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Monday, 23 June 2003
Page: 17265

Dr EMERSON (8:51 PM) —I would like to draw the attention of the House to the high farce that is Taxation Laws Amendment Bill (No. 5) 2003. I have here the full copy of the second reading speech. It runs one page and struggles to creep over the back to a second page. I will refer to the contents, such as they are, of this second reading speech in a moment. I point out that the second reading speech on this bill, which no doubt is important because the government is trying to get it through before the end of this sitting period, was delivered by the Parliamentary Secretary to the Minister for Finance and Administration. Where is old jellyback? Where is the Treasurer? I do not think the Treasurer would have any idea what is contained in the one-and-a-little-bit pages of this second reading speech, just as he would have no idea what is contained in the bill, which runs to 79 pages, and the explanatory memorandum, which runs to 91 pages. I wonder aloud how much time the Treasurer of this country has spent even contemplating the policy choices contained in this bill. I would say that the amount of time he has spent is precisely zero.

That goes to the question of whether this bloke has got his heart in the job. He got bowled over by the Prime Minister's fairly recent statement that he will bat on past the age of 64—you know: `When I get old and losing my hair, many years from now.' Well, it is happening right now. Old jellyback could not stomach it but he could not do anything about it, and he just let it go through to the keeper, just as he has let this bill go through to the keeper—one-and-a-little-bit pages of a speech, 79 pages of a bill and 91 pages of an explanatory memorandum. This reminds me very much of a government in decline. You have got a Treasurer who has run out of speed, run out of petrol and run out of enthusiasm, who has now left it to his Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, and to a parliamentary secretary to bring forward this legislation.

You have to ask in the end: who is behind the legislation? Who drafted the 79 pages of the Taxation Laws Amendment Bill (No. 5) 2003 and the 91 pages of the explanatory memorandum? You also have to ask: who on the government's side has any idea what is contained in this legislation? I think the answer to that question is that no-one does. Someone drafted a speech for the previous government speaker to rattle off a few statistics and say that this is all very good and what a marvellous job the government is doing. But the truth is that the government does not even know what is contained in this legislation; certainly, the Treasurer does not. The parliamentary secretary does not. He comes in here, treats the parliament with contempt and reads out a one-and-a-little-bit pages of a second reading speech.

I will now refer to that speech, because the substantive provisions in this bill, such as they are, relate to the thin capitalisation provisions. The reason we have these provisions in the taxation law is that multinational companies otherwise—in effectively engaging in transfer pricing—could say in relation to their affiliates operating in Australia that, instead of providing equity, those companies could engage in the provision of debt. The taxation feature that distinguishes debt from equity is that interest payments are tax deductible whereas dividends are not. So it would be open to a multinational company effectively to engage in transfer pricing by contriving to have very high levels of debt in its relationship with its affiliate here in Australia.

This is not a realisation that has occurred to the present coalition government but one that occurred many years ago to the previous Labor government. This bill includes amendments that implement changes to the thin capitalisation regime to ensure that multinational companies do not inappropriately allocate an excessive amount of debt to their Australian operations. Effectively, the bill is a bit of finetuning. It is finetuning that we welcome, because it was the previous Labor government that cracked down on this abuse through what was effectively transfer pricing through the vehicle of utilising thin capitalisation rules. To that extent, we support this legislation.

I now move on to a second provision in this bill, which is in respect of fringe benefits tax applied to employees whose duties are performed in, or in connection with, a public hospital. They will qualify for a $17,000 capped fringe benefits tax exemption regardless of whether or not the hospital is a public benevolent institution. There would be no cause at all for this legislation if there were no fringe benefits tax. This legislation provides reasonable relief from fringe benefits tax. The fringe benefits tax was introduced by the previous Labor government on 19 September 1985, if my memory serves me correctly. The reason that the previous Labor government introduced the fringe benefits tax was that high-income taxpayers were converting their salaries into fringe benefits. For example, if your children went to a private school and you had a company which employed you—which was probably yourself, because high-income earners establish themselves as companies—you could then provide a tax deduction for sending your children off to a very wealthy, well-to-do school.

Dr EMERSON —Many of those schools are even more well-to-do as a result of the government's schools policy. If this government had had their way, there would be no fringe benefits tax and there would be, therefore, no need to amend the fringe benefits tax legislation. This government, then in opposition—the same characters returning to the scene of the crime—opposed Labor's fringe benefits tax lock, stock and barrel. That phrase is not mine; it is the phrase of the current Prime Minister of Australia. He said, `We will oppose the Labor government's tax reforms in relation to capital gains tax and fringe benefits tax, lock, stock and barrel'—and they did. This Prime Minister is fond of saying how enthusiastically he and his cohorts in opposition supported Labor's tax reforms and microeconomic reform agenda. I was around at the time, and they opposed option A—that is, the cleaning up of the income tax system—lock, stock and barrel.

Debate interrupted.