Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

by leave—The Greens have circulated in the chamber a proposal to divide this bill. As I indicated in my speech on the second reading, the Greens have some significant problems with schedule 3 of this bill. We propose that schedule 3 be divided from the bill and that it be moved into a separate bill. I indicate to the government that if this is not successful and we go into committee this will take some time, because I have further amendments and I have a significant number of questions for them.

John Hogg (President) Share this | Link to this | Hansard source

Are you seeking leave to move your instruction?

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Yes.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

by leave—The Tax Laws Amendment (2009 Measures No. 1) Bill 2009 is an extremely important bill and one that the government requires. I understand that the opposition understands the requirement for this. It contains, as I am informed, about $0.5 billion worth of necessary expenditure. It is on the list as a matter that we want to progress. We are not going to deal with it by splitting it. We are happy to try to achieve a result in committee if that can be done in short time. I recognise that there are many people here who have been here for some time and are keen to depart this place. Having said that, there are still the appropriation bills to be worked through as well—although I understand that they will not take a particularly long time. I would like to at least have an opportunity in committee to try and reach agreement with Senator Siewert in respect of this particular bill, but not if that cannot be achieved within a short time. I understand that Senator Siewert has indicated that she intends to pursue the matter with vigour, which is her right.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

That is code for a long time.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

Yes. I understand that that is her right. But I would like to attempt, at least at the outset, to try and get the bill through and give the Senate an opportunity to hear the arguments that Senator Siewert is pursuing.

John Hogg (President) Share this | Link to this | Hansard source

I indicate that the Clerk has advised me that the second reading of this bill has not been put yet. I need to put the second reading before we take any action foreshadowed by Senator Siewert.

Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

by leave—Given the hour and what has transpired over the past few days and the, no doubt, fatigue of many people in the Senate, it might be helpful if I indicate the opposition’s position in relation to Senator Siewert’s proposal. I have had a careful look at the amendment as it is framed. I accept what the government says—that the Tax Laws Amendment (2009 Measures No. 1) Bill 2009 is time critical. This is the reason that we in fact engaged a day or so ago with the minister’s office to get an assurance that the reportable employers super scheme would be looked at, and that assurance has been given.

As to the Greens amendments, the broader policy intent of income test reforms is to remove inconsistencies in treatment of certain types of income when determining eligibility for government support payments. We do note that the amendments—both the splitting amendment proposed by Senator Siewert, which really goes to excising the schedule and dealing with it in a different way, and the substantive amendments—do in effect underpin concerns of the Greens for low-income earners. I thought it would be helpful to indicate to the chamber that we believe that the amendments would be inconsistent with the measures contained in this bill that are intended to accurately reflect a person’s income for determining their eligibility for income testing. We do not believe that there would be consistency in applying two separate income-testing regimes based on a person’s total gross income. The proposed amendments in relation to the spouse superannuation tax offset would not maintain the integrity of the tax and transfer system.

Having said that, that is not to say that we do not have some sympathy for the force of Senator Siewert’s amendments. We would be very supportive if Senator Siewert were able to achieve in negotiations with the government, either now or at some later time, a better arrangement around the way in which the tax and transfer system works in relation to low-income people and also for the spouse superannuation tax offset. For the purposes of what I understand will be the debate in committee, we will not be supporting the Greens amendments.

Question agreed to.

Bill read a second time.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

by leave—I move:

That it be an instruction to the Committee of the Whole that the committee:

(a)

divide the Tax Laws Amendment (2009 Measures No. 1) Bill 2009 to incorporate in a separate bill the provisions of Schedule 3—Reforms to income tests; and

(b)

add to that bill enacting words, provisions for titles and commencement, and a provision giving effect to amending schedules.

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

by leave—I wish to make some remarks about Senator Siewert’s proposition and indicate why the government has some difficulties with it. Unfortunately, Senator Siewert had to leave the chamber when I was responding to some of the issues that were raised during the second reading debate which went to her concerns about schedule 3. The opposition has managed to engage with the government on some of its concerns around schedule 3 and has come to an agreement that is in good faith about how we are going to work through those concerns. Senator Siewert raised the issue of the adverse impact on the not-for-profit sector. I did speak in the second reading debate about what her concerns were. I thought, from my information, that her concerns were overstated as to the impact that it might have and the number of people that might be impacted. It would be far less than what she was presuming would be the case.

I also said that the government released the discussion paper and then went to the not-for-profit sector to consult on this. I advise that, during the intervening period between the debate suspension and now, I did go back to some members of the ATO’s charities consultative committee to ask whether or not this issue was of concern to them. My feedback was that there is not a general sector-wide concern about the impact of these measures on third sector organisations. So I want to reiterate that, while we are all mindful of some unintended consequences of legislation, I think the concern that Senator Siewert raised in the second reading debate is really something that we do not need to be as concerned about as she is.

I go to the amendments that the Australian Greens are proposing and to the government’s position on them. First of all, the first amendment, which is about the spouse superannuation offset, is really quite problematic for a number of reasons. The most important one is that the fundamental challenge that we have is about fairness and consistency of treatment across the system, which is really what this bill is about. It is actually about getting rid of anomalies, about getting rid of cobbled-together, last-minute arrangements that make the tax and transfer system both clunky—and I suppose ‘clunky’ is a good word for a Friday afternoon—and unnecessary.

We really need to think about some of these issues. Not counting the super contributions of the spouse results in people being able to artificially lower their income through salary sacrificing to ensure eligibility for an offset. The proposed amendment does not address the existing inequity arising from the current treatment of salary sacrificing. So other taxpayers who do not have the ability to salary sacrifice, because their employers do not offer salary sacrificing arrangements, will continue to be at a disadvantage under this proposal. The government’s change only affects the eligibility for the offset of a very small number of people. My advice is that about 350 people would be affected in this way. There are a range of other measures and programs that encourage superannuation and this bill does not propose to abolish this offset which encourages super; it only aims it at those most in need. The other point that I need to make about the Australian Greens proposal is that this proposed amendment would actually impose significant administrative and compliance costs on organisations.

In relation to the second amendment—this issue of introducing two different income tests—again we are stuck with a real problem. We have two different income tests for below and above $60,000 and that adds considerably to the complexity of the tax and transfer system. It actually goes against one of the main aims of the bill, which is about simplifying and standardising the income tests across tax law. It would actually impose a ‘drop dead’ test. So $1 of income above $60,464 would result in a totally different income test. That amendment, too, would undermine the aim to simplify the law. So it is not appropriate for this bill.

I want to go back to Senator Siewert’s concerns, because she has raised this with me privately outside the chamber. And she has raised it again—that is, the issue of the consultation process. I want to assure Senator Siewert and the Australian Greens about the extent to which organisations were consulted. There was public consultation on the draft income test, which took place between 7 November and 5 December. It involved the draft version of the income test reform amendments and a consultation paper from the Treasury being issued. Submissions closed on 5 December and then 120 individuals from key stakeholder organisations were invited to make submissions. As well as those 120 stakeholder organisations, the Australian Taxation Office notified members of its charities consultative committee, and the National Taxation Liaison Group, the FBT subcommittee, the superannuation consultative committee, the clubs consultative committee and the software developers consultative group were part of the public consultation process. The committees also comprised representatives of major accounting, professional, superannuation, employer, business, charitable, not-for-profit and government bodies as appropriate.

After the call for submissions and that invitation, 16 formal submissions were received as part of that process. Of those, five were received from the software companies and industry associations, two each from professional bodies and consulting companies and one each from a superannuation fund and a private individual. The main issues raised in the submissions were the commencement date of the reforms and a perceived added complexity in complying with the reforms. Almost all of the submissions raised particular concerns about the reportable employer superannuation contribution definition, which was generally considered to be too complex to calculate and would place a significant burden on employers in order to comply. The specific concern raised included difficulty in calculating the superannuation contributions exactly in excess of amounts required under the superannuation guarantee legislation, and difficulty determining the RESC amount for contributions mandated by industrial agreements. That goes to the issue that was raised by Senator Coonan and which is subject to further negotiation and discussion between the opposition and the government.

On the other hand, the submissions from the software companies actually expressed difficulties in modifying programs in time for commencements from 1 July 2009. The submissions indicated that the software companies would not be prepared to start working on updated systems until at least April of 2009, when parliament is expected to have completed its consideration of the bill. That is the timing imperative that we are confronted with today. We need to get these bills through the Senate so that the work can be done in modifying the programs for the commencement on 1 July. There were claims that even the time between April 2009 and July 2009 might not be enough to develop, test and implement the software changes. As well, there were concerns that there may not be time to educate employers on the changes to ensure the new software would be used correctly, which could result in mistakes or noncompliance.

Some submissions also queried the interaction of these reforms with the review of Australia’s future tax system, and there was concern that any changes made as part of the reforms may be unwound by further reforms occurring as a result of the review.

You can see that in all of the consultative processes the issues stated by Senator Siewert as being fundamental to her argument really were not raised. I think that what we have to do is to ensure that we stick to the purpose of the bill, which is about increasing consistency in the treatment of non-wage remuneration to take better account of certain losses for means test purposes. By focusing financial assistance on low and middle incomes, these measures, we believe, will save around $504 million over the next four years. I again thank all the senators who participated in this debate and indicate that the government cannot support the amendment moved by Senator Siewert.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

On the basis of discussions that have just been held, Senator Siewert has asked to withdraw the amendment. On behalf of Senator Siewert, I seek leave to withdraw the motion to divide the bill in Committee of the Whole.

Leave granted.