Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

We are debating a bill today that was introduced by the Treasurer into this House last night at about 10 minutes to seven. That is less than 24 hours ago. This bill makes 17 amendments to taxation legislation: five amendments to the fringe benefits tax legislation and 12 amendments to the Income Tax Assessment Act 1997. The Tax Laws Amendment (Budget Measures) Bill 2008 will raise over $1.4 billion in revenue over the next four years—one of the high-taxing measures contained in last fortnight’s budget.

I have to say that I think it is with extraordinary audacity that the government is prepared to bring on this debate less than 24 hours after this bill was introduced. I think it is a tactic of a government that is under pressure, a government that is desperate to divert parliamentary attention away from its woeful attempt and lack of a plausible policy to help struggling Australians—singles, families and pensioners—cope with climbing fuel prices. The move to debate these bills at this time is clear evidence that, within the short space of six months, this government has become arrogant and drunk on power.

The Keating government introduced fringe benefits tax legislation in 1986. I think anyone with any passing knowledge of the tax code in Australia will be prepared to concede that it is extraordinarily complex legislation. Over the years, it has rightly been roundly criticised for its density, its language and its tortuous syntax. I might enlighten the House with some examples of this difficult and tortuous legislation. This is complex legislation and we have been given less than 24 hours to have a look at these amendments. Let me give you an example from section 136 of the Fringe Benefits Tax Assessment Act 1986. It is a definition and a central matter for Australian employers to understand in working out their liability for FBT. I will quote directly from it, and I think this is probably a good example of what I am talking about:

“business journey” means:

(a)

for the purposes of the application of Division 2 of Part III in relation to a car fringe benefit in relation to an employer in relation to a car—a journey undertaken in a car otherwise than in the application of the car to a private use, being an application that results in the provision of a fringe benefit in relation to the employer; or

(b)

for the purposes of the application of sections 19, 24, 44 and 52 in relation to a loan fringe benefit, an expense payment fringe benefit, a property fringe benefit or a residual fringe benefit, as the case requires, in relation to an employee in relation to a car—a journey undertaken in the car in the course of producing assessable income of the employee.

This is the sort of material that the House is dealing with in this FBT legislation, so I think it is fair to say that amendments to this legislation require careful analysis. They warrant more than 24 hours consideration.

This is hardly an example of new leadership. What happened to these promises of greater accountability and transparency? We are seeing a desperate government desperately trying to change the story of their failure, to do anything about the rising price of petrol and spin their way out of the situation they find themselves in by dint of their own actions. So they come into this chamber and ram through complex legislation without giving the opposition the courtesy of a sensible amount of time to properly assess it.

There are three FBT amendments contained within this legislation. The first relates to meal cards. In his second reading speech—a speech, as I said, made less than 24 hours ago in this chamber—the Treasurer stated that the intent of this measure is to tighten the law applying to arrangements for work related items and for property consumed on an employer’s premises. These meal card arrangements rely on the exemption given in the FBT legislation for property consumed on business premises on a working day. There is no suggestion that the meal card arrangement has been an exercise in avoidance—far from it. The Australian Taxation Office has issued a number of class rulings that sanction meal card like arrangements.

The change will mean that the exemption for on-site consumption of business property will no longer apply to salary sacrificed food or drink. Salary sacrifice arrangements are widely used by employees wishing to have additional superannuation contributed from their salary package—something you would expect the government to be in favour of. This budget has changed eligibility criteria for many entitlements and payments. For example, for holders of the Commonwealth seniors health card the eligibility test now takes into account salary sacrificed superannuation. This from a party, the Labor Party, that likes to claim it is the father of superannuation—perhaps a more accurate description is the godfather of industry superannuation. You have to wonder whether the government is determined to stop salary sacrifice arrangements.

This FBT measure, like so many other measures contained within this high-taxing budget, is a tax increase. It is yet another case of the government promising one thing and, upon gaining office, doing another. Prior to the election Peter Garrett explained what was going to happen, and this government is living up to his comments.

I note that the explanatory memorandum claims that the cost impact of this measure will be minimal. Certainly there will be a financial impact on the many small businesses that sell food and drink under meal card deals. A great example of that was aired in the media last week. A person who runs a small cafe—for example, on the ground floor of a larger building in one of our major capital cities—relies on this sort of business to keep their doors open. The government shows a pattern of behaviour that demonstrates that it just does not understand the consequences of the decisions it takes. Those small businesses are going to be casualties of this ill thought out measure. The explanatory memorandum also states that the measures restore the original policy intent of the exemption being given for ‘modest benefits’. I would say that sustenance through food and drink is in fact a modest benefit.

The second amendment applies to work related items. In addition to computer software, a briefcase, protective clothing and a tool of trade, there will be an FBT exemption for a portable electronic device. No doubt there will be numerous rulings and determinations from the tax office in the months and years ahead that seek to clarify what is meant by ‘a portable electronic device’. For example, guidance will be required by employers in deciding whether a portable electronic device does or does not have substantially identical functions to another portable electronic device. This is the sort of absurdity that the ATO will have to rule on. In a world of fast-changing technology, they are going to have to decide whether a portable device does or does not have substantially identical functions to another portable electronic device. What a ridiculous waste of time for the ATO. This provision gives little certainty to employers in working out the FBT liability. As has been noted by many commentators, those employers who have been providing benefits like meal cards, salary packaging, laptops and PDAs will have to consider their strategies to attract and retain scarce talent in this tight labour market.

Regarding employee share schemes, the opposition supports action that prevents employees from making a late election for up-front taxation where the taxpayer does not have an acceptable explanation. That is the current policy. To remove the commissioner’s discretion to accept late elections in any situation suggests that the government considers that the ATO has been ineffective in its administration in this area of the law. There is no public evidence that supports this implication. Indeed, the tax office was successful before the full bench of the Federal Court in a recent challenge to its determinations in relation to taxation of employee share schemes. It would be helpful to be provided with the assumptions underlying the revenue impact, estimated at $77 million over the forward estimates—another tax slug for the Australian people. Another point is that there are numerous elections throughout the tax legislation. Numerous discretions are given to the commissioner throughout the legislation. These are features of the self-assessment system that has been in place for more than 20 years.

The Treasurer should inform this House of whether the taxpayer behaviour that apparently justifies this measure included in item 12 of the bill has implications for the self-assessment system more broadly. Will the self-assessment system be part of the root-and-branch Henry tax review? If not, evidently it can quite readily be added to the scope of that review—a review that does seem to be growing on a daily basis. Since the announcement of the Henry review, the government has been madly flapping around, including on subjects like the interaction of the excise on fuel and the GST—that was very convenient for them—and the interaction of the GST and the luxury car tax legislation just rammed through this House. Indeed, it seems that the review will undertake a comprehensive analysis of the GST as a value-added tax—something, of course, that the Treasurer explicitly ruled out when he announced the review. Who knows where this review is ultimately going to end up?

We know that this is something that the Prime Minister seemed to realise when he was in opposition. On 16 January last year, in a radio interview, he was asked by a journalist:

Would you at least remove the GST component on petrol?

The Prime Minister said:

No, I don’t think you can go that far.

The journalist said, ‘Why not?’ and the Prime Minister—the then Leader of the Opposition—responded:

I think you’ve got a system when it comes to the application of GST across the general economy you start gouging out more exceptions, I think the taxation system becomes ungovernable.

What a difference a year and a half makes. Then the journalist went on to ask:

So, what do you mean, it would cost you too much?

The Prime Minister said:

I think you’ve got to be very careful about carving out exemptions and exceptions to generalised taxation arrangements and that applies to GST as well.

The Prime Minister might help out his Treasurer, help out his Assistant Treasurer and let his views on this matter be known to them. He should then go and tell Dr Henry that the review will rule out differential GST rates and the introduction of a retail sales tax—which, perhaps, the Assistant Treasurer has in mind for the sale of fuel—and, of course, rule out this old Labor favourite: the reintroduction of a wholesale sales tax; a position, of course, that the member for Griffith thoroughly embraced when he was first in this place when he infamously described the most fundamental tax reform that had been undertaken for a generation as ‘a day of fundamental injustice’. But this was in the days when he did not like economic reform. This was in the days when he was ‘Caring Kevin’ and he did not have his new persona as the hardcore economic reformer. This was in the days when he hated economic reform.

I will turn to in-house software. This measure contained within the bill is another tax hit on business, and small business in particular. Software is bought for operational, not tax, reasons. That is something that the government just does not seem to grasp. Software is a pretty fundamental thing that businesses need to conduct their operations. The measure in this bill defers deductions. The measure is estimated to raise about $1.3 billion over the forward estimates period. I note that the Treasurer’s second reading speech acknowledges that, where a business scraps software before the four-year write-off period has ended—which is something that, of course, can occur, as software is made redundant at a very fast pace—this business will still get an immediate write-off for the remainder under the existing tax law. I call on the Treasurer to inform the House about the assumptions that underlie this estimate of $1.3 billion, a substantial sum of money, given that businesses will be able to fully write off their expenditure in the circumstances outlined by the Treasurer and will still be able to self-assess an effective life that is shorter than the four-year write-off period.

I note that there is a measure in Treasury’s 2007 Tax Expenditure Statement described as ‘accelerated depreciation for software’, a tax expenditure in relation to software which has an effective life of greater than 2½ years, which estimates the concession to cost approximately $70 million per annum. Given this lower estimate in the tax expenditure statement, I call upon the Treasurer to inform the House why he is setting a slower depreciation rate than the effective life for software assumed or implied by Treasury in the TES.

These are just a few of the issues that the opposition has been able to raise about this legislation. Fringe benefits tax is, I think, by popular consensus an extraordinarily complicated and difficult area of tax for business to interpret. I think it is extraordinary, and symbolic of the way this government have now started to behave after just six months in office, that they would introduce a measure less than 24 hours ago in this House and not do us the courtesy—which we always gave to the opposition—of allowing us to fully assess this legislation on behalf of the Australian people.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

You aren’t serious.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Actually, I am deadly serious. Of course, you were not here, so you do not realise that that was a courtesy that we always extended to you when you were in opposition. It is symbolic of a government that is already so arrogant and out of touch. It is not being disrespectful to the opposition; it is being disrespectful to the Australian people, who elect people to this chamber to fully assess the impact of legislative change on their lives. We have this legislation that is apparently going to be rammed through by this government. I think it is a disgrace. I think it is symptomatic of a government that are already so arrogant and out of touch that they are prepared to treat the Australian people—the people who are represented in this place—with such extreme contempt. I would therefore like to move a second reading amendment. I move:

That all words after “That” be omitted with a view to substituting the following words: “while not declining to give the bill a second reading, the House records its concerns at the haste with which this bill is to be dealt with and calls for the bill to be referred to the Senate Economics Committee for review, which will allow those with practical expertise and legitimate interest in the proposals to have an input”.

I think that that is a very sound policy, and I urge the government to consider it. It makes sense that this legislation be given a proper assessment, as is proper in this place. It is appropriate that that be done within the Senate economics committee, and I urge the government to drop some of its arrogant persona that the Australian people are now seeing and to consider joining with the opposition in allowing this bill to be properly assessed.

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

Is the amendment seconded?

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Infrastructure, Roads and Transport) Share this | Link to this | Hansard source

I second the amendment and reserve my right to respond.

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

I speak in support of the substantive Tax Laws Amendment (Budget Measures) Bill 2008 and against the amendment moved by the previous speaker, the honourable member for Stirling. We have just witnessed quite an extraordinary performance by the previous speaker. That the member takes issue with the speed with which this legislation has been put at a time when numerous frivolous and irrelevant points of order were taken yesterday—and there was also a dissent motion against the Speaker and a censure motion against the Prime Minister—is quite extraordinary. I just wonder: he was in this House for the last few years—was he aware of the Work Choices legislation? It was legislation that rivalled the tax act, yet thousands of pages of legislation were rammed through opportunistically by the previous government. It is quite extraordinary. We still do not know whether, in fact, they will ultimately support our substantive bill.

This bill is about equity for employees, consistency in the treatment of employees concerning employee share schemes, the removal of the double tax on ESSs and the alignment of the tax treatment of deductibility concerning computer hardware and software. It removes uncertainty and improves efficiency in the tax system and it restores, contrary to what the previous speaker said, the intention of the fringe benefits tax exemption first introduced in 1995.

This bill is integral to the Rudd Labor government’s budgetary process. It is a responsible bill and it is part of a responsible budget. It shows the true mantle of economic responsibility, if it were ever held by those opposite, has well and truly passed to Labor and I commend the Treasurer for the reforms in this bill—it is a Labor bill. It protects and enhances the integrity of the taxation system and it improves the economic prospects of our nation.

I wish to speak on four aspects of these reforms. The first measure relates to meals provided by employers on their premises as part of any salary sacrifice arrangement. This measure will restore the integrity of the fringe benefits tax scheme. It is about fairness towards those employees who purchase meals out of their after-tax income. It is not about ensnaring legitimate arrangements such as subsidised staff canteens which are not part of any salary sacrifice arrangement. Staff canteens and similar arrangements will not be affected.

Under a salary-sacrificing arrangement an employee with a meal card can purchase meals out of pre-tax income. Under this meal card arrangement the employer pays the employees’ meals, which are independently provided by a caterer on or delivered to the employer’s premises. These reforms in this measure will bring back the original intent of the legislation, which is that fringe benefits tax exemption for property consumed on an employer’s premises be limited to modest benefits and not geared to tax avoidance. This means that taxpayers will not be treated differently. Also, it has the benefit of removing any disincentives to employees to leave and purchase meals elsewhere that may be cheaper or better quality. This measure can simply be seen also to increase competition between retail outlets that sell food.

I turn to the fringe benefits exemption amendments applying to eligible work related items used primarily for work related purposes. The fringe benefits tax laws permit exemptions for eligible work related items, including laptops, briefcases, calculators, mobile phones, computer software, PDAs, electronic diaries et cetera. Since their promulgation in 1995, of course computer technology and its mobility have advanced enormously. Many people now use these items for private use extensively, yet the current law allows employees to enter salary sacrifice arrangements meaning that these items are purchased from income pre-tax. This means workers are treated differently.

The new measure will bring back the intent of the original law by restricting the fringe benefits tax exemptions to items primarily used for employment purposes. Further, it will restrict the fringe benefits tax exemption to one item of each type per employee per fringe benefits tax year unless it is a replacement. The current law is not fair to those employees who cannot purchase these items by use of pre-tax income. This measure will treat workers equally. Under the Rudd Labor government gone are the days when some workers are treated more equally than others, as in the Orwellian world of the Howard government. The meals tax measure will gain the Australian taxpayer $610 million and the work related items I have outlined, $530 million over the forward estimates.

I want to refer to the employee share schemes election requirements provisions. This amendment removes the ability for taxpayers to manipulate when they are taxed on the discount they receive for acquiring shares or rights from their employer to minimise their tax liability. This means that the value of discounts is properly included in assessable income, as it should be. An employee electing to be taxed up-front will have to include the value of the discount in the income tax return in the year of shares or rights acquisition under the employee share scheme.

Why are we doing this? We are doing this because, while the taxpayer currently must elect which concession applies to the discount in the year they received the shares or rights, they are not required to provide the election to the Commissioner of Taxation. Therefore, if the value of the shares or rights increases significantly, the taxpayer can decide retrospectively that it would have been beneficial for them to elect to pay up front, rather than defer the taxation. They can claim to have made the election but simply by inadvertence forgotten to tell the Taxation Office to include the amount in their assessable income in the income year of the shares or rights acquisition.

These reforms will mean that, if a taxpayer makes an election under the up-front tax method, the value of the discounts greater than the $1,000 tax exemption amount must be included in the taxation return for the year in which the shares or rights were acquired. However, contrary to what the member for Stirling said, the Commissioner of Taxation will still retain the ability to permit the taxpayer an extension of time to make the election. This measure will benefit the taxpayer to the tune of $77 million over the forward estimates.

With respect to the amendments concerning depreciation of computer software, the measure increases the period of time over which a taxpayer can deduct expenditure on in-house software from 2½ years to four years—the same period as the safe harbour period for computer hardware. The measure applies to in-house software held under a contract, developed, or held in some other way after 15 May 2008. Pre-existing software assets remain unaffected.

This measure will not affect small business, which can access special tax concessions. For example, small business still has the option of immediately deducting expenditure of $1,000 or less in this regard. For expenditure of more than $1,000, the option remains of pooling with other assets with effective lives of less than 25 years and depreciating at 30 per cent. There is a vast array of software packages on the market at less than $1,000—payroll, accounting, record-keeping and invoicing packages, for example. This measure will not affect the amount that is deductible. It is an alignment of the duration of deductibility. If the software is scrapped within the four-year period, there is an automatic write-off for the remainder. It will increase government revenue by about $1.3 billion over the forward estimates. One wonders why the previous coalition government did not fix these anomalies. But of course the opposition have always been on the side of just some taxpayers, not of all taxpayers. They do not want all taxpayers to pay, just some. Let others pay for schools, roads and the like. Hospitals should be paid for by some taxpayers, according to the former Howard coalition government.

In summary, these measures add billions to government revenue while improving the fairness and integrity of the tax system. These measures are important as part of an economically responsible budget crafted by the Rudd Labor government—a government which believes in consistency and fairness, a government which believes that all workers should be treated equally. No-one should be able to manipulate the Australian taxation system in the manner which was allowed under the previous coalition government. These measures help the Rudd government to meet its election commitments on tax cuts, child care, education and infrastructure. I commend the bill to the House and I congratulate the Treasurer on the delivery of a Labor budget that is both equitable and responsible.

Scott Morrison (Cook, Liberal Party) Share this | Link to this | Hansard source

Before making comments on the substantive elements of the Tax Laws Amendment (Budget Measures) Bill 2008, I think it is important to discuss why we are discussing the bill now. In 2007 a total of 168 bills were introduced in the House of Representatives. It is a well-established convention that bills are not debated in the week that they are introduced—as has been done with this one—to allow the various political parties and Independents the opportunity to scrutinise the legislation and take it through an internal party process, such as a caucus or a coalition party room, so there is an opportunity for this parliament to provide the proper scrutiny. This is why I particularly support the amendment put forward by the coalition, those who sit on this side of the chamber, to ensure that this bill, amongst others I am sure, receives the proper scrutiny.

Of those 168 bills introduced in 2007, only 11 were introduced and passed in the same sitting week. Five bills actually comprised the package of legislation to establish the Northern Territory emergency intervention. Three bills related to welfare support payments required before the end of the financial year, including a bill related to pensions for war veterans. That was essential legislation, urgent legislation, emergency legislation. One bill related to the Australian Crime Commission. One bill was to establish the superannuation co-contribution scheme before the end of the financial year. The final bill was to introduce the stronger safety net for workplace relations.

In all 11 instances that they broke with this convention, the Howard government made an argument. They actually came into this place and made an argument for extreme urgency and ensured that the Senate was sitting to facilitate urgent consideration by both chambers. That has not happened in this case. In every circumstance where the former government overrode convention, the case for urgency was made by the fact that the Senate was also sitting along with the House and, therefore, the bills were available for full passage through parliament. The fact that the Senate is not sitting this week exposes the motives of the government in bringing these issues before the parliament today and ensuring that they are rammed through the parliament at this time.

There are no grounds for urgency here. I have heard no statements for urgency in this place today, none at all. The House is sitting again next week and, even if they are passed urgently today, the bills cannot be introduced into the Senate until the week beginning on 16 June. Even then, those bills are still subject to referral to a Senate committee. What we see here is not urgent legislation. What we see here is the product of those in the Prime Minister’s war room who have decided: ‘We really don’t want to have this debate about things like petrol in this place today. We really need to get something else out there on the agenda. We really need to tie this parliament up in other issues and spring this on those opposite to make sure that there isn’t the opportunity to really hold the government to account.’

So in opening my remarks on this bill I condemn those opposite for the way they have behaved in bringing this before the parliament. When they have an urgent bill, maybe they would like to make a case for it and in those cases, if there is a statement of urgency, then I am sure there would be support from both sides to ensure these things can be dealt with. But not for stunts like this.

Coming to the bill before us, this is a $1.4 billion effort as part of the Labor Party’s $19 billion tax grab in this budget. It is $1.4 billion out of the $19 billion tax grab outlined by the Treasurer in this place not that long ago. This was a budget that was supposed to be an inflation-fighting budget, but you cannot fight inflation by increasing taxes. You cannot fight inflation by putting taxes up and therefore prices. We saw this with fuel in the debate we have had before the parliament to date. The government wants to watch fuel prices; we would actually like to cut them by cutting fuel excise, by actually reducing taxes. That is one way of actually reducing prices, but this seems to be lost on those opposite. The coalition has form on cutting taxes on petrol and diesel: a 6.7c a litre cut on excise in 2000 and a further 1.5 per cent cut in 2001. There was also the abolition of indexation, which all meant that today petrol prices in this country are 20c a litre less than they would have been were it not for those measures introduced by the Howard government.

If the government wants to cut inflation, here are some suggestions. It needs to do something about wage pressures in our economy and inflationary expectations. Inflationary expectations have risen since this government was elected. People’s expectations of where prices are going to go are now at 4.3 per cent. Is there any surprise that inflationary expectations have risen when the government and the Treasurer in particular and the Prime Minister in this place are obsessed about talking about genies and bottles on the eve of Reserve Bank meetings? They have been talking up inflationary expectations as part of a deliberate political strategy.

The other thing we have seen is that the Reserve Bank of Australia Bulletin in May of this year, the current edition, has some interesting figures on median inflation expectations not just by economists but by union officials. Those figures show that in November of last year, at the time of the election, the median inflationary expectations of unions were three per cent. By February they had got to 3.5 per cent. Now they are at four per cent and they are rising. But the interesting thing is that the median inflationary expectations of union officials are a full one percentage point higher than those of the economists served by the Reserve Bank. Is it any wonder that we have union fuelled inflationary pressures now building on our wages and we read headlines in the Australian of 17 per cent wage rises demanded by unions? These were things that were warned of by the coalition going into the election and these are things we are now seeing coming to pass.

This bill is a grab bag of opportunistic and ill-considered measures. It is not designed to fight inflation, as I have just argued; it is designed to do something very different, and that is simply to grab $1.4 billion any which way they can. This is not something we heard about before the election. We did not hear about $19 billion of additional taxes as the Prime Minister wandered around the country on his crusade. This is a government that ran a campaign prior to the last election based on a massive con, a massive deceit and a massive fraud. There was no mention of $19 billion in new taxes, there was no mention of means-testing the baby bonus, there was no mention of dismantling private health insurance, there was no mention of U-turning, watering down, the Northern Territory intervention and there was no mention of fining petrol retailers for reducing petrol prices. I stand corrected: there was one Labor member opposite who was very honest in the chairman’s lounge in Melbourne on that fateful day when he spoke to Steve Price. The member for Kingsford Smith said, ‘We’ll change it all.’ And when pressed on this point, what did he say? ‘I was just kidding, I was just joking, I was just larking about.’ We know now that he was not larking about. We know that the member for Kingsford Smith was dead serious. He said, ‘We’ll change it all,’ and they are changing it all, much to the disadvantage of Australians living right across this country.

This government deliberately raised expectations on grocery prices and fuel prices. I say to those opposite that the Prime Minister has made his bed on this issue and he can lie in it. He is the one who paraded around saying they could do something about this. He is the one who said that it could all change. And when he gets into the job, within a matter of months he says: ‘That’s all we can do. We can’t do any more than that.’ What I suggest is that they never intended to. There was never any serious intention to follow through on this perception that they allowed to be created out there in the public. I say the only difference between the Prime Minister and a former Leader of the Opposition, the former member for Werriwa, Mark Latham, is this: Mark Latham was found out before the election. He was found out well before the election and the Australian people made their judgement when they found him out. The Australian people are now finding out about this government. They are finding out about this Prime Minister, who allowed people to think that he was going to change all these things, that he was going to improve conditions when it comes to petrol prices and improve things when it comes to grocery prices. But when the acid test comes on the government, he had no intention of delivering, and they know this.

This bill is totemic of this approach. As I said, it is a grab bag of measures which I think display a very poor judgement. It betrays Labor’s politics of envy and punishment, which is written all through the documents of the budget, punishing those that they simply do not like. I think it betrays a real desperation and inexperience. I am sure those opposite would have seen, as keen students of politics, that great film The Candidate, which had Robert Redford in it. And there he was, totally minded by the minders all the way through the election: the golden smile, the five-point plan, the clever answers—all of this. And there he is on election night and he wins, and he has this look of shock on his face. He turns to his adviser and he says, ‘What do I do now?’

And that is what we find in the budget. They all got together and said: ‘We now have to put a budget together. We have gone and won this election. We are going to actually have to govern now.’ And as they came together they said: ‘What can we do? We have all these promises we have to commit to.’ In fact, they have $30 billion worth of new expenditure they introduced in this budget, and one of the ways they sought to finance that was to slug the Australian taxpayer with an extra $19 billion worth of taxes. So this budget, with its rather inexperienced and desperate measures, is really a fizzer. I am reminded of another person who sat in this place, the former Prime Minister Paul Keating, when he used to talk about fizzers. He gave a great speech—which, I am sure, with the passing of time even people on both sides of the House can appreciate—on cracker night. Well, I think the cracker night speech has come back to haunt the Labor Party, because this budget is very much like what the former Prime Minister used to call the flower pot. It always promised this dazzling performance but often when you lit it up it went ‘fip’—and that was it. And that is what we have with this budget—fip; nothing. While we would not have agreed with the former Prime Minister on virtually anything he said, one of the things I think we admired, on occasions, was his wit. I said in this place earlier today, of the Prime Minister, that he has lived up to the former Prime Minister’s saying—that he was all tip and no iceberg.

These measures will make it harder for employers in a tight labour market to retain competitive provisions in their salary packaging. It will add to the cost of business in doing this. I would like to refer to an article in the Australian Financial Review, which came out after the budget, where KPMG partner Andy Hutt said that the FBT changes would make it harder for businesses to be ‘employers of choice’. He went on to say:

For an employee this means their remuneration package will lose its value because choices are taken away and employers will have to review their use of salary packaging as a tool to attract new employees and retain existing ones.

This will make it harder for those trying to retain staff and ensure good package arrangements to keep skilled employees and valued employees as well as attracting new ones.

One of the measures that are in this bill relates to meal cards. This is what I would equate with the Prime Minister and the Treasurer, Mr Happy, basically trying to steal taxpayers’ lunch money. They want to come in and steal your lunch money. But they only want to steal it from some, because this measure allows big businesses, who can afford the cafeterias, to continue to provide meals. Maybe they can afford butlers too? They may well be able to afford butlers, valets and all of these things, but one thing these big businesses can afford—and I am sure many of them are big donors to the Labor Party, part of Labor’s big-money club—is to put these cafeterias in place.

The lunches that are served in the big business cafeteria will not be penalised by this measure. But the small business that contracts out meals with a salary-sacrificing arrangement, that delivers these meals to workers on site—and they may be at a mining establishment; they could be anywhere—will be the ones who will be punished by this, not the big businesses. No, those who can afford cafeterias will be able to continue providing meals. But heaven forbid you decide to go out and support another business which is out there trying to make their way in providing catering to these businesses! No, that door has to be shut. This is the big evil that this budget has to address: it has to steal your lunch money.

Then there are the laptops. Again, this is a mean spirited, revenue driven initiative that gives with one hand and takes with the other. I refer again to the article from the Financial Review on 15 May. It says:

Under a Howard government initiative—which ended in Tuesday’s budget—

like many things ended in Tuesday’s budget, including 134,000 jobs—

wage earners had been able to save money on laptops by buying them with pre-tax income and not having to pay FBT. The changes are a blow to families who have used the exemption to help the children use computers.

“It’s been a great thing for both employees and employers to be able to salary package laptops through work,” said Mr Hutt, who added that the change was counterintuitive to Prime Minister Kevin Rudd’s “ education revolution”.

So we take computers with one hand and then we give them back with the other. But when we give them back with the other we do not think through the issue of security. We do not think through issues of supporting the schools as to how they are to be made available and the other systems that are needed to be put in place. We say: ‘No, the way you are making these decisions is not how we want you to make them. We are going to give the largesse in this way.’ And on every laptop there may even be a little note from the Prime Minister. Former New South Wales Premier Bob Carr used to send out cheques just before school started—and, of course, we know that the Prime Minister is the Bob Carr of national politics.

Then, of course, we have the other measure relating to software depreciation. I do not know how IT literate the Treasurer is. I do not know how often he is online. I do not know how literate he is with matters of communications technology. One thing I do know about software is that its economic life is not getting longer. It is getting shorter. But this measure actually says, ‘No, we think software should have the same economic life as hardware.’ I do not know where he got this advice from. The other thing that shows the inexperience here is that the measure is a dud, because at the end of the day it provides that if you ditch the software or have to replace it you can write the remaining component off anyway. I am not quite sure what the stunt is here, but basically what they are saying to people who have this software is: ‘We are going to extend the economic life because we frankly do not have a clue about how software works or what its economic life is. But if you happen to ditch it, well, you can write it off anyway.’ So it seems to me to be a completely fruitless and pointless exercise.

This bill is a grab for tax. In contrast, the coalition is all about lowering tax. In contrast, the coalition introduced more flexible arrangements in relation to taxation in the workplace. It increased the in-house fringe benefit from $500 to $1,000 and it extended employee share scheme concessions to stapled securities. Labor have never been on the field of providing tax relief. They would not even know where it was, let alone take to it. This is a Labor Party that walked away from the l-a-w law tax cuts after the 1993 election. They opposed tax reform in 1998, they gave us rollback in 2001, they gave us absolutely nothing in 2004, they followed it up by opposing tax cuts in 2005, and in 2007 the grand achievement of the Treasurer was to give the people of Australia the coalition’s personal income tax policy. That was it. I have said in this place before that the member for Higgins is the finest Treasurer this country has ever had. Based on the performance of the current Treasurer, that position remains in no threat.

I want to conclude by reading one more quote, and that is from Ross Gittins. All of this extra $19 billion was there for one purpose—that is, to fund $30 billion of new expenditure. After the budget Ross Gittins said:

The good news in the budget is that Mr Rudd has broken the mould of politicians feeling free to go back on their promises.

I am sure there was a big, happy smile on the face of the Treasurer when he read that. Ross Gittins further said:

The bad news is that most of the promises he has insisted on keeping were weak, vote-buying policies and now quite inappropriate to the present economic circumstances.

So we have $19 billion worth of extra taxes to deliver $30 billion worth of duds. The highest taxing and highest spending budget in our nation’s history—that is what we have in this budget and that is what we have in these measures. We believe they deserve more attention. This is a budget which, by the government’s own admission, will put 134,000 people out of work.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Tax Laws Amendment (Budget Measures) Bill 2008. I wish to speak to a couple of elements of the bill, but first I should respond to the suggestions from those on the other side that the government has not provided the opposition with sufficient time to consider the bill. There are a couple of points to make there. The first one is that, given the inordinate delay that all of us in this House were subjected to yesterday because of the carry-on by those opposite, it is no wonder it took us a bit longer than we had anticipated to introduce the bill. So to some extent I think they have only got themselves to blame. But you will not see any of those on the other side accepting any responsibility. Accepting responsibility is something that they are not in the habit of doing.

My Labor Party predecessor in this debate, the member for Blair, indicated that there was not the same commitment to due process, transparency and the opportunity to scrutinise, debate and consider when it came to Work Choices. Whilst the member for Stirling rightly pointed out that I was not in this place prior to the recent election, I have undertaken some research and the record shows that when those on the other side were in government they made a number of changes. In fact, they tabled 337 legislative amendments to the Work Choices material and then guillotined the debate in the Senate 35 minutes later. That was the commitment to openness. That was the commitment to giving the opposition an opportunity to debate the issues.

We are not talking about a handful of, albeit important, measures that are going to impact on the lives of every person out there in this country in the way in which the Work Choices laws did. These are sensible amendments, sensible proposals, that go to instilling a greater sense of integrity into the tax system. Those on the other side are very fond of coming in here and defending the lurk and the loophole. Where there is a lurk and a loophole they will not be far off. That is why they opposed fringe benefits tax for so long. That is why it was a Labor government that was required to introduce fringe benefits tax in order to ensure that one of the most fundamental inequities in the taxation system as it then existed was addressed.

Let me give you a bit of background as to what that was all about. Those on the other side come forward without any context about what fringe benefits tax is all about. I heard the member for Cook saying, ‘This is going to take away opportunities for employers to be employers of choice.’ Just hold that thought, because I will come back to that point in a moment. Fringe benefits tax was introduced for a simple reason—that is, some taxpayers in collusion with their employers were engaging in a range of activities in order to derive benefits without having them subjected to any taxation. That is okay if you are in a workplace that is conducive to striking up and structuring these arrangements. And that is all right if you have the capacity to do that. But if you are the average wage and salary earner out there—the people that do not have access to taxation law advice, that do not have access to employers that are prepared to engage people to structure deals in order to provide those benefits—then you do not get the benefit of those non-cash benefits, those benefits that previously were not subjected to taxation.

This is about bringing to account gains that are derived by taxpayers. That is a fairly fundamental principle of taxation law. If I am out there earning income derived as a result of my labour, it will be taxed through the income tax system. In the past, if a benefit was provided to me and it was not of a cash nature, on occasions there were benefits that were not subject to taxation. The FBT was introduced to attack that.

I certainly concur with the member for Stirling that the legislation is complex, but the principles are not that complex. That is why I do not believe there is any reason to delay having a debate about these issues. Both the member for Stirling and the member for Cook spoke a lot about all the contemporary political debates that we are engaged in, but they really did not speak all that much about the issues in contention in this bill.

When it comes to fringe benefits tax, let us have a look at some of those particular lurks and loopholes that have been closed. Meal cards: we have listened to those on the other side talk about the issue of cracking down on the salary sacrificing of meal cards, which are essentially a means by which an employee derives a benefit, possibly in the form of a free lunch or a long lunch. I know that those on the other side are particularly fond of long lunches. It is a shame the member for Mayo is not with us, because he will go down in this place with one of the finest reputations for being one that partakes in the long lunch. I am sure that the member for Mayo does not need any excuse for a long lunch. But perhaps one day he might take out some of his colleagues and teach them a lesson or two. He has been around in this place a little bit longer. He probably even remembers the debates that occurred when the fringe benefits tax was first introduced.

When it comes to these meal cards, the real issue is that the average wage and salary earner out there has to buy their own lunch. Many of them make their lunch and take it to work. That is a concept that might be foreign to a few people around here, but it is something that happens on a regular basis out there in the real world. You do not see the person who packs their sandwiches at home and goes to work getting any tax benefit out of the meal that they have prepared, and they have prepared it with their own labour. They have already paid tax on the dollars that bought the bread, the ham, the tomatoes and the butter. Why should someone who happens to be the beneficiary of a structured arrangement get a tax benefit?

The member for Stirling referred to class rulings. Class rulings are not applied for or developed without there being some concerted approach to at least obtain a ruling from the tax office on how a particular arrangement will apply to a class of people. That is not something that Mr and Mrs Smith from South Penrith are in a position to do. That is something that a corporation or an organisation with resources at its disposal and access to taxation lawyers or accountants is able to do. They can engage that advice and submit an application. That is why there are class rulings. But the average wage and salary owner does not have access to those benefits. So why shouldn’t the people who use post-tax dollars—they have already paid their tax; in some cases they have made their own lunch; in others, they have bought their lunch—get the tax benefit that someone who salary sacrifices and uses pre-tax dollars gets? That money goes towards the purchase of their lunch, and they never paid a cent of tax on it.

The member for Cook speaks about how important it is to be an employer of choice. The member for Cook said that these particular arrangements are an attack on small business. I would like to see the range of small businesses out there that provide this sort of benefit to their employees. In fact, in my experience it is almost exclusively larger businesses that have the capacity to deliver these types of arrangements to their workforce. If you are talking about employers of choice, what you are talking about are those employers—the large businesses—getting a competitive advantage when it comes to luring and attracting workers within a highly competitive work force.

The argument that the member for Cook is putting forward needs to be turned on its head, because the reality is that what occurs out there is that the employers making themselves employers of choice are only able to do that because they have competitive advantages over their counterparts by way of being larger and thus having the resources to pay for the taxation advice necessary to obtain class rulings. Those on the other side are pretty keen to come forward and lecture us about standing up for small business. Here is your opportunity: I challenge you to come forward and support small business on this one. There are not many small businesses out there getting the benefit of this lurk.

When it comes to laptops, as the member for Blair indicated earlier, the measures that were introduced as part of the compliance measures back in 1995 were designed at a time when technology was not at the point that it is now. Back then, it was not anticipated that the sorts of benefits being provided—such as laptops—would effectively end up being largely, if not predominantly, for personal use. In fact, speakers on the other side are talking about an existing law under which individual taxpayers are able to salary sacrifice, obtain a laptop and provide it to their children. It is hardly work related. It is a benefit being provided to that taxpayer. It is a benefit that should be taxed. All the other hardworking people out there who are wage and salary earners and do not have the capacity to salary sacrifice do not get the tax break on their laptop. One of the best measures introduced in our budget is the education tax refund, which will encourage people to get some tax relief when they go and buy a laptop or a computer for their family. The issue here is that individuals, particular high-income individuals, have been salary sacrificing and obtaining laptops without paying any tax, by using their pre-tax dollars.

The other point to make about fringe benefits tax and salary sacrificing is that of its nature it favours high-income earners, because what you are doing is using pre-tax dollars. The benefit you get is greater if the tax that you have avoided paying is at a higher rate. Salary sacrificing and avoiding fringe benefits tax has a much greater impact on those who are high-income earners, so there is a real equity issue here. When you look at the fringe benefits tax proposals contained within this bill in their totality, they are designed to provide some equity. It does not matter who you are as a taxpayer, how you earn your income or who your employer is. If you receive a benefit for your employment, it should be taxed in the same way as benefits earned by the person in the business down the road. Everybody should be taxed under a similar regime. That is the equity consideration that is foremost in this legislation.

The other aspect that I want to deal with is the denial of depreciation capital allowances in terms of those benefits. This is an important point. What has occurred in the past with FBT-exempt items is that the taxpayer has had the opportunity—to the extent that the depreciating asset has been used for a taxable purpose—to claim deductions under capital allowances in respect of that asset. That allows for double dipping; tax relief at both ends: tax relief on the way to the store when acquiring the product or securing the benefit and then tax relief over the effective life of that depreciating asset. This is about avoiding an area where there has been some double dipping.

These are important measures. Most importantly, they are at the very heart of this government’s commitment to deliver a $21 billion surplus. Speakers on the other side asked the question, ‘Why is this so urgent’? It is urgent because we need to not only implement the election commitments that we took to the people last November but also ensure that we secure and preserve that $21 billion surplus. Those on the other side have all manner of plans to raid the surplus—$8 billion would already have been squandered on the 5c a litre reduction in excise had they been over on this side. Yet, they have not identified one saving. They oppose most of our integrity measures that will raise revenue. It does not add up: $8 billion of spending and additional items where they choose not to achieve the savings that we are achieving.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

Mr Robert interjecting

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

The member from the other side, who no doubt will have the opportunity in a minute to lay his economic credentials bare on the table, has said that those on this side, and our economic credentials, are not up to the job of managing this economy. The only credible claim that those on the other side ever had before the Australian people as to why they should have been given an opportunity to manage this nation’s finances was that, on occasions, they had actually run the economy in reasonable shape. But what we have seen, in recent years in particular, is out of control spending. It is not enough for these people to have spent all that money that they did trying to get re-elected. Now, having had the burden of government lifted from their shoulders, there are no constraints. It is a ‘spendathon’. It is ‘another day, another dollar’ when it comes to spending. They will throw money at anything.

The reality is that the Leader of the Opposition is in such dire straits that he knows that whatever promises he makes at this point in time he will not have to deliver, because his timetable is not the next election, it is the next day, the next week—it is making sure that the shadow Treasurer behind him looking over his shoulder takes a little bit of pressure off and does not go in for the kill. I support the proposals. These are important integrity measures. Those people committed to cracking down on the lurk and the loophole will stand up to be counted on this legislation, and I have a sneaking suspicion that history will repeat itself in that regard.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I stand to make a few comments on this piece of legislation, to reiterate my view and to support the amendment put forward by the member for Stirling. Rene Magritte, who was a famous Belgian surrealist artist, once said:

Everything we see hides another thing, we always want to see what is hidden by what we see. There is an interest in that which is hidden …

The surrealist artist is correct because Labor, in a particularly surreal moment, almost analogous to the clocks painted by the artist Salvador Dali, hid a whole range of bills, coming forward last night at 7 pm and dumping them on the floor of the House for the second reading. Whatever is rushed has something to hide. In complete deference to the member for Lindsay, it is interesting to look at the history of this. The member for Lindsay came out and said that this was not rushed and this was not new. Well, let us look at the facts.

In 2007, a total of 168 bills were introduced into the House, including 14 from the Senate. It is a well-established convention that bills are not debated in the week that they are introduced to allow the various political parties and independents time to scrutinise the legislation and take it through an internal party process. Of the 168 bills introduced in 2007, only 11 were introduced and passed in the same week. Labor wants these four bills and this one passed in the same day. Last year, only 11 of the 168 bills were passed in the same week. Five bills comprised the package of legislation to establish the Northern Territory emergency intervention, three related to welfare support payments required before the end of the financial year—including a bill related to pensions for war veterans—one related to the Australian Crime Commission, one was to establish the superannuation co-contribution scheme before the end of the financial year and the final bill was to introduce the safety net for workplace relations.

In all but one instance when it broke with convention, the Howard government made an argument of extreme urgency and ensured the Senate was sitting to facilitate urgent consideration by both chambers. The Senate is not sitting this week, my Labor colleagues. It is not sitting, and the Rudd government has sought to introduce, debate and pass 10 bills this week, including a number today. Last year, of the 168 bills, only 11 were passed in the same week. All but one stayed within convention, and all of them were passed at a time when the Senate was sitting. Now this government wants to put 10 bills through when the Senate is not sitting. They have said, ‘We don’t care about convention and we are not interested in ensuring that there is proper scrutiny and proper accountability’, even though this fraud, this farce, this con called Rudd went to the Australian people and said, ‘I believe in a new era of independence. I believe in accountability and in new standards’. And what does he do? What is the first act that he puts forward? An act of tyranny on the parliament that says, ‘I will put 10 bills through in the same week. I will give no warning. I will give no notice. I want them all done and all dusted even though the Senate is not sitting’. And get this: there are no grounds for urgency in any of this. The House is sitting again next week—therefore there is time to consider these bills in detail. Even if this plethora of bills—these 10 that demand the parliament’s absolute and undivided attention now—were passed today, the bills cannot be introduced in the Senate until 16 June at the earliest. Even then, bills are still subject to referral to a Senate committee. If the referral is made, the Senate will be unable to debate the bills until the report is tabled as no legislative committee can meet when the Senate sits, under Senate standing orders. Any bills sent to committee cannot be debated before resumption of the Senate on 26 August.

This is not about urgency. This has nothing to do with urgency. If this legislation were genuinely urgent, if these 10 bills that this government rushed through last night and demanded the House look at were indeed urgent, the Senate would be sitting. But they are not. And the Senate will not be sitting again until 16 June. That only leads me to one conclusion: this is all about diverting the attention of the media away from petrol and the government’s failure to guarantee that Australian motorists will not be worse off after the introduction of Fuelwatch—or, as the Australian people are now calling it, ‘Foolwatch’. This is about a government that cannot guarantee that no-one will be worse off. It is a government that is consumed by spin. It is a government that is hopelessly trying to cover the fact that, at the Adelaide declaration, the Prime Minister stood there and told the Australian people: ‘There is nothing more I can do.’ The Prime Minister stood up, held the white flag high and admitted defeat. Where I come from, and with a military background, we do not admit defeat—we fight until the very end. This Prime Minister is an example of all that is disgraceful in running up the white flag. So, here we have it, one of these 10 notorious bills that demand such urgency, even though the Senate is not sitting. That, government, is a joke.

The Tax Laws Amendment (Budget Measures) Bill 2008—let us call it the FBT bill—is a classic Labor Party budget measure. It is an increase in taxes that will hurt Australian workers and employees, all lumped up and disguised, wrapped with a pretty red ribbon in a box called ‘closing loopholes’. According to Treasury’s own estimates, this will deliver $1.3 billion over the forward estimates to government coffers. So why don’t we just call this what it so patently and obviously is: a grab for tax. Why wrap it up into something that it is not? Why try the chameleon effect? Why not call it what it is?

This bill only strengthens my view, and undoubtedly the views of most small business owners throughout the country, that Labor does not care about small business, it does not understand small business and it does not appreciate the contribution that small business makes to the economy. I represent the hardworking men and women of Fadden, on the northern Gold Coast. Fadden is one of three electorates that cover the Gold Coast. And the Gold Coast, as we know, has more small to medium enterprises than any area of commensurable population in the country. So I can say with some authority that I stand here and represent small to medium enterprises. And let me give you the drum: they are not impressed.

Let us look at the software changes. This bill increases the period over which taxpayers write off for tax purposes depreciable purchased and in-house developed software, but it changes from 2½ to four years. This effectively reduces the rate of depreciation from 40 per cent per annum, excepting the third half-year, to 25 per cent per year. Expenditure for in-house computer software is incurred by acquiring, developing or having someone else develop computer software. But it also includes off-the-shelf purchases. The change took effect on 13 May. There was no warning for the software industry. There was no: ‘Let’s look at global competitiveness; let’s us look at your research and development; let’s look at what’s best for the industry—for companies and small to medium enterprises.’ There was none of that. In an act of unilateralism, it was just in the budget and bang! It was stopped.

In absolute deference to the member for Lindsay, I am IT literate. I have a masters degree in IT and founded, with a colleague, a company in IT contracting and recruiting. I have a fairly good idea of how IT actually works. And it does not take a genius to realise that four years is an enormous length of time for software to remain current. This is a measure that stifles efficiency in small business, and will no doubt be reflected in labour productivity figures as Australian business finds itself behind the eight ball while our international competitors continue to be encouraged to innovate and use technology to develop and deliver economic growth. The most bewildering thing about these measures is that straight-line depreciation, used when deducting the cost of software to business, would deliver the same depreciation figures over time as the previous measure, though it would take four years, not 2½ years. So, previously, business over 2½ years would depreciate their software. Now it is going to take four years. They will lose 1½ years of deductible expenses that they would have used to reinvest in their business for research and development, for employee share options, for employee benefits or for a whole range of initiatives they might take. Small to medium businesses across Australia have now lost 1½ years of expenses that they could use to build their business. And, generally, when it comes to software, depreciation allows businesses to build extra modules, to put in extra enhancements for their software and to make themselves more competitive. They now have to wait 1½ years longer to realise the full expense deduction of that depreciation. We are deferring tax deductions rather than reducing them.

This is a tax on small business. Let us call it what it is. Let us look in the mirror unashamedly and call this what it is: a grab for tax. This government are saying to small and medium enterprises, to the member for Moncrieff—who I note is at the table—to my electorate of Fadden and to the Gold Coast, which has the largest number of small to medium enterprises: ‘We are going to defer 1½ years of deductions so that we the government can keep the money and earn interest. Sorry, you can’t claim those deductions for a further year and a half. We’re sorry you have missed out on the expense claims that you are due, that you can’t reinvest that to make yourselves more internationally competitive, that you can’t invest that in R&D, because we, a Labor government that have no idea about small business, want to take it off you.’

That point is indicative of the changes put forward by a rudderless government. They do not understand the importance to the Australian economy of workplaces maintaining their international competitiveness and productivity. The really odd thing is that reducing the time to depreciate software in itself can be inflationary, in that software costs impact on every part of business life. Everything runs on software. You cannot get on an escalator, get in an elevator, go through an automatic door or get into a cab that uses automatic billing systems without having software running on it. If a business cannot realise depreciation on its software in 2½ years, if it cannot realise the expense deductions, it will be forced to pass those costs of business on to consumers, which results in—wait for it—higher prices, and higher prices equals inflation. It is absolutely staggering that the ‘happy member for Lilley’, who rolled out ‘Australians are happy’ and who has a war on inflation—because apparently the inflation genie is out of the bottle—said, in an act of absolute economic lunacy, a day before the Reserve Bank raised interest rates, that he would change something to actually put inflationary pressure on the economy.

Small business is not impressed. Once again this government has let small business down. I remind the government that small business employs 50 per cent of Australians. Fifty per cent of Australians are employed by small business, yet this government says to small business: ‘We’re sorry—we don’t care that the change from 2½ to four years depreciation for software will have an inflationary impact, will cause you to raise prices and will make it more difficult economically for you.’ This is appalling—absolutely appalling.

I move on to electronic equipment. Electronic equipment is given an FBT exception but it now has to satisfy a concept: used primarily for work purposes. The test is a subjective one, for which no clear guidance is given by the government. The government rush this legislation through, even though the Senate cannot look at it until 16 June—or until the end of August if, indeed, it goes to inquiry. It was so urgent that it had to come before the House. The government have given no clear guidance on what ‘used primarily for work purposes’ means.

Employers, and especially small to medium enterprises, have no choice now but to have more administration and more paperwork to ensure the test is met, to ensure they can work through an audit process if audited and to ensure they have appropriate means of substantiating the use of the exemption. In an environment where governments are supposedly trying to reduce the compliance and administration burdens of taxes on business, it is disappointing that the proposed amendment is going to cause more administration for businesses. Indeed, given the subjective nature of this test, businesses may be risking FBT exposure by adopting a particular position and may be forced to pay FBT on the item merely to avoid the risk of such exposure.

Companies can allow employees to salary sacrifice communications equipment, including laptops, for work purposes, but there is no guidance given, so how do we know what it is? If the laptop is at home to allow the employee to log into the systems at night for half an hour and the rest of the time the kids use it, is that primarily for work purposes? If you use the test of hours used, the answer is no. If you look at the test of the impact on the business of an employee who happens to be a systems administrator and is only one of seven administrators for a major bank and who has to move in because there is a problem with cheque clearances that might cost a bank $2 million if they do not make the short-term money market, may I suggest the business imperative argument is a sound yes. But it is impossible to determine whether it is an hours-used or a business-imperative argument, because this government has not bothered to work through the unintended consequences and decide the rules on what ‘used primarily for work purposes’ actually means.

This is appallingly sloppy legislation. This government had 11 years in opposition—11 years to put together a legislative agenda that actually makes sense, and what do we get? We get nonsense bills like this, rushed through last night. Ten bills in the same week that apparently have to be dealt with because of the urgency, even though the Senate does not sit until 16 June. Last year there were 168 bills and 11 were introduced in a week. The Senate was sitting and they did not break the convention, except one time. That is the history; that is the convention. The fact is that this is what this government has done. This government stands condemned.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

Mrs D’Ath interjecting

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

The member for Petrie may find it completely amusing, as she is an industrial advocate only with experience in screwing small business over, not actually working with them, assisting them or helping them. But let me give you the drum, member for Petrie: small business is not impressed. They are not impressed by this government. They think this government is a fraud, they think it is a con, and they think this bill should be shot down.

Alan Griffin (Bruce, Australian Labor Party, Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I am blushing at that last entry from the member for Fadden. I thank the honourable members who have made a contribution to this debate on the Tax Laws Amendment (Budget Measures) Bill 2008. This bill makes important improvements to the tax law. It improves the fairness and integrity of the fringe benefits tax system, it restores the intent of the tax treatment of employee share scheme arrangements, and it aligns the period over which taxpayers can write off depreciable in-house software with that for computer hardware. These measures are part of a budget that has delivered significant reform of tax expenditures to improve productivity, fairness and integrity in the tax system. The amendments in this bill help contribute to funding the government’s key priorities for the future.

The revenue raised from the increase in the luxury car taxes helps contribute to a strong surplus for 2008-09 of $21.7 billion or 1.8 per cent of GDP. Such a strong surplus is needed to fight inflation, which has risen to a 16-year high, and to put downward pressure on interest rates. The spendaholics opposite do not understand the importance of a strong surplus to the fight against inflation. They do not understand that some Australians who are doing very well should be asked to bear a greater burden in the fight against inflation. The government want to know where the opposition stands on responsible budgeting. We want to know whether this is part of their $22 billion raid on the surplus. The government also want to know whether they understand that there is an inflation challenge. We have had to take the tough decisions to fund long-term investment in the infrastructure, education and training, and health and hospital needs of the nation. They do not understand that you cannot keep spending without knowing where the money is coming from. Now they want to punch a $22 billion hole in the surplus that we need to fight inflation. We should not be surprised. They are absolutely addicted to the type of reckless spending that has given Australia an inflation problem. They cannot resist a good $22 billion raid on the surplus; old habits die hard. I want to issue this challenge to the Leader of the Opposition and the member for Wentworth. I challenge them to change their ways. I challenge them to say which programs would be cut to pay for their $22 billion raid on the surplus. I challenge them, for once in their political lives, to choose economic responsibility over short-term political opportunism. I challenge them to support this responsible measure and join us in the fight against inflation.

Janelle Saffin (Page, Australian Labor 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 Stirling has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The question now 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.