David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

When we debated the fifth tax bill of 2015 last December, I sang about the five tax bills of Christmas my Treasurer sent to me. If you recall, the five bills delivered more FBT, more CGT, seafarer's tax, slower deductions and a tax on the elderly. Well today we are debating the sixth tax bill of 2015, which suggests I should sing something that sounds like 'six geese a laying'. But I cannot, because with this bill the government is killing the golden goose.

Australia's prosperity is built on foreign investment, but with this bill the government makes it abundantly clear that foreign investment is no longer welcome in this country. The bill imposes a tax on Australians who purchase Australian land, plant and equipment from foreigners unless those foreigners have obtained a certificate from the tax office. It is like requiring a note from the headmaster. This will have the obvious effect of discouraging foreigners from purchasing Australian land, plant and equipment in the first place.

The government justifies its new tax by complaining that it is difficult to get foreigners to pay capital gains tax when they sell Australian land, plant and equipment. But foreigners are already exempt from capital gains tax when they sell other Australian assets, like shares. And such exemptions help Australians. If you tax the returns of foreign investors you simply drive up the returns that foreign investors demand when they invest in Australia. Australian businesses face a higher cost of capital as a result, and business expansion is stifled. It is for this reason that successive governments have reduced taxes on interest and dividend payments to foreign investors. But now we see a new tax on payments to foreign investors—a tax that pleases the xenophobes, but hurts Australians. And a tax that sets out to rake in the revenue when the Treasurer says he is focused on cutting spending.

The solution is the exact opposite of what this bill aims to achieve. The solution is to exempt foreigners from capital gains tax when they sell Australian land, plant and equipment. The art of taxation is said to consist of plucking the goose to obtain the maximum amount of feathers with the smallest amount of hissing. But we are not plucking the goose; we are strangling it because it flew in from overseas.