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

This morning I would like to talk about Labor's attacks on family trusts. Firstly, by way of disclosure, I have never participated in a family trust or been a member of one. But what Labor are doing is an attack on families, it is an attack on small business, and it is an attack on entrepreneurship in this country.

There are a couple of things to make clear. What will this will actually do? Labor say it is to reduce inequality. But, like many of Labor's policies, it has the opposite, perverse effect to the outcome that they are trying to achieve. If they go ahead with their crackdown on family trusts, it will only attack and affect small business. As the economist Judith Sloan has noted:

Let’s be clear on one thing: the change being proposed will not affect the really wealthy. Where the individual trust distributions exceed $137,000 a year, Labor’s policy has no effect

What Labor's policy on the taxation of trusts will do is hurt honest small-business owners that distribute relatively modest sums to beneficiaries, while not laying a glove on the wealthy. So, there you have it: it will not affect the large income earners. But, as with most of Labor's policies, when they talk about inequality they target the middle class. They target hardworking family small businesses. They want to make them poorer and less well-off. This is where we see flaw after flaw in all of Labor's policies.

The other thing that's of real concern about Labor's proposal is that it simply drives a wedge of division. Many people do not understand the workings of family trusts, and rightly so—people going about their business do not understand the complexity of our tax system. To not understand a family trust is to not understand the structure of how many small businesses work. Whether it's the husband, the wife, the family or the kids, they all often get in and lend a hand. And the income and success of that family business is distributed through a trust, which pays exactly the same rate of tax as every other Australian who earns income. So, it's just division and class warfare that we are hearing from Labor.

But the real concern is that Labor say this will raise $17 billion. It will not raise anything like that whatsoever. Instead of using a family trust, people can simply restructure as partnerships or they can do it through company structures. So, the money raised will be limited. But Labor will use the perception of all this new taxation revenue to make promises that they cannot afford—promises they will never ever be able to finance. (Time expired)