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Wednesday, 12 October 2011
Page: 11750

Mr FLETCHER (Bradfield) (17:07): I am pleased to rise to speak briefly on the important topic of tax reform. Let us give credit where credit is due. If there is one thing in which this government has a competitive advantage, if there is one thing in which this government has a superlative track record, if there is one thing in which this government has not been bested since Federation, it is in its capacity to convene forums, summits, reviews, inquiries and roundtables. The critical success factors are many. It is good to have a celebrity or two. If Kate or Hugh are available, that always adds to the magic. It is terrific to have some whiteboards, some butcher's paper, some focus groups, to really thrash through the ideas. But there is one critical success factor above all others when it comes to this government's unsurpassed expertise in summitology, and that is to ensure that you do nothing at the end of the exercise, because to do otherwise would be a most unfortunate misunderstanding of the purpose of the exercise.

I am sorry to say that in last week's tax summit—according to some; Tax Forum, according to others; tax non-negotiable, no liability, no responsibility accepted, informal exchange and interaction, according to others again—none of what was achieved has lived up to the promises. Sadly, we have seen once again the track record of getting people together and getting the media announcement but getting very little of substance to emerge. That is a matter for considerable regret because we clearly have a serious need to revisit the structure of our tax system here in Australia.

We had a tax summit which remarkably had many of the major issues ruled out from discussion immediately. The GST, the Treasurer said, was off the agenda. Carbon tax was off the agenda. The mining tax was off the agenda. And we had a very, very odd process in getting to the establishment of this exercise, starting with another summit, the 2020 Summit. Then we had the root-and-branch tax review, which the government did its best to ignore, and then the member for Lyne insisted that this grouping be convened. There are a range of serious issues that we could very usefully address when it comes to thinking about our tax system. We need to recognise that we are a relatively high taxing country in a relatively low taxing region. Many of the Asian countries with which we compete and which are part of the growth segment of the world have materially lower personal income tax rates than we do here in Australia. Many of those countries, for better or worse, do not have an expensive, full-service, Western world type social security system to fund as we do here in Australia. We need to recognise that capital is footloose and that one of the issues that is considered as capital and is allocated internationally is the tax system of various countries. If we want to be an attractive venue for international investment we need to make sure that our tax system is internationally competitive and is attractive to foreign investors.

Another reality of the tax system is that there is an inevitable and necessary nexus between how much you spend and how much you tax. Regrettably—though unsurprisingly, perhaps, under a Labor government—there was very little talk at the forum about containing spending and very little talk about getting the deficit down so that we can start to reduce the debt and we are not immediately spending the first $7 billion, $8 billion or $9 billion a year that is collected in tax in paying interest on debt. There was very little talk about those issues, and that is a matter for regret.

The other area that I want to talk about very briefly in the time left available to me is the superannuation system and some of the very perverse tax incentives which apply under that system. There are contribution limits that have been set by this government which make it now impossible to contribute more than $25,000 a year for those below the age of 50 and $50,000 for those above, and, in the latter case, you must also meet the second condition of having an existing balance of less than $500,000. There are extremely punitive tax rates if you inadvertently exceed those limits which can get up the high 90 per cent range—an extraordinary, inefficient, inequitable, ramshackle arrangement. So let us simplify the arrangements where people have made excess contributions and let us look at ways of making it easier for people to accumulate contributions, particularly where they have not used their full limit in one year. That would be a sensible thing to do.