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Tuesday, 23 August 2011
Page: 9055


Mr NEUMANN (Blair) (17:20): I speak in support of the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. These are quite technical changes which essentially put beyond doubt the question of where the excise on condensate will apply in the region called the Rankin Trend. The region was prescribed by the Commissioner of Taxation, but the North West Shelf partners initiated legal proceedings challenging their excise liability based on the validity of the prescribed condensate production area. The subsequent price determinations were made by the Commissioner of Taxation. Given the value of the revenue—and a huge amount is associated with this particular legislation—the government decided proactively to take steps by this legislation. In the 2011-12 budget, the government announced it would legislate the definition of the Rankin Trend area.

I cannot let go by that the Senate Standing Committee for the Scrutiny of Bills criticised the federal Labor government in relation to this legislation. I think they are wrong. They said it was retrospective and that it may:

… trespass unduly on personal rights and liberties, in breach of principle 1(a)(i) of the committee's terms of reference.

The bills do not actually impose any additional impost, so it is not retrospective in the sense that the committee outlined.

I am going to address the issue of the broader tax agenda and the budget in relation to what we are doing, and some history is required in relation to this. In the 2008-09 budget, the federal Labor government announced the removal of the crude oil excise exemption that had applied to condensate production since 1977. The condensate production is subject to an excise regime equivalent to that applying to stabilised crude oil discovered on or after 18 September 1975. Under the arrangements excise is applied to condensate production for individual 'prescribed condensate production areas' in a manner similar to income tax assessment, with higher rates applying to production exceeding certain thresholds up to a maximum of 30 per cent.

I mentioned before that the Commissioner of Taxation issued a by-law prescribing the Rankin Trend and another area called Angel, being condensate production areas located in the North West Shelf project area. As I also mentioned before, the partners in the North West Shelf project challenged the excise liability on the basis that the Rankin Trend is not a valid condensate production area. They claimed it is of uncertain size and contains petroleum accumulations from which condensate had not been produced, as well as being an area where no hydrocarbons are present.

This legislation undertakes a statutory definition in relation to the Rankin Trend production area by reference to the reservoirs within the intended Rankin Trend area which currently produce condensate. The amendments also provide for the Minister for Resources and Energy to add known but currently non-producing reservoirs to Rankin Trend by specifying them in regulations when he is satisfied they form part of the Rankin Trend field and after considering the affected areas. There needs to be an efficient exploitation of the resource. This is important legislation because this is an important resource and important revenue for our economy and our country. It is important also to get the system of taxation correct. I have said before in this place that sometimes you can measure the income tax assessment legislation by weight, not by sections, subsections and chapters. We need to make sure that we get a sustainable taxation system. If we are going to have a strong economy, a sustainable environment and a just society into the future, we have to make sure that the legislation is accurate and that there is no lack in definition specificity in legislation which covers the collection of taxation. This is sensible legislation and it is part of our broader tax agenda.

I am pleased to talk about some of the things that we have done and to wrap this into the framework of what we are doing in the budget. In the 2011-12 budget we announced that we would legislate the definition of the 'Rankin Trend area', so I am happy to talk about what we are doing in the budget to make the taxation system simpler and fairer. Since the 2010-11 budget, we have announced a number of reforms, about a dozen, for what we have described as Australia's future taxation system review. We have made many changes. Reforming the statutory formula method for valuing car fringe benefits, phasing out the dependent spouse tax offset, abolishing the entrepreneur tax offset and developing a small business tax package, which includes the $5,000 immediate deduction for motor vehicles, are important measures. We are also providing certainty for investors in relation to infrastructure projects of national significance to carry forward their losses with an uplift factor. Also—and this has particularly benefited my electorate of Blair in South-East Queensland—we have increased family tax benefit part A payments for 16- to 19-year-olds by $4,200 per child, because everyone knows that the cost to families, single parents and couples does not abate when a child turns 16 years of age. Another important measure is the extension of the education tax refund to uniforms, which we have announced as part of the budget framework that I said this legislation should be seen as part of.

We are also planning to improve the tax system governance by committing to a principles based approach to tax law design. We will allow the Board of Taxation to initiate its own reviews into how tax policy and laws are operating and establish a new tax system advisory board. So there is much we are doing. Also, the minerals resource rent tax will allow the cutting of company tax rates to 29 per cent from 2013-14. This is another assistance to small business across the country. I mentioned the instant write-off for all assets under $5,000 and the bringing forward of that company tax rate to 2012-13. Also, there is the lifting of the superannuation guarantee from nine per cent to 12 per cent. In my electorate alone, that would see 43,500 Blair residents get an increase in their superannuation. This is really important because this gives dignity, confidence and financial security to people in my electorate and communities across the country so that they can live out their retirement with respect. We have $1.3 trillion in superannuation sector funds established by previous Labor governments and carried on.

It is a tragedy that the coalition are not supporting the minerals resource rent tax or the boosting of the superannuation guarantee to 12 per cent. Once again, they demonstrate that they have never been in support of real tax reform. What they want to do is mouth the words but never actually carry out genuine reform. They often criticise us in relation to tax and alleged waste, but, really, when they were in power the coalition wasted money on middle-class welfare as opposed to spending money on health, education, roads, infrastructure and the like. We also know that we are the most prudent managers when it comes to monetary issues and fiscal issues. We have been committed in this country to floating the dollar, deregulating the banking sector, ensuring the Reserve Bank has independence and also ensuring that the Australian taxpayer gets value for their dollar. We are not the big-taxing and the big-spending government of the Howard years where the tax as a percentage of GDP rose up to 24.1 per cent. It is not 24.1 per cent now; it is 21.8 per cent, so those opposite should really have a good look at the budget papers; but they do not want to really look at the budget papers. Real spending over the next five years is at one per cent, the lowest since the 1980s, but in its last five years we saw the profligate, willy-nilly Howard government spend at the rate of 3.7 per cent. Those opposite have a narrative about us, but the reality does not bear it out.

The legislation that the Assistant Treasurer is presenting to this parliament is important legislation; once again it demonstrates that this Labor government is interested in tax reform. The Labor government will hold a tax summit in early October to make sure that we can get the best and brightest people in this country together to talk about the way forward in taxation. I must say, the fact that we have seen this government deliver tax cuts three years in a row so that people in my electorate across Ipswich and the Somerset region get personal income tax cuts is a demonstration of this government's commitment to carrying out tax reform and also gives people a helping hand under cost-of-living pressures. If you are on $50,000 a year, you are currently paying $1,750 less in tax; and if you are on $100,000 a year, you are currently paying $1,900 a year less in tax, as a result of this government's efforts. It is this government which has been prudent with respect to managing the dollars and prudent with respect to government expenditure. It has made good investments in South-East Queensland and good investments in health, hospitals and infrastructure, but it has also made important changes that we have seen here.

I support this legislation. I think it is a part of the whole fabric of what Labor governments are about: reforms of the taxation system, prudent management of money and investing in infrastructure and communities across the country. I commend the legislation.