Tuesday, 25 June 2013
Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013; Second Reading
Government senators interjecting—
Thank you, Madam Acting Deputy President. They really are a rabble over there. They are in complete chaos, they are dysfunctional and they are divided. The only thing that holds them together over there is when there is a vested interest being pushed on them by the union movement. That is the only time there is unity of purpose over there—when they get to pursue the vested interests of the union movement instead of pursuing the public interest. Other than that, they are just a divided rabble completely incapable of governing Australia, completely incapable of providing good governance.
So here we go again—another two pieces of legislation proposing 14-odd changes to our tax laws and superannuation laws. Sorry, there are just 13 changes now because in relation to schedule 4 of the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013—in which the government tried to impose additional restrictions and more red tape on self-managed super funds in terms of related party transactions, making it harder for people who are doing the right thing by saving to achieve a self-funded retirement—the Labor Party was forced to back down because, again, they got it so wrong.
Whenever they see self-managed super, this Labor government, in their ideological pursuit of people who are inspired to look after their own needs in retirement, always looks at ways to make things harder for people. On this occasion, in the face of opposition from crossbench members of parliament in the House of Representatives, the government was forced into an embarrassing backdown, which of course was good news for people across Australia who are saving to achieve a self-funded retirement. The Labor Party, left to their own devices, would have made it much harder for people to manage their own affairs with a view to looking after their own needs in retirement so they do not need to be a burden on the public purse. This government has a track record of dysfunction, of division, of incompetence, of adding massive additional red tape, of adding massive additional new and increased taxes and of casting around perpetually for more cash to plug yet another budget black hole—of which, under Treasurer Wayne Swan, there are many. These bills are no different from what the Labor Party usually does.
Let me give people a flavour of the many measures that the government wants to ram through the parliament without proper scrutiny here tonight, without proper debate, without proper opportunity for the Senate to carefully and responsibly consider all of the implications. Some of the measures are more straightforward than others, but a number of the measures are quite bad and irresponsible. Here is the long list. This bill seeks to enshrine documentaries and list game shows as ineligible for film tax offsets. It seeks to exempt from tax certain payments relating to certain recent natural disasters. It seeks to allow GST remitters in net refund positions an election for simpler compliance. It seeks to add a further six entities to the list of deductible gift recipients. It seeks to require superannuation trustees to merge the multiple accounts of their members. It seeks to further reduce the Howard government's super co-contribution scheme—which is of course an example yet again of the utter hypocrisy of this Labor government. They know that you, Madam Acting Deputy President, along with all of the senators on the coalition side of the Senate, are very interested in good policy that encourages people to save more money through superannuation, to make additional contributions to their super so that they have a chance to get themselves into a position where they can look after their own needs in retirement.
In order for people to have confidence that they can plan their future retirement safely, they need certainty and stability in superannuation policy settings. In the lead-up to the 2007 election this government, in trying to pitch to that particular aspiration across Australia, made a very solemn promise. In fact it was the then Labor leader Mr Kevin Rudd who made the promise that, in government, should they be successful at the 2007 election, there would be no change to superannuation laws—not one jot, not one tiddle. But of course since that time there has been a whole series of changes to superannuation, not just in terms of additional red tape and additional compliance costs but also in terms of additional taxes targeting low- and middle-income earners. The Labor Party has imposed almost $9 billion in additional taxes on low- and middle-income earners' superannuation—money that comes straight out of people's savings accounts, money that leaves their retirement savings lower than they otherwise would have been, with all of the implications in terms of compound interest.
One of the many examples of bad decisions the government has made is how, progressively from budget to budget, the government has slashed the super co-contribution benefit for low-income earners from $1,500 for every $1,000 saved under the Howard government to $1,000 for every $1,000 saved. In this bill, they are now proposing to go all the way down to $500 for every $1,000 saved. This is a measure that particularly targets low-income earners—because the superannuation co-contribution benefit is an incentive for low-income earners to put more money into their superannuation, with the government matching the savings made, up to a certain amount, on a year-to-year basis. But this government promised not to make any changes. There would be no change at all, they said. But here we are, five or six years later, and they have imposed an additional $3.3 billion worth of costs. Just in relation to this one measure they have cut the super co-contribution benefits for low-income earners by more than $3.3 billion so far.
When this Labor Party goes out into the community in the lead-up to the next election and makes any promise whatsoever in relation to superannuation, people across Australia will know that they cannot trust them. People across Australia know very well that they cannot trust Labor's latest solemn promise that they will not scrap the low-income super tax offset, which was linked to Labor's mining tax. Of course Labor would scrap the low-income super tax offset if they were re-elected on 14 September, because they cannot afford it.
Look no further than Labor's track record of broken promises in superannuation. Look no further than the almost $9 billion in additional taxes Labor has imposed on people's super savings after promising not to make any change. Look no further. Even before the last election the Labor Party made promises that they have since broken. Before the last election—I am sure you would well remember this, Acting Deputy President Boyce—the government promised that they would increase super concessional contributions, which they had previously slashed from $100,000 a year for people over 50 down to just $25,000 for all people, including people over 50. They promised they would increase that for people over 50 with super balances of less than half a million dollars, should they be successful at the election. It has not happened; it now will not happen. The increase the government is going to make is just $35,000 a year, which means that people putting money into super will have to pay higher tax if they make contributions beyond that.
The point here is that Labor has a track record of broken promises in superannuation. People across Australia who are saving to achieve a self-funded retirement cannot trust the Labor Party with their money. In contrast, the coalition has made a very clear commitment that, should we be successful at the next election, there will be no unexpected detrimental changes to superannuation.
We are being open, transparent and up-front in the lead-up to this election about what we will and will not do. Yes, we will delay the full phase-in of compulsory superannuation from 95 per cent by two years. Instead of getting there by 2019, we would get there by 2021. That will help us fund the income tax cuts and pension increases without a carbon tax. And, yes, we are quite up-front that the coalition will not proceed with the low-income super tax offset, because it is not funded and because the government does not have the money for it—because recklessly and irresponsibly they have attached it to Wayne Swan's failed mining tax, which has not raised any meaningful revenue.
I will go back to the specifics of the bills before us. Let me point out, right up-front, that the coalition will be moving amendments to excise schedules 5 and 6—the so-called loss carry-back measures—from Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, because it is irresponsible for the government and for the parliament to proceed with them—because they are not funded. These are yet more measures which are directly linked to the MRRT, which has failed to raise any meaningful revenue. The coalition will not be complicit in exposing the Commonwealth budget to this sort of unfunded liability, moving forward.
We will not oppose the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill. However, we just point out that the government is again cutting super co-contribution benefits for low-income earners. When they try to make people believe that their targets are high-income earners, invariably they target low- and middle-income earners with their increased taxes. Labor is no friend of low-income earners saving for their retirement through superannuation. Labor invariably runs class warfare rhetoric in the lead-up to an election or in the lead-up to yet another leadership challenge, but they invariably target low- and middle-income earners after an election or after the latest leadership challenge has been dealt with. But, with Labor, after the war is always before the war. Whenever you think: 'This is it; they've finally sorted themselves out. They finally know who is in charge. It is now going to be smooth sailing'—no, it goes on and on and on.
As well as the constant feedback that people are sick and tired of Labor chopping and changing the superannuation rules and chopping the tax rules, the other feedback I am sure people right across the chamber are getting is that people are sick and tired of Labor's shenanigans when it comes to their leadership. People cannot wait for the next election. People want to have the next election sooner rather than later so that they can put an end to this complete chaos, this complete dysfunction, this complete incompetence. People know that while this government is obsessed with itself—and while members of this government are in there fighting one battle after the other with each other—it is not focused on the national interest or on what needs to be done to ensure we have a strong, more prosperous economy and to make sure our borders are safe and secure.
In relation to the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, people will be aware that, in the Parliamentary Joint Committee on Corporations and Financial Services inquiry, we made a recommendation—you were part of that inquiry, Madam Acting Deputy President—to excise the MRRT-linked schedules from this bill. And we made it very clear that, if unsuccessful with that excision, we would oppose this bill.
The coalition were also going to move, as I flagged, an amendment to remove schedule 4, concerning off-market transfers of assets in self-managed superannuation funds. However, the government, knowing they were facing certain defeat in the House of Representatives, pre-empted our amendment to that effect in order to avoid some political embarrassment.
Schedule 1 of this bill ensures income tax is generally not payable on the interest paid by the Commonwealth on unclaimed money from 1 July 2013. You would be aware, Acting Deputy President Boyce, that late in 2012 the Gillard government, desperate to keep the illusion of a surplus in 2012-13 alive for a little longer—not for much longer, mind you—pursued a significant grab for cash at the expense of people's supposedly lost bank accounts, supposedly lost super and supposedly lost life insurance. Earlier today, after I spoke on another Labor fix through the unclaimed money bill, I had an approach from somebody whose son has been working overseas for the last four or five years. He had a bank account with the ANZ. His mother, who still lives here in Australia, had a sick husband and was not keeping too close an eye on the son's correspondence coming in from the bank. Guess what—this Gillard Labor government snaffled her son's money. The lady is deeply distressed as a direct result of the actions of this incompetent, disgraceful government that we have here in Canberra, who put their hand into people's pockets because they cannot manage their own money, because they cannot manage the affairs of government, because they have not been able to live within their means and because they have spent $220 billion more than they had raised in revenue—at a time when we had the best terms of trade in 140 years. There are pensioners in Western Australia who are deeply distressed because, as a result of this government's legislation, money is going out of their accounts without their knowledge.
Senator Carol Brown interjecting—
That is because of the legislation that you, the Labor Party, passed. You are putting your hand into people's bank accounts to plug your budget black hole. It is an absolute disgrace.
Of the so-called surplus that the Labor Party promised in the Mid-Year Economic and Fiscal Outlook in October 2012, three-quarters was supposed to come from the rapid raid by the Gillard Labor government on people's bank accounts and superannuation accounts. It is an absolute disgrace. People should not be exposed to that sort of stress. Now, of course, this lady has to chase ASIC and try and get her money back. ASIC do not even know whether the money has arrived with them yet. It is going to be a convoluted process for them to get their money back. People across Australia should not be forced to deal with ASIC to chase their own money just because this government were so desperate to get their hands on it, to create the illusion of an early surplus that was never going to be. It is disgraceful and makes me angry.
Over the first six months of this year, the government were aiming to raise $760 million in additional revenue, including $555 million from so-called 'lost' super, from bank accounts of either individuals or companies. By the way, there was no upper limit to how much money people could lose out of their bank account—no upper limit at all. The government's shamelessly dishonest spin was that this was all about reuniting people with their own money more quickly. Well, that ain't happening in practice. People across Australia are losing money out of their accounts as a result of legislation passed by this government and, quite frankly, they are finding it very hard to get reunited with their own money. The government should be ashamed of themselves.
Under pressure during the consideration of the unclaimed money bill, the government advised the Senate Standing Committee on Economics of its intention that interest on this unclaimed money would be exempt from tax. But, again, because they are so incompetent, because they are so chaotic, so dysfunctional and so divided, they could not get it together in time to put that in the legislation, given the rushed way they put it through. So the government has to make yet another fix to yet another bad piece of legislation which was rushed through the Senate in a fashion not dissimilar to the approach to the current legislation.
There is a whole range of other schedules. I do not think we are going to have time to get through all of them, which is quite inappropriate, but that is just the way things are under this government at present, as it pursues its last hurrah before the election. Schedule 2 is meant to improve consistency across the fringe benefits tax law and reduce the complexity of the law, but that is invariably not what happens with this government. Schedule 3 is intended to allow participants in the Sustainable Rural Water Use and Infrastructure Program to choose to make payments received under the program free of income tax, including capital gains tax. The coalition has previously been supportive of this change, which was originally announced in February 2011. Why it has taken until now to pass it we do not understand, but we continue to support it.
Schedule 4 was scrapped. Schedules 5 and 6 we will seek to excise for the reasons I have explained. Now I have run out of time. (Time expired)
These composite bills, the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, are, again, subject to the guillotine that has been imposed by the government on all bills passing through this place this week. In the case of these two bills, we have less than two hours to debate them. Senator Cormann just touched on a couple of the schedules and noted that he did not have the opportunity to go through them properly. I do not know that I will have the opportunity to go through each of them in detail, but I think it is worth, for the record, looking at the scope of these bills.
I will start with the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the details set out in the Bills Digest. I am going to go through the scope of what these bills actually cover, because there are a lot of things—they are complex and they are matters that deserve proper scrutiny and debate in this place.
The Bills Digestsays:
Specifically, the Bill:
The scope of the other bill, the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, is similarly large. On that bill, the Bills Digest says:
that is probably not so large in scope—
So clearly, as you can tell from the list of what these two bills are trying to achieve, their scope is quite broad.
There are a lot of potential issues in these bills and they are both deserving of a proper and full debate in this place. The fact that they are not getting a proper and full debate—the fact that the debate on this has been confined to an hour and 50 minutes—is not good for the country. It is not good for taxpayers. It is not good for the government. These things deserve a proper examination and a proper debate on the floor of parliament.
These composite bills, as I have just outlined, deal with a range of changes to the taxation and superannuation system that, on the whole, the coalition will not be opposing. However, we will be moving amendments.
Schedule 1 of the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 deals with interest on unclaimed money. It ensures income tax is generally not payable on the interest paid by the Commonwealth on unclaimed money from 1 July 2013. However, the coalition notes that the Gillard Labor government was, when it was still maintaining the pretence that a budget surplus would be delivered this financial year, using this measure as part of that desperate attempt to keep the illusion of their ability to deliver a budget surplus alive for just a little bit longer. In its MYEFO released in October, which was much earlier than usual, the government promised their paltry surplus of just over $1 billion. As mentioned by Senator Cormann earlier, three-quarters of that promised surplus was expected to come from the unclaimed money bill and I think Senator Cormann highlighted very well that the unclaimed money is actually money that belongs to other people. There may well have been some interjections in this place saying that that was not true, but the reality is: if the government are counting it as revenue towards their surplus, they are expecting to keep it, at least for the purposes of putting forward their achievement of a surplus, which of course they have not managed to do.
Over the first six months of this year, the government anticipated that this measure—taking money off pensioners and others who have money in accounts they have not touched for some time—would raise over $760 million in additional revenue. This figure included $555 million from lost super, with the rest from lost bank accounts of individuals or companies. That is right: it was not a budget surplus which was promised on the basis of sound economic policy or good fiscal outcomes; it was a budget surplus constructed on the basis of taking money by raiding the forgotten bank accounts of everyday Australians and the accounts of those who were quite happy to have some of their hard-earned assets parked as cash in a bank account for an extended period. We heard from Senator Cormann that that may have been because people were overseas for a number of years. I know that my own mother, who is a pensioner, received a letter regarding her bank account advising her that she had money in an account that would have been taken if she did not do something about it. Fortunately for her, she was on top of that and managed to deal with it. I think she manufactured a transaction to make sure it did not happen.
Senator McLucas interjecting—
But how ridiculous is it that she had to manufacture a transaction in order to keep her own money in her own account! Senator McLucas is sitting over there nodding, and saying: 'There you go, you see? She knew about it and she sorted it.' But the fact is that she had to go in and manufacture a transaction on an account that she did not want to transact on just so the government would not take her money out of her account and put it in their account to make it look like they had achieved a surplus.
Under pressure during consideration of the unclaimed money bill, the government did advise the Senate Standing Committee on Economics of its intention that this interest would be exempt from tax. The rushed implementation of these changes was a consequence of the government's desperation, as I said, to fill yet another budget black hole. The government's claim that the financial impact of this measure is nil as they have not budgeted on tax from interest payments suggests to the coalition that this was yet another oversight in a rush to implement yet another policy thought bubble. That is something this government has become famous for and they have a pile of failed policies to prove it.
Schedule 2 of this bill deals with airline transport fringe benefits. It is supposed to improve consistency across the fringe benefits tax law and reduce the complexity of the law. Currently, the taxable value of an airline transport fringe benefit is its value less the employee contribution. Under this change, the taxable value of an airline transport fringe benefit will be aligned with the in-house benefit valuation method. This will be calculated as 75 per cent of the standby airline travel value of the benefit less the employee contribution. This is a technical change to the law that should simplify this particular area. The coalition supports this schedule.
Schedule 3 of this bill allows participants in the Sustainable Rural Water Use and Infrastructure program to choose to make payments received under the program free of income tax, including capital gains tax. If this choice is made by participants under this scheme, expenditure related to infrastructure improvements under the program is non-deductible. Alternatively, participants can decide to stay under the current rules. The program provides funding to irrigators to improve water efficiency. Some of the resulting water savings are then transferred to the government to be used for environmental watering. If chosen by the taxpayer, the new arrangements remove a cash flow gap that currently exists between the timing of tax liabilities and tax deductions. The financial impact of this measure is around $45 million over the forward estimates. The coalition have previously been supportive of this change, which was originally announced over two years ago in February 2011, and we continue to endorse this measure even though we have had to wait almost 2½ years for it to be introduced.
I note that schedule 4 of this bill, to amend the Superannuation Industry (Supervision) Act to prescribe requirements for the acquisition and disposal of certain assets between self-managed superannuation funds and related parties, was removed by the government prior to debate in the other place.
That brings me to schedules 5 and 6 of this bill. Schedule 5 implements the loss carry-back for small and medium-sized businesses linked to the mining tax and schedule 6 includes the necessary consequential amendments. The new rules give a corporate tax entity the choice of carrying back all or part of a tax loss from the current income year or from the preceding income year against an unutilised income tax liability for either of the years before the current year. This measure applies to assessments for the 2012-13 and later income years. A transitional, one-year carry-back period applies for the 2012-13 income year. If the loss carry-back conditions are satisfied, a corporate tax entity can get a refundable tax offset for the losses it chooses to carry back. The financial impact of this measure is around $700 million over the forward estimates.
These two schedules implement the government's announced loss carry-back measure, a measure linked to and supposedly funded by the government's minerals resource rent tax. But, as we all know in this chamber—including, I am sure, and much to the frustration of, the Greens, who have joined with the government to try to slay the goose that has laid the golden eggs in this country over the past decade or so; and despite the promises of the government and the view of the Greens that the mining industry can be taxed exponentially without any impact on activity or consequential falls in tax revenue—the minerals resource rent tax is a fundamentally flawed tax that essentially raises no revenue. In fact, according to the government's monthly financial statement for April 2013, which was released after this year's budget, the MRRT has raised just $310 million in gross terms, with no more payments due this year. That is about 10 times less than the net estimate from the 2012-13 budget and about five per cent of what the tax was originally predicted to raise.
The government negotiated the design of the MRRT exclusively and in secret with the managing directors of Australia's three biggest mining companies. Apparently even Labor's own Treasury officials were locked out of proceedings, instead instructed to be on the end of a phone line should their input actually be required into one of the country's biggest new taxes. True to form, this government also excluded any other mining industry stakeholders and state governments from the negotiating process.
The coalition condemned the MRRT as a great big new tax on the mining industry right from the start. We predicted the fiscal disaster that has come to fruition since its implementation and we continue to oppose it. The Treasurer has overestimated the gross revenue from the MRRT and has underestimated the cost of the various concessions he and Julia Gillard made in their MRRT heads of agreement, yet the Gillard Labor government have spent all the money they expected to raise from the MRRT and more—primarily as a result of them linking various expenditure measures, including loss carry-back, to the MRRT, as dealt with in these bills.
Additionally, the government cannot afford to continue adding to the $172 billion in accumulated deficits it has achieved over its first four completed years and the anticipated two large budget deficits now forecast for this year and the next. Furthermore, the government's decision to allow loss carry-back ignores that two-thirds of small and medium-sized enterprises are not incorporated and so cannot benefit from the measure. This is because only businesses with franking accounts can avail themselves of this measure. Unincorporated businesses that must compete with those using carry-back will be handed a competitive disadvantage by this measure, which is completely unacceptable. The coalition cannot support these schedules, which are wholly linked to the government's failed MRRT, which we are vehemently against and which we will abolish if we are successful at the 14 September election.
I now move to the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013. Again, this bill deals with a range of changes to the taxation and superannuation system, including six tax schedules and two superannuation schedules, as I went through earlier. Schedule 1 amends the Income Tax Assessment Act 1997 to define 'documentary' in accordance with the Australian Communications and Media Authority guidelines and to restore its intended meaning. It also clarifies that the exclusion of light entertainment programs from film tax offset eligibility does extend to game shows as the offset is designed to encourage Australian investment in film production. The coalition considers these amendments to be sensible. They are good integrity measures that better target eligibility for and access to the key film industry tax concession.
The coalition also supports measures in schedule 2, which exempts from income tax any ex gratia disaster income recovery subsidy. Schedule 3, relating to the GST instalment system, and schedule 4, adding six entities as deductible gift recipients, in addition to schedule 7 and schedule 8, are also supported by the coalition.
However, the coalition is concerned with the changes made in schedule 6 of this bill. Once again, with schedule 6 the Gillard government seeks to quietly reduce the Howard government's superannuation co-contribution scheme for low-income earners. It halves the government's maximum co-contribution under the scheme from the current $1,000 down to $500. Under the Howard government, the government's super co-contribution for low-income earners was up at $1,500. It also again reduces the government's co-contribution matching rate, this time cutting it in half, from the current dollar for dollar down to 50c for every dollar put in by low-income earners. This schedule also halves the income band across which the co-contribution phases out. Instead of the higher income threshold being set $30,000 above the lower income threshold, as it is currently, it will be reduced to $15,000. Finally, indexation of the lower income threshold, which has been frozen for two years already, will be frozen for another income year.
These amendments will commence from the date of royal assent and apply from the 2012-13 income year. The financial impact of these amendments is around $330 million per year—another cut to the super co-contribution benefits of low-income earners and another demonstration by an out-of-touch government that they are not the friend of low-income earners saving for retirement through superannuation that they try and present themselves as.
The reality of what they are doing in this bill is in stark contrast to the class war they were pedalling on superannuation earlier this year. While they were running with their class war rhetoric, they failed to inform the public that this cut to the co-contribution regime will be the sixth change they have made to it, which now represents a cut to those benefits of more than $3.3 billion. That is $3.3 billion that is not going into the superannuation fund accounts of Australians, particularly low-income Australians, by definition.
Superannuation is integral to our retirement framework in Australia. Understandably, as a result, Australians seek certainty and stability when investing in their super because it is a nest egg and it will determine the quality of lifestyle that Australians will achieve in their retirement years. This Labor government has not afforded Australians that certainty, with both their policies and their cabinet constantly changing. Not only that but, by constantly attacking our superannuation system, the Labor government is creating generations of retirees who will have an increased reliance on the public purse in years to come because incentives to invest in superannuation are being removed.
The coalition knows there is a better way and we have given our word to the Australian public that an Abbott-led Liberal government will restore certainty and stability to our superannuation system. However, given the precarious state of the budget handed down earlier this year, the coalition has no choice but to not oppose the passage of these bills through the Senate tonight. The appalling mismanagement of the budget, the waste and the poorly targeted spending have all helped create a clear budget emergency. The government is consequently scrambling round implementing new and increased taxes—incidentally, there have been 30 new or increased taxes under this government—with Australians paying for Labor's mistakes. The cost for superannuation account holders is now around $9 billion, money that Australians will not be able to use to support themselves in retirement, money taken off Australians to subsidise the wanton spending of the government.
I wish to place on the public record yet again the coalition's disgust with the way the Gillard Labor government has sought to guillotine debate in this place this week, ramming bills through this chamber without due consideration or regard for parliamentary process. As has already been noted this week, under the Howard government, in the three years of the Liberal-Nationals control of the Senate between 2004 and 2007, only 32 bills were guillotined. In those cases we never saw the use of such Draconian so-called time management. We at least allowed debate to occur and only brought that debate to an end after reasonable debate had actually taken place. However, in the three years since the Greens-Labor alliance achieved their cosy majority in the Senate, over 215 bills will have been guillotined through this place. There is no transparency in this process, just extreme arrogance from a desperate government in its dying days. It is disgraceful and it is no way to run the making of laws in our great nation. The sunlight that was pledged to the Australian people three years ago with such public fanfare has failed to make it into this chamber.
I too rise to speak on the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and on the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013. It is a pleasure to follow the contributions of Senator Bushby and Senator Cormann, who have made an outstanding case for the coalition's concerns about aspects of these bills, for our understanding of other parts of them and for our overall concern about the government's approach to its management of the nation's finances, especially its management of our taxation and superannuation regimes.
As I contemplate the tax and super laws proposed by this government I cannot help but think of that wonderful quote of PJ O'Rourke's—that giving money and power to government is like giving whiskey and car keys to teenage boys. There is perhaps no finer example of PJ O'Rourke's quote than the Rudd and Gillard governments, who have been drunk on money and power and who have wasted it to an extent never before seen in Australia and hopefully never seen again. They have abused their power to burden the Australian economy with enormous new areas of regulation, with enormous new areas of taxation. They have burdened our superannuation industry with an ever-changing regulatory landscape that only further enhances the concern and the lack of trust and confidence that so many Australians, especially Australians who are around my age, have about their superannuation. A vicious cycle then sees people potentially opt out of engaging more in the management of their own superannuation because of the changing rules, because of the lack of trust and confidence and because they are really not convinced that they can trust what the government will do with their savings.
It is that lack of trust that underlies so much of what the government has done in the taxation and superannuation landscape. When they go to an election promising not to implement a tax, the carbon tax being the most famous of such promises, they then turn around straight after the election and do the exact opposite, undermining the trust that people need to have in government if they are to invest wisely and with confidence—whether it be business investments, personal investments or investments for the future like superannuation.
The propensity of the government to say one thing and then do another really seems to know no boundaries. Senator Bushby made the point very clearly: this government runs a class war on matters around superannuation yet has an appalling track record of its own in cutting assistance to low-income earners for superannuation. It is a government that is laden with hollow rhetoric, and clearly it will stoop to whatever level it thinks it needs to to try and con and fool the voters. I trust that the Australian people will not be fooled again. But I continue to be amazed at the blatancy of Labor's campaign tactics, whether it is its class warfare in the superannuation space or whether it is—and we saw this again in the chamber during question time today and in fliers distributed across countless electorates around the country—its claim that a coalition government will charge people $5,000 to connect to the NBN while it is free to do so under Labor. Both of those statements are completely and utterly false.
The truth is that if you want to take up an internet connection under Labor's policy or under the coalition's policy you are going to have to go to a retail service provider and buy it. It is not going to cost you $5,000, but you will have to buy a service. Senator Conroy and the Labor Party are trying to play cutesy around the physical connection of infrastructure. The truth is that under the coalition every household can be guaranteed to have by the end of a first term a minimum service of download speeds of 25 megabits per second available to them—in terms of the physical infrastructure that they need—at no cost to them unless and until they decide to take it up, at which point, just like under the Labor Party, they will have to get on the phone or on email or get in touch some other way with Telstra, Optus, Vodaphone, Hutchinson or any of the other retail service providers out there and buy a service. What the government is doing in that space is just plain wrong.
Equally, in our home state, Mr Acting Deputy President Fawcett, and in Tasmania as well we see similar blatant lies from the government when it comes to the coalition's approach to GST funding. Campaign material is being distributed that is simply and utterly wrong. The coalition has put very clearly on the record—Mr Abbott has, Mr Hockey has and many other members of the coalition have—that there will be no changes to the GST arrangements unless all of the states agree. That means the Tasmanian Premier needs to agree, just as much as the South Australian Premier needs to agree, just as much as the Western Australian Premier needs to agree. It is very clear.
Senator Polley interjecting—
You can choose not to believe that, just like I would not believe a word Julia Gillard says after, 'There will no carbon tax under a government I lead.' Nobody will believe a word she says.
As I was indicating to Senator Polley, nobody will believe the Prime Minister, Ms Gillard, about pretty much anything that she has to say from here on in because she has a track record of lying to the electorate. That is the brutal truth. That is what she did in the last election, and why would anybody believe what she says in this election?
Mr Acting Deputy President, I rise on a point of order. It is not parliamentary to use the language that Senator Birmingham has when speaking about the Prime Minister. He can assert things, but he cannot accuse the Prime Minister of lying. It is unparliamentary.
I withdraw and simply state the fact that the Prime Minister, in the days leading up to the election, stated, 'There shall be no carbon tax under a government I lead,' and, as the record demonstrates, then promptly introduced a carbon tax. I will let those matters speak for themselves when it comes to the electorate and others judging whether that was a truthful statement by the Prime Minister or an untruthful one. What is clear is that on a whole range of fronts—as they did in the last election—the Labor Party are simply trying to con and dupe and lie their way into office.
Turning to the bills before us tonight, there are a range of matters in these bills. I will deal with some of them—not all of them, because a number are minor and technical and would enjoy broad support. But I want to touch on a few particular areas, things that the coalition supports and things that we have some concerns about. The coalition, as Senator Cormann and Senator Bushby have outlined, have some concerns with the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, and particularly with schedules 5 and 6, which relate to the loss carry-back measures linked to the mining tax. There are foreshadowed amendments in relation to those.
Firstly, I will touch on schedule 1, which relates to interest and unclaimed money. It ensures that income tax is generally not paid on the interest paid by the Commonwealth on unclaimed money from 1 July 2013. Late in 2012, the Gillard government announced this measure as part of its MYEFO. Back then, we were living in the illusory land of budget surplus and Mr Swan, the Treasurer, and indeed all members of the government were still proclaiming that the government would be delivering a surplus this year. That MYEFO, released in October, outlined a surplus—a wafer-thin surplus, mind you—of just over $1 billion. And indeed three-quarters of that promised surplus was expected to come from schedule 1 of this bill. Over the first six months of this year, the government expected to raise from this measure over $760 million in additional revenue, including $555 million from lost super, with the rest from lost bank accounts of either individuals or companies to the tune of around $100 million from each.
Under pressure during the consideration of the unclaimed money bill, the government advised the Senate Standing Committee on Economics of its intention that this interest would in fact be exempt from the tax. With the government finally realising that their surplus was a mirage, to say the least, they have changed their minds on the approach here. The rushed implementation of these changes and the way in which sums were counted and not counted were driven by nothing more than the government's desperate need to plug their then budget black hole, before they realised that the black hole was of such a scale and size that it was completely unpluggable. The financial impact of this measure is nil, as the government claim that they never budgeted on tax from interest payments, despite earlier statements to the contrary, which of course demonstrates the rushed, thought-bubble approach. Nonetheless, the coalition, noting the history of that measure and where it now stands, supports schedule 1.
Schedule 3 is a particularly important one dealing with the Sustainable Rural Water Use and Infrastructure Program, an area related to my portfolio responsibility of the Murray-Darling Basin. It is notable that the changes contained in schedule 3 of the bill were announced in February 2011. Here we are in June 2013, in the final sitting week of this parliament before the election, with the Senate operating under guillotine to ram through some 53 bills that the government wants to get in place, and we are asked to deal with something the government promised to do in February 2011. There surely can be no greater demonstration or example of the complete incompetence of this government when it comes to managing its own policy reforms and legislative agenda. Why on earth this was not done promptly, why on earth it was not done soon after its announcement, why on earth it was not done some time in 2011, or sometime in 2012 or even earlier in 2013 is a mystery—one that I suspect that the government will refrain from ever explaining properly, because it comes down to its own incompetence.
But this is an important reform. In fact it is a change that the parliamentary committee processes had identified and advocated be made to how our water infrastructure programs work. Water infrastructure programs are very important to how we can sustainably recover water from the Murray-Darling Basin to provide for the necessary environmental flows to give us a healthier river system into the future and yet do so in a way that maintains the productive capacity of river communities, retains the capacity to produce the food, fibre and produce we rely upon for so much of our economic output and in doing so continues to underpin not just the economic fabric but also the social fabric of those communities.
One of the concerns that some of those who have received and been awarded grants under the Sustainable Rural Water Use and Infrastructure Program had identified was the tax treatment of those grants and the issues that that tax treatment had for their own cash flow operations. Those concerns were outlined through the parliamentary committee processes of the House and the Senate, which identified the problems and recommended that government take action. It was pleasing in February 2011 when Minister Burke announced that he would enact changes in that regard. It is just so disappointing that it has taken so long for the legislation to come before the parliament.
This schedule will allow participants in the Sustainable Rural Water Use and Infrastructure Program to choose to make payments received under the program free of income tax, including capital gains tax. If the choice is made, then expenditure related to infrastructure improvements under the program is non-deductible. Alternatively, participants can decide to stay under the current rules. So it provides a level of flexibility, allowing them to choose the circumstances that will work best for their financial arrangements and cash flow management. This program provides funding to irrigators to improve water efficiency, with the resulting water savings to some extent being transferred to the government for use for environmental watering, as part of and consistent with the Murray-Darling Basin Plan.
If chosen by the taxpayer, by the grant recipient, the new arrangements remove a cash flow gap currently between the timing of tax liabilities and tax deductions. The financial impact of this measure is around $45 million over the forward estimates, noting that the infrastructure package itself is a multibillion-dollar package of grants and assistance to recover this water as part of the Murray-Darling Basin Plan.
It is not just in relation to tax laws that the government is synonymous with dragging its heels and poor approach to implementation. There have been so many other areas of the Murray-Darling Basin Plan, as well, that have been of grave concern in terms of the government dragging its heels in implementation. If we date right back to the first election of this government, in 2007, it took an inordinate period of time just for the membership of the new Murray-Darling Basin Authority to be appointed and for it to be properly established. Then we had multiple delays that saw the commencement date for the Murray-Darling Basin Plan drag out from 2014 to 2019 and now an ultimate finalisation time frame of 2024. Little wonder then that a couple of years slippage in terms of legislation coming to the chamber is seen as being of little consequence, when you see such significant delays of a decade in relation to a significant policy reform like that.
When Minister Burke released the final Murray-Darling Basin Plan in November last year, the government promised it would sign an intergovernmental agreement with all of the basin states in the following month, last December. We still see that only two of those states have been signed on: Victoria and the Australian Capital Territory. Only two jurisdictions have signed on. Even our home state of South Australia, despite all the bleating and posturing of Premier Weatherill and his government, has not managed to come to terms with the intergovernmental agreement to actually help facilitate the implementation of the Murray-Darling Basin Plan. It is just another example, like this measure within this bill, of the constant failure of this government to do anything in a timely and proper process.
Schedules 5 and 6, which my colleagues have addressed at some length, in relation to measures that are linked to the mining tax, are areas that do cause the coalition particular concern. Schedule 5 implements the loss carry-back for small and medium sized businesses, linked to the mining tax, and schedule 6 includes the necessary consequential amendments. The new rules give a corporate tax entity the choice of carrying back all or part of a tax loss from the current income year or from the preceding income year against an unutilised income tax liability for either of the years before the current year. The measure applies to assessments for 2012-13 and later income years. A transitional one-year carry-back period applies for the 2012-13 income year. If the loss carry-back conditions are satisfied, a corporate tax entity can get a refundable tax offset for the losses it chooses to carry back. The financial impact of this measure is around $700 million over the forward estimates.
The coalition's grave concern is that this measure is allegedly funded by the mining tax, and the coalition has opposed all elements of government activities that are allegedly linked to the mining tax, with the exception of the increase in compulsory superannuation. We have opposed them because, quite simply, this government cannot afford to implement measures paid for from a mining tax that is failing terribly to generate the revenue promised. It has failed on all fronts, as have so many areas of this government's policymaking.
In the time available, I will not dwell on the other aspects of our concerns or support but return to my opening remarks and simply reflect that this government's capacity to mismanage money, to mismanage our tax laws and to mismanage our superannuation laws is doing a grave disservice to the economy overall, to the confidence of personal investors, to the confidence of business investors and to the confidence of those seeking to invest for the long term in their retirement savings. The sooner we can return a level of confidence to the Australian people the better. (Time expired)
It is my pleasure this evening to make a contribution and to follow my colleagues Senator Cormann, Senator Bushby and Senator Birmingham to speak on the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013. In particular, I want to speak tonight as a Western Australian senator with regard to those bills that are linked so closely to the rolling disaster that we know in Western Australia as the minerals resource rent tax.
It has been a week of milestones in this building. In addition to celebrating 25 years in this place, yesterday we observed the third anniversary of the Gillard government—three years since the Prime Minister brutally knifed her predecessor and promptly told the nation not to worry, that she would fix all the problems that had bedevilled poor Mr Rudd. Remember, it was Julia Gillard who was going to stop the boats; she was going to develop a community consensus on climate change; and she was going to fix the mining tax. Well, let's just reflect on where we are three years later. And, as we look on, so too does the member for Griffith as he stalks the halls of this building this evening, still seething, still plotting his revenge against this Labor leader. And, when we reflect, what do we see? We see that the boats have not stopped. In fact, there are more of them than there ever were under the member for Griffith. In all fairness, though, I suppose the Prime Minister has in a sense achieved that broad community consensus that she sought on the issue of climate change. That consensus, some of us on this side might think, was built around her duplicitous dealings with the Australian people before the last election, when she said there would be no—
I withdraw that. Perhaps I can use the term 'untruthful dealings' with the Australian people before the last election, when she said there would be no carbon tax under the government she led and then, just six months after the election, set about introducing that same carbon tax. That consensus that was the carbon tax—that rolled-gold dud that has increased the cost of living for Australian families—has done nothing for the environment. I do not know if that is the community consensus the Prime Minister had in mind, but it is certainly the one she has achieved and certainly the one that has been levelled against Australian families across our country.
On the mining tax, which is a critical and crucial element of one of the bills we are considering here this evening, the coalition is seeking to exercise some amendments. What we do know about the minerals resource rent tax—the solution, if we could charitably call it that, to the superprofits tax problem that the former Prime Minister, the member for Griffith, had created in his dying weeks in office—is that, having dispensed with the services of the member for Griffith as Prime Minister, the new Prime Minister and her faithful sidekick, the Treasurer, sat down with Australia's three biggest mining companies to fix the problem. And fix it they did; they fixed it in a real good old way. This shows what happens when you have a poor, rushed, secretive process, and that is how we can best describe the development of the minerals resource rent tax. You would have thought that the MRRT, the mining tax, would have provided Labor with a cautionary tale. Yet apparently this government has learned nothing, as here we are with yet another rushed legislative process. The guillotine will fall on this bill very shortly in the same manner as it has fallen on many others in this place. Indeed, 54 other bills will face the guillotine in this Senate in this week alone.
So what has happened? The government had secret meetings with managing directors of Australia's three biggest mining companies. Those discussions deliberately excluded other mining companies. They deliberately excluded state governments with a very, very strong interest in resource development. Even more extraordinarily, they excluded other Commonwealth officials from those discussions. That is to say, they cut out of the process Treasury experts who might have been able to say to them: 'Wrong way—go back. You have made a wrong and foolish decision.' I am sure there were any number of people who, had they been asked for their considered, professional opinion, would have been able to tell this government that it was setting itself up for a fiscal disaster.
But, as we have seen from this government time and time again, it is not interested in hearing the views of others. It detests having to deal with anyone who holds a different view from its own. We saw this most evidently in Senator Conroy's ham-fisted attempts earlier to regulate our newspapers. We know now, very well, that this government will go to exceptional lengths to silence voices that disagree with it. So it was with the mining tax as it has been with so many other initiatives. It was designed in secret, with the government talking only to three mining companies who told the government just what it wanted to hear—and in the process cut themselves a pretty decent deal.
What was the final outcome? Has the MRRT achieved what the government said it would? Of course, it has not, because, once again, poor process led to a poor outcome for this government, for this budget and for the Australian economy. It is now apparent to even the most casual observer that Treasurer Swan and the Prime Minister got their calculations horribly, disastrously wrong. The MRRT has raised just $310 million in gross terms, with no further payments expected in this financial year. That is 10 times less than the net estimate in the 2012-13 budget. The Treasurer and the Prime Minister grossly overestimated the revenue their MRRT would generate, and they vastly underestimated the cost of the concessions they made to the three big mining companies in order to prove that they had solved the problem of Kevin Rudd's mining tax.
Certainly, Mr Acting Deputy President. So we are left with an MRRT that has essentially raised no revenue, a budget that remains deeply in deficit—despite Julia Gillard's promise to have a surplus in 2013—and a government that has absolutely no idea how to restore Australia to fiscal health. Much more could be said about these two particular bills and the devastating effects they have had not just on the budget but certainly on the economy in Western Australia and, more importantly, on the business confidence of those who want to invest in resource development in our country.
In my final comments, I want to reflect, yet again, on the rushed process that has beset the Senate over the first two days of the last sitting week of the 43rd Parliament. It is worth reflecting briefly on some key facts. It is worth pointing out that, in the last week, the coalition facilitated the passage of 23 pieces of legislation through the Senate. It is worth reflecting that, when the coalition controlled the Senate, just 32 bills were guillotined in those three years. When we compare that with the last three years of this government, we see that 215 bills will have been guillotined by the end of the 43rd Parliament. Of these, 54 bills will have been guillotined in this week, with 48 of those debated for just one hour, and 30 of those 48 bills debated for just 30 minutes. I will restrict my comments to that, to allow my colleague Senator Ryan, from Victoria, to make his contribution before the guillotine falls on this set of bills.
I rise to speak on the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, conscious that the time I have to deal with them will be truncated by the issues raised by Senator Smith. What we have experienced this week is something that I did not think I would experience in my time here, especially when I heard the preaching and the bleating from those opposite and those in the corner two parliaments ago when there was a short period of a coalition majority in the Senate. I have sat in this chamber and been responsible for bills on behalf of the opposition for which not a word has been spoken either on the bill or the second reading response by the opposition or any of the amendments moved, so I suppose that I am actually expressing my gratitude today that I am being given a chance to address these bills.
These bills are emblematic. They are symbolic of the tax chaos that has been created by this government. There has never been a period, in my knowledge of Australian political history, where there has been such chaos in the design and administration of our taxation system. I want to commence by referring to the provisions in the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill. Schedules 5 and 6 of the bill are indirectly funded, through consolidated revenue, by the mining tax. The whole experience of the mining tax, which is just over three years old, represents worst-case practice for the design and implementation of any taxation system. We had, first of all, the RSPT, which, as well as being responsible for bringing down a Prime Minister, was one of the most poorly designed and poorly conceived models of a tax that this country has ever seen. It was based on flawed information and an overly theoretical view of the world.
There is a reason that a so-called 'Brown tax' has never been implemented anywhere in the world: what works in a Microsoft Excel spreadsheet, what works in theory, does not work in practice. The designers and conceivers of it sought to put this into place without any genuine consultation with the sector or with experts in the field, whether they be people that work in tax in this sector or people that—as Senator Smith outlined—took risks with their own capital to undertake investment in our critical resources sector. These people suffered from that fatal conceit that they could actually design the perfect world, and that the tools of tax and economics could be used to assume away all the problems of human nature and all the imperfect knowledge that exists—especially in resource exploration and development—and come up with a taxation system that ensured, in effect, that the Commonwealth government became a shareholder in Australia's resources sector.
Let us put aside for one minute the implications of that for our federal constitutional arrangements, which I know do not matter to anyone on the other side of this chamber, be it in the corner where the Greens party sits or opposite with the Labor Party. Let us put aside the fact that the Commonwealth government and parliament have no legal interest in the resources that are properly held by the Crown for the people of the states. They are not the property of states such as Western Australia. They are held in trust by the Crown for the people of those states. That is a critical part of our Constitution. Let us put aside the fact that this particular attempt to seize the royalty regimes of the states was in fact a massive Commonwealth revenue grab. As I have outlined before, I come from a state without a large mining sector, at least in this century. A century and a half ago my state was the home of Australia's mining industry.
What the government and the advocates of the mining tax do not tell you is that, through our fiscal equalisation arrangements, the dollars raised by the royalties in Western Australia for iron ore and the dollars raised by coal in Queensland and New South Wales are, within three years, distributed to every citizen of this nation. The citizens of Victoria through our fiscal equalisation arrangements and especially the citizens of Tasmania—which I note for Senator Milne, the Leader of the Greens, who is in the chamber—all benefit from royalties collected by the states. This has, in fact, been a source of some contention for many decades in this country, because my home state of Victoria has always been a net contributor. We are, of course, seeing stresses placed on this at the moment because of the unique mining boom over the last few decades. It is putting stresses on our fiscal arrangements, with Western Australia's share of the GST falling to levels that have not been seen before. What that guarantees is that the benefits are being spread. What that guarantees is that Tasmanians, Victorians, South Australians and even people in the ACT, jurisdictions with no mining sector, and their nurse, police and teacher wages and their public sectors are stronger because of the royalties being collected by primarily the mining states.
Before the mining companies had the better of our elected officials, the arrangement sought to take the whole pool of resource revenue out of the state funding pool into which the GST and other state taxes go, which is then distributed amongst the states based on the cost of providing services. That was an attempt by the Commonwealth to grab that revenue which would have left every citizen in every state worse off. That is what people around this country need to know. What the Commonwealth government was trying to do was to make every state worse off.
The RSPT, that flawed tax, that constitutionally invalid tax, that misdesigned tax, brought down a Prime Minister. Then we were left with the MRRT, which allegedly funds many other measures. We have heard about measure after measure that is allegedly funded by the MRRT. The problem is that the MRRT collects no revenue. How can you have a tax that funds measures but does not collect any revenue? It is collecting 90 per cent less than was forecast. I do not know of a single private sector area where someone would keep their job if they forecast that wrongly and that soon on a tax designed by the same person making the forecast.
This government has no understanding of the pressures on the private sector, so it will make assumptions, it will print budget estimates and it will print budget forecasts to justify the measures it wishes to implement. It sees the world the way it wishes it was rather than the way it is. We have constant revisions downward. The problem is that when those forecasts are originally made there are plenty of people who say that those forecasts are rubbery. That has happened budget after budget, but this government does not listen.
The opposition will not support measures that are not sourced from MRRT revenue; they are sourced from borrowings and they are sourced from placing a further burden on future Australian taxpayers. We do not shy away from the need to put our fiscal house in order as a priority of the government of this country. The sad thing is that there was once a Labor Party that believed in this as well. Unlike those on the other side, the people on this side have always given credit to previous Labor governments when they have taken the right decisions. John Howard was always supportive of measures that were introduced under the prime ministership of Bob Hawke or even Paul Keating when they sought to liberalise our economy or when they sought to strengthen our economy. None of that has happened under this government.
We have seen tax after tax, rubbery forecast after rubbery forecast, downward revision after downward revision, and only a handful of years later we see the work of decades undone. The regulations, red tape and debt are at levels that, if they were predicted in 2007, those opposite would have laughed at. Those numbers are going to hang around the neck of the Labor Party for generations, as they should. This country has been through a unique period of a resource boom. We have had a unique period of revenue upswings, but none of that was put to use by this government. None of that was invested. None of that was put aside to pay for liabilities like superannuation run over decades like the previous government did. So—in my last few words before another guillotine comes down on the coalition's neck—we will stand by a balanced budget.
The question is that the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013 be now read a second time.
Question agreed to.
Bills read a second time.
In respect of the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, the question is that schedules 5 and 6 stand as printed.
Opposition ' s circulated amendments