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Thursday, 3 December 2015
Page: 14649


Mr RIPOLL (Oxley) (11:42): by leave—I also thank the committee members for their diligent hard work and their valued input into the preparation of the Tax expenditure statement report. I also thank the chair, the member for Forde, for his good work and diligent work also in producing a great report on a complex matter that is of great interest to the committee members. Tax expenditures might not sound very interesting to most people. They may be even less interested in tax expenditures statements, but they serve a very important purpose and play a very important role in decision making and policy setting for people to better understand what is done through tax expenditures. While I have the opportunity, I would also like to thank the committee secretariat for making the members of the committee look very good, because they do the hard work in putting the report together. So I thank the committee secretariat as well.

In its report the committee concluded that the statement is effective, noting comments by the Parliamentary Budget Office that it makes a significant contribution to budget transparency. The committee absolutely agrees with that. We think it is very important. The PBO also stated that it uses the document in its work. However, the committee also noted the statement's limitations—in particular that it is only a starting point for analysis. Like anything, it should not be the end-all of anything. We learned through this process that there is a lot of data. There are lots of different reference points. There are lots of places to start and to end. No-one should just take any one figure out of a tax expenditure statement as the be-all and end-all of everything. There was a lot of deliberation and debate over one particular area, which I will get to in a minute, which caused some controversy.

In the end, intelligent people looking at the TES would understand that you do not just pick one number out of those expenditures and say, 'Well, that's it; everything else hinges around that.' It is a much more comprehensive set of data and work. It does involve judgement from intelligent people—for example, in setting the benchmark. It also needs to be acknowledged that it is a really expensive exercise. It is resource intensive for Treasury to do this work. It might be convenient for all of us to want the best of everything all of the time, but there is a cost attached to that. The committee's view was that we need to be cognisant of that as well.

I would just like to add a little bit of history so that people can understand that tax expenditure statements are not something that we just dreamed up in the last couple of years or in the last term by either a Liberal or Labor government. Tax expenditure statements were initially proposed by Stanley Surrey of the US treasury department in 1967 because he felt and wanted to make the point that tax concessions given to particular groups were similar to giving them a government grant or payment. The same concept and ideas would apply here in Australia as well. The tax expenditure statements are really good for setting policy goals and achieving them as well.

In Australia in the 1970s, Treasury started producing some information on tax expenditures. However, it was not until 1982, following a report by the House of Representatives committee on expenditure, that we noted that we needed more comprehensive information. The government responded in 1986 with the first tax expenditure statements. So they have quite a bit of history not only here in Australia, but in the United States. Importantly, it was not until the Charter of Budget Honesty Act in 1998 that the statement was made a legal requirement. That was followed with the insertion of a list of the largest tax expenditures sourced from the statement as well.

The committee's inquiry follows on from the Auditor-General's reports in 2008 and 2013. It particularly covered the areas of prioritised reviews of tax expenditures, integration, improving the accuracy and better reporting and also, as I said earlier, the limitations around them only being a starting point for analysis that involves judgement and that they do cost a lot of time and money to put together.

The committee made 13 recommendations. They are good quality. I will only refer to recommendation 4 because I think it is important in the context of the work that was being done and some of the debate at the moment—that Treasury model the long-running interactions between superannuation and the age pension, develop present value estimates of the future costs and benefits of superannuation and its tax concessions, and publish those results. All of the other recommendations are equally as important.

There has been more attention paid to the tax expenditure statements this year than there probably has for quite some time. This attention has particularly focused on the very large size of the concessions that are allowed on superannuation taxes. This debate around the size and beneficiaries of super tax concessions, I am sure, will rage on regardless of the work of the committee or any of the unanimous findings in our report.

As a matter of fact, having access to quality data does help government and others to formulate policy. Tax expenditure statements are an important part of that policy process, as is each component such as the data on superannuation tax concessions, whether or not there is any other data which shows corresponding or offsetting tax collection of superannuation as well.

With those comments, I commend the report to the House.