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Tuesday, 29 June 1999
Page: 6818

Senator MURRAY (9:34 PM) —The Taxation Laws Amendment Bill (No. 6) 1999 deals with two issues that I would like to address. The first is the provision for amortisation of expenditure on spectrum licences. The Democrats support that measure. We believe that it results in spectrum licences being treated consistently with any other capital asset purchased by a business, such as machinery, plant and motor vehicles. Amortisation will need to take place over the full term of the licence.

The second issue I wish to raise relates to the correction of the error in the social security legislation. My understanding is—and the minister should correct me if I am wrong—that when the youth allowance and the new Austudy were introduced it was intended that, if a person earned income in addition to the benefit, the benefit and the income would be aggregated and the person would pay tax on that total. The person would then receive a rebate on the tax paid on the benefit as if the benefit were the only income earned.

An error in the legislation has resulted in the benefit simply not being included in assessable income. Clearly, a person will pay less tax if their benefit is simply excluded from their assessable income than if it is included and they are rebated the tax on that component. The government says in its bill that it is correcting an error. I ask the minister—and she may want to respond to this in the committee stage—whether she can assure me that it was the original intention to include the income and rebate the tax that was paid on the benefit.

If this was an error and the original policy intention was as the government has stated, then obviously we should express concern that an error of this nature could occur. It has been drawn to my attention confidentially that the error could have cost the government in the order of $50 million. Without being too harsh, the government would need to re-examine its processes if, notwithstanding the vast resources and personnel at its disposal, that error was able to occur. Having said that, the Australian Democrats record that they support the bill.