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Monday, 18 November 2002
Page: 6652


Senator MURRAY (8:58 PM) —I am sure that Senator Conroy had a much longer speech; he just wanted to make me run. The New Business Tax System (Consolidation and Other Measures) Bill (No. 1) 2002 is being debated cognately with the New Business Tax System (Franking Deficit Tax) Amendment Bill 2002. The latter is a nice skinny creature, three pages long. The former, the third tranche of consolidation measures, is 164 pages of complex legislation. I think that makes 500 pages all told of new tax legislation. Frankly, when I look back on those three tax bills I have a shiver of legislative fear down my spine, because the complexity of it—the necessity to adjust the tax law to remove elements of existing tax law and substitute new ones— means that you can never be sure that you are passing something which is going to get it exactly right. With respect to the anticipated $1 billion cost over the projected four years to the end of the 2006 financial year, I think we are all, especially the government, taking a leap in the dark, because I cannot believe that anyone can properly predict the consequences of the consolidation measures. However, that does not imply any opposition to them.

I first really got into the nature and the depth of what was proposed with the consolidations regime with the Ralph report. From the time I read that report, I and the Australian Democrats have supported the concept consistently and thematically all the way through. The Senate has played an excellent part in the review of these particular measures. Not only did the Senate review the Ralph tax proposals when they originally came through but also, as Senator Conroy said, the Labor Party has referred them, through the Selection of Bills Committee, to the appropriate Senate committees, and the result has been the exposure of elements of complexity, of concern and of greyness— elements which still require attention. That has been valuable.

I note that the Labor Party, in their supplementary remarks to the latest Senate report on this third set of bills, acknowledge with some pleasure that the government have responded quite quickly to some of the needs to adjust the legislation that went through three months before. We all know that there are going to have to be one or more bills to wind up, if you like, outstanding, unfinished business and unfinished consequences that emerge when this consolidations regime is put together. At the heart of my own acceptance of the principles behind the bills is the belief that the consolidations measures will free up the market productively and will allow entity taxation and structuring adjustments to take place that will have a positive outcome for the functioning of companies, the utilisation of tax losses and the structuring of companies to maximise their effective and productive nature rather than the tax benefits.

Having said all that, one still has to be concerned by the complaint and the concerns expressed by the tax professionals, the accounting professionals, about how difficult it is going to be to go through the transitional phase and about the first years of adjustment to this legislation—in particular, the concerns on the small business side. I do not presume, as the longstanding taxation portfolio holder for the Democrats, to be across every inch of this legislation. I doubt that anyone here apart from perhaps the Treasury advisers would dare make that claim, and even then I suspect they would scurry to their reference books. The interactions and complexities are quite considerable.

These bills are going to move forward without amendment. They wrap up the legislation. I think this whole process has been a very good example of government, parliament, committees and non-government bodies—professionals and representative organisations—working together through consultation, review and examination to meet a legislative deadline which is necessary for implementation in the financial year starting 1 July 2003 and to ensure, as far as possible, that the legislation will be effective and will work as planned. The measures outlined are fairly extensive. They do relate to a number of interacting areas: grouping, consolidation, thin capitalisation, research and development, foreign tax credit provisions and imputation rules. And there are technical amendments. I can do no more than conclude by saying that it is complex, and I indicate that the Democrats will support the legislation.