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

I am pleased to inform the Senate at the outset that the opposition will be supporting the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015. This bill contains four schedules. Schedules 1, 3 and 4 are non-controversial, technical changes with no fiscal impact. Schedule 1 provides tax relief for certain mining arrangements, schedule 3 deals with income tax look-through treatment for instalment warrants and similar arrangements, and schedule 4 deals with certain categories of company losses.

Schedule 2 is the material schedule of this bill. It increases the statutory effective life of in-house software from four years to five years, and this means that deductions will be claimed over five years for expenditure allocated to software development pools. The measure is a recognition of the fact that software developed in-house has a longer effective life now than it had in the past. The savings are not inconsiderable either—some $420 million over the forward estimates—and it is a measure of Labor's constructive and bipartisan approach to budget savings measures that we do support this bill. We believe it meets the key tests of being equitable and efficient by aligning the statutory life of in-house software with its practical life span.

I would, however, contrast Labor's constructive approach to this particular measure with the approach the coalition took in 2008, when the effective life of in-house software was last changed. In the 2008 budget, the then Treasurer, Mr Swan, recognised that the effective life of in-house software had risen, and moved that it be extended from 2½ years to four years. At that time, the member for Cook, Mr Morrison, in the other place referred to that move as 'a completely fruitless and pointless exercise' and 'a grab for tax'. So, in 2008, the coalition displayed a lack of bipartisanship when facing exactly the same measure that we are considering now. They chose the cheap political grab over sensible and constructive support, which is what the opposition offer here today.

The Labor opposition will not be doing what the then coalition opposition did in 2008, because we recognise that the depreciation of in-house software ought to reflect its practical life span. We recognise that the practical life span of in-house software has increased. Software is now doing its job for longer in the real world, and the tax laws need to keep up with that. We will not be suggesting, as the coalition did in 2008, that this is a 'completely fruitless and pointless exercise' and 'a grab for tax'. We recognise that in-house software development is an extremely important part of innovation and an important part, therefore, of a modern economy. It is supported through the tax deduction for software development itself and through the research and development tax credit.

In this vein, the significant cuts to the research and development tax credit contained in the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill, which is listed for debate in the Senate tomorrow, put in jeopardy the $9.3 billion of in-house software development paid out by companies with turnovers larger than $30 billion. The Parliamentary Library has estimated that research and development spending will be 0.56 per cent of GDP in 2014-15. That is equal to the lowest level since records began in 1978-79.

This is hardly surprising, given this is a government that came into this office without a science minister, a government that has been slashing jobs recklessly from the CSIRO and a government that has been cutting the research and development tax credit. It is hard to imagine how Australia goes forward as a strong and innovative nation when we have a government which is so anti science, shutting down the Climate Change Authority and cutting back funding to the CSIRO and to the research and development tax credit. Many on this side of the parliament have a passion for research and development, for science, for the development of new firms and for the ability of existing firms to innovate. But you do not get any of that when you cut back on research and development assistance.

This is a tax reform measure, and so it is appropriate that we look at the government's overall record on tax. If we look at tax as a share of GDP and at tax receipts, we see that tax receipts are predicted to rise from 22.3 per cent of GDP in the current fiscal year to 23.4 per cent of GDP at the end of the forward estimates. That puts tax considerably higher than it was under Labor. During Labor's period in office, the tax share of GDP sat at around 20 to 21 per cent. So Australians will find it strange when they hear Mr Abbott and Mr Hockey bellowing about this being a low-taxing government. All you have to do is look at the budget papers—budget statement No. 1, pages 10 to 12 and 10 to 13—to see that they give the lie to the suggestion that this is a low-taxing government. This is a government which aims to have a tax share of GDP considerably higher than Labor did. The last budget brought down 17 new or increased taxes, and, when this government brings down taxes, almost invariably they are taxes that hit low- and middle-income Australians.

We in the Australian Labor Party believe in serious tax reform. That is why during the first half of this parliamentary term we brought out a policy on fair taxation and multinationals—a move not made, I believe, since the 1990 to 1993 parliamentary term. It is a policy that will raise over $7 billion over the course of the decade by allowing more careful treatment of hybrid instruments—by allowing the Australian Taxation Office to look at how other tax offices deal with hybrid instruments, rather than being blind to the tax treatment of hybrid instruments in other jurisdictions.

Labor's multinational tax package says that, rather than allowing companies to pick their favourite debt deduction rule, all companies should have to use the debt deduction rule that makes economic sense—that is, the worldwide gearing ratio. It is a rule that, put simply, says that if you owe a lot of money to the banks you can deduct a lot of money for your Australian operation; if you do not owe much money to the banks you cannot claim large debt deductions for your Australian operation. It is economically sensible, it is grounded in work that the OECD has been doing in their Action Plan on Base Erosion and Profit Shifting, and it adds to the budget bottom line to the tune of $7 billion over the course of the next decade. It is sensible policy.

This year, Labor has announced a package curtailing excessive superannuation tax concessions. The government's own Financial System Inquiry found that 10 per cent of Australians receive 38 per cent of Australia's superannuation tax concessions—more than the bottom 70 per cent of Australians receive. Indeed, if we go further up the distribution chain, we know that the top one per cent of Australians get more superannuation tax concessions than the bottom 40 per cent. This is why the government's own Treasury secretary, John Fraser, has said that we need a rethink of superannuation tax concessions. This recognises that superannuation tax concessions are the fastest-growing tax concessions in the budget.

As the Shadow Treasurer has pointed out, current superannuation tax concessions are not fair and they are not sustainable. The forgone budget revenue from superannuation tax concessions almost doubles over the next four years, from $11.8 billion in 2014-15 to $22.4 billion in 2017-18. The forgone budget revenue, as a result of the superannuation tax concessions, will soon exceed the total expenditure on the pension. The government's own tax white paper suggests that superannuation tax concessions are an area that ought to be looked at. The government have eschewed that recommendation, saying instead that they will not change superannuation. When they say that, they are not saying that they will not take away the low-income superannuation contribution, which benefits three million low-paid Australians, two-thirds of whom are women. No. They are willing to scrap that! They do not mean that they will not continue to increase the universal superannuation contributions, frozen at 9½ per cent. No. They intend to do that, despite the fact that they themselves benefit, as those who have served as parliamentarians since 2004 receive a 15.4 per cent superannuation contribution. Nine and a half per cent is apparently good enough for the low paid; 15 per cent is good enough for those who serve in here. We on the Labor side of this Senate are deeply concerned that the government is not willing to tackle these unfair and unsustainable superannuation tax concessions, as are so many business groups and the head of the Treasury and as the government's own tax white paper has said.

The government's approach to multinational taxation has been to try to shield big companies from legitimate scrutiny. Extraordinarily, the Treasurer was out recently saying that we did not need the Senate economics inquiry into multinational tax, because the government was already requiring firms with a total income over $100 million to report total income, taxable income and tax paid. It might have helped if he had also told listeners to the program that he was on that that was the measure he was trying to wind back. That is right. It is such a good measure that Mr Hockey is trying to shield almost half the firms that are affected by it.

Multinational taxation is a core part of the taxation reform agenda, which we are discussing in this bill before us in the Senate today. Unless the government are serious about tax transparency, unless they are willing to take on Labor's sensible measures on multinational taxation, we are not going to get far with a constructive bipartisan debate that will add to the budget bottom line. The government's own multinational tax measures are so woolly that Treasury cannot cost them. The bits that can be costed raise a desultory $30 million, less than one-sixtieth of what Labor's package raises. Fundamentally, that is because this government is not serious about cracking down on multinational profit-shifting.

When Labor brought a sensible multinational profit-shifting package to the parliament in 2013—under the leadership of Wayne Swan and David Bradbury, who a couple of years later received an international tax award given to the 50 most serious tax reformers around the globe—the coalition voted against it. When coalition came to office, they failed to enact the $1.1 billion package, effectively handing $1 billion instead to multinationals. When Labor came up with our package, I have to be honest, given all the government's complaining about budget emergencies I fully expected them to embrace part of it. I thought, 'Well, that is a pity, we will not get to see a Labor government embrace it, but ultimately what you want in this place is for your good ideas to be at least taken up.' We were extremely surprised when the coalition government decided instead to back the big end of town—to not embrace our package, not even in part. Well, maybe we were not all that surprised after all, because, let's face it, they do have a bit of a track record in this space.

If on the one hand they say there is a budget emergency and on the other hand they are doling out a billion dollars to multinationals, it does not seem to fit. Many Australians will be concerned about the sacking of 1,100 compliance staff in the tax office in the past year alone, including 270 from specific sections that investigate private companies. Labor's additional investments in the tax office's compliance program continue to provide dividends in the form of increased revenue for the tax office, significantly exceeding in increased revenue what we spend on it. That program is slated to come to an end, and the government has no plans, so it seems, to continue it.

In recent times there have been attempts by those on the opposite side of the chamber to talk up the degree of bipartisanship the Hawke-Keating Labor governments enjoyed as part of implementing the groundbreaking reforms that opened up our economy and led to unprecedented economic growth. An opinion piece by John Howard in The Australian Financial Reviewon Monday, 17 August, this year even suggested that the bulk of those reforms enjoyed bipartisan support. Paul Keating responded the following day in classic Keating style, pointing out a reform or two not backed by the then coalition.

Let me go through only a partial list of those tax reforms and other reforms of the eighties and nineties which were not backed in. Medicare was fought by the coalition. Native title was fought by the coalition. The petroleum resource rent tax was fought by the coalition. The HECS scheme was fought by the coalition. Capital gains tax was fought by the coalition. The assets testing of the pension was fought by the coalition. The fringe benefits tax was opposed by the coalition.

They like to come in here and talk about the legacy of the Hawke and Keating governments. They love to say they were halcyon days when Labor believed in reform and the coalition just backed it in. That huge list that I just gave you shows what a furphy that is. The fact is that so many of the reforms on which Australia has been built, on which this country has been built—from universal superannuation to Medicare—were fought tooth and nail by the Liberal and National parties in this country. They have had to be dragged kicking and screaming to support good and sensible reform enacted by past Labor governments.

By contrast, we on this side of the Senate are today standing up and supporting the kind of reform that was opposed by those opposite in 2008 when we were in government. When we in the Australian Labor Party see sensible reform we back it in. In doing so, Labor is going to be supporting this bill and will not be doing what the coalition has done so many times throughout history when it has not backed in sensible economic reform.

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015, and I welcome the fact that the opposition have indicated that they will support the bill, notwithstanding the spray that people have just heard about certain aspects of the economic history of this country going back to the eighties and nineties. Let me expand a bit on that economic history in order to correct this impression that has been going around ever since Paul Keating wrote an article to The Australian Financial Review seeking to rebut some comments by the former Prime Minister, John Howard.

The eighties was a period where several major reforms were backed in in this country, and that was done with the support of the opposition. The most significant was the flexible exchange rate. That was a very important reform which opened the way to a lot of other reform. The coalition, having gone into opposition, could have played politics with all of that but did not. They backed it in. They supported it wholeheartedly. Malcolm Fraser and John Howard had put together, through the Campbell committee, a set of recommendations to open up the banking system.

When Paul Keating came to power as Treasurer in 1983 he appointed Vic Martin to do a review in order to find a way to rationalise the Labor Party's support for those changes, which went to the entry of foreign banks and the deregulation of our capital markets. The financial services industry, which is so important today, particularly in my home state of New South Wales, and which is one of Australia's comparative advantages today when it comes to trade and investment, grew off the back of that deregulation and having a sound, robust regulatory system. That was supported by the coalition. Labor built on the work of the coalition to bring forward the recommendations of the Campbell committee.

What was the big tax reform that was attempted in the 1980s? It was the rejigging of the taxation system to put more focus on indirect tax and to take it away from direct tax. It was to reduce income tax and company tax and put more focus on indirect tax through a broad based indirect tax known as the goods and services tax. That was the big change. That was option C, and Labor laboured mightily in 1985, through the tax summit and whatever, to produce a package which included this major tax. Who was the first person who expressed support for this tax package? It was that then shadow Treasurer, John Howard. In fact, Paul Keating went up to him and signed a copy of the paper that encapsulated option C, and they talked about the importance of getting this tax reform through. What happened on option C? It was torpedoed by the then Prime Minister, Bob Hawke, because the ACTU had the final veto over that package. Isn't it funny—30 years down the track and here we are again: the ACTU has a veto over Labor Party policy. It was Simon Crean and Bill Kelty who vetoed that package. The coalition was prepared to support a comprehensive package, but then Paul Keating decided that he would go with changes to capital gains tax, fringe benefits tax and other things, but he was not prepared to have a go with the big change, the big reform. So the coalition rightly said, 'We are not going to support piecemeal reform—we need comprehensive reform.'

That is what the 1980s were about: when bipartisanship counted on the big things, the things that would particularly impact on the public, on the person in the street, the coalition was prepared to be there. The coalition was prepared to be there on tariff cuts, which impacted on part of the coalition's constituency in manufacturing, industry and business. We are seen, in part, as a party which has some regard for business—big and small business—but we supported those tariff cuts. We did not exploit every job that was being taken out of motor vehicles or textiles, clothing and footwear. We supported those cuts right through that period, including the third set of cuts in 1991 at the height of the recession we had to have. So this talk about seeking to close down bipartisanship and trying to minimise the amount of bipartisanship is wrong. On the big calls, the coalition was there.

That changed in 1993, when Dr Hewson came along and Paul Keating decided that for political reasons he would not support a GST—what he would do was to say, 'You can have income tax cuts without a GST.' 'The budget will whirr back into surplus,' he said. He produced a set of numbers in his One Nation statement to show that this would happen almost automatically as the economy recovered; you did not have to have more hard reform. Well, we saw what happened: he opposed reform, then from 1996, when Labor went into opposition, they opposed any and every reform going. That was the sad reality of that period. All those reforms—the New Tax System in 2000—were hard fought. We had to get votes wherever we could in the upper house. So there was bipartisanship on economics in the eighties and nineties but it has since disappeared, much to the cost of the national economy.

I want to pick up on what Senator Singh said in relation to the issue of spending and taxation. She rightly said that Labor have produced a couple of proposals lately in respect of taxation. But they do not talk about the budget as a whole. They do not talk about how they are going to pay for the billions of dollars worth of promises that Bill Shorten made in his reply to the budget—$40-50 billion worth of promises—

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Tell us about your first budget!

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

We needed that first budget, Senator Cameron, in order to deal with the mess that you left us, the trajectory of debt and deficit that you put us on. You still do not admit that, and this is a major issue. One of the mistakes that Ed Miliband made when he became leader of the Labor Party in the United Kingdom in 2010 was that he did not admit that Labor had botched its economic record in its last years in government and needed to start over again. He moved more to the left rather than going to the centre. Every time you want to talk about the budget, all Labor spokesmen want to talk about is more tax. But look at some of these proposals that they have put up on tax or superannuation, where they talk about taxing earnings in the retirement phase. I had a look at that when I was Assistant Treasurer, and the advice that came back from the Treasury was that this measure, which had been snuck in towards the end of Labor's time in office and had been announced but not enacted, was not workable and would not raise the money that was being claimed. At any time since then the Labor Party have had the opportunity to be briefed by the Treasury to that effect. When I came in as Assistant Treasurer, with Joe Hockey as Treasurer, there were 92 announced but unenacted measures. We systematically went through that list to get them done. In a number of areas, such as warrants on shares, this bill deals with announced but unenacted measures which are finally being implemented by this government.

This government is also tightening up on tax in this bill. The effective life of software is being increased by a year. That will save the budget $420 million over the four years to 2017-18. On tax more generally, the coalition is looking at further measures which tighten up taxation in relation to multinationals. But we are not doing it in a harum-scarum way. We are not doing it in a dash for a media headline. We are looking at this rigorously, conscious of our obligations as part of the Organisation for Economic Cooperation and Development. We are involved—and we were involved when we chaired the G20 last year—in what is called the base erosion and profit shifting exercise, which is looking at how the changing nature of the global economy is affecting where you tax and how you tax. In a world dominated increasingly by intellectual property, this raises thorny issues about how you define tax, the point at which you tax and what, for example, 'permanent establishment' means when you are looking to find the taxing point.

These are very important issues, and the reason it is important to look at them in a multilateral way is that, first and foremost, we have double tax agreements. We have to be conscious that changing our tax system has ramifications for other countries, where income is earned in one country and potentially shifted to another country or taxed in another country. We have to be conscious that when it comes to tax rates, there is competition going on around world. There is no point putting our heads in the sand. The fact is that we compete with a lot of countries which are lowering their tax rates, particularly on corporate income. All of that is above board. Look at some of the arrangements they have in the UK now for taxing corporates: 20 per cent, 18 per cent. These are the range of issues that we have to look at. The UK recently looked at a Google tax, but we are not implementing anything unless we are completely satisfied that it is rigorous and will raise the revenue that is being claimed. That is why, in the budget, when we have taken measures around tax evasion in this sector, we do not necessarily put a number against it—we wait until we see the result. We do not want to exaggerate the potential impacts. But the Treasurer, Mr Hockey, will soon be releasing government legislation around multinational corporations.

Consistently, we have to remember that if we want lower taxes, we have got to have lower spending. We have to keep a lid on spending, otherwise we will not get tax rates down in a sustainable way. As a country, we have to make sure that we are competitive when it comes to both our tax and our spending. When it comes to tax reform, it is important that we look at how we reform personal income tax, company tax and indirect tax. It is important to look at all of this as a package. It is important to look at the costs and benefits of various concessions.

A thing that we are doing as a government is that later this year we will releasing an options paper on comprehensive tax reform and then taking a white paper to the election. If Labor wants to be serious about this, it must not focus on individual measures; it is about putting a package together. Unless you put a package together, people cannot see the ultimate impact on the budget bottom line and on their hip pocket. It is very important to put that together as a package. In the context of what the government is doing, we are also mindful of the need for a clear delineation of roles and responsibilities between different tiers of government and to make sure that governments are in a position to raise the revenue they need to fund the services they need.

People forget that for all the vilification of the goods and services tax, it goes to the states and is used to fund essential services like health, education, police and so on and so forth. That is what it does. In fact, there were some people on the right wing of the Liberal Party who objected to the goods and services tax and said, 'That's just going to be a blank cheque for people to keep raising the rate to fund services and increase spending.' That was on the right wing of the Liberal Party. That is what they said. But we needed to rejig the indirect tax system because it was narrow and inefficient, based on sales taxes, stamp duties and the like.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Name them! Name and shame!

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

It was people like Senator John Stone, for a start.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

That's one. Name them!

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

That is an example. There are others, Senator Cameron. The important point here is that Labor should not put their head in the sand. We cannot just fund increasing spending. The gap will just open up and the deficit goes up. The deficit goes up, so the debt goes up. Debt is just deferred tax. Sooner or later, you have got to pay it. We cannot just keep kicking the can down the road.

The ratings agencies look at Australia and they look at our debt. When our net debt gets to about 20 per cent of GDP, they will start to ring the alarm bells if we not careful. They will start to say, 'Well, this country isn't on the right path. It's not a sustainable path.' Why is it an issue for us? Because even though we are in the G20 and we are the 12th largest economy in the world, relatively speaking, we are still a small, open economy that is still subject to external crises and still very much subject to foreign investment.

We need to attract foreign investment. A huge amount of that foreign investment into Australia is coming in the form of debt through our banking system, which then gets recycled into housing and so on and so forth. That is why during the global financial crisis, when capital markets froze across the world, we had issues with our banking system and had to provide guarantees for depositors and all the rest of it, as other countries were doing. That was because we were so interconnected with global capital markets.

This is an important bill. It is a further instalment and a further down payment on our second budget. It is an important budget which also rightly recognised the role of small businesses in our economy. It had a range of measures to support small business by cutting tax to those businesses in the tax net, giving a benefit and giving instant asset write-offs of up to $20,000 from now until 2017-18 to those businesses who are not incorporated and who are not in the tax net. They are very important measures, all of which are meant to promote the small business sector of the economy. That is a sector where you get the new enterprises which are potentially the medium and large enterprises of the future—the start-ups.

That is why we have also made good on our promise to fix up employee share ownership, which Labor had botched in 2009. That is because people who work in start-ups cannot be paid an appropriate salary, but they will take a cut of the upside of what happens when the value of a company or a start-up goes up when they finally commercialise a major new product, process or service. These are very important measures. That start-up economy is something that we need to increasingly nurture.

In my own state of New South Wales, there is a lot of work going on around promoting the fintech sector, which is technology and its application to financial services, which will disrupt existing models. It will disrupt the way the big banks operate and it will provide new products, processes and new ways of doing things. That is very important to us and it, of course, has implications over the next few decades about taxing points and how we tax. As I said before, we are increasingly living in a world where intellectual property is so important. Taxing that properly on an equitable basis between countries is going to be very, very important.

For those who want to see multilateral tax reform—particularly in this area of base erosion, profit shifting and dealing with multinationals—it is very important that the United States of America is persuaded to be as supportive as possible of these measures; without the support of the US, these measures will not be as effective as they should be. That is because so many of the corporations that we are talking about are, at the end of the day, American corporations. I am thinking of Google, Amazon and Microsoft—you can go through the list. One of the challenges we faced, and I faced when I was Assistant Treasurer, was understanding better the business model that underpins these companies and the implications that has for tax. You cannot look at tax, as I said before, through a filter of our local conditions only. You have to look at it in the context of the multilateral rules around all of this.

In the time left to me, I will just say that the OECD has done valuable work in these areas. I think it would be a pity if we just discount that work. It is complicated work; it is complex. In fact, there are people like the former Assistant Treasurer, David Bradbury, who have been involved at the OECD end of all of this. This is important work. It is rigorous. If we do things in tandem with other countries, we will get the best possible result. On that point, I will sit down.

Michael Ronaldson (Victoria, Liberal Party, Minister for Veterans’ Affairs) Share this | Link to this | Hansard source

On behalf of Senator Cormann, I thank those senators who have contributed to this debate. I congratulate Senator Sinodinos on his speech today. He articulated very clearly the government's desire. He articulated very clearly why we believe the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015 is so important. The Abbott government is determined to repair the budget and to change the outlook for Australian families and businesses. We want to make sure that future generations will enjoy the same high living standards we do. We want Australia's future to be one of prosperity and opportunity.

I turn now to schedule 1 of the bill, which relates to tax relief for certain mining arrangements. This bill keeps our promise to the resource sector. Limiting the immediate deductibility of mining rights and information will not impact farm-in farm-out arrangements or resource sector interest realignments. These arrangements will ensure genuine exploration activities and other legitimate restructuring arrangements can continue without any unintended tax consequence. This is important for both small explorers and larger scale oil and gas producers. This measure maintains the tax neutrality of a farm-in farm-out arrangement and provides tax rollover relief for an interest realignment in which the parties to a joint venture exchange interests in mining, quarrying or prospecting rights.

I now turn to schedule 2, which relates to increasing the effective life of in-house software. Schedule 2 to this bill will make a minor change to the depreciation treatment of software used by businesses. Taxpayers can claim a tax deduction for money spent on software. This includes packaged software bought off the shelf and money spent on developing software in-house. Currently these deductions are spread out over four years. This schedule increases this period to five years starting from 1 July 2015. This change will mean that the effective life of software for tax purposes better reflects the typical useful life of software for businesses. Taxpayers will still receive the same tax deduction in total; it will just be spread out over one extra year. This schedule will save $420 million over the four years to 2017-18, helping to repair the budget.

I now turn to schedule 3. This relates to income tax look-through treatment for instalment warrants and similar arrangements. Currently some uncertainty exists regarding the income tax treatment of instalment warrants and instalment receipts. Schedule 3 to this bill removes this uncertainty. Instalment warrants and receipts enable investors to purchase assets by paying in one or more instalments. For capital gains tax purposes it is a longstanding practice for taxpayers to ignore the instalment warrants and receipts arrangement. Uncertainty has arisen about whether this practice is supported by the tax law. Schedule 3 to this bill clarifies the income tax treatment and provides certainty for individuals, businesses and superannuation funds.

I now turn to schedule 4, which relates to multiple classes of shares. Schedule 4 to this bill will ensure that the company loss rules operate as intended. This measure is part of the backlog of announced but unenacted tax measures. A number of tests are used to check whether companies are able to carry losses forward. These tests relate to the company maintaining the same ownership and control and carrying on the same business from the time the loss was incurred. Currently there are some small issues with these tests, which means that they do not always operate as intended for some taxpayers. This stops some businesses from being able to carry forward their tax losses and to use them in future income years. Schedule 4 to this bill fixes these technical issues and will provide taxpayers with much needed certainty. Full details of each of the measures in this bill are contained in the explanatory memorandum.

In conclusion, the measures in this bill are part of the government's plan to repair the budget and build the foundations for a strong and growing economy. We are committed to repairing our finances so that future generations can enjoy the same standard of living we do. This bill will ensure that genuine exploration activities and other legitimate restructuring arrangements will continue without unintended tax consequences. The bill will also increase certainty for businesses and investors, reduce red tape and improve the integrity of the tax system. These changes are another important step in clearing the backlog of announced but unenacted taxation measures. I commend this bill to the chamber.

I want to take the opportunity to take up some of the Minister for Finance's words in relation to our plan to repair the budget and to build the foundation for a strong and growing economy. While one is no less important than the other, I want to focus on the second part, which is the foundation for a strong and growing economy.

I had the honour to represent the government in China last week for China's 70th anniversary commemorations for the end of the Second World War. This nation had similar commemorative events. On Thursday it will be my great honour to join a group of men who were at the tail end of the war. As you would be aware, Mr Acting Deputy President Back, the war in New Guinea and other parts continued even after the surrender was signed. These men were in New Guinea at the time. When I was in China, I met with the Vice President, Mr Li. We were talking about ChAFTA—our free trade agreement. When we were talking about that, I was reminded of the words of Senator Cormann about the need to build the foundations for a strong and growing economy.

On this side, we understand—as, I suspect, many on the other side understand; certainly, former members understand—that these sorts of agreements are absolutely fundamental if we are to build the foundations for a strong and growing economy. It just again exposes Mr Shorten and some of those opposite to claims of utter hypocrisy. On the one hand, they talk about Australia's future, but on the other hand they are prepared to pull apart the foundations for a strong and growing economy by not supporting ChAFTA. Everyone in this country—apart from some sections of the union movement—knows that this is a vital agreement for this nation's future. That is why the New South Wales Leader of the Opposition has now come out in support of it. That is why former trade minister Simon Crean has come out in support of it. That is why the Premier of Victoria, Mr Andrews, has come out in support of it. They presumably know that, if we are going to build the foundations for a strong and growing economy, this agreement is fundamental to us achieving that. It goes further than that. Mr Jay Weatherill, the Premier of South Australia, I understand now supports this agreement. Mr Bob Hawke, a former Labor Prime Minister, also appreciates that this will enable us to build the foundations for a strong and growing economy. Mr Martin Ferguson, a former resources minister, supports this agreement.

I have been watching those on the other side over the last two months. When the names of Crean and Ferguson are mentioned, their lips curl; I presume that they have done the same since Mr Hawke's comments. While you agree with the Labor Party, you are a party hero. When you disagree with Labor Party policy, when—having been a former ACTU president, Prime Minister or minister—you say to the Australian Labor Party, 'You are wrong, and, by doing what you are doing, you will diminish or destroy the foundations for a strong and growing economy,' all of a sudden, they do not want to know you. I say to Mr Crean, Mr Ferguson, former Prime Minister Hawke, Mr Foley, Mr Andrews, Mr Weatherill and others that have come out in support of this agreement that they know as well as I do that this agreement creates strong foundations for a prosperous economy, and the beneficiaries of that will be our children and grandchildren. This agreement is not about us. This agreement is about our kids and grandkids. This agreement is about jobs for our kids for the future. This agreement is about strong economic growth. This is about building those foundations for a strong and growing economy.

The CFMEU are dragging Mr Shorten around by the nose—presumably, with a ring through his nose. They are dragging him around, and they are calling the shots. Mr Shorten has to make a decision about whether he does support this nation's future, about whether he is going to do something that will help build those foundations for a strong and prosperous future and, indeed, about whether he is just going to continue kowtowing to the CFMEU. I saw a comment from Mr Ferguson in the Australian Financial Review on 5 September. He said words that should ring in the ears of every one of those opposite:

It's almost as if the CFMEU, in a sector that is benefiting from Chinese investment … wants to hold the rest of the nation in terms of lower paid jobs … for their short term political gain.

I repeat:

… for their short term political gain.

Is this just about the by-election in Canning? Is this about the opposition leader and the CFMEU making decisions clearly against the national interest, because of the Canning by-election? I am sure the Australian community hopes that it is not. I am sure the Australian community is equally as cynical as I and many others are about the motivation for this.

I invite those opposite to listen to what Minister Andrew Robb said on Insiders on Sunday morning. He put to bed once and for all this notion of Chinese workers being treated differently to any other person on a 457 visa. He put it absolutely to bed. He showed the disingenuous nature of what the CFMEU has been saying, aided and abetted by the Leader of the Opposition and those on his front bench. It has been said that what they have done is completely and utterly xenophobic. I have to say that it is hard to disagree with those sentiments. The Chinese government has not given any other nation preferential treatment in the way that we are receiving it. I am sure that that, in the main, is recognition of the trading relationship between our two nations, with China being our main trading partner. Conversely, I think we are their seventh largest trading partner. So this is recognition of a relationship built on trust, mutual understanding and an acknowledgement that, in equal parts, this is good for both our nations. That is why they are entering into this agreement and that is why we are entering into this agreement.

The CFMEU and the trade union movement have apparently spent some $12 million on an advertising campaign that is basically just lies. The CFMEU are better known for thuggery and intimidation than for having the best interests of the nation at heart. How can it be that they are driving the agenda of the Australian Labor Party? As I said before, Mr Ferguson has said that it is almost as if the CFMEU, in a sector that is benefiting from Chinese investment, want to hold the rest of the nation in lower paid jobs for the CFMEU's short-term political gain.

Again we have seen the Australian Labor Party abrogate its responsibility to Australian workers. This is no longer a party that supports Australian workers. This is no longer a party that will do those things required in the best interests of Australian workers. This is a party that is now completely and utterly beholden to the trade union movement. They have got you—those opposite—completely bound up. They are driving your agenda. They are calling the shots. They want to destroy Australian jobs. They want to hold this nation back and reduce the standard of living which this country is used to. I beg those opposite to listen to Bob Hawke, Martin Ferguson, Simon Crean, Luke Foley, Daniel Andrews, Jay Weatherill and others and pass this bill. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.