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Thursday, 3 December 2015
Page: 14648


Mr VAN MANEN (Forde) (11:37): On behalf of the Standing Committee on Tax and Revenue, I present the committee's report, entitled the Tax expenditures statement,together with the minutes of proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

Mr VAN MANEN: by leave—I rise today to speak on the committee's report for its inquiry into the Tax expenditures statement.

Tax expenditure estimates represent the use of tax concessions provided to particular groups of taxpayers. Often, a tax concession has a particular policy goal, such as encouraging a valuable activity or improving equity.

In the late 1960s, the observation was made that tax expenditures are similar to government spending and deserve similar scrutiny. Following a report by the House of Representatives Standing Committee on Expenditure in 1982, Australia's first comprehensive tax expenditures statement was published in 1986.

Publishing a regular listing of tax expenditures is now a legal requirement under the Charter of Budget Honesty Act 1998.

The tax expenditures statement has been reviewed several times in the past decade. This includes by the Joint Committee of Public Accounts and Audit, as part of the Australia's Future Tax System review, and twice by the Australian National Audit Office.

The committee conducted a thorough review of the tax expenditures statement, building on the work of these previous inquiries. We found that the statement achieved its stated goal of facilitating scrutiny of tax expenditures and informing debate on the tax system.

However, it is important to remember that the statement is only a starting point for analysis. The committee noted that there is an unmet demand for more sophisticated information beyond the statement. The committee recommends that Treasury conduct prioritised reviews of tax expenditures, calculate a meaningful aggregate of tax expenditures and calculate the longer term costs and benefits of superannuation.

The committee found there were areas in which efficiencies could be found, and the statement improved.

For example, producing the statement is labour-intensive and there are significant costs to enhancing it. While Treasury draws on highly skilled staff to compile the statement, greater consultation with stakeholders may have benefits. These could include: improving the data; establishing benchmarks; and determining which expenditures should receive longer term estimates or should be calculated using the more sophisticated revenue gain method.

The resources issue meant that the committee also supported Treasury's suggestion that it put less effort into estimating smaller, more technical expenditures and focus on other parts of the statement. Further, the committee would support a budget bid by Treasury if it believed that additional resources were warranted to implement some of the report's recommendations.

Finally, the committee has made several recommendations that would improve the explanation of data and methods used in the preparation of the statement, as well as increasing the visibility of its limitations.

The tax expenditures statement is held in high regard around the world. It is an integral part of budget transparency, and it informs the national debate on taxation. While it can be improved, I commend Treasury on producing a document of high quality and technical complexity.

I would like to thank my fellow committee members for their assistance in the inquiry and acknowledge the support of the secretariat, so ably led by David Monk. I would also like to thank the parliamentary agencies of the Australian National Audit Office and the Parliamentary Budget Office. Their expertise and access to data mean that parliamentary committees are now well equipped to undertake technical inquiries of this nature.

Finally, I extend my thanks to the agencies, organisations and individuals that contributed to the inquiry through submissions or evidence at public hearings.

I commend this report to the House.