Jessica Collins (NSW, Liberal Party) | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Foreign Affairs (Senator Wong) and the Minister for Finance (Senator Gallagher) to questions without notice asked by Senators Dean Smith, McKenzie and Hume today relating to taxes on charities, to the Construction, Forestry and Maritime Employees Union and to falling productivity.

Let me begin with Labor's tax on charities and faith based organisations. It is a shame. It's a crying shame. Labor's new trust tax is forecast to rip $4½ billion from the Australian economy, from Australians, and religious leaders are anxious. I sat down with one just last week, and he was worried about what this new tax—this range of taxes from Labor's budget that was handed down in May—is going to do to his ability to serve his community.

We asked the government today whether they could guarantee that distributions from discretionary trusts to registered charities and tax-exempt not-for-profits, including faith based charitable groups, will be exempt from Labor's 30 per cent tax. Do you know what we heard? 'We're now doing consultations; consultations are ongoing.' They're also working through the feedback. We can give that feedback right here and now. This is a bad budget, and it's going to tax faith based charities that are out there doing the work that the government's not. These faith based communities play a huge role in the community that the government doesn't. They fill the gaps that the government services don't reach. They provide English lessons to migrants. They help them settle in for years after the government stops serving them. They provide services to the homeless and the vulnerable—food and shelter.

We heard from Senator Pocock that 56 houses have been provided under the Housing Australia Future Fund. While we have a homelessness crisis, 56 houses are barely going to touch the sides. Ten billion dollars has gone into that fund, and they've got 56 houses. That's a shame. What is the government going to do? They're going to have more taxes and fewer houses. We asked the government what they are going to do. Labor are consulting on that. We've told them exactly how Australians feel about their widows tax, the tax on divorcees and the tax on women who are escaping violence. This is the impact of their budget on the community.

We are seeing, at the same time, the hit that the economy and the housing market have taken since the budget—a total lack of confidence in the market. Property values are absolutely smashed because of their budget. No loans are being given out. Banks are completely walking away. The slump is moving faster than anybody ever imagined—even faster than in the past 30 years after a big downturn like this. The impact has been absolutely huge. We asked the government: does increasing taxes on individuals, businesses and construction increase productivity or lower it? And what did we hear? Personal pot shots. It's a serious question. We don't have a serious government. We want serious answers for the Australian people.

Ellie Whiteaker (WA, Australian Labor Party) | Link to this | Hansard source

If there's one word I would use to describe that question time, I think it's 'distraction'; it was a pretty poor attempt at distraction by those opposite. We've made it really clear that we're undertaking really important consultation on our tax changes and that there will be more legislation to come.

But the real question is: why are the Liberals and Nationals—the coalition—so focused on these distractions? Well, you don't have to look too far to see. You don't have to look too far to see what it is that they don't want Australians to know. They don't want Australians to know that two of the biggest taxing governments in the last 30 years were coalition governments, and at the very top of that list was John Howard's government. They don't want Australians to know that they voted against our tax cuts, that they voted against our housing tax reform to get more Australians into their first home. They don't want Australians to remember that Senator Hume called our tax cuts 'egregious' not once but twice in the space of just a couple of minutes. They've been clear all along that they've opposed our attempts to get more young Australians into their first home. They've made it clear that the coalition are here for wealthy investors, while Labor, our government, is here to work for the Australians who work to earn a living. We're here for young Australians, who want to get their foot in the door, who want to buy their first home. We believe it should be easier for Australians to buy their first home than it is for people to buy their fifth or their sixth or their 10th. That is what sets us apart from those opposite.

On women—well, there's nothing that makes my eyes roll further back in my head than hearing those opposite talk about women. They pretend that they're here in this place to stand up for the women of Australia. Give—

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Order! Senator Whiteaker, please resume your seat. Senator Collins.

Jessica Collins (NSW, Liberal Party) | Link to this | Hansard source

 Sorry; I was very specific about the questions that we are taking note of.

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Senator Collins, there is no point of order. These are wideranging debates. As long as there is some reference to the topic under consideration—and Senator Whiteaker has been talking about taxation policy—as long as she refers back to those issues, she is certainly within order. Senator Whiteaker, you have the call. But I would remind you of the three questions that Senator Collins is taking note of.

Ellie Whiteaker (WA, Australian Labor Party) | Link to this | Hansard source

Thank you. Here is yet another attempt at distraction, because it's clear they don't want Australians to know the truth about their record. On women, Senator Cash and the Liberals have voted almost always against closing the gender pay gap, voted consistently against paid parental leave, voted consistently against increasing workplace protections for women, voted consistently against federal government support for child care. Of course, no-one has forgotten that they just recently toppled their first female leader, and I think we can all see how well that has gone for them in the months that have followed. If the Liberals are so concerned about the women of Australia, then I ask them to come in here and prove it, because I have seen no proof in my time in this place that the coalition have any commitment to standing up for the women of Australia. They have shown time and time again that they aren't—

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Senator Whiteaker, please resume your seat. Senator Collins.

Jessica Collins (NSW, Liberal Party) | Link to this | Hansard source

Can I just get a clarification on that, please? Women have absolutely nothing to do with tax or the economy.

Ellie Whiteaker (WA, Australian Labor Party) | Link to this | Hansard source

What about widows tax?

Jessica Collins (NSW, Liberal Party) | Link to this | Hansard source

Then talk about widows tax.

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Order! Senator Wong, Senator Collins is still on her feet. Senator Collins, have you finished your point of order?

Jessica Collins (NSW, Liberal Party) | Link to this | Hansard source

I have.

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Senator Wong.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

These points of order are without basis and should not be continued in the way that they are. The senator is simply interrupting this senator because she doesn't like what she is saying. That's not actually what points of order are for.

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Senator Wong, you know very well that anyone has the right—a senator has the right—to make a point of order. The point of order is not completely out of order. The fact is that we do have to stay within the bounds of the questions that are being taken note of, even though we do allow a fairly wideranging debate. However, I will bring Senator Whiteaker back to the topic of the three questions currently under consideration. Senator Whiteaker has the call.

Ellie Whiteaker (WA, Australian Labor Party) | Link to this | Hansard source

This couldn't have gone better if I had set it up myself! While those opposite have spent this question time hearing answers from our ministers on widow tax and on our tax reform, Australians should be really clear about their record on tax cuts, on their record on women. While those opposite have spent this question time hearing answers from our ministers on widows tax and on our tax reform, Australians should be really clear about their record on tax cuts and their record on women. That is something that we will continue to point out, because their attempts to distract from that truth are pretty dismal. (Time expired)

Paul Scarr (Queensland, Liberal Party) | Link to this | Hansard source

I must say I'm delighted to rise to contribute to this debate, and my heart is filled with joy after hearing Senator Bragg's address to the National Press Club. It was a terrific address, and I invite everyone to watch it on our wonderful ABC.

Now, Senator Whiteaker asked, 'Why did the coalition raise these questions during the course of question time?' I'll give you three answers. The first is that the Labor government introduced a whole range of tax policies in the last budget which, before, the last election they said they weren't going to do. So they broke their promise. That's the first reason why we're raising them. The second reason is we've come back from winter recess. Certainly in my case, in my home state of Queensland, I've heard from so many small businesses who are telling me about the kick in the guts the Labor budget delivered to them, especially because of these tax changes. That's the second reason we're raising these questions. The third reason is we're finding that there are a whole raft of unintended consequences flowing through these tax changes because there was insufficient consultation.

In relation to that third point, my dear friend Senator Dean Smith raised the issue of the impact on charities. I want to explain how this works. At the moment, a small business that has a discretionary trust can give money to not-for-profits and can give money to organisations engaged in charitable purposes which don't necessarily have the benefit of tax-deductible status without there being a tax impact. That's the benefit of discretionary trusts. You can allocate that money to a not-for-profit organisation. You don't pay tax on that income. The not-for-profit organisation gets 100 per cent of the benefit. That is the current situation.

If you are going to tax everything coming out of discretionary trusts at 30 per cent, that is necessarily going to have an impact on the amount of money that is received by not-for-profits and charitable organisations across this whole country. That impact has been estimated by Mark Fowler, who's a specialist in charity law, to be—listen to this—$2.9 billion a year. That's $2.9 billion a year of contributions which will not be received by not-for-profits and charities that don't have DGR status in relation to gifts that are made to them. Those organisations engage in a whole raft of charitable-type activities, and that includes human rights organisations, charities focused on prevention of disadvantage, religious institutions or charitable work that they undertake. It can be community service organisations, cultural organisations or sporting organisations.

A whole raft of organisations are going to be impacted by this ill-thought-out discretionary trust tax proposal, and that's before you even get to the cost of administration of all those discretionary trusts that are going to have to be converted into corporate structures and the changes to their insurance, their business registration, their employment arrangements—a whole raft of changes. It is going to cost hundreds of millions of dollars in restructuring changes—hundreds of millions of dollars as a result of this ill-thought-out policy which has been proposed by the Labor government and was introduced in the last budget. That is why, Senator Whiteaker, we are asking questions, and we will continue to ask those questions and hold the Labor government to account. (Time expired)

Lisa Darmanin (Victoria, Australian Labor Party) | Link to this | Hansard source

Maybe I can help to continue to answer your questions, Senator Scarr, on discretionary trusts and, more broadly, the tax reform changes that we brought in. The reforms that we brought in were all about making the tax system fairer by better aligning the tax rate on trust income with taxes paid by workers and will help fund income tax cuts for workers. Creating a fairer tax system is at the heart of what we are trying to do here and is a key aim of our ambitious tax reform package, along with making it easier for people to buy their first home and cutting income taxes for workers. There has been a whole lot of consultation and, as we've heard today, there will continue to be more consultation on these questions.

As we know, discretionary trusts do allow some people to plan their tax affairs in a way that isn't available to most Australians. From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. The minimum tax on discretionary trusts won't change or limit the use of the trusts for legitimate reasons but will more closely align the tax rates for trusts with tax rates paid by workers and families who earn a living from wages. Over 90 per cent of active small businesses won't be affected by this change.

As Senator Wong said in answer to a question earlier, when it comes to trusts, the budget clearly outlined that the minimum tax would not apply to charitable trusts. Donations to organisations with deductible gift recipient status will continue to be tax deductible for discretionary trusts. Donations to sports clubs or other community and environmental groups without DGR status can still be made from those trusts and by individuals as they always have. We are consulting on a range of implementation details around the minimum tax on trusts, and that includes the appropriate arrangements for donations and distributions to charities and other tax-exempt entities. We believe in charities and we are big backers of the sector.

Let's contrast that with this confected outrage around charities from those opposite. When we came to office, many charities were reeling from the former government's war on charities which had seen three open letters from the sector to successive Liberal prime ministers asking them to back off on their attacks on charities. Now they are standing up for them, but they were attacking them previously for many, many years. Charitable advocacy was under fire, with environmental, legal and social welfare charities being told to keep quiet. The Australian Charities and Not-for-profits Commission was led by a well-known charity critic.

Since coming to office, as demonstrated in a range of measures, we have chosen a different path, engaging respectfully with Australia's great charity sector. We will continue to consult them with on these measures. Perhaps nothing better illustrates this than the fact that the grouping known as Hands Off Our Charities under the former government has rebranded as the Stronger Charities Alliance. I have had the pleasure of meeting with them, as have many on this side. I'm not sure about on theirs.

Finally, we've also lifted the minimum distribution to six per cent of net assets, which is expected to see an extra $60 million a year flow to charities. At the same time, we are allowing funds to smooth distribution over three years. This means that a fund can help a charity build something really substantial, rather than just being forced into a pattern of small annual grants. We back our charities. Treasury analysis shows that a fund receiving market returns and distributing six per cent per year could keep supporting charities for decades, even without further contributions to its assets. We back charities; I'm not sure about those opposite.

Richard Colbeck (Tasmania, Liberal Party) | Link to this | Hansard source

The debate during take note today just demonstrates yet again that, just because Labor say it, it doesn't mean that it's real. In fact, Australians are coming to realise that you can't trust or believe anything that this government says. That's because they'll say one thing at one point in time and they'll change it again later. They say that real wages are moving again, and yet, when you look at the real numbers, when you look at what's happening in the economy, real wages have fallen back to about 2011 levels. That takes away all of the growth that occurred during the period of time when we were in government, when real wages actually grew. Real wages grew under the period of time that the coalition was in government. Was it slow and low levels of growth? Yes, it was. But, oh, for a low-inflation economy. That's what we would like to see now. But Labor, because of their spending, have lost control of the economy. The Reserve Bank has told them that. The Reserve Bank has talked about the problem of productivity, which is now going backwards, which is why Australians' real living standards have fallen back to 2011 levels. In four years they've destroyed what happened in the previous decade. They stand up and talk about how well everything's going and how wonderfully they're supporting Australians, but real Australians know because they're feeling it. They're feeling it when they go to the supermarket, where eggs have gone up 36½ per cent; milk 29.7 per cent; coffee, tea and cocoa 26.9 per cent; dairy products 25.6 per cent; bread 22.7 per cent; and breakfast cereals 20.9 per cent.

You cannot trust or believe a thing that this Labor government says. When they come out, as they have in this debate today, and talk about references to the truth, I've got to say that you'd choke on your Weeties, because they will say one thing before the election and then do the exact opposite after the election, and they have done so on a number of occasions. They have destroyed the trust of the Australian people. They stand up here during question time, batting back, ignoring reality and ignoring the truth. Meanwhile Australians, when they go to the supermarket, can feel the impact of this government's mismanagement on the economy, to the extent that the Reserve Bank talks about being concerned about the productive capacity of the economy not growing.

As long as the productive capacity of the economy isn't growing, we cannot grow very fast without running into inflationary pressures. That is how all these things are linked. Because productivity is so bad, it will be inflationary if the economy grows too quickly. The Labor Party, under this government, has lost control of that, and Australians are suffering because of it. They're seeing it at the supermarket, and they know that they can't trust or believe a thing that this government says.

Question agreed to.