all over the world that show that two glasses of wine per day are better for you than none at all. I try to keep to that amount!

The wine equalisation tax is a value based tax. This was a result of what the industry said to us as a government. It is levied at the wholesale level. The tax is paid on the value of the goods and the equivalent value when there is no wholesale sale. Generally, WET is included in the price for which retailers, including bottle shops, hotels, restaurants and cafes, purchase the wine. The WET forms part of the retailer’s cost base and is passed on in the retail price of the wine to the end consumer. In the changes being proposed in the legislation, each wine producer or group of producers will be able to claim an increased rebatable amount of $500,000 each financial year. I was talking to the owner of a winery in my electorate the other day and he said that from about April he had to start paying tax again. Now he will not be paying tax at all. That is certainly a good result for him—and not only that but it enables him to keep producing some of the best wine in the world.

The changes to the legislation will cost about $126 million over the next four years. That is forgone taxation revenue, but it is to the benefit of the wine industry as a whole. It gives me great pleasure to support the Tax Laws Amendment (2006 Measures No. 3) Bill 2006. I urge the House to support the bill.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to contribute to this debate on the Tax Laws Amendment (2006 Measures No. 3) Bill 2006, which contains amendments to our tax laws. Of particular interest among the many and varied matters that are contained in this bill is the introduction of capital gains tax exemption for grants paid under the Unlawful Termination Assistance Scheme and grants paid under the Alternative Dispute Resolution Assistance Scheme. Despite the fact that grants made available as a result of Work Choices legislation are difficult to access, I am pleased to see that the government is acting to at least exempt them from capital gains tax.

I am sure the 10 million hardworking Australians who have had their employment placed at risk, who have had any sense of job security ripped from underneath them, appreciate the fact that they will not be completely cruelled by the Howard government should they be eligible to receive one of these Work Choices grants. I am sure they would prefer not to have to make an application for such a grant at all, because if they do find themselves in the position of needing to make such an application it means one thing. It means they have been sacked. It means they have had the full impact of the Howard government’s industrial relations agenda thrust upon them.

It is possible to refer to the capital gains tax exemption, although a relatively standard exemption for recipients of government grants, as a positive thing. It may be the one and only positive thing in the Work Choices legislation, but referring to it as positive is drawing an extremely long bow. Removing the rights of working Australians, outlawing the contents of employment agreements, introducing draconian penalties are not positive outcomes for any working Australian family. Members opposite know that the introduction of Work Choices was nothing more than the culmination of the Prime Minister’s 30-year ideological dream for industrial relations reform. It is the Prime Minister’s fantasy brought into reality, and typifies this government’s obsession with cutting take-home pay and conditions for working Australian families.

Recently, I was prevented from giving voice to some real and legitimate concerns that were expressed to me by my constituents in Werriwa, and no doubt some of the constituents of the Parliamentary Secretary to the Minister for Education, Science and Training, who is at the table, in Macarthur have expressed them to him. They were concerned about the issue of Work Choices. A gag was placed upon me. I noted the advice from the parliamentary secretary at the time to use other forums to get these matters out or to voice these matters in the parliament. I think it is incumbent on all of us who are representatives of our local communities to make sure that the issues that are legitimately brought to our attention by our constituents are given ventilation in this place.

The Work Choices legislation has set about turning employment relationships on their heads, it has set about weakening the position of employees, it has set about undermining the living standards of working Australians and it has set about forcing good employers to act badly solely so they can stay in business. A great many people in my electorate are extremely concerned about the introduction of Work Choices. Ever since the government’s announcement that these sweeping changes were coming, I have spent time at railway stations and shopping centres and at meetings and functions of community groups picking up that vibe—and, if anyone is listening out there and doing their jobs as local members, I am sure they will be picking up the same vibe. They will be hearing from the lips of constituents their concern about this government’s extreme industrial relations agenda and the impact that it is going to have not only on their take-home pay and conditions but also on their families.

Not only are they worried about trying to maintain their wages and conditions into the future but also most of them are worried about their kids. They worry about how they are going to fare under this negotiation system, which could be typically referred to as ‘catch and kill your own’. I notice there are a lot of flagpoles going up around my electorate. I know the minister attends many of these ceremonies and I welcome him when he turns up in Werriwa. I have talked to teachers, and they are worried about how hard some of their most forthright and bold students are going to find standing up to a potential employer—the negotiation of a better deal, one on one, between an 18-year-old and possibly some representative of a multinational company. I do not think there is anyone on either side of the House who really believes the rhetoric that both the Prime Minister and the Minister for Employment and Workplace Relations have put on the issue of flexibility. By the way heads all seem to go down whenever anyone mentions Spotlight, I find it difficult to believe that government members would be willing to swallow that sort of rhetoric. After all, their constituents have to account for their integrity and their intelligence when they front up to the ballot box and decide on who is best able to represent not only the individual constituents in their electorates but also the constituents’ families.

I mentioned earlier that I was gagged, and I do note the member for Macarthur pointed out to my local newspaper that there are other ways to introduce these subjects into the House. I do take his advice, as I am always grateful for advice from the member for Macarthur, but at that stage during the MPI debate it was very interesting to hear what the member for Deakin had to say. The member for Deakin said that, if you take it as a whole, people are better off having a job than having no job at all. I do not think people are arguing that it is better to have people unemployed. But the nub of this MPI debate, when it got down to the cut and thrust of it, was that no-one is forcing you to take the contract, so do not take the job. I think the words were to the effect of they do not have to take the deal that they are offered. He is right, they just do not get the job. That is the view that pervades the members opposite, and it is certainly selling Australian workers and Australian families short.

It is regrettable that my friend the member for Macarthur—I say ‘friend’ because I do regard him very highly—who joined in the debate only recently, is reported in the local newspaper the Macarthur Advertiser as saying there is nothing wrong with no overtime pay, no meal breaks, no penalty rates and no leave loading. He was also reported as saying that people should consider themselves lucky to have a job. Those comments are misplaced and draconian. Mr Deputy Speaker, you could anticipate that that might be the view of the Prime Minister trying to bat away questions in question time or the Minister for Employment and Workplace Relations trying to do another doorstop. To give the member for Macarthur his due, I think he does try to represent constituents with all due diligence, but to demean people and their families to the point of saying that they should consider themselves lucky to have a job does not say much for some of us as representatives of our communities.

The workplace relations legislation has started a race to the bottom. We have seen it with Spotlight. That case was probably one of the most unwanted developments in the workplace relations debate so far. Most people in the inner city areas probably do not know too many abattoir workers—inner city Sydney is a long way from Cowra—but they understand when you talk about what is happening to people in Spotlight and the mothers who work in the local haberdashery store. As Pat Farmer knows, we share a Spotlight store in Patrick Street, Campbelltown. Spotlight is an organisation that has put paid to this concept that there is any negotiation out there. There is no negotiation. You will find Spotlight’s template Australian workplace agreement on its website. It is not ashamed to put it on the website. It has it there. It goes back to what the member for Deakin said, ‘If you don’t want the job, don’t sign the contract.’ It is not a case of, ‘Come in, let’s negotiate; let’s try to work our way around an acceptable position for an incoming employee.’ That is not the case at all.

When push came to shove on this issue, the defence of Spotlight’s general manager of marketing was, ‘I didn’t write the legislation; all I’m doing is implementing the legislation of the federal government.’ In other words, ‘If this government is going to allow us to cut corners, we’ll do it.’ Another interesting piece of information came out at about the same time. Far from trying to rail against the position of Spotlight, the National Retail Association applauded Spotlight’s position. Not only did they applaud it but they said that they had encouraged their members to do the same. Will we see managers of the stores in the main street of Campbelltown being seriously encouraged to take away overtime rates and penalty rates for workers who work on shopping nights on Thursdays and Saturday afternoons? Is that what this government stands for? That is what the legislation allows. If members make trite comments to the media about standing behind the legislation so solidly, they have to be accountable. The simple fact is that the cutting of wages and conditions and the undercutting of award terms and conditions of employment is not appropriate. To do so may generate new jobs out there, but at what cost?

The evidence presented to the estimates hearings shows that 6,200 individual contracts have been lodged with the Office of the Employment Advocate since March this year—since Work Choices came into effect. In the OEA’s role as the examiner of agreements, it looked closely at 250 random samples of all the agreements that had been lodged. Unsurprisingly, it found that the vast majority of agreements eroded the take-home pay and conditions of Australians. It is not me or the Labor Party asserting this. It comes from the Office of the Employment Advocate, which the government appointed; hence, I have no hesitation in accepting the figures that were put out by this statutory office-holder.

The AWAs examined will cut family budgets and make it even harder for many families to keep their heads above water. There is no doubt about that. The evidence provided to the estimates hearings shows that every single one of the 250 individual contracts examined by the Office of the Employment Advocate excluded one protected award condition: 64 per cent removed leave loadings, 63 per cent removed penalty rates, 52 per cent removed shift loadings, 40 per cent lost gazetted public holidays and 16 per cent excluded all—every one—of those conditions. They simply relied on the government’s five minimum standards.

In addition to that, nearly one in four individual contracts removed leave loading, penalty rates and shift loadings. How did the government respond to that? The only response offered by the Prime Minister when he was presented with these facts in question time was that 84 per cent of the contracts examined resulted in higher rates of pay than the relevant award rates. The recent individual contracts offered to the new Spotlight employees also had a higher rate of pay than the award—a full 2c an hour higher than the award rate of pay.

Of course, while the wage rate might have been higher, when you take into account the removal of shift penalties and overtime payments, the take-home pay of employees certainly was not higher. The take-home pay for employees on wages a whole 2c an hour higher than the award was less than that of their colleagues who were being paid award rates of pay and who still had all those other award entitlements accruing to them. In outer Western Sydney and, I imagine, just about every other location, take-home pay is what is relevant to Australian working families. We can talk about individual rates but, at the end of the day, it is about what workers’ take-home pay means to them and what they need to sustain their families.

Even more staggering was the government’s defence of the actions of Spotlight. It tried to excuse it by suggesting that new stores had been opened because they could pay lower rates of pay. What rubbish that is. I cannot believe the government would genuinely believe that a new store would only open in Mount Druitt simply because Spotlight did not have to pay award rates of pay. Like other members in this place, prior to entering the parliament, I was in business. I know the member for Macarthur referred to me as a union lobbyist, but I was in business. I actually helped the development of other organisations. Sure, I was retained by the Police Federation of Australia to assist them as well, but I would not necessarily see that as meaning I was just a union lobbyist. From my background in working in business development, let me say that businesses do not work out where they are going to set up a new venture just by looking at how cheaply they can pay their employees.

Businesses go out to expand by looking at the marketplace, at the customer base and at how their goods and services are positioned in a market. They present a business plan. I do not know any business—maybe members opposite do—that has in the forefront of its mind when it wants to set up a new business: ‘How can we undercut the award wages and conditions of hardworking Australians? How cheap can we get it? That will be our business model.’ Maybe those ones who want to go offshore, do their manufacturing offshore and embrace the Chinese approach of living on $5.80 a day in some of the provincial areas think this. If that is what they are advocating for Australian workers, let them be upfront and say that.

Let me simply say that what has occurred at Mount Druitt was a prime example of how this government is encouraging new jobs by allowing employers to undercut terms and conditions of employment, to undercut award wages and to force people onto individual contracts which only satisfy the five minimum conditions and are not even at the same level as those for existing employees. It is an utter nonsense. I would also indicate that this is not a matter that is only relevant to new employees. Think about the position of the other 6,000 Spotlight workers if it is now appropriate and legal for their management to employ 35 new people to whom they do not have to pay overtime, penalty rates and leave loading. If they work side by side on the same shift at that Spotlight store, one group is going to get paid $90 a week less than the other group. What do you think is going to happen to the other group? I will tell you: the next contract they get offered will not have those penalty rates in it. It is not only these 35 new people that Spotlight want to recruit at Mount Druitt; it is the 6,000 other people in that store. This is all being done, according to the general manager of Spotlight, on the basis that it is government legislation— (Time expired)

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I rise today to speak on the Tax Laws Amendment (2006 Measures No. 3) Bill 2006 and the New Business Tax System (Untainting Tax) Bill 2006. I will speak on one area in particular, due to the shortage of time allocated for this debate. I wanted to speak in the context of the changes in the legislation relating to an inconsistency in the taxation treatment of payments received by drought affected farmers. In September 2002, the government answered the call—and, I might add, a very needy call in the Riverina—and we introduced an interim income support payment for farmers in areas like the Riverina where an exceptional circumstances application lodged by the state had demonstrated a prima facie case for full exceptional circumstances assistance. The payments were always considered to be a temporary measure, but the long, protracted disabling of the longest drought in at least 100 years has seen drought relief rolled over on a continual basis. Again, my electorate now finds itself back in a drought and in a declared drought position.

We had two measures by which people were able to claim some kind of relief. We had what we call an exceptional circumstances relief payment. This payment is paid under the Farm Household Support Act 1992, and the payment is taxable. But, as the payment is defined as being able to be a rebated benefit, it entitles the taxpayer to a beneficiary tax offset on the amount of the payment. This payment is made after all exceptional circumstances criteria have been established. Then we have what we call the emergency and general assistance payment. This payment is made as an interim income support or reimbursement compensation for lost salary—for example, it may used where a volunteer firefighter fights a fire. This payment is made in lieu of the income that they would have been paid when they were on the job. It gives relief to the employer, in that they do not have to pay for the volunteer to go out and do such a thing as firefighting. It gives the employee the opportunity to commit themselves to community service—a much needed community service, as we have seen during the devastating bushfires of the last few years. This payment was designed to ensure that, if there was salary lost due to volunteering, that salary was made up. It was also used in the case where an interim, prima facie exceptional circumstance condition had been established but there had yet to be validation of the entire EC process and criteria.

So we had a mechanism that would enable a relief payment to be given to a farmer in a time of crisis, in the event that they had not completed the establishment of the criteria, and the payment was looked at as a reimbursement of their lost salary or earnings. But it was also looked at in the context of the case of a rural firefighter or volunteer firefighter where the payment was in lieu of lost earnings, thereby it was a taxable payment under the EGAP system. Then we had the disaster relief payment. This one-off payment is to provide short-term financial assistance to victims of a major or widespread disaster and it is exempt from tax. So of those three payments there is one payment that is taxed: the payment that is made in lieu of salary. Of course you do have your salary taxed, so you have a tax on the emergency and general assistance payment.

However, we had an inconsistency in the way in which the Australian Taxation Office was treating the EGAP. This was brought to my attention by a firm of accountants called Bush and Campbell. In particular, Geoff Watson and Anna Powell brought to my attention the way in which two of their clients had been treated differently over the same particular payment. Once I started to investigate this issue, I found that it was simply inconsistent treatment, primarily because the EGAP, as I have explained, was an interim measure used in exceptional circumstances for farmers, but if they actually rolled over into receiving the exceptional circumstances relief payment then part of the income that they had received in the interim period, the prima facie period, was taxable. For that payment they had to meet exactly the same criteria and process as those with the exceptional circumstances relief payment, yet their payment was being treated differently by the ATO.

Having investigated this issue, I thought that this seemed to be an anomaly in the system: if you were getting interim relief and then you rolled over into receiving the exceptional circumstances payment, surely the same tax treatment should apply to it as applied to the emergency and general assistance payment. Rather than having accountants dealing with two forms of income with exactly the same criteria and delivered by exactly the same people for exactly the same purpose, the payments were being treated in two different taxation ways, one being taxed and one not being taxed. So I undertook to see if I could remove this anomaly and restore the balance of good commonsense. Sometimes rocket science is not required when dealing with taxation issues and the many other issues which come before the parliament. Indeed, what is required is the will to put in place what seems to be consistent commonsense to deal with a payment that is designed to achieve exactly the same objective and to fulfil exactly the same criteria. While it is exactly the same amount of money for all of the same purposes, some of it will be given a different tax treatment.

Having seen in February the anomaly in two people being dealt with differently on the same issue, I followed the issue up with the accountants in June and decided that I would pursue this issue to get some commonsense into the equation. I brought this to the attention of the former Minister for Revenue and Assistant Treasurer, the Hon. Mal Brough, and then I went to the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran, on Wednesday, 17 August 2005, when I explained what I saw as being a significant problem as to the treatment of tax. I think he suspected that I did not have my facts right, because it was commonsense that these treatments should be the same, when in fact the payments were being treated differently. He asked me the question, ‘Why hasn’t anyone else raised this issue?’ to which I said that perhaps nobody was actually picking this up. To his great credit, he went to the Hon. Mal Brough and had some discussions with him as to why this was the case.

We are seeing significant commonsense in the treatment of this tax. When a farmer rolls over he is getting that emergency general relief payment because all of the criteria for EC have not been met, but he requires it. Prima facie we look at it and say, ‘To all intents and purposes this is going to roll over into EC.’ Thankfully, commonsense has prevailed. Peter McGauran approached the former Minister for Revenue and Assistant Treasurer, Mal Brough, who determined that certainly there was an issue to be dealt with. Given that he wanted to see this changed so that it would be consistent, the former Minister for Revenue and Assistant Treasurer wrote to the Prime Minister in December 2005 to seek consistent treatment for exceptional circumstances relief payments and for any gap payments on reaching EC.

In front of us now we have a bill that will put in place what is sensible and what needs to happen—that is, consistent tax treatment under our tax rules for two forms of relief payment which are primarily the same. Sometimes when you are but a mere backbencher in the House you feel that maybe you do not have a lot of persuasive abilities on different things. But you can find that a simple, well-thought-out process that is well established, well argued and well documented—I have a file that is extremely large—will come to fruition with some commonsense and well-thought-out legislation.

As I said, our time to speak on these bills today has been limited. I congratulate the Minister for Agriculture, Fisheries and Forestry, the Hon. Peter McGauran, the former Minister for Revenue and Assistant Treasurer, the Hon. Mal Brough, and the current Minister for Revenue and Assistant Treasurer, the Hon. Peter Dutton. I am also thankful to Geoff Watson, to Anna Powell and to Bush and Campbell for raising this issue through their local member to ensure that an injustice in the tax system in the treatment of stressed farmers in particular has been rectified. I thank all ministers involved and I commend the bill to the House.

Chris Bowen (Prospect, Australian Labor Party) Share this | Link to 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)

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

Order! In accordance with the resolution agreed to earlier today, I call the minister.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

To begin with, I would like to thank members who have taken part in the debate on the Tax Laws Amendment (2006 Measures No. 3) Bill 2006. The government is providing income support payments to farmers and small business owners, and one-off business assistance grants to businesses, that have been adversely affected by Cyclone Larry and Cyclone Monica. The parliamentary amendments proposed to this bill will provide certain tax concessions for those payments. I am tabling a supplementary explanatory memorandum which explains the operation of the tax concessions. This bill and the amendments implement a variety of changes and improvements to the tax laws. The amendments to the first measure in this bill extend eligibility for the beneficiary tax offset to farmers and small business owners in receipt of Cyclone Monica income support payments. This means that both Cyclone Monica and Cyclone Larry income support payments will be eligible for the beneficiary tax offset. This ensures consistency with the taxation treatment of Newstart allowance.

The amendments relating to the second measure in this bill make assistance payments to businesses under the cyclones Larry and Monica business assistance funds tax free. This is equivalent to the treatment given to payments received from the Cyclone Larry business assistance fund under this measure. The third measure in this bill extends eligibility for the beneficiary tax offset to drought affected farmers who receive income support payments, as announced in the 2006-07 budget. The fourth measure represents a further component of a simplified imputation system and inserts the share capital tainting rules into the Income Tax Assessment Act 1997. This is broadly consistent with the old rules.

The next measure in this bill provides an exemption from capital gains tax for recipients of Work Choices grants and adds a generic provision to expand the capital gains tax exempt status to include other government grants that reimburse expenses. The next measure provides a tax offset to taxpayers who have a Medicare levy surcharge liability or an increased liability as a result of receiving an eligible lump sum payment in arrears.

The seventh measure amends the Superannuation Guarantee (Administration) Act 1992 to ensure a superannuation fund or retirement savings account provider continues to report to the Commissioner of Taxation on an annual basis. The eighth measure in this bill excludes from the fringe benefits reporting requirements fringe benefits provided to address certain security concerns relating to the personal security of an employee, or their associate, that arise from their employment. The next measure protects revenue and the integrity of the taxation system by preventing superannuation funds from inappropriately using pre 1 July 1988 funding credits.

The 10th measure in this bill will allow those prescribed private funds and public ancillary funds that distribute to deductible gift recipients that are not charities but are income tax exempt—such as public ambulance services—to obtain an Australian business number. The next measure in this bill gives effect to the announcement in the 2005-06 budget to create five additional deductible gift recipient general categories to cover war memorials, disaster relief, animal welfare, charitable services and educational scholarships. The 12th measure will address the potential exploitation of certain GST charity concessions. The changes in this measure confirm that the GST concessions apply only to deductible gift recipients and not to any non-charitable activities of entities that operate the deductible gift recipients.

The next measure in this bill makes a technical clarification to the Tax Laws Amendment (Improvement to Self Assessment) Act (No. 2) 2005 to ensure that the reduced four-year amendment period for income tax assessments involving tax avoidance applies from the 2004-05 income year, as announced by the government. The 14th measure delivers enhanced assistance for the wine industry under the wine equalisation tax producer rebate scheme by increasing the rebate to $500,000. The last measure in this bill amends the GST act to ensure supplies involving properties such as serviced apartments and strata title units leased to hotel operators remain input taxed. This will avoid the need for many small investors to register for the GST. For the reasons I have outlined, I commend the bill to the House.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Hunter has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.