Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

by leave—I move opposition amendments (1) and (2) together:

(1) Clause 2, page 2 (table item 6), omit the table item.

(2) Schedules 4 and 5, page 34 (line 1) to page 44 (line 12), omit the Schedules.

The coalition is moving these amendments to remove schedule 4 and schedule 5. The coalition support the measures in schedules 1 to 3. We think they are sensible paths forward. But we cannot support the broken promise contained in other parts of the bill.

Schedule 4 amends the Income Tax Assessment Act to limit the ability of listed companies to offer franking credits on off-market share buybacks, raising $200 million a year in tax clawbacks, particularly from older Australians. Schedule 5 amends the Income Tax Assessment Act to limit the ability of listed companies to offer franking credits on capital, raising $50 million over five years. These two measures will limit the ability of companies to offer franking credits to shareholders.

Before the election, the Prime Minister and the Treasurer ruled out changes to franking credits. They said on multiple occasions, 'They will not be happening.' It was absolutely unambiguous. But, worse, the taxes in schedules 4 and 5 will fall overwhelmingly on older Australians and particularly the money in their superannuation funds—money which belongs to Australians. There are so many in the Labor Party now that see superannuation money as money belonging to them, to the government, not to Australians. But the truth of the matter is that we should always see superannuation money as money put away over long periods of time, when those investors have to trust government, they have to trust the system, often over many decades—five decades for someone in a very young age bracket, but still very significant periods of time for older Australians as well.

I heard from the member opposite a claim that franking credits go to the companies. This is deeply, deeply misleading because the truth of the matter is that franking credits are only useful to investors. There is no point to them other than for an investor to avoid double taxation. This was, of course, an initiative of Paul Keating and a very good initiative indeed, because Paul Keating understood, as it seems those opposite don't anymore, that double taxation was a bad idea. He understood that double taxation was a bad thing, and the whole point of franking credits was to prevent double taxation.

It seems the Labor Party is particularly predisposed to double taxation of Australians over the age of 75, because, as we have recently seen in the Tax expenditure and insights statementwhich I'm sure the member opposite reads because he does do the detail; I understand that—it's the over-75-year-old group who will be most punished in Australia by being taxed twice by a double taxation regime, as Labor is moving away from some of the very good reforms of the Hawke-Keating era. We heard about the competition reforms a moment ago. These were good reforms in many ways. My former colleague Fred Hilmer was one of those who were behind them. So these were good reforms of that era, but Labor seems to have decided to move away from them.

This measure reduces the ability for companies to offer franking credits on new capital-raising activities, and we heard a long speech about the importance of dynamism and new entrants and being able to raise capital for new entrants. If you're going to have that dynamism, you must have the ability for those companies to be able to offer franking credits as part of their offer to raise capital. There is genuine concern that the measure will have unforeseen impacts and wider application than Treasury claims, and that is why I strongly commend these amendments to the House.