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Tuesday, 24 June 2003
Page: 17369

Mr COX (8:35 PM) —I would like to thank the Parliamentary Secretary to the Minister for Finance and Administration for his very gracious acceptance of the Labor Party's amendment to the Taxation Laws Amendment Bill (No. 2) 2003. I would like to point out to the parliamentary secretary the reasons why this amendment has been necessary. This measure to provide certain tax concessions to foreign expatriates who are temporary residents of Australia would cost the taxpayer approximately $200 million over a four-year period. It is important to consider that cost in the context of the position of the Commonwealth budget.

This year, the government has provided a modest tax cut, which has a cost in the 2003-04 financial year of $2.4 billion. If the government had handed back all bracket creep this year, that tax cut would have cost another $900 million. That would have reduced the budget surplus in the 2003-04 financial year to $1.3 billion.

If the government set that precedent and decided to hand back all bracket creep to Australian taxpayers, then, in the following financial year—that is, 2004-05—the budget would actually be in deficit by $550 million. In the following year—2005-06—if all bracket creep was returned, the budget would be in deficit by $1.55 billion. The reason the opposition moved this amendment is that the government cannot afford this measure.

Since the government came to office, it has made new policy decisions which have had a net negative impact on the budget bottom line. Over the current financial year, the budget year and the three forward estimates years—that is, the years recorded in the budget reconciliation and measures tables—the decisions now total $65.4 billion, and the government cannot afford this measure.

It is with very great regret that the opposition also has had to vote or will vote against other aspects of the government's review of international tax arrangements which were proposed in the budget. We are doing this because they have less priority for the Australian community than doing something about the rapid decline in bulk-billing. Medicare is a priority for of all Australian families. It is a great regret that the government could not have done more as a result of the review of international tax arrangements, that it could not have provided some taxpayer relief for foreign dividends and that it could not have provided a measure to allow Australian companies to stream dividends. Those two measures were the essential measures in the review of international tax arrangements.

The foreign expatriates measure, which has been dealt with a couple of times by the House in the last 12 months, was a relatively minor measure. The other measures that were contained in the budget, which related to foreign investment funds and controlled foreign corporations, were also relatively modest. But they too are unaffordable, because this government has lost control of its spending. In fact, it lost control of its spending at the end of its second year in office, and it has been on an expenditure rampage ever since. There have been a succession of expenditures that have been largely politically motivated. They certainly have not been a response to clear policy thinking and good policy design. (Extension of time granted) The result has been that we are seeing what were public expenditures being shifted to private expenditures in the areas of health and higher education.

The parliamentary secretary spoke at great length about our need for international tax competitiveness. The government cannot afford to provide international tax competitiveness because of its profligacy. That is a great regret to me and the opposition, and it is something that is going to need to be addressed in future years. But it cannot be afforded now, and it cannot be afforded by this government. This government has to learn that, having increased taxation as a proportion of GDP from 23 per cent under Labor to 25 per cent now, it cannot provide international tax competitiveness when it does not control its own new policy agenda and its budget bottom line. That is the bottom line in this debate. This measure may well be of great benefit to Australian companies that need to attract skilled personnel here, but the brutal reality is that this government cannot afford it. It has been the duty of this opposition, which is fiscally responsible, to draw the attention of the government and parliament to that. I am very pleased that the government has felt compelled to accept our amendment.