Andrew Bartlett (Queensland, Australian Democrats) Share this | Hansard source

I move:

That the Senate take note of the document.

The document lists the tax expenditures for 2006 and was released just before Christmas Day. It seems a long time ago now, but people may recall that in the lead-up to last year’s budget there was quite a lot of public debate about the need for significant tax reform. A lot of people put forward a range of different ideas for major improvements to our taxation system, to improve its fairness and efficiency. There were indeed contributors from the government’s backbench as well, and for a while there the member for Wentworth, Mr Turnbull—prior to becoming a parliamentary secretary—was also floating some ideas on taxation and ways to improve the system which, from memory, the Treasurer, Mr Costello, was rather dismissive of.

But it is probably timely, on the first sitting day of this year and with the budget coming up in three months time—of course, a pre-election budget—to once again start ensuring that there is some decent community debate about some of the continuing flaws in our taxation system and to look at different ideas that will increase its fairness and its efficiency. The complexity of the whole system is certainly something that still needs addressing.

The tax expenditures document that I am speaking to here is but one part and, in many ways, a small part of the whole taxation system, but it is not a small document; it is a very large document. It gives an idea of the burgeoning nature of tax expenditures. Without launching into a detailed examination of all of them now, not least because I do not have the time, I do think that the time is right to look at the huge range of tax expenditures that are now in place. They are in effect revenue forgone. They tend to be a range of different things, many of which seem like a good idea at the time but can develop a life of their own and operate in ways that have an impact on unexpected matters and interact unexpectedly with other aspects of the tax system—or the market, for that matter. I think, given the huge size of the tax expenditures statement these days, it is certainly time to re-examine some of these.

One area that I have pointed to a number of times in the past, and I single it out in part because it is topical for other reasons, is negative gearing—forgone revenue, if you like. That is now up to over $2 billion a year, a significant part of which is in effect a taxpayer funded subsidy for people who are investing in the property market. I am certainly not suggesting that people should not invest in the property market, but it is no secret that there are enormous problems in many parts of Australia at the moment with housing affordability, both renting and purchasing. There are a range of reasons for that; I do not seek to point to negative gearing as the only factor. But I do not think there is much doubt it is significant. Indeed, the Productivity Commission itself, when it did a report for the Treasurer some years back, pointed to the effect of negative gearing, particularly in conjunction with another, separate change that was made—to introduce a discounted rate for capital gains tax. Those two measures acting together clearly played a role in pushing up the price of housing, due to the flood of investors who moved in.

If we are going to give support and assistance to people in the housing market, I think we should give it to people who are simply trying to buy a home to live in ahead of people who are speculating. So that is one example. In singling out negative gearing, I am not saying it should be scrapped, but I would say, as the Productivity Commission said in a recommendation that was comprehensively ignored by the Treasurer, that it should be examined along with other measures.

In my view, there is scope for reform here. There is scope for potentially reducing some of the tax expenditures, broadening the base, that would generate more revenue that could be available for perhaps a reduction in overall rates of income tax or changing some of the thresholds. Those are the main things that I think we need to have a debate about. I seek leave to continue my remarks later.

Leave granted; debate adjourned.