Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

We needed that first budget, Senator Cameron, in order to deal with the mess that you left us, the trajectory of debt and deficit that you put us on. You still do not admit that, and this is a major issue. One of the mistakes that Ed Miliband made when he became leader of the Labor Party in the United Kingdom in 2010 was that he did not admit that Labor had botched its economic record in its last years in government and needed to start over again. He moved more to the left rather than going to the centre. Every time you want to talk about the budget, all Labor spokesmen want to talk about is more tax. But look at some of these proposals that they have put up on tax or superannuation, where they talk about taxing earnings in the retirement phase. I had a look at that when I was Assistant Treasurer, and the advice that came back from the Treasury was that this measure, which had been snuck in towards the end of Labor's time in office and had been announced but not enacted, was not workable and would not raise the money that was being claimed. At any time since then the Labor Party have had the opportunity to be briefed by the Treasury to that effect. When I came in as Assistant Treasurer, with Joe Hockey as Treasurer, there were 92 announced but unenacted measures. We systematically went through that list to get them done. In a number of areas, such as warrants on shares, this bill deals with announced but unenacted measures which are finally being implemented by this government.

This government is also tightening up on tax in this bill. The effective life of software is being increased by a year. That will save the budget $420 million over the four years to 2017-18. On tax more generally, the coalition is looking at further measures which tighten up taxation in relation to multinationals. But we are not doing it in a harum-scarum way. We are not doing it in a dash for a media headline. We are looking at this rigorously, conscious of our obligations as part of the Organisation for Economic Cooperation and Development. We are involved—and we were involved when we chaired the G20 last year—in what is called the base erosion and profit shifting exercise, which is looking at how the changing nature of the global economy is affecting where you tax and how you tax. In a world dominated increasingly by intellectual property, this raises thorny issues about how you define tax, the point at which you tax and what, for example, 'permanent establishment' means when you are looking to find the taxing point.

These are very important issues, and the reason it is important to look at them in a multilateral way is that, first and foremost, we have double tax agreements. We have to be conscious that changing our tax system has ramifications for other countries, where income is earned in one country and potentially shifted to another country or taxed in another country. We have to be conscious that when it comes to tax rates, there is competition going on around world. There is no point putting our heads in the sand. The fact is that we compete with a lot of countries which are lowering their tax rates, particularly on corporate income. All of that is above board. Look at some of the arrangements they have in the UK now for taxing corporates: 20 per cent, 18 per cent. These are the range of issues that we have to look at. The UK recently looked at a Google tax, but we are not implementing anything unless we are completely satisfied that it is rigorous and will raise the revenue that is being claimed. That is why, in the budget, when we have taken measures around tax evasion in this sector, we do not necessarily put a number against it—we wait until we see the result. We do not want to exaggerate the potential impacts. But the Treasurer, Mr Hockey, will soon be releasing government legislation around multinational corporations.

Consistently, we have to remember that if we want lower taxes, we have got to have lower spending. We have to keep a lid on spending, otherwise we will not get tax rates down in a sustainable way. As a country, we have to make sure that we are competitive when it comes to both our tax and our spending. When it comes to tax reform, it is important that we look at how we reform personal income tax, company tax and indirect tax. It is important to look at all of this as a package. It is important to look at the costs and benefits of various concessions.

A thing that we are doing as a government is that later this year we will releasing an options paper on comprehensive tax reform and then taking a white paper to the election. If Labor wants to be serious about this, it must not focus on individual measures; it is about putting a package together. Unless you put a package together, people cannot see the ultimate impact on the budget bottom line and on their hip pocket. It is very important to put that together as a package. In the context of what the government is doing, we are also mindful of the need for a clear delineation of roles and responsibilities between different tiers of government and to make sure that governments are in a position to raise the revenue they need to fund the services they need.

People forget that for all the vilification of the goods and services tax, it goes to the states and is used to fund essential services like health, education, police and so on and so forth. That is what it does. In fact, there were some people on the right wing of the Liberal Party who objected to the goods and services tax and said, 'That's just going to be a blank cheque for people to keep raising the rate to fund services and increase spending.' That was on the right wing of the Liberal Party. That is what they said. But we needed to rejig the indirect tax system because it was narrow and inefficient, based on sales taxes, stamp duties and the like.