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Monday, 25 June 2012
Page: 7738


Mrs PRENTICE (Ryan) (19:48): I rise to speak on the Tax Laws Amendment (Managed Investment Trusts Withholding Tax) Bill 2012 and associated bill. This bill is once again before the House. As bill after bill is introduced into this House, the Australian community continues to be let down by this Gillard Labor government, which refuses to listen and refuses to consult. Just last week, the government decided to withdraw the bill before a vote. The coalition believed that finally the Gillard Labor government had woken up to reason and that the Gillard Labor government had finally listened to concerns in industry and the community. I thought at least that they had noticed the immovable outrage pouring from the financial, property and tourism industries about the measures in these bills. Yet here we are again debating bills which, if passed, will be another direct attack on the Australian economy.

I welcomed the decision not to pass the tax increase last week—a tacit admission that the government had not thought through their policy and an admission by the Gillard Labor government that they were completely wrong to introduce this measure in the first place. Their delay is yet another concerning sign that this government continues to develop policy on the run.

This scattered and confused approach does not, as they say, inspire consumer confidence. It was reported last week by Dun and Bradstreet that three-quarters of Australians are expressing concern about their financial situation and one in three Australians say they would be unable to cover basic expenses for longer than a few weeks if faced with sudden unemployment. As a result, consumers are saving. They are not spending, which poses significant risks for industries including construction and retail. Nor does this government encourage business confidence. Their incessant incompetence and their proclivity for new and increased taxes sends a signal to the international business community that Australia is not a good place in which to invest money.

Today's increase to the managed investment trust withholding tax, is yet another attack on business confidence. The Gillard government, on a whim, has decided that it will increase the withholding rate from 7.5 per cent to 15 per cent—double. This increase makes investment in Australia less viable and directly undermines the aim of maintaining our economic resilience and boosting Australia's international reputation as a financial services hub in our region. This increase directly contravenes the words of the current Assistant Treasurer, the member for Lindsay, when he said in 2008:

If we are to be internationally competitive then … we must have rates of taxation that are amongst the lowest in the world.

The Assistant Treasurer should heed his own advice, because this tax increase does make us less internationally competitive and it does makes foreign investment, using the MIT structure, less attractive. This policy translates to a disincentive for foreigners to invest in Australian infrastructure. Make no mistake: this move will damage Australia's reputation and will hurt our economy. Indeed, according to the Property Council of Australia, more than $1 billion of planned foreign investment has already been affected.

Maintaining the 7.5 per cent tax rate is important because it is of fundamental importance to attract foreign investors to invest in key Australian infrastructure. In particular, many institutional investors such as pension funds and sovereign wealth funds use the MIT structure to invest because they are specifically the types of organisations which are looking much longer into the future and have the capacity to invest billions of dollars in infrastructure projects which may not see a return for many years. They invest in the construction of buildings like electricity generation facilities, hotels and tourism facilities, hospitals, motorways and toll roads, green buildings, and other carbon dioxide abatement programs. Sometimes these projects require decades-long commitment to keeping their investment money in Australia. It is important to note that not only are these facilities crucial to the long-term benefit of the Australian economy but those institutional and pension fund investors are exactly the type of reliable and respected investors we can trust to stay here.

It has been only 48 days since the Treasurer delivered his budget—the budget of smoke and mirrors, broken promises and direct attacks on the fiscal bottom line of all Australians. After the Gillard government's apparent decision to drop the proposed increase in the managed investment trust withholding tax last week, we now have the fourth proposed change to a budget measure. The Treasurer announced that the government would be dumping their proposed company tax cuts, yet has more recently said they are now back on the table. Their second backflip was indexation of the passenger movement charge, which the government gagged debate on last week on the floor of the House because they did not want to hear how bad indexation would have been for the tourism industry.

Fortunately, the government backflipped and dumped the CPI increases that they had previously said were part of the budget. Last week we saw the dumping of the MIT withholding tax increase, and today—lo and behold—its reintroduction. As the Australian Financial Review reported today, the property and finance industries were shocked when this proposal was first put forward. Yet it is not a surprise that the Gillard Labor government is still going through with this policy. We have a government which time and time again refuses to conduct a thorough cost-benefit analysis on any of their bills. Yet here they are today, coming out and blasting an independent report compiled by the Allen Consulting Group.

And this report is damning. It highlights that the attempt to increase government revenue in the short term will raise $35 million but will be accompanied by a decline of $30 million in gross domestic product. This increase in federal government revenue will also be accompanied by a decrease in collections by state governments, which will further affect the financial viability of states like Queensland, still trying to overcome decades of poor and reckless financial mismanagement by state Labor governments.

Australians and international investors do not just want responsible economic management—they deserve responsible economic management. They want consistency in government and they want a government that will tell the truth, that will do what it says, and that will not expose this country to sovereign risk. The shadow Treasurer, the member for North Sydney, persistently reminds the Gillard Labor government that so much of their legislation is exposing Australia to sovereign risk. And what is the usual response from government ministers? It is to bury their heads in the sand and pretend that nothing bad is happening. They pretend that somehow the policies they introduce into this House will not act as a disincentive for foreign investment, despite it being the express intention of the Treasurer to come up with short-term bandaid fixes to cover up his gross economic mismanagement.

This toxic government can hide all they want from the concerns of Australians and Australian families, and pretend that they are not doing the best they can to wreck the long-term viability of the Australian economy, but the truth about the Treasurer's smoke and mirrors surplus will be revealed later this year in the Mid-Year Economic and Fiscal Outlook. Behind closed doors, the government provided a so-called protected briefing for senior public servants which reportedly forecast 'turbulence and disruption' in the Australian economy as a result of volatility in Europe and the United States. The Prime Minister and the Deputy Treasurer have the gall to come into this House with their never-ending accusations of negativity from the Leader of the Opposition and the shadow Treasurer—as if we are the ones who are introducing poorly designed legislation, as the Gillard government does so often.

Is it mindless negativity from Mr Ivan Glasenberg, Chief Executive Officer of one of the largest commodity trading companies in the world, who said, 'We are getting greater business certainty out of Congo than we are getting out of Australia'? Is it mindless negativity when Mr Marius Kloppers, CEO of BHP Billiton, says, 'Australia is risking foreign direct investment'? Is it mindless negativity when Steve McCann, Group CEO and Managing Director of Lend Lease, says, 'Foreign capital is very important in funding large nation building projects; the country's largest real estate and infrastructure projects can't be funded, even by the biggest Australian superannuation funds; it will be the competitiveness of our industry that will suffer'?

And was it mindless negativity when Mr David Denison of the Canada Pension Plan Investment Board said on 15 May this year:

Australia’s budget … doubled the tax burden on our real estate and infrastructure holdings in that country.

It cannot be expressed in plainer language than that. He said that increasing the risk of investing in Australia calls into question the predictability and stability of cash flows, and if the risk of investing in Australia becomes too high then their response would be very quick and rational—they would simply stop investing in Australia.

The coalition, as the opposition, must hold this Labor-Greens coalition government to account, because we know that members on the other side of the House do not know what they are doing and do not fully consider the planned and unplanned consequences of their policies. Their answer to political instability and to a minority government is not to reassess their policies or to recognise and acknowledge when they do not have the details correct. They do not change policy; they simply change leader and swap around their ministerial titles. We recently observed the two-year anniversary of when Prime Minister Gillard and the faceless men of the ALP betrayed the trust and the will of the Australian people.

What did the sacking of Prime Minister Rudd achieve? Nothing. We will soon have, from 1 July, the world's only economy-wide carbon tax that is hundreds of per cent higher than the average carbon trading price, a tax that will do nothing for the global environment. We will soon have the economically destructive minerals resource rent tax. We will soon witness a 17 per cent increase in the passenger movement charge, which directly threatens Australia's $73.3 billion tourism industry. These taxes, increased by the Labor government, have been enforced without any rational explanation. This year's budget was clearly just another ploy in the Gillard government's desperate attempt to try to achieve a paper-thin surplus—no matter the consequences for local industry.

This is a government that give on the one hand and take on the other. They introduce a tax on carbon dioxide, increasing the cost of living for all Australians, and pretend that out of the kindness of their self-righteous hearts they are giving cash to you to ease cost-of-living pressures. They claim on the one hand that they are supporters of the industry, but on the other hand they turn around and make it as difficult as they can for industry to survive and prosper.

The Leader of the Opposition noted in his budget reply on 10 May that there is nothing wrong with this country that a change of government cannot fix. Today my message to Australian industry is: only the coalition has the economic credentials to help business survive and prosper. The coalition is committed to lower taxes, to helping attract investment in critical infrastructure—

The DEPUTY SPEAKER ( Hon. BC Scott ): Order! The debate is interrupted in accordance with standing order 34. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The member for Ryan will have leave to continue speaking when the debate is resumed.