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Wednesday, 13 March 2013
Page: 2022


Dr EMERSON (RankinMinister for Trade and Competitiveness and Minister Assisting the Prime Minister on Asian Century Policy) (10:24): As part of my summing up I want to respond to the comments of the shadow trade minister and also to the Leader of the Nationals.

The criticism of this government is that, firstly, we do not support EFIC. Of course, we do. The Productivity Commission did a thorough review and we have accepted a number of those recommendations and rejected others. I do think it is poor form for the Deputy Leader of the Opposition to attack the Productivity Commission for its work. The Leader of the Nationals did the same thing. The Productivity Commission does its very best based on objective evidence. For the alternative government to attack this institution for suggesting that perhaps $200 million could be better used, that its opportunity cost is significant and made a recommendation in this direction, I think is unedifying on the part of the coalition. But I suppose that is its approach to economics, just as its approach has been to assert that this government is a high-taxing government and damaging Australia's competitiveness.

The truth is the highest-taxing government in Australia's history is the previous coalition government. By any standard, that is a fact, as reflected in budget paper No. 1. In fact, in the period from about 2001 to 2007 taxation as a share of gross domestic product was higher than at any time since and higher than any time previously. So if you are looking for gold medals, the gold medal for the highest-taxing government in Australia's history hangs around those members of parliament who were members of the previous coalition government.

It is hypocrisy for the coalition now to claim that this government is a high-taxing government when in fact their policy prescriptions, to the extent that we have been able to squeeze them out of the coalition, are in fact for higher taxes. I refer, for example, to the fact that the coalition has announced that to pay for its gold-plated paid parental leave scheme there will be a 1½ per cent increase in company tax for larger companies. That is an indisputable fact. That is a tax rise. It has been a quite feeble attempt on the part of the coalition to assert that a 1½ per cent increase in the company tax rate for larger businesses is not a tax rise but a 'levy'. This is the oldest trick in the book—to call a tax rise a 'levy' and say it is okay. Ask the major companies if it is okay, if it does affect the competitiveness, if it does affect their returns and they will indicate to you that obviously it does affect their returns.

The Leader of the Opposition has said that these large companies will do the right thing and they will absorb this tax rise and not pass it on to the men and women of Australia in the form of higher prices. He is asserting that the banks and the major retailers will do the right thing and absorb the coalition's 1½ percentage point tax rise. I am not sure from which planet they are formulating these policies, but it is certainly not planet Earth.

There are further proposals to increase tax on some of the most vulnerable people in Australia, and that is through reversing the trebling of the tax-free threshold from $6,000-$18,200. The shadow Treasurer the other day confirmed that this indeed was coalition policy, being directly repudiated by the Leader of the Opposition. But he said during his press conference that this was just $3 per person—completely false. It is around $300 for low-income earners. So embarrassed was the shadow Treasurer in having made that statement that he expunged it from his transcript. It was so clearly wrong—so ridiculous—and, true to form, the coalition just removes these sorts of mistakes from their transcripts. But what is unmistakable is that the coalition would take that tax-free threshold back from $18,200 to $6,000, bringing back, dragging back, into the tax system more than one million Australians. That is indisputably a tax rise.

The coalition has also said that in respect of superannuation for low-income earners it would reinstate the 15 per cent superannuation contributions tax. That is a tax rise. No matter what language they use to seek to disguise the reality, it is a tax rise. Of course, the party that pretends to be the champion of small business has revealed that in respect of the small business tax breaks, where small businesses can claim for immediate deduction any assets valued up to $6,500, that, too, would be scrapped. So everywhere you look you see the coalition behaving to form—that is, it was the highest-taxing government in Australia's history and it plans to be the highest-taxing government in Australia's history if it were re-elected. We do not accept the criticism from them that the decision in this legislation to take $200 million from the EFIC fund would be damaging to EFIC. We have, in fact, received advice from the Productivity Commission that the relevant prudential ratios would be preserved.

I sum up by saying that the Export Finance and Insurance Corporation Amendment (Finance) Bill 2013 makes changes to the financial arrangements of the Export Finance and Insurance Corporation. The 2012 Productivity Commission report on Australia's export credit arrangements recommended, amongst other things, that the EFIC Act be amended to allow the government to direct EFIC to return surplus capital to the Commonwealth. The Productivity Commission found that EFIC held capital well above its minimum prudential requirement, and this surplus capital has an opportunity cost that is borne by the taxpayer. The amendments in this bill give effect to the 2012 budget measure which directed EFIC to pay a $200 million special dividend from EFIC's retained profits, as well as accepting the Productivity Commission's recommendation. The bill also provides for a mechanism to adjust EFIC's core capital should the government consider it is necessary for EFIC to meet its future prudential benchmarks.

Next week I plan to introduce a second EFIC amendment bill to implement further elements of the government's response to the Productivity Commission report. The government's broader response to the Productivity Commission report was announced in January and includes a new mandate for EFIC to ensure more of its resources are devoted to small- and medium-sized enterprises which face financial barriers to exporting. The forthcoming bill will also give effect to EFIC's new powers to enable it to better support Australian businesses participating in global and regional project teams.

Supporting Australian small- and medium-sized enterprises in their exporting endeavours, including through participation in global value chains, is an Asian century white paper objective upon which we are delivering. The measures in this bill, which will ensure greater flexibility in EFIC's financial arrangements, will help support EFIC's continued sound operation into the future, and I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.