Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I move government business notice of motion No. 2:

That the provisions of paragraphs (5) to (8) of standing order 111 not apply to the Financial Framework Legislation Amendment Bill (No. 3) 2012, allowing it to be considered during this period of sittings.

I might take the opportunity, Senator Cormann, to briefly put on the record the reasons for the exemption from the cut-off.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Take 20 minutes.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I won't take 10 or 20 minutes, I promise.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Feel free.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am sure you would want me to take 20 minutes, but I shall not do that. The government are moving to exempt the Tax Laws Amendment (Managed Investment Trust Withholding Tax) Bill 2012 from the cut-off. The first point about that is that the government made very clear in its budget the reason for this bill. It changes the tax regime for managed investment trusts to increase the trusts' final withholding tax from 7.5 per cent to 15 per cent on fund payments. The amendments apply from 1 July 2012. This is obviously the last occasion on which this bill can be passed in order to give effect to that decision. Whilst the cut-off is something that I know the Senate regards as important in terms of scrutiny of legislation, I note that given the fact that this was included as a budget decision, given that Senator Cormann has been issuing a multiplicity of press releases on this point and given that this is a reasonably simple proposition, I suggest that it is not supportable for the opposition to suggest that they have not had time to consider this legislation. I commend the motion to the Senate.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The coalition will vote against this motion. There is absolutely no case to expedite passage of yet another Labor Party tax-grab through the Senate. You have to remember that it was the government that scrapped this exact measure by removing it from TLAB No.2. It was the government that had this exact measure before the House of Representatives last week, before removing it from a bill that was before the parliament. Why? Because it has not done its homework properly. If it had put it to a vote in the House of Representatives as part of TLAB last week, it would have been defeated. It was the government that said to the House of Representatives, 'We do not want to proceed with this measure as part of TLAB No. 2.' This government is in complete chaos. This government is incompetent. This government is dysfunctional. This government has not got a clue what they are doing. Last week the government removed this proposed doubling of the withholding tax on managed investment trusts from the TLAB. Then it turned around and said, 'We've changed our minds again. We want to pursue this measure after all.'

We have to remember that it was former Prime Minister Kevin Rudd—whom I know you support, Mr Acting Deputy President Cameron—and Minister Bowen who reduced this tax in order to attract investment for important infrastructure across Australia. It was former Prime Minister Kevin Rudd and Minister Bowen who thought it was important to have a tax rate of 7½ per cent for managed investment trusts because of the need for Australia to be an attractive destination to invest in. We need to attract more private investment for hospitals, for our major roads, for electricity generation, for office buildings—including energy efficient green buildings—and for tourism infrastructure. Our tourism sector is struggling right now, in case the government has not noticed, and here we have this incompetent, high-taxing, high-spending, dysfunctional Labor government saying: 'We want to whack yet another tax on the tourism industry. As if the carbon tax was not enough to hurt the tourism industry, let's whack on another tax—and not only that; we're so incompetent about managing this process that we don't know how to pursue tax legislation through the Senate. One day we say we want it, then we say we don't and then we want it again.'

This is not the way to run a government. How can anyone have any confidence in this government? No wonder confidence levels across Australia are so low. No wonder people across Australia are lacking confidence to spend and to invest. This is not a motion that the Senate should support. The government, since the budget, have had ample time to introduce this bill and have it considered by the House of Representatives and by the Senate through a normal and proper process. The government should not be so incompetent as to require a circumvention of our normal procedural rules. The government want us to give them an exemption from a very important set of standing orders. Why? Because they could not get themselves organised in a proper way and because they are so chaotic these days that none of them really know how to run the affairs of government.

This is yet another massive Labor Party tax increase. It is a doubling of the withholding tax on managed investment trusts. As I have mentioned, it was this current government that only two years ago said the rate should be 7½ per cent. It has been at 7½ per cent only since 2010-11. So we have had 2010-11 and 2011-12, and from 2012-13 it should be 15 per cent? This should go through the proper processes of the Senate. It should go through a Senate inquiry. The Senate Economics Legislation Committee should have the opportunity to hear evidence from relevant stakeholders, from people who can provide some information and some advice to the Senate about what the implications of this latest Labor Party tax grab will be on the economy, on investment in important infrastructure and so on.

The Labor Party cannot escape the fact that, since the government made this announcement back in early May as part of the budget, billions of dollars of planned investment has already been put on hold. This latest Labor tax grab initially could not even get the support of the Australian Greens. Even the Australian Greens, who are hardly known to be resistant to tax increases in a general sense, took the view, so I am told and so the minister conceded in question time here last week, that they had some concerns about the government's proposal to double the withholding tax on managed investment trusts, which puts our tax rates out of step with the relevant tax rates imposed in our competitor countries in the region.

This is a government that is supposedly committed to making Australia a financial services hub in the region. I tell you what: if you want to be an attractive destination for investment, if you want to be a genuine financial services hub in the region, one of the things you need is a stable taxation policy and taxation administration framework. You have to have a certain predictability and stability around your taxation arrangements. This is a government which in 2010-11 said the tax rate on these types of investments should be 7½ per cent, then told us in May 2012 the rate should be 15 per cent, then told us last week, 'No, no—we got that wrong. We scrapped that. We'll go back to where we were,' and then said, 'No, we actually want to double it again.' That sort of zigzag approach to taxation policy is combined with all these other ad hoc Labor Party tax grabs. There have been more than 20 tax grabs since the Labor Party won government in 2007. This zigzag approach to taxation policy, this chopping and changing, sends a terrible message to foreign investors about our brand and image as a safe and attractive destination for investment.

The reason why this government is constantly in a rush to get more cash, the reason why this government has to be constantly casting around for new opportunities to raise more cash, is that spending is out of control. This government does not know how to live within its means. This is a government that inherited a very strong budget position back in 2007, a budget position with no net government debt after the Howard-Costello government had paid off $96 billion worth of Hawke-Keating debt. So no net government debt is the position that this government inherited. There was a $22 billion surplus and $70 billion of past surpluses invested in the Future Fund. The position that the Labor government inherited back in 2007 was such that the government was actually receiving net interest payments to the tune of $1 billion. If you have a close look at the budget papers you will see that when the Labor Party won government in 2007 the position that the coalition left behind was one where the government had collected in net terms $1 billion worth of interest payments. Now, after 4½ years of massive and record deficits, heading towards $145 billion worth of government net debt, this government is planning to spend nearly $30 billion in net interest payments. They have to pay nearly $30 billion over the next four years just to service the debt that their incompetent and dysfunctional Labor administration has accumulated over the last 4½ years.

That is the reason for this mad rush. That is the reason why this government always want to cut corners. That is the reason why this government do not want to follow proper process. That is the reason why they are constantly asking the Senate to do away with standing orders. It is because they are so desperate to get their hands on some more cash as quickly as possible, even though this is a very short-sighted approach.

Quite frankly, we have some serious doubts—and so do industry experts and analysts—as to whether this particular bill that the government wants to rush through the parliament so desperately will actually raise the money that the government says it will raise. When you keep on lumping one tax hike on top of another, it eventually has an impact on your level of economic growth. As you impact on Australia's sovereign risk profile, as you make our taxation arrangements less competitive internationally, as you impact on the level of investment coming into Australia, our economy eventually will grow less strongly. As our economy grows less strongly—guess what?—not only is that bad for everyone; it is actually bad for the government too because the government starts collecting less revenue.

Conversely, if we were actually focused on ensuring an internationally competitive taxation framework, one that was stable, predictable and had internationally competitive rates that could attract more investment, we could grow our economy more strongly. The beauty of that is that, when you grow your economy more strongly, that is good for the government not only because the government ends up collecting more revenue but also because the government collects more revenue without the need for all these new and ad hoc Labor Party taxes.

There was a time when this Labor government were trying to make people believe that somehow they were committed to genuine tax reform, that somehow they were committed to making our tax system simpler and fairer. The former prime minister—who I know you have a very fond opinion of, Mr Acting Deputy President Cameron—told us that the Henry tax review was all about delivering a fairer and simpler tax system. Instead, all we have had under this government over the last 4½ years is one ad hoc new tax grab after the other.

It started in April 2008 with the alcopops tax. Do you remember the alcopops tax? It was the biggest budget tax grab in the initial Labor budget. It was supposed to stop binge drinking. There was not going to be any more binge drinking as a result of the alcopops tax. We have had a whole plethora of taxes from the Labor Party. There was the increased luxury car tax, the tax on the North West Shelf gas project, the flood tax, the mining tax, the carbon tax—you name it. There was also the doubling of the withholding tax on managed investment funds.

All of these Labor Party tax grabs have got to stop. The Senate should not be complicit with this high-spending, high-taxing, dysfunctional, incompetent Labor government executive which is just, quite frankly, taking us for mugs. The Senate should take seriously its responsibility to scrutinise the sorts of proposals that the government is putting forward here. We have to make sure that there are no unintended consequences. We need to make sure that we go into this with our eyes wide open.

The only way we can make judgments on these sorts of bills with our eyes wide open is if we go through proper process. Proper process is not something that this government understand. This government get themselves into trouble again and again because they do not know how to follow proper process. The Senate should not be party to that. We have some established processes. We have some established ways to deal with this sort of legislation.

If the government thought that this piece of legislation was such a high priority, why did they not introduce it in budget week? Why did they wait until the day before we were due to rise? Why did they wait until the Wednesday in the last sitting week before the winter break to bring on this bill if they thought it was such a high priority? If it was such a high priority, they could have brought this bill on earlier. They could have enabled us to send this to a Senate economics committee inquiry, which would have been the appropriate way to go.

That is what should still happen. The Scrutiny of Bills Committee tonight, I am led to believe, was going to consider what would happen with this legislation. Obviously our recommendation was going to be that this bill be referred to an inquiry by the Senate Economics Legislation Committee. This is clearly now an attempt by the government to short-circuit all of that. This is clearly an attempt by the government to prevent the proper scrutiny of this legislation and to force it through the parliament before we are due to leave tomorrow night.

I urge the Greens to reflect very carefully on this. In years to come, do they really want people to look back at this? In a sense, the Greens might think, 'The damage is done, so we might as well just keep at it.' These are the Greens who, over the three years of the Howard government, when the Howard government had a majority in the Senate, complained bitterly and said how evil it was when there was a level of time management for various pieces of legislation. We did that on 36 occasions in three years. This government, together with the Greens, have done it on 36 occasions in a fortnight. The Labor Party and the Greens have gagged debate on 135 bills since 1 July last year. That is the sort of perversion of process that is going to lead to inferior outcomes.

I really encourage senior Labor senators and senior members of the government to have a look back at what they said when they were in opposition—Senator Evans in particular. The Leader of the Government in the Senate, Senator Evans, once gave a speech to the Subiaco branch of the Labor Party, which I read very carefully, in which he promoted the virtues and the great importance of the Senate committee work and of properly scrutinising legislation that comes before the Senate. In fact, he said that both in opposition and in government the Labor Party supported the role of the Senate as an important institution which is there to scrutinise the activities and the performance of the government. And here we are—this government is desperate to get its hands on some more cash without the Senate being given the opportunity to properly assess the implications of that for our economy, for investment and for jobs moving forward.

We are not going to be party to that. We think this bill deserves proper scrutiny. We think this tax grab goes against the things former Prime Minister Rudd and the former minister in this area, Minister Bowen, said were important. That needs to be properly scrutinised. So here we go: we had the then Prime Minister, Kevin Rudd, and the then minister in this area, Minister Bowen, say to us that it was critically important to reduce the tax rate to 7½ per cent and now we have Prime Minister Gillard, Minister Shorten and Mr Bradbury telling us we desperately need to double it. Somebody has to be wrong. Either Mr Rudd and Mr Bowen were wrong—and I would like members on the other side to say whether that is their view—or now Ms Gillard, Mr Shorten and Mr Bradbury are wrong.

The truth of the matter is that the Labor Party's time in government has had a terrible impact on our public finances. People across Australia instinctively know that whenever the Labor Party gets into government they stuff up our public finances. After the Labor Party has been in government for a couple of years, deficits come in and come in and the debt keeps blowing out. People across Australia instinctively know that after a period of Labor government the coalition has to come in and fix things up. We are not going to be complicit with the Labor Party in ramming tax bills like this through the parliament without having submitted them to proper scrutiny. We want to make sure that the impact of this sort of tax increase on investment in key infrastructure across Australia is properly understood and that people across Australia are very well aware of the implications before we are called to vote on this bill. I think every senator in this chamber should make it their business to properly understand the implications of this bill before they vote on it. The motion which is before the chamber must be opposed because it has been designed to be rammed through the Senate without proper scrutiny, something that the Senate should not be supporting. (Time expired)

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

I want to support the comments made by my colleague in relation to this motion to avoid the normal processes of the Senate and deal with the bill without giving it appropriate scrutiny. It is certainly a bill that requires scrutiny. As Senator Cormann has quite rightly pointed out, this is another backflip by a government that does not know what it is doing. A former Labor government, the Rudd Labor government, reduced the tax from 15 per cent to 7½ per cent amid great fanfare that it was reducing taxes. Not two years later, the Gillard Labor government is now reinstating the 15 per cent, doubling the tax, as part of their insatiable appetite for new taxes on the Australian people.

If ever there were a bill needing proper scrutiny by the Senate Economics Legislation Committee, it is this bill. For that reason I urge the Senate not to support this motion but to vote against the motion so that it can go through the normal—

Debate interrupted.