Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

Very few people put in a tax return because it is complex and they avoid it, and they will avoid it in future. That is precisely the point that the Labor Party is making—that you are turning off foreign investors by making it too difficult. The 30 per cent withholding rate is one step in advance, but we want two steps in advance to take it to a flat and final rate of taxation which will make us competitive with others in our area. It is a very simple premise and one which should not be too difficult for the government to grasp.

Senator Watson talked about protecting revenue. I think it was pretty much conclusively proven, although Treasury was unable to give us decent figures on this—unable or unwilling, I am not sure which—that the revenue would not be as dramatically affected as the Treasury described, because they do not take into account any gearing. So we know that their figures have to be wrong.

There was also talk about Australian investment in domestic assets now being fairly mature and that many of the funds are now investing offshore, which, of course, is not subject to taxation. But the question is: do we want to put any kind of cap on investment in Australian assets? The answer surely has to be ‘no’. Surely we have to give investors the kind of flexibility they choose and we have to allow the flexibility for capital funds to flow into the Australian investment market. Foreign capital coming in to support our assets and our investments is something that we in Australia have always relied on since we began as a colony.

The critically important fact is that, given the complexity and the compliance costs of the government’s proposed tax regime, Labor counteracts that with a proposal to abolish the need for overseas investors to pay withholding tax or to lodge a tax return and claim debt as a deduction by making the flat tax a final rate. This flat and final rate will remove a significant burden that is threatening to hold back Australia’s funds management industry from capitalising on the growth of funds under management in the region. Australia’s fund management industry is well regarded across the globe and is well placed geographically to become a financial hub for the Asia-Pacific region. A 30 per cent withholding rate could hamper the potential growth of our funds industry and I strongly support the Labor amendment on the issue.