Senate debates

Monday, 2 March 2015


Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014; In Committee

8:43 pm

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

I move the Australian Greens amendment (3) on sheet 7665:

That schedule 1, page 3 (lines 1 to 20), be opposed.

We are moving this amendment in order to oppose the removal of the mature age worker tax offset—so, removing this schedule to maintain the mature age worker tax offset—because we feel the provisions that are currently available to mature age workers to stay in the workforce are very much provisions that are worth maintaining. We understand there are other incentives that are possible and which we support to keep mature age workers in the workforce, but we feel that this tax offset in itself is a very important provision that will help mature age workers to stay in the workforce.

8:44 pm

Photo of Lisa SinghLisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | | Hansard source

Labor will not be supporting this Greens amendment. Labor has a strong record of increasing workforce participation for older Australians. When we were in government Labor introduced measures including the productivity ageing package, which provided additional training and financial incentives for employers hiring older Australians. The previous Labor government also commenced the phase-out of the mature age worker tax offset—MAWTO—in the 2012-13 budget, limiting it to taxpayers born before 1 July1957. That measure had an estimated $255 million gain to revenue over the then forward estimates period.

This reform implemented a recommendation from the Henry review, Australia's Future Tax System, and built on Labor's growing record of tax reform. At the time, the then Labor government stated:

The MAWTO is a high cost method of facilitating mature age workforce participation. The Government will be investing in better targeted workforce participation programs.

The mature age worker tax offset is regressive and is not an effective way of encouraging older people into the workforce. Encouraging mature age workers to participate in the workforce can be done more effectively through direct payments or incentives. The Labor government planned these savings in order to be able to redirect support to better targeted mature age employment initiatives in order to give mature aged workers the greatest opportunity possible to secure and retain work if they wish.

In keeping with those plans, the government claims to have replaced the mature age worker tax offset with the restart program. This program will make a payment of up to $10,000 available to employers who hire a mature age job seeker 50 or over who has been receiving income support for at least six months. When initiated by Labor, some of the measures the savings were linked to included the National Workforce Development Fund to provide additional support to mature age workers and mature age participation through job seeker assistance and the Economic Potential of Senior Australians package of measures.

So it is for those reasons that Labor will not be supporting this amendment.

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party) Share this | | Hansard source

The question is that schedule 1 stand as printed.

Question agreed to.

8:47 pm

Photo of Lisa SinghLisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | | Hansard source

I now move Labor amendment (3) on sheet 7647:

(3) Schedule 2, page 4 (lines 1 to 16), to be opposed.

Labor's amendment ensures that the seafarer tax offset is not abolished. Abolition of the seafarer tax offset is the start of the coalition's attempt to remove the supports that Labor put in place to revitalise Australia's shipping.

The object of this offset is to stimulate opportunities for Australian seafarers to be employed or engaged on overseas voyages and to acquire maritime skills. It provides a benefit to employers of Australian seafarers. The offset also is only two years old, yet the government wants to abolish it already. It should be given an opportunity to work, because Australia needs to maintain and expand its maritime skill base. The Australian Shipowners Association, in fact, strongly opposes the abolition of the offset, and so do Shipping Australia, the MUA and the department of infrastructure. No submissions to the legislation inquiry on this bill, in fact, backed the abolition. In fact, apart from the coalition all on its ownsome, I cannot find anyone at all who supports the abolition of the seafarer tax offset. This tax initiative was one of several that arose from the lengthy industry consultations that led to Labor's shipping package. This package commenced in July 2012 and has been operational for just two years, and already this coalition government wants to abolish it.

Australia, as we know, is an island nation. One-tenth of the world's trade goes to and from Australia. Australia has the fourth largest shipping task in the world. It is in Australia's national and security interests to revitalise Australian shipping, not to provide this backward step through the abolition of the offset. Australian shipping is an industry in its own right. It is not simply a cost to other industries. The coalition should stand up for Australian shipping rather than do what it has done continually over the past year and a half, which is walk away from taking practical action to save jobs and defend Australian skills.

We know that the coalition will soon try to walk away from supporting Australian coastal shipping. Opening the coast to an increased number of foreign vessels on Third World wages is bad for safety, is bad for our sensitive maritime environment and deprives us of skills needed to maintain security at our ports and harbours. It makes related activities like shipbuilding and ship maintenance less viable and weakens our long-term naval capacity.

That is why the opposition moves this amendment on sheet 7647.

8:51 pm

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

The Greens will be supporting this amendment. It is the equivalent of our amendment (4) on sheet 7665.

This amendment really puts the priorities of this government in stark relief. We are going to be saving a measly $2 million by abolishing the seafarer tax offset. In doing that we are going to be adding to the risk of completely destroying the Australian shipping industry—shifting support away from the Australian shipping industry so that we will end up having virtually no Australian flagged ships or Australian workers, and far fewer Australian seafarers, in our waters.

It is a tiny saving that this measure would make. It is a measure which makes savings that, if it were being supported in the interest of balancing the budget, could easily be made in other areas. In fact, many times this amount of money could be made in revenue from the big end of town.

The shipping industry needs certainty at the moment. We have the minister's options paper, so we really do not need to be adding this as an extra impact on the shipping industry—an extra impact that is going to be reducing the viability of the Australian shipping industry. Shipping is an international industry and it means that we have to be competitive internationally. Other countries have similar tax offsets. Removing this tax offset will put the Australian shipping industry at a disadvantage. As Senator Singh has already said, the seafarer tax offset has the support of players right across the field in the shipping industry. It is a measure that, for a relatively small cost, helps to support and enable our shipping industry to continue to flourish and thrive.

The TEMPORARY CHAIRMAN (20:54): The question is that schedule 2 stand as printed.

Question negatived.

8:54 pm

Photo of Lisa SinghLisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | | Hansard source

I move opposition amendment (4) on sheet 7647:

(4) Schedule 3, page 5 (lines 1 to 17), to be opposed.

I do so as it relates specifically to a research and development tax incentive which will be reduced by 1.5 per cent, as it was from July last year. This will reduce the offset from 45 per cent to 43.5 per cent for companies with an annual turnover of less than $20 million, and from 40 per cent to 38.5 per cent for all other companies. As that is, it will preserve the relative value of the R&D tax incentive to the company tax rate, which will be cut by 1.5 per cent in July 2015—that is, July this year.

The level of R&D tax incentive is determined by the R&D rate and the company tax rate. As company tax is being reduced by 28.5 per cent, maintaining the current R&D rate would effectively increase the subsidy. Companies will already receive a benefit from the reduction in company tax and so this reduction should not reduce overall R&D expenditure, as the size of the subsidy is maintained. There is a potential timing issue, as well, with the R&D tax incentive reduction occurring one year earlier than the cut in company tax. This means that the difference between the company tax rate appears to be lower in the 2014-15 year than in previous and future years.

This potentially undermines the ostensible policy rationale for the save, which is to maintain a stable R&D reduction rate. However, companies are able to carry the R&D tax incentive forward into future tax years, which may reduce the impact of this timing effect. This may explain why the first year of this measure has a smaller impact on the budget bottom line compared to the outer years.

More fundamentally, though, when the Labor government changed the R&D tax incentive arrangement from a tax credit to a tax offset, one of the reasons it did so was to increase certainty by uncoupling the level of R&D support from the corporate tax rate. The proposed change undermines that uncoupling and raises an expectation that every time there is a change in the corporate tax rate we could see the incentive adjusted accordingly. Given that multinational companies, in particular, often need to make those periodic large investments in R&D capability to undertake ongoing R&D in Australia, certainty, transparency and international comparability of the investment environment are critical for Australia to attract such investments. It is with that in mind that Labor moves this amendment, item (4) on sheet 7647.

8:58 pm

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

The Greens will be supporting this amendment, it being the same amendment as our amendment (5) on sheet 7665. The reduction in R&D funding that would occur through this schedule, cutting 1.5 per cent from research and development, is entirely the wrong direction than we need to be taking as a country. We are already trailing far behind our trading partners and other countries like Germany, the UK and the US, and are outspent in research and development by key trading partners like Korea and Japan. We need measures that increase the amount of support and funding to research and development, not cutting it back. There is no justification for reducing expenditure on science and research and development.

This is particularly highlighted and underlined by the fact that already, before implementing this measure, we have the lowest expenditure on science, research and innovation since Treasury started publishing data in the late 1970s. We are set to spend less this year than we did in 1979. This is just appalling. This is not the Australia of the 21st century. It is not direction our economy needs to be heading in. We need to be supporting research and development. The R&D tax offset is just one measure that is part of that support for a country that really values science, that values research and development, and that knows where the future of our economy needs to be headed.

The TEMPORARY CHAIRMAN: The question is that schedule 3 stand as printed.

Question negatived.

9:00 pm

Photo of Lisa SinghLisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | | Hansard source

by leave—I move items (1) and (2) on sheet 7647 together:

(1) Clause 2, page 2 (table item 2, column 1), omit "Schedules 1 and 2", substitute "Schedule 1".

[seafarer tax offset]

(2) Clause 2, page 2 (table item 3, column 1), omit "Schedules 3 and 4", substitute "Schedule 4".

[ R &D tax offset]

These are consequential amendments required following the support of Labor's amendments that removed schedules 2 and 3 from the bill.

The TEMPORARY CHAIRMAN: The question is that the amendments be agreed to.

Question agreed to.

The TEMPORARY CHAIRMAN: Senator Rice, I am seeking your guidance. You are not seeking to move the amendment on sheet 7665; I understand that is the amendment that Senator Singh just moved?

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

Yes, I think our other amendments were consequential.

The TEMPORARY CHAIRMAN: The question is that the bill, as amended, be agreed to.

Question agreed to.

Bill, as amended, agreed to.

Bill reported with amendment; report adopted.