Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Before I begin, Mr Deputy Speaker Scott, I wish to acknowledge your former staff member who has faced some tragic events over the weekend. The thoughts of many people are with her and her family.

By leave—I move notice No. 4, as amended, relating to taxation reform, in the terms circulated to honourable members:

That this House:

(1) recognises the need for comprehensive tax reform to maximise the standard of living for Australians for the next 50 years; and

(2) instructs the Treasurer to release a 10 year road-map for comprehensive tax reform as a standalone budget paper as part of the 2012-13 Federal Budget.

There has been considerable movement since the Tax Forum of 4 and 5 October in a number of different areas of tax reform. There is now a working group of the Council of Small Business of Australia and the Australian Taxation Office looking at opportunities to improve administration in taxation. There is also the Business Tax Working Group. It has already met to look at a number of different areas where business taxation can be improved in the current fiscal environment, particularly the areas of loss carryback and of equity versus debt. There is also the state tax reform planning work going on, led by the Liberal state treasurer of New South Wales, Mike Baird, and the Labor state treasurer of Queensland, Andrew Fraser. There is also work on the progress in ATO governance and some recommendations made by the Inspector-General of Taxation. All of that is good and welcome work, along with the announcements of $1 million a year going into further tax research and also, at some point in the future, a further lifting of the tax-free threshold up to $21,000. But what is desperately needed and called for by many groups, including small business communities and the representative body for the top 100 companies in Australia—the Business Council of Australia—is a 10-year reform agenda, and that is very much what this motion is about. It seeks a direction from the parliament and instructs the Treasurer to bring forward that 10-year road map for comprehensive tax reform.

Some very good work was done by Ken Henry and others in 2009 in this area of comprehensive tax and transfer reform, and many of us who were in the previous parliament were somewhat frustrated that more of those recommendations were not at least publicly debated if not taken up by government. We have seen progress in many areas. Government is responding by saying that it has picked up about 30 of the 130-odd recommendations, but that still leaves a lot of work. Australia does face an unfolding fiscal challenge which, if not addressed, has the potential to bring on fiscal problems within the next 40 years. If all of us want to have, as part of our job description and our brief, the best possible standard of living for our children and grandchildren over the next 40 to 50 years, this is an area where we need to do a lot of work. We currently have an unsustainable tax system, based on issues internationally, relationships between the Commonwealth and state governments, and the demographic profile of Australia with the ageing bubble coming through.

We do need to have a substantial discussion on the back of the Ken Henry reform papers and the tax forum that has taken place. I strongly urge the Treasurer, the executive and the government generally to take up the opportunity to put in place the road map for the next 10 years so that we can have certainty in the marketplace, certainty in policy direction and a sustainable tax system for the future of this country so that business can do what it does best—and that is to do good business—and, more importantly, so that the community has the best possible standard of living, even if at times that involves the unpopular decisions of today.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Is the motion seconded?

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

It is quite ironic that we should be debating this motion which recognises the need for comprehensive tax reform to maximise the standard of living for Australians for the next 50 years when, the last time we were here, we put through the largest, most economy-wide, economy-destroying tax that this nation has ever seen—a tax which, if the Labor Party has its way, will last for 50 years and stand as their legacy. I think what we should be doing is looking at how we can simplify tax, how we can lower tax, how we can provide for fairer tax—but, sadly, I cannot see that happening. I must say that the previous speaker has a very optimistic view of the world, because he called for his summit when the backdrop is that this government, since 2007, has introduced 19 new taxes. If we want to do this seriously, we need to make sure that we have a government in power that is serious about tax reform. It is hard to call the current government serious about tax reform when we have had 19 new taxes introduced since 2007. Of course, one of those taxes is the mother of all taxes: the carbon tax.

I cannot see how we are going to get much achieved by debating this. We have had the Henry tax review. This government undertook a serious tax review and it cost $10 million. And what came of it? Did we get comprehensive tax reform? No, we did not. Did we get any movement to try to get rid of some of those 19 new taxes which have been put in since 2007? No, sadly, we did not. I think we do need to see serious tax reform. We do need to see a road map for the next 10 years and we do need a political party to map out what it wants to see as the tax vision for Australia in the future. But we will not see it from a government which has introduced 19 new taxes since 2007. The penny needs to drop on that. I think it has dropped for the Australian people and they are starting to see that this government will never be serious about tax reform. But if you look at the history of the coalition and what it has achieved, you see the single most important piece of tax reform that this country has seen—the introduction of the GST. We have a record of looking seriously at lowering taxation, of making taxation fairer and of making taxation simpler.

Government Members:

Government members interjecting—

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

For those members interjecting, that does not include taxes like alcopops tax, a new tax on Australians working overseas, cutting what Australians can put into superannuation tax free, restriction on business losses, changes to employee share schemes, a cigarette tax hike of 25 per cent, mining tax, ethanol tax increases, LPG excise increase and tightening restrictions on medical expenses before you can claim them on tax. That is 10, and we are still counting. There is the increase in the luxury car tax, the impost of a flood levy, the tax increase on company cars, the abolition of the entrepreneurs tax offset, the phasing out of the dependent spouse tax offset, disallowed deductions against government assistance payment, removing miners' eligibility for the low-income tax offset on unearned income, deferral of tax breaks for green buildings and, of course, the last one, No. 19—the tax we were never going to have, the tax which we were told before the last election we would not have, the carbon tax.

So if we are serious about having a proper discussion on tax reform I think we need a change of government, because one side of this parliament has a record of providing for lower, fairer and simpler tax; the other side, sadly, does not. I commend the member for Lyne for having the initiative to talk about taxation; he just needs to do it with a government that will act in the right way. (Time expired)

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I cannot blame the member for Lyne for being optimistic. I think those of us who were actually at the tax forum walked away with some optimism. It was a genuinely pleasant experience in many ways. It was good to be in a room with so many informed, intelligent people who were genuinely talking about the future and putting aside, at least for those few days, their self-interest to consider the future of the country. It is something that we do not get to do often enough in this place. We get instead the level of debate we have now, which is more negativity and sniping rather than discussing what should be the tax future of Australia for the benefit of its future citizens.

I do want to talk about the government's history of tax reform. Contrary to the member for Wannon's contribution, it is quite substantial. In the 2008 budget we delivered the first of three rounds of personal income tax cuts, and that was the budget in which we commissioned the Australia's Future Tax System Review. In the 2009 budget, a year later, we announced the secure and sustainable pension reforms which delivered a historic increase in the rate of the pension. It also introduced a new pension work bonus to reward pensioners who do more work, a gradual increase in the age pension from 65 to 67 and strengthened the indexation arrangement so that pensioners are now well over $100 a week better off.

In the following budget, in 2010, we announced the Stronger, Fairer, Simpler package of reforms to get a fairer return on our renewable resources. We also announced then business tax cuts for struggling firms, including a $1 billion small business tax break and a boost to national savings through fairer and more superannuation, and new investments in resource infrastructure. Most recently, our Clean Energy Future package included major reforms which triple the tax-free threshold from $6,000 to $18,000, taking around one million extra Australians out of the tax system and providing greater incentives to return to work.

And we have not exactly been sitting on our hands. In addition to those, we have increased the childcare rebate from 30 per cent to 50 per cent, introduced paid parental leave, increased family tax benefit for teenagers, cut the income test withdrawal rate for single parents with school-age kids by 20 per cent, introduced a more generous youth allowance income test, introduced a $5,000 motor vehicle write-off for small business, improved assistance for R&D through the new R&D tax offset, improved tax treatment for infrastructure investments and replaced the entrepreneurs tax offset with more effective support, such as the instant write-off.

All of this we have managed to do while keeping tax as a share of GDP below the level we inherited. Tax is currently 21.8 per cent of GDP this year, well below the 23.5 per cent we inherited in 2007-08 and the all-time record for the Liberal government of 24.1 per cent set in 2004-05 and 2005-06. So, when the member for Wannon claims that we are the high-taxing government, he should consider that, as a share of GDP, under Labor it is currently close to three per cent less than it was at their high in 2004-05 and 2005-06.

The tax forum discussed the next steps in the tax agenda, and it was a very productive discussion that recognised the patchwork economy and the ageing of the population and looked well into the future at the needs of Australians. We heard a consensus around targeted business tax measures to respond to those pressures. So we have announced a collaborative process to work them up, along with how to fund them from within the business tax system not the personal tax system.

There was also extraordinary progress on state taxes—a very productive discussion in the states session, with the state treasurers committing to develop a plan for state tax reform that provides a time line for harmonisation and the next steps for reform. It was an incredibly productive session.

We also announced that our first priority in personal tax is to go further and not just triple the tax-free threshold but to increase it all the way up to $21,000 as fiscal circumstances allow. We also flagged a number of other issues for early attention, including expanding the options available in the draw-down phase for superannuation and reforming not-for-profit concessions. It was a wonderful place to be for those few days— (Time expired)

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The first clause of this motion, moved by the member for Lyne, states that this House recognises the need for comprehensive tax reform to maximise the standard of living for Australia for the next 50 years. When considering tax reform to maximise the standard of living for Australia, there are a few basic principles that we should keep in mind. Firstly, in today's international marketplace and globally connected world, any tax reform must enhance Australia's international competitiveness, or at the very least avoid burdening Australian companies with taxes that will place them at a competitive disadvantage against their foreign competitors. Secondly, it must encourage investment in Australia. Thirdly, it must be characterised by stability and predictability, and it must reduce red tape. Fourthly, any reform should avoid taxes that eat away at our standard of living. Yet the member who moved this motion is the very same member who held hands with this government to inflict the carbon tax upon our nation and introduced reforms that do the exact opposite of what is needed to maximise the standard of living for all Australians. As the Productivity Commission pointed out, no other nation in the world is engaging in so-called tax reform by imposing—

Debate interrupted.