Tuesday, 2 December 2014
Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014; Second Reading
Labor supports the Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014. The bill has four schedules, each implementing different measures. The first three implement minor amendments to previously announced Labor government measures. Schedule 4 is a necessary change in response to the increase in the fuel excise rate that was required to prevent an arbitrary change in excise subsidies.
Schedule 1 removes tax impediments to business restructures. Business restructures are complex processes designed to increase productivity and efficiency. To assist in this process, rollover tax concessions have historically been awarded to business to allow eligible businesses to defer income tax consequences of restructures. This amendment seeks to extend the availability of these concessions to suit a broader range of business restructures, thus reducing compliance costs and delivering greater certainty to business. The specific amendments contained in this bill were previously announced by the then Labor government as part of the 2012-13 budget. The changes to the announced measure are minor and not controversial.
Schedule 2 makes amendments to the managed investment trust withholding tax. The managed investment trust withholding tax regime provides a reduced rate of withholding tax for foreign investors in Australian managed funds for the purpose of attracting greater foreign investment in Australia. Currently, however, the concession is not awarded in circumstances where the ultimate beneficiary of the fund payments cannot be established. This is often the case where fund payments are made to trusts without entitled beneficiaries. Accordingly, foreign pension funds which receive such fund payments are not entitled to claim the MIT tax concession. The amendment will ensure that foreign pension funds can access the MIT tax concession by treating foreign pension funds as the ultimate beneficiary of fund payments.
Schedule 3 implements an income tax exemption for force posture initiatives. The force posture initiatives were first announced by Labor in 2011. These initiatives were designed to enhance the strategic and defence cooperation between Australia and the United States. The program involved annual rotational US Marine Corps deployments and enhanced aircraft cooperation activities with the US Air Force in Northern Australia. In August 2014, the Force Posture Agreement was signed between Australia and the US. As part of this agreement, an exemption was granted from Australian income tax for income derived by US contractors in connection with the force posture initiative. Such exemptions are already in place for 'approved projects' involving cooperation between Australia and the armed forces of the US. This amendment simply adds the force posture initiatives to the list of 'approved projects' to ensure that the income tax exemption also applies.
Perhaps the most significant element of this bill is schedules 4 and 5 to make changes to fuel tax credits and grants. Fuel tax is levied on all excisable fuel and petroleum products whether domestically produced or imported. The fuel tax credit system was established in July 2006 to ensure that fuel tax only applies to fuel used in private vehicles and for certain other private purposes. Since the cessation of fuel indexation in March 2001, the real value of fuel tax has declined with inflation. In order to bypass parliamentary approval, the Abbott government increased the rate of excised duty on fuel through a tariff proposal which, in effect, re-indexed the fuel tax rate with inflation.
The Customs Act 1901 and Excise Act 1901 allow for a variation of customs or excised tariffs to be made by the government initially without a bill, but validating legislation must be passed by both houses at a later date. This validating legislation can be a considerable time after the original proposal comes into effect but conventionally falls within three to 12 months of this date. However, tariff changes do not have a flow-on effect on tax concessions or subsidies which are linked to the nominal amount of the excise. As such, without this amendment, the real value of the fuel tax credit will fall, creating additional costs for eligible business.
On the subject of fuel tax, let me regale the chamber with a quote used by the shadow assistant Treasurer, Dr Leigh, when he began his contribution to the debate on this bill in the other place:
It is an absolute principle of democracy that governments should not and must not say one thing before an election and do the opposite afterwards. Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election and do the opposite afterwards.
I wonder who might have said that? Could it be a member of this side of the House? Those words were uttered on 22 August 2011 as part of a litany of statements by the now Prime Minister in the lead-up to the last election. He made statements such as: 'We want taxes going down, not going up,' and statements such as:
The one thing that people will never have to suffer under a coalition government is an unnecessary new tax, a tax that could easily be replaced by savings found from the budget.
That was what the Prime Minister said in parliament on 10 February 2011 when speaking about the flood levy to rebuild Queensland. The coalition opposed the flood levy. They thought those savings could be found from within the budget. But they do support the fuel tax. That is despite the statement by the Prime Minister on 10 May 2012, when he said that people who work hard should 'not be hit with higher taxes'. On 16 August 2011, he said:
A very clear message is going out from the Australian people to this government: there can be no tax collection without an election. If this government had any honesty, any decency, that is what we would have: an election now
That was repeated in this parliament on 14 September 2011:
I say to this Prime Minister: there should be no new tax collection without an election.
If the Prime Minister is to stick to his pre-election claims, then, apparently, Australia should be going to the polls, because that is exactly what has been foisted on the Australian people—an increase in the fuel tax in direct contravention of the Prime Minister's pre-election promises. Before the election, on 19 September 2012—September 2012 was the lie-athon: there was lie after lie after lie—the Prime Minister said:
The time for big-spending, big-taxing, big-fibbing government has gone.
I am afraid the Australian people do not see it that way. They see a government that is raising their taxes and fibbing to them all the way. Worse than the promise breaking is that the government is trying to mislead the Australian people. Let us not forget that it was the communications minister who called out the Prime Minister for his farcical statement that he had not broken his 'no cuts to the ABC' promise because he was actually implementing an efficiency dividend. How foolish the Australian people were to listen to the Prime Minister when he was campaigning before the last election, when what they needed to do instead was to look at the carefully crafted words of the communications minister beforehand.
Clearly, when the Prime Minister told Australians on 9 August 2013 that the only party that was going to increase taxes after the election was the Labor Party he was misleading Australians. It was another Liberal lie. On 14 March 2012 he said:
What you'll get under us are tax cuts without new taxes.
We are debating today a measure which arises directly from yet another broken promise among the litany of cuts to health and education to the tune of $80 billion and of cuts to the ABC. We are seeing great ABC workers losing their jobs, and cuts to production in Adelaide. But, as they have gone about trying to break this election promise, the Government has blundered yet again. The once shiny Treasurer is not so shiny after he drove directly into a fuel tax blunder. Let me quote very clearly what the member for North Sydney told ABC radio in regard to the fuel tax:
What we’re asking is for everyone to contribute, including higher income people. Now, I’ll give you one example: the change to fuel excise, the people that actually pay the most are higher income people, with an increase in fuel excise and yet, the Labor Party and the Greens are opposing it. They say you’ve got to have wealthier people or middle-income people pay more. Well, change to the fuel excise does exactly that; the poorest people either don’t have cars or actually don’t drive very far in many cases. But, they are opposing what is meant to be, according to the Treasury, a progressive tax.
Let us step through those claims that the poorest people either do not have cars or do not drive very far, and that the fuel excise is a progressive tax. In the other place, Dr Leigh referenced an ABC Fact Check, updated on 28 October 2014, which rates this claim overall as 'misleading'. First of all, the claim that poor people do not have cars: in a media release accompanying this extraordinary claim, Mr Hockey published a chart showing that 35 per cent of the lowest income households did not have cars. That is somewhat surprising, because there is an Australian Bureau of Statistics publication called Car Nation, which finds that only 15 per cent of those in the bottom income range do not have cars. That is 35 per cent in one publication and 15 per cent in the other
; there are slightly different measures of low income, but that is a big difference. So ABC Fact Check looked into it, and it turned out that the way in which Treasury had boosted the share of households that did not have a car was by assuming that if you answered 'not stated' or 'not applicable' to the question, then you did not have a car. They contacted the ABS, the Australian Bureau of Statistics, about this and the ABS frankly said that they would not make those sorts of assumptions. They would not try to inflate statistics on the share of Australians without a car by assuming that, if you did not answer the question, you did not have a car. But, even if we take the government at face value, their own statistics show that in the poorest income group two-thirds of households had a car. It is probably an underestimation; it is probably more like 80 per cent of those in the bottom-income groups have cars. Clearly, any way you cut the data, poor people drive.
What about the claim that they do not drive very far? We turn to Professor Graham Currie from the Institute of Transport Studies at Monash University. He conducted research in 2008 on average travel distances for people who live on the urban fringe of Melbourne and for inner-city area residents. It is not a perfect measure of low and high income, but we do know that inner-urban residents tend to have higher average incomes than those on the urban fringe. The typical travel distance for those in the inner area is 6.4 kilometres a trip and for those in outer fringe areas it is 16.4 kilometres a trip. The implication, as Professor Curries puts it, is that:
They have higher costs for travel and longer travel times.
Professor Currie also points out that people on the urban fringe are more likely to be travelling by car because there is very little public transport, so on the inner fringe a much higher share of trips are by public transport than in the inner areas. Again, poor people have cars and poor people drive further.
What about this extraordinary claim that the petrol tax is a progressive tax? What is the definition of a progressive tax? As any economist will tell you, it is a tax where the share of total income is higher for those at the top of the distribution than for those at the bottom of the distribution. Is that the data that the Treasurer produced? No, I am afraid not. The data that the Treasurer produced was dollar expenditure. He showed that higher income Australians spend more on fuel. This is absolutely true.
But that is not what we are talking about here. Of course, higher income Australians spend more on fuel; higher income Australians spend more on just about anything. In the 2009-10 Household expenditure survey, there are 593 items, and for 580 of the 593 items the rich spend more than the poor. There are only 13 items for which the poor spend more than the rich. The point of a progressive tax, as any Treasurer who knows his economics would know, is that the share of income is higher for the top than for the bottom. This is very clearly a tax whose burden falls more heavily on the bottom than the top.
If you look carefully at household expenditure statistics, petrol accounts for a higher share of spending among low-income households than high-income households. A fuel tax is therefore a modestly regressive tax. So on all three counts: poor people drive cars, they drive further and they spend a larger share of their income on fuel. It might be reasonable if the Treasurer were to say, 'Well, I know it's a regressive tax and I know it'll hit the poor hardest. But I've put in place a compensation mechanism to look after the most vulnerable and to protect them from the impact of my regressive fuel tax increase.' But that is not what this budget did. This is one measure amidst an extraordinarily regressive budget, which is probably the most regressive budget that Australia has ever seen.
This is entirely unlike what happened when a carbon price was introduced in Australia, when a household assistance package ensured that nine out of 10 Australian households received household assistance. This is a regressive fuel tax accompanied by a regressive budget. A NATSEM analysis, looking to 2017-18, analyses the change in disposable income from 18 different budget measures. That does not include the GP co-payment, but it does include the changes in family tax benefits, the clean energy supplement freeze, the changes to Newstart, the pensioner education supplement and senior supplement removal, the dependent spouse tax offset removal and the changes in fuel tax indexation.
The poorest couples with children, those in the bottom fifth of the income distribution, lose 6.6 per cent of their disposable income. This is a huge whack to these households, losing more than $1 in $20 out of their incomes. The poorest single parents, who are the single parents in the bottom fifth of the income distribution, lose 10.8 per cent of their disposable income. What an extraordinary government it is that would think that it is all right to look at the poorest single mums in Australia and take $1 out of every $10 out of their wallets. No government in Australian history has ever been so brutal to Australian low-income single parents as has this government in taking $1 in $10 from the pockets of these households. Think of a single parent family on $65,000 a year. They are losing something in the order of $6,000. That is a massive whack to the most vulnerable Australians.
We are not going to support the change in indexation to the fuel excise that was snuck in behind the back of the parliament. It is because it is a broken promise and one of a number of broken promises by this government. We as an opposition are opposing arbitrary increases in fuel taxes, but we are not a wrecking opposition. We are working constructively with the government to ensure that eligible businesses are not unduly punished. (Time expired)
I rise this afternoon to make comment on the Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014. I wanted to talk specifically about the fuel tax credits in schedule 4. The Australian Greens do not support this schedule because it reinforces this government's budget priorities of benefitting the wealthiest in our society, while imposing burdens on those who are the least able to absorb them.
The fact of the matter is big miners should pay more for their fuel, as everyone else is expected to do under this government. But, of course, what the community has not picked up on in the course of this debate on fuel excise, as has just been outlined by Senator Cameron, is that, with an increase in the fuel excise, the big miners have put out their hand to say they want an increase in the fuel tax rebate. In other words, they will not pay a cent more for their fuel under this government's proposition. It is exactly as Treasury Secretary Martin Parkinson said of the big end of town—that their philosophy on tax and their whole perspective on tax is to:
… take from the citizenry at large and give it to [us].
That is where the big miners are coming from.
In this whole debate, when the government proposed increasing the fuel excise, they were silent on the fact that that would cost the budget greatly because it would increase the amount that they gave back to the big miners who would not be paying a cent. And that is appalling. They tried to sell this argument about a fuel tax excise. In fact, it has been extraordinary to watch Senator Cormann stand here and try to argue that it is an environmental tax. What a joke! They are actually going to give it all back to the big miners so that they can pollute as heavily as they like. But, what is more, they want to spend any money that is raised on roads to expand urban sprawl, to increase congestion and to actually increase gas emissions. Once you build those freeways, add more congestion and push out the edges of the cities, you have no public transport, and the poorest people, who live further from the centre of the city, drive the oldest vehicles and have the least access to public transport, are the ones who suffer.
I want to come to this particular point about this schedule, because, make no mistake, schedule 4 says that the big end of town does not have to pay anything. Why should Gina Rinehart get cheap fuel when ordinary commuters suffer? Tony Abbott, the Prime Minister, and his government want to back the big miners, continue to give them the full fuel rebate, including this increase, and make ordinary families pay more under a budget that targets the most vulnerable. Billionaire mining companies should not have a free ride on fuel excise while everyone else has to pay. The Greens have always said that farmers, who need our support, should continue to receive it through the fuel rebate, but the big miners cannot have it both ways.
Frankly, I have never witnessed such a brazen attempt by any prime minister to ruthlessly and so quickly impose such a vindictive, hard, cruel and ideological agenda on the Australian people and our environment, and then try to justify it by concocting a fake national budget emergency. It is breathtaking to watch the Prime Minister and his Treasurer and finance minister try to con the community into believing that everyone has a moral obligation to share the burden of a confected crisis, arguing that the burden is being shared fairly whilst making absolutely sure that the full weight is carried by those who have no power to fight back—the young, the sick, pensioners, students and those least able to able to shoulder it, not to mention the natural environment and future generations. If you are privileged, the Liberals will protect that privilege; if you are already struggling, they will stamp you down and make your life harder.
It is very interesting that when there was some speculation that the diesel fuel rebate may be cut in the budget, who was the first in the Treasurer's office? BHP Billiton. There we had Andrew Mackenzie directly lobbying the Treasurer, saying, 'Do not touch BHP's fuel rebate.' On April 28, there was a confidential brief that was leaked with the miners rushing to the Treasurer, saying that any substantial change to the rebate would have a worse impact on them than the mining tax. In fact, if you look at the figures, it is absolutely disgraceful to see the billions that are going to be lost over time as a result of allowing the big miners off scot-free while requiring the community to pay.
This schedule will cover the difference between the fixed 38.14 cents per litre in excise and the twice yearly increase in the CPI indexation. Our amendment will prevent the big miners from being eligible for fuel tax credits. They would have to pay excise for fuel, like everyone else is expected to do. Currently, the big miners receive a gift of $1.5 billion in fuel tax credits from the repeal of the carbon price. The carbon price meant that they got 6 cents a litre less in their rebate than they otherwise would have done. When the carbon price was abolished, they got that full rebate back. That is $1.5 billion that the deal between Prime Minister Abbott and Clive Palmer delivered to the big miners. It is no surprise that, of course, Mr Palmer owns one of the big miners who benefited enormously from the repeal of the carbon price. The schedule, which people did not understand at the time, gave every big miner a 6c-a-litre additional rebate in their fuel tax credit. While we have the ABC being cut by $264 million, here we have in the budget this year the likes of Gina Rinehart, BHP and Mr Palmer, our member for Fairfax, getting—as I said—$1.5 billion in fuel tax credits. So anyone who thinks that this is about a budget emergency is totally wrong. This is about a choice by the Prime Minister to look after the mates at the big end of town and expect everybody else to pay. They are laughing all the way to the bank—the whole lot of them—in this case.
This schedule will give a further $720 million to them over the forward estimates in lost government revenue. That means it is a total of $2.2 billion that the big miners are going to get from the abolition of the carbon price and this increase in the fuel tax rebate to them—a nice little earner for nothing. They get off scot free on any increase in fuel excise. Why is that fair? How is that fair? It is not fair. It is because they fronted up in the Treasurer's office, and the government said: 'Don't worry; we'll look after you. You're the big mates. You're the big end of town. We'll look after you. Give us another cigar. That'll be all good. Then we will take it out of the pockets of the rest of the community, and we will sell that as a way of building roads to add more congestion, more greenhouse gas emissions and nothing into public transport.' It is really a Neanderthal way of behaving. We are in the 21st century. It is just utterly ridiculous that this is the case.
In line with the Greens policy, farming businesses that are eligible for the fuel tax credit should see those credits rise in line with movements in fuel excise. However, this schedule would compensate multibillion-dollar mining companies for all their expenditure on fuel excise. As I said, this measure this afternoon will cost the budget around $720 million over the forward estimates for the miners alone. Everyone who has been rallying around the country for the ABC, just listen to that again: what we are doing here today on this bill is giving the big miners $720 million while saying to the ABC, 'Sorry, guys, we're taking a couple of hundred million out of the ABC and SBS, but we want Gina and all the friends over at the big miners, BHP and the rest, to benefit from this.'
The Greens have always said that farmers who need our support should continue to receive it through the fuel rebate, and that seems to be the case. But it is clear that the big end of town is not doing any heavy lifting in the budget, and the age of entitlement has certainly not finished for the mining corporations. There is no public policy rationale for multibillion-dollar mining companies to receive taxpayer funded subsidies for fuel use in their operations. Not only is it an unjustifiable waste of public money but it distorts energy generation on mine sites, favouring diesel generation, which is rising in cost against clean energy and storage, which are falling and are cost competitive without the fuel tax credit for the mining operations. Not only is it grossly unfair that what we are doing here this afternoon, if the government has its way, is giving the big miners an extra $720 billion, but by making their diesel cheaper for them it means that they will not move to solar and battery storage for electricity generation on their sites. They will continue with their generators, their diesel fuelled operations. It is just the wrong way of going.
Subsidies for miners are popping up everywhere in greater exploration deductions, and in Queensland last week miners were told that they could have unhindered access to limited water resources and no longer have to go through licence approvals. What an extraordinary additional subsidy! This is ridiculous. Exactly at the same time, the Queensland government has taken the ecologically sustainable development principles out of the legislation. The intention is clear: take out sustainable development principles from the legislation and give the big miners unhindered access to water in a country where we suffer drought.
Do you know what is going to happen, Mr Deputy President? The farmers will have to come here and ask for drought assistance and assistance with water, and who will have gone and taken all the water but the big miners? It is just an extraordinary thing. We are coming into an El Nino. We are going to have accelerated global warming and an El Nino on top of it, and we have the Premier of Queensland, Campbell Newman, giving the miners unhindered access to limited water resources.
Never ever assume. When the coalition stand up anywhere in the country and say that they are being responsible about water, they are not. They are saying to the miners, 'You can have the water first.' Whether it is the mining operations with coal or coal seam gas or anything else, they can have the water. The environment can lose; the wetlands can dry out; the farmers can have their water contaminated; the groundwater can be contaminated, but never mind. So long as the miners want it, they can have it, and they can be exempted from the environmental assessment that is needed for the licence approval.
This statutory right to take water shifts costs onto farmers, who have to prove damage—technical and legal costs, for example—to local water resources before a mining company has to make good. So the farmers are going to have to pick up the costs—and this is the National Party delivering this, the National Party agreeing to this nonsense whereby the farmers are going to have to pick up the costs—against the big miners.
Gina Rinehart, who became Australia's richest person, valued at $20 billion on the BRW Rich 200 list, recently signed a $200 million deal with Caltex to provide her Roy Hill iron ore mine with 120 million litres of fuel. Under current laws, our Treasurer, Joe Hockey, will be writing her a cheque for $45.6 million for this agreement, rising over the life of the project under this bill. Who in their right mind could believe a Prime Minister or a Treasurer or a finance minister who gets up and tells the Australian community that there is a budget emergency when they are about to write a cheque for Gina Rinehart for $45.6 million for her 120-million-litre contract with Caltex to provide her mine with fuel?
That is how ridiculous we have become in this parliament. We are at the end of a cruel budget year, and what we are pushing through here is an increased rebate to the big miners. They got their 6c dividend with the abolition of the mining tax, and now they are getting an increased fuel tax rebate so that they do not have to pay anything additional and the rest of the community does have to pay anything additional. We are just seeing the most ridiculous position being put here. That is why I will move an amendment when we get to the committee stage to take out schedule 4 so that the rebate does not flow to the big miners. It should not flow to the big miners. They should have to pay; that is the fact of the matter. You cannot argue that the age of entitlement is over and then provide the entitlement to the big mining corporations in Australia. After their big success in the budget, having had the government back off getting rid of their fuel tax rebate, they are now going to have three successes this year. They had no reduction in their fuel tax rebate in the budget, they had the abolition of the carbon price, so an extra 6c went back to them, and now they are getting an extra $720 million out of the fact that the fuel excise has increased and therefore they get the full increase rebated to them.
We will hear, no doubt, from the finance minister about how he believes that an increase in the fuel tax excise is a climate change related policy and that is why they are doing it. If they are doing it for the environment, then they should abolish it for the big miners for a start and assist the budget in that way. But we all know that this is a load of rubbish and that all we have here is a revenue raiser from the government to take the money out of the pockets of the community and give it back in full to the big miners. The government, at the same time, will spend on roads which will increase congestion, urban sprawl and greenhouse gas emissions in Australia. We are already seeing greenhouse gas emissions rise because the finance minister, the Treasurer and the Prime Minister decided to get rid of the carbon price and forgo billions of dollars in revenue. We have seen the figures that came out in the last 24 hours. Once again emissions have gone up in Australia as a result of that action, and we are going to see that continue. Now we have a flurry from the government, thinking that they might now subsidise nuclear energy, because there is only one way you could ever get nuclear up in Australia, and that is with another massive government subsidy.
I end where I began. I remind the Senate of what Martin Parkinson, the Treasury secretary, had to say:
… take money from the citizenry at large and give it to me.
That is the philosophy of the big end of town in Australia. That is not the Greens saying it; that is the Treasury secretary saying it, and that is exactly what this is doing. This is saying: raise the money with the fuel excise from the citizenry at large and give it back in full to the big miners so that they can continue with their success with this government in getting rid of the mining tax, getting rid of the carbon price and making sure they hold their total fuel excise and all of the other subsidies that they benefit from.
Is it any wonder that the community recognises that this government is not governing for all Australians? It is managing to reward those who are extremely well off. Let us look at how much it is costing the community collectively. This is huge. The government intends to get $1.26 billion in savings from making the unemployed wait for six months and here the collective benefit to the big miners as a result of the government's activity is $2.2 billion. I think that tells the story. I look forward to moving my amendment in the committee stage.
Firstly, I would like to thank those senators who have contributed to the debate on the Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014. This bill will implement a range of improvements to Australia's tax laws, helping to clear the backlog of 92 unenacted tax and superannuation measures that we inherited when we came to government. It will also make sure that businesses that are entitled to fuel tax credits can claim them at a higher rate as a result of the government's tariff proposal that reintroduces fuel duty indexation to provide a predictable and growing source of revenue that the Commonwealth will use to deliver road infrastructure projects. This will help to give Australian businesses the certainty they need to get on with doing business and creating opportunity. It will assist businesses by reducing the costs of transporting goods around the country. With those few words, I commend the bill to the Senate.
Question agreed to.
Bill read a second time.