Michael Ronaldson (Victoria, Liberal Party) Share this | Hansard source

I will read it again. This is in the context of a reduced rate. It says:

• greater investment would also flow into Australia for Australian funds managers to invest globally. For example, a Japanese resident could place their funds for management with an Australian funds manager for investment in an appropriate third country market; ...

As we discussed last night, there is no witholding tax associated with that sort of investment, so how the Leader of the Opposition could be so badly advised as to underpin his argument with a false premise is beyond me. As I said last night, I am prepared to accept that he had not sought Senator Sherry’s advice. I am prepared to accept that Senator Sherry, given his level of experience in this area, could not possibly have advised the Leader of the Opposition in relation to that speech, because it is only in relation to Australian sourced income. Senator Murray knows that, Senator Webber knows that and I am sure that Senator Sherry does as well.

The other acknowledgement that we have had today—finally—is that the Labor Party proposal is a tax cut for foreigners without any ability, because it is an across-the-board proposal, for Australia to negotiate appropriate circumstances that would be in our national interests. Senator Sherry knows full well why this is potentially a tax cut for foreigners: because if they are taxed at a rate higher than that 15 per cent we are effectively subsidising them. So we have the Leader of the Opposition playing Father Christmas to foreign treasuries with the hard-earned dollars of the working men and women of Australia without any ability at all to have those negotiated on the basis of mutual benefit for us if appropriate—because this is an across-the-board flat rate with no ability for us to utilise this for our mutual benefit. It is nothing else but a tax cut for foreigners, from which we are unable to extract any potential benefit. I want to read out paragraph 3.27 of the report:

... Treasury representatives also questioned whether the 30 per cent rate is uncompetitive against international rates, stating that a number of other countries had rates that were similar, although rates may be lower where a double tax treaty is in place:—

So that is where we have negotiated a double tax treaty for the benefit of Australians, as opposed to a flat rate on which there is no potential negotiation in our national interest. I quote a Treasury official:

Just commenting on the international comparisons, I think what has been quoted this morning is 15 per cent. Looking at different structures overseas, you are not always comparing like with like. We have different organisational structures, different regulatory structures. When we look at the withholding tax arrangements we find that in Canada there is a 25 per cent withholding tax on foreign distributions but it is reduced in double tax treaties, generally down to 15 per cent. In the United States there is a 30 per cent withholding tax on distributions from estate investment trusts but it is reduced to 15 per cent for portfolio investments under its double tax treaties; so they start off much higher. Similarly, in Korea there is a 27.5 per cent withholding tax but they reduce it down in their double tax treaties. Japan has a seven per cent rate but it is scheduled to increase to 15 per cent after 1 April 2008. It only applies to listed property trusts. For unlisted property trusts it is 20 per cent. In Singapore, listed REIT is subject to 10 per cent, but this is temporary; it is scheduled to return to 20 per cent on 18 February 2010. So I think we have to be careful of these international comparisons.

Further on, in a reference to Japan, there is this:

On 1 April 2007 it was only a temporary seven per cent. It is going to 15 per cent on 1 April 2008. As I say, it only applies to listed property trusts. For unlisted trusts it is 20 per cent. Like all things, in the case of Japan if a foreign investor owns more than five per cent of a listed REIT then any capital gain is subject to Japanese tax at 30 per cent.

So all of these examples, whether it is Canada or elsewhere, are talking about reductions in the context of double tax treaties. They are negotiations on behalf of the Australian taxpayer, so there is some mutual benefit. But the Australian Labor Party’s response to this is to have an across-the-board totally non-negotiable rate. This is where Senator Sherry and the Labor Party have confused priorities, and you have regrettably jumped and taken the bait from industry in relation to this matter without thinking twice about it. You have taken the bait to the extent that the Leader of the Opposition, the would-be Prime Minister of this country, does not understand the basics of this issue. It is all very well to run TV ads and have a multitude of focus groups talking about your fiscal conservatism, and at the first hurdle in relation to something as basic as this you do not even understand the principles of it. This is not an economically conservative Leader of the Opposition. This is a man who has again shown his utter inexperience and inability to understand basic economic concepts. He has shown his inability to make sure that when he makes a comment, particularly in relation to something as important as this where we are effectively giving away taxpayers’ dollars subsidising international treasuries, he has done the work required to substantiate a policy position.

We saw a classic example of this again last week where he rushed out and made announcements in relation to further troops into Afghanistan. If you want to be the Prime Minister of this country and if you hold yourself out to be the alternative Prime Minister of this country, then you are required to have the policy integrity that enables you to make policy decisions and policy comments on the basis of fact and not fiction. If the Australian Labor Party wants to run their program between now and the next election relying on focus groups and grabs from Sky News, then so be it. But you should have no expectation at all that you will be supported by the Australian people if that is the way you choose to conduct yourselves between now and the federal election. The Australian people will quite rightly say that if you are not prepared to do the hard work now, if you are prepared to rely on focus groups, then you do not deserve the opportunity that may be presented to you. If you are not prepared to do the hard work now, why would anyone have any confidence at all that you are prepared to do the hard work in government? Why would they have any confidence in that at all? Senator Sherry will probably jump up and say, ‘Well, this was just a minor aberration.’ Senator Sherry’s leader now has a litany of so-called minor aberrations, and this has gone from a number of small creeks to a large river of incompetence—a large river of incompetence from someone who is not prepared to do the hard yards and who is not prepared to ensure that those underneath him are doing the hard yards. And, for that, he stands condemned.