Tuesday, 18 March 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
A $3.3 billion cut over the forward estimates. And you want to scrap it and you want to make people on $37,000 or less pay more tax on their super? I do not understand that logic. To add insult to injury, while cutting the low-income super contribution to millions of Australians, including 2.1 million Australian women, the Liberals and Nationals are boosting the super for 16,000 people who have over $2 million in super balances. I think that says a lot.
A significant percentage of the women affected by the abolition of the low-income super contribution, the LISC, are mothers working part-time while looking after young children. This is exactly the time in a woman's career when an additional $500 a year going into superannuation would be of most benefit for building savings for her retirement. Industry Super Australia estimates that, when combined with the proposed delay in increasing the super guarantee to 12 per cent, the removal of the LISC will reduce national savings by $53 billion by 2021-22. As everyone listening would know, some of the major investors in Australian infrastructure are superannuation funds. This thoughtless attack on low-income earners is not only hurting the lowest paid Australian workers but also thoughtlessly sabotaging Australia's capacity to build infrastructure into the future. The lack of vision of those opposite is startling.
The other major concern with this bill's removal of the LISC is that it is an example of a retrospective tax measure—a fact confirmed by the Parliamentary Budget Office's checking of the coalition's election costings. Low-income earners entered the 2013-14 financial year on the understanding that they would be refunded their superannuation tax. Now we are part way through the financial year and the government wants to slug low-income earners while giving generous tax breaks to those on high incomes. There is something wrong in a system where working Australians on average wages are providing excessive support to people with millions in their superannuation account. It is utterly ridiculous and unjust. Those on the other side bemoan income being transferred in our society. In this case it is being transferred from those on low incomes to those on high incomes and, quite frankly, it stinks. Talk about wrong priorities.
The bill would also abolish the income support bonus, a tax-free payment which came into effect earlier this year to help people prepare for unexpected living costs such as medical expenses or car repairs. If the proposed abolition is successful, around 1.1 million low-income Australians, primarily people receiving Newstart or youth allowance, will lose the payment. The income support bonus is an income-tax-exempt, indexed, non-means-tested payment made twice every year to eligible social security recipients. It was introduced in early 2013 'in recognition of the fact that the current rates of income support allowance payments are manifestly inadequate'. The bonus provides $210 a year to single recipients and $350 a year to most couples where both partners are eligible. The bonus is paid in instalments in March and September each year and is vital for people receiving income support to make ends meet. ACOSS were concerned at the axing of this payment and noted in their submission to the Senate economics committee inquiry:
… 57% of Parenting Payment recipients and 28% of Newstart Allowance recipients could not afford to pay utility bills on time compared with 12% of all Australians. Over 40% of both groups could not afford dental treatment when needed.
That is what this government is about: attacking those that it thinks will not hit back.
This bill also attacks small businesses and reduces their ability to survive. This bill will increase taxes on up to 2.7 million small businesses and close the loss carry-back scheme, taking away tax breaks for up to 110,000 businesses. The coalition's plan to remove these small business investment incentives has united big and small business in opposition, with both the Australian Industry Group and the Council of Small Business of Australia speaking out against the removal. Even the coalition's friends in the Australian Industry Group do not support the provision that would reduce the small business asset write-off threshold. In evidence given to the Senate economics committee's inquiry into this bill, Dr Burn, from the Ai Group, stated that the existing arrangement provides a very important boost to a company's cash flow 'at a time when they need it most and at a time when it is going to be most critical in ensuring the survival of that business'. He also informed the committee that the Australian economy faced a 'large gap in investment, particularly outside the mining sector'. He stated that the proposal to remove the instant write-off facility for small business would have a material effect on them and 'decrease investment at the time it is needed most'. In his view, waiting for the tax review in these cases is 'poor timing' and the 'timing needed is right now'. You do not have to cut off your nose to spite your face.
This bill also has extremely negative effects on geothermal energy exploration. Under current arrangements, geothermal energy exploration and prospecting expenditure is deductible in the income year that the asset is first used or expenditure is incurred. Under the new legislation, this expenditure would not be immediately deductible. The Australia Institute observed that this measure 'seems to contradict the intention behind Direct Action'. It argued in evidence to the inquiry:
If this measure is repealed geothermal exploration will not have the same incentives as any ordinary explorer looking for fossil fuels will get. If anything the playing field should be tilted in favour of geothermal energy exploration.
The Australia Institute suggested that this decision should not go ahead or, if it does, that the measure should be replaced with measures to boost the attraction of investment in geothermal. It is utter madness to discontinue this measure without the government advancing viable alternatives to encourage geothermal energy exploration.
I would just like to remind those opposite that they do not have to try and destroy everything the previous government has done. Government does not involve just indiscriminately attacking all the changes that have come before. Those opposite got elected on three-word slogans. Now they have to realise that governing is about more than three-word slogans, glib sound bites and relentless negativity. Now they have to explain to the Australian people why a bill on repeal of the mineral resource rent tax means people are going to lose their schoolkids bonus. Now they have to explain to 2.7 million small businesses why they are getting a tax hike. The senators opposite need to explain to 2.1 million working women why there is going to be a tax hike on their superannuation. Those opposite need to explain to the people who receive the income support bonus why the Liberal-National government are taking it away, just when these people need their car fixed or their fridge replaced. These people cannot just be brushed aside, and I doubt that three-word slogans are going to cut it. The Australian people are hearing nothing but three-word slogans from this Liberal-National government, and they are hearing one in particular. It is a slogan which is evident in every act of this government, and it is this: Abbott doesn't care.