Joe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

Or both. Paul Keating set to work getting rid of this preposterous circumstance, which has forced mum-and-dad investors and small, family-run businesses to pay tax twice on company income. These days, when dividends are distributed to shareholders—whether they are small private investors like self-funded retirees or families that run successful businesses—individuals receive a franking credit for the company tax already paid on that income—that is sensible.

The ATO currently recognises that dividends have already been taxed at the company rate and therefore individual investors receive a franking credit when dividends are distributed. That means that an investor who has had a marginal tax rate of 37 per cent will only be taxed at seven per cent for the dividend that they receive—clear. But the Treasurer and Prime Minister are planning to bring back double taxation in order to fund this Paid Parental Leave scheme. They are going to hit mum and dad investors again.

Now people who receive dividends from companies which are liable to pay the 1.5 per cent levy will no longer receive a franking credit for that 1.5 per cent. Mum and dad investors who listened to John Howard and bought Telstra shares and had a marginal tax rate of 37 per cent will now pay 8.5 per cent tax on any dividends they receive—another slug. You think it will not be seen? It is there. Mums and dads will feel it, let me tell you.

Paul Keating did Australia a great service by removing double taxation, and it is quite astonishing that a government such as this—a conservative government, which, at least up until a few years ago, championed the ability to say that they were for mum and dad investors—would consider reintroducing that appalling position. It is even more galling that it is being done to pay for an excessive paid parental leave scheme that will deliver very few benefits. For a party that professes to be in favour lower taxes, it is frankly absurd to be reintroducing double taxation. But there we have it. That is what they are doing.

I would encourage those opposite to recognise that that is exactly what they are signing up to: to double taxation again. But, given the conservatives' history in this area, it should not come as any great surprise; it just places Mr Joe Hockey in his rightful place in the long line of lazy and incompetent treasurers that we have had from the conservative side of politics. He dances on the 'best day of his life' as he cuts support and funding for the most vulnerable in the community; that is his signature tune. Mr Abbott's signature tune is an unaffordable Paid Parent Leave scheme.

This bizarre funding mechanism does not even cover the entire cost of the scheme. As Laura Tingle pointed out prior to the 2013 election:

Having finally undertaken a more serious costings exercise than it did in 2010, it emerges this levy will only finance slightly less than half the cost of the scheme.

In fact this government is so unsure as to how it will pay for the Paid Parental Leave scheme, it is not even in the budget. It cannot be found. It is a signature policy, the one that they have been promoting for so long, but it cannot be found in this budget. Instead, it is locked up in the contingency fund, because the government is still working through how to fund it. So, be aware: double taxation might be the first tranche of some other innovative ways this high-taxing Liberal government will find to tax the Australian people so as to be able to cover an unaffordable Paid Parental Leave scheme that is plated in gold.

The Prime Minister and the Treasurer have had four years to figure out how to pay for this extravagant scheme—three years in opposition and now almost a year with the full resources of the Treasury department to help them—but they are still unable to find a coherent funding mechanism. Quite frankly: give it up.