Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 31 May 2011
Page: 5331

Mr FLETCHER (Bradfield) (18:50): I rise to make some brief comments on one aspect of the Tax Laws Amendment (2011 Measures No. 4) Bill 2011. This bill deals with amendments to the low income taxpayer rebate and the treatment of income paid through a trust to minors. As has been made clear, we on this side of the House will be supporting this bill, but I do note the manner in which this particular measure was dealt with in the lead-up to the budget and highlight some of the unfortunate consequences of the way that this matter has been managed. I recollect listening to Adam Spencer on ABC local radio interviewing a tax expert one morning shortly before the budget was brought down. There was a lengthy discussion about whether trusts as a vehicle were to be prohibited, and that was a consequence of the media management engaged in by this government on this measure. We were told that there was going to be a major crackdown, and this of course caused understandable anxiety on the part of many people and businesses who use trusts for a range of important and legitimate business reasons. Operating a business through a trust can provide considerable flexibility and it can be of great importance in preserving assets, including for preserving assets to be passed to the next generation. For example, trusts are widely used in primary industry for precisely that reason.

What we have here is a government which is grasping for revenue as a consequence of the fact that it has been spending without restraint now for some four years, and it is finding every possible way it can to fill the increasingly large gaps which have opened up. I note with interest that the explanatory memorandum says:

In recent years the low income tax offset has increased significantly as a means of providing targeted tax relief to low-income earners. The low income tax offset has been available to all taxpayers with incomes below its cut-out threshold, including minors. An increasing amount of distributions from discretionary trusts have subsequently taken advantage of this concession …

I simply make the point that this is an issue which could have been foreseen at the time the low-income tax offset was increased and if it were such a problem it could have been dealt with then. The consequence we have now is that a significant number of Australians will have arranged their affairs in reliance upon the law as it stood until the night of the budget and, in doing that, they were acting perfectly legally. In this government's desperate grab for revenue, what they have obviously done is ask the Treasury, 'What ideas have you got to find other ways in which we can claw in some money, because we are facing yet another yawning deficit in the coming year, 2011-12, of $23 billion to add to this year's yawning deficit of $49 billion and the previous year's yawning deficit of more than $50 billion and the previous year's yawning deficit of over $20 billion.' Cumulative deficits have reached over $150 billion since Wayne Swan has had his hands on this country's financial steering wheel.

It is clear that as a result of the urgent and desperate desire to find additional revenue to deal with the fact that this government has been spending without restraint, this government has thrown caution to the wind and has driven expenditure up from approximately $250 billion in 2006-07 to $349 billion this year—an increase of almost $100 billion in four years. It is clear that as a consequence of this unrestrained and profligate spending what we have is a government that is desperately on the lookout for revenue anywhere it can scrounge it. So this measure has been included in the budget, and a significant number of Australians who had arranged their affairs in reliance upon the law as it previously stood are now going to be inconvenienced and are now going to have to make changes. They also suffered considerable anxiety in the period leading up to the budget because of the way this matter was managed. There were deliberate attempts by this government to give the impression through the media that it was going to produce a tough budget and then it was going to be a fiscally responsible budget. As we have seen, the budget failed those tests. We were told that this was the budget which would return Australia to surplus. What we know is that the 2011-12 budget does no such thing. It produces yet another deficit following the dismal run, the increasing run, of deficit after deficit after deficit—and we do not in fact get a surplus until 2012-13. It is going to be a mere sliver of a surplus, at $3.5 billion, making almost no impression on the cumulative deficits of $150 billion and more which by that point will have been racked up.

It is an unfortunate consequence of this government's chaotic and incompetent financial management that amongst measures they have needed to introduce is this measure, introduced with no notice and at considerable inconvenience to many Australians who had arranged their affairs in reliance on the law as it previously stood. It is therefore a matter for regret that this particular aspect of budgetary and taxation management has been handled in the way that it has.