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Monday, 26 February 2001
Page: 24371


Mr BARRESI (4:16 PM) —It is a pleasure to speak on this motion. One cannot help thinking that the member for Rankin's motivation in bringing this motion forward is purely self-interest, this is obviously one of many we will have in the lead-up to the next election. The member for Rankin must be saying, `I have to get myself noticed by the frontbench. I have been pushing this barrow on tax avoidance for a number of months now since the report by the parliamentary committee came down and I must keep it going. Hopefully this is one way that I will get noticed among the backbench of the ALP.' This is a self-serving motion. It has been dealt with in question times and in the presentation of the report by the House of Representatives Standing Committee on Employment, Education and Workplace Relations.

Obviously the member for Emerson subscribes to the practice so prevalent in the Australian Labor Party that if you repeat an untruth often enough it will be believed. Throughout his talk this afternoon he constantly repeated untruths about the Treasurer and his relationship with what the member for Emerson terms `tax cheats'. He also talked about the integrity of the tax system being watered down when in fact there have been a number of measures introduced to enhance the integrity of the tax system, which I will go through very shortly.

One thing the member for Emerson did avoid in his presentation was the fact that the ACTU itself supports the indefinite tax deferral of shares until disposal. That was in a report commissioned by the ACTU at the time when the member for Batman was president of the ACTU. So his own union affiliated organisation supports the very measure which he says is abhorrent to him. He also does not believe that talented people, particularly those in high-tech industries, should be retained in Australia. Of course we know, from the various research that has been done, that we are losing a lot of very talented Australians to overseas competitors because of our inability to offer legitimate share ownership plans.

As a member of the House of Representatives Standing Committee on Employment, Education and Workplace Relations, I participated in the inquiry into employee share ownership and it is clear that 95 per cent of the Australian work force in businesses with fewer than 20 employees have little or no opportunity to take part in the shared ownership of their employer's business. Employee share ownership should continue to be encouraged. I am pleased to hear that Minister Abbott and his cabinet colleagues are reviewing the committee's recommendations. We await their announcement with anticipation. Very few in our community would disagree with the notion that having an ownership stake provides an incentive to take interest in the performance of the business and its fortunes. These employees, as shareholders, as part owners, are likely to experience a greater level of emotional and financial reward.

As to the member for Rankin's specific points regarding tax avoidance by company executives and the ATO's private binding rulings in support of scams, let me address some of these points. The government has recently introduced legislation to address aggressive tax planning, and that should be acknowledged by the member for Rankin. Despite the Commissioner of Taxation's view that the scams are ineffective under existing laws, these arrangements are still being promoted. As a result, the government has acted. The government is acting to remove deductibility for contributions to non-complying super funds, including offshore super arrangements. Why? Because these funds are not used for retirement income purposes and are not subject to prudential regulation. The government is also clarifying the law. For the purposes of deducting superannuation contributions, an employer and an employee cannot be the same person. These measures are enhancing the integrity of the tax system.

The bill implementing these provisions is currently in the parliament. These provisions will remove any doubt about the application of the law. In regard to private rulings it would be worth noting that the ALP is criticising a mechanism under which taxpayers can get advice from the ATO which it itself introduced in 1992. Part 3 of the member for Rankin's motion condemns the Treasurer for refusing to legislate against the abuse of executive share schemes and for obfuscating on promised legislation about tax avoidance through family trusts. Let us have a look at this.

It is amusing that the opposition accuse the government of this when, in the 13 years that they were in office, they did not seek to pass legislation relating to the way trusts are taxed. They did not even seek to pass legislation and yet here they are condemning us. Since the government established the review of business tax, it continued the highly consultative process of business tax reform begun by Mr John Ralph. Part of the approach is the publishing of exposure draft legislation. Interested peak bodies, businesses and members of the community can make submissions to the government on these proposals which are in the legislation. This is what has happened with the entity taxation proposals. In October last year, the Treasurer released exposure draft legislation on the entity taxation proposals. The government also called for submissions. Those submissions and the suggestions that they contained are currently being considered. The member for Emerson is saying that we are doing nothing but, in fact, there are measures being undertaken and we are consulting. Of course, part of the meaning of that word `consultation' is listening—listening to what the community is saying. The community is not just simply a vested interest behind the Australian Labor Party.

I would also like to note that the government has recently released exposure drafts of other legislation for public comment, including the simplified tax system and the new capital allowances regime. The legislation for the simplified tax system was introduced into the parliament last December after a number of changes were incorporated. Once again, we have acted on bringing greater integrity to the tax system. Point 4 calls on the government to act against tax avoidance schemes wherever they emerge, using both legislative and judicial means. Following the Review of Business Taxation, the government legislated significant business tax reforms. Together these will provide Australia with an internationally competitive taxation system and one that also has greater integrity. The government has cut company tax from 36 per cent to 34 per cent for this income year.


Mr Emerson —That is not an integrity measure.


Mr BARRESI —You will have to listen, Member for Rankin. From 1 July 2001, it will fall to an internationally competitive 30 per cent. The capital gains tax rate for individuals has been cut in half and imputation credits are refundable to lower income Australians, such as self-funded retirees, providing real incentive. The government has also legislated particular CGT breaks for investment in small businesses, farms and venture capital. This will promote investment and jobs growth. The government's business tax package also contained a number of other key integrity measures. These include a measure which limits the extent to which non-commercial losses can be written off against wage and salary income from 1 July 2000 and the restriction of individuals to reduce tax through the alienation of personal services income. The measure that the member for Emerson seems to object to in the alienation of personal services is the fact that we are protecting the small businesses.


Mr DEPUTY SPEAKER (Mr Jenkins)—Order! The honourable member for Deakin will resume his seat. The honourable member for Rankin has a point of order, which I think I might be able to pre-empt. Throughout the course of his speech, the honourable member for Deakin has been referring to the honourable member for Emerson. He should refer to honourable members by their correct titles. I call on the honourable member for Deakin.


Mr BARRESI —There will probably never be an electorate called Emerson. Another key integrity measure is the limited use of tax shelter arrangements from 11 November 1999. Other measures recommended by the Review of Business Taxation and now legislated include those dealing with loss duplication and the creation of artificial losses. These measures are inclusive of previous legislation that the government has passed since it came to office.

What we need to do is look at the entire package of measures that the government has introduced since it came to office. The way the member for Rankin seems to present the case is in terms of small parcels of legislation. Put all the measures together and we are increasing integrity measures. We have the closing down of the infrastructure borrowing scheme—do you remember that one, Member for Rankin?—and the cracking down on the abuse of research and development syndication, which is the `deals in the back of the Roller' example that we have heard about and which was certainly attributed to some members on the other side. Of course, the Australian business number and the new withholding arrangements also give Australia's tax system greater integrity.

The government has made the tax system fairer by delivering the largest income tax cuts in Australia's history and by increasing pensions, allowances and family assistance, particularly to one-income families. These are measures which are creating incentive for individuals to be part of a legitimate tax system and also to crack down on avoidance measures. From 1 July 2001, we will also see other measures being introduced as part of the new tax system.

It is no understatement to suggest that the issues surrounding employee share ownership and our committee's recommendations are rather complex. In examining these, the coalition is committed to making work more financially rewarding for everyone. (Time expired)