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Thursday, 2 June 1994
Page: 1180

Senator COOK (Minister for Industry, Science and Technology and Minister Assisting the Prime Minister for Science) (12.02 p.m.) —The Senate is debating the Taxation Laws Amendment Bill (No. 2) 1994, which is an omnibus bill. It contains a host of amendments to taxation law—amendments that can be broadly categorised as closing off loopholes discovered over the last period and which arise from community consultation to smooth the implementation of tax law with the approval and support of many taxpayers. There are a lot of amendments; the explanatory memorandum runs to 171 pages.

  There have been several speakers in debate from the opposition and two from the Australian Democrats on this legislation. Whenever something appears on the Notice Paper of the Senate headed `tax' a number of senators make a beeline for this chamber and use the occasion to express their views about taxation. We have seen that today. Broadly, the tone of the contributions has been worth while, even though I am bound to disagree, as I will now shortly set out, with many of the comments that have been made by senators in this debate. But I do thank them in the broad for a constructive approach.

  One can analyse in four parts the body of argument put before the government on this bill. First, we have a series of observations and indeed reservations put forward by a number of speakers, including Senator Watson and Senator Kernot, about elements in this bill that they will not oppose or will support. But in expressing their view about those elements they made observations and/or reserved their right to come back later and do other things. I acknowledge that. The government has listened assiduously to what they have said; it will take on board their comments, which will inform our future decisions.

  Secondly, several amendments have been put forward under the name of Senator Watson, which might be called the HECS amendments, dealing with the higher education payment. These amendments are supported, as we have been informed in this debate, by the Australian Democrats—Senator Bell in particular has led the charge there. That means that the government faces a majority and, on the numbers, we would lose the measures proposed in this bill. That being the case, I nonetheless want to put the government's case and why it is that even at this last minute the opposition and the Democrats should reconsider their position and change tack.

  Thirdly, there has been an amendment put forward by Senator Short, which again I understand is supported by the Democrats. Indeed, Senator Short and the Democrats were vying for the honour of who could be first into the field to put forward this amendment. This amendment is in the form of a motion to add to the second reading motion and it comprises three points which essentially broadly condemn the government, although these points have not been expressly addressed or particularly argued by anyone. The amendment condemns the government for:

(a)its desperate pursuit of every last cent of revenue, without regard to the costs that this imposes on industry and on all Australians;

(b)unnecessarily adding further complexity to a tax system which it has already allowed to become excessively complex; and

(c)further extending and complicating the fringe benefits tax—

and a couple of other taxes. Let me just quickly dispose of this amendment, which the government opposes. It reflects Liberal Party policy in the main. We have no need to include Liberal Party policy to deform the structure of our tax laws.

  Section (a) seems to suggest that the government should not be assiduous in pursuing a proper and thorough collection of its tax dollar. A principle of taxation is that, while no-one likes paying tax, people accept their responsibilities and do so. But in accepting their responsibilities, they want to be sure that all those who have the same responsibilities meet them. So a motion of this Senate which condemns the government for ensuring that that principle is met is a motion which will just fall on deaf ears, be idle, and discredit those who move and support it in the eyes of the commentators and the media, because it just runs against a fundamental principle of taxation.

  Section (b) is the sort of motion that every opposition has moved against every government. Even if my party were in opposition and the opposition party were in government, it would be the standard stock motion and requires no other comment than ho-hum.

  Section (c) omits the fact quite conveniently that the government has announced an inquiry into the fringe benefits tax in order to deal with some of the complexities of that tax. At this point in referring to the third element of this debate I simply rest my case and say that the government will oppose the amendment moved by Senator Short and supported by the Democrats.

  Fourthly, and lastly, we have a last-minute and, might I say, hasty amendment that has come forward under the name of Senator Watson. This amendment has arisen because as the debate has unfolded it has become obvious, I believe, to the opposition that it is on thin ground indeed. The amendments that it is proposing to the HECS legislation simply fly against the fact that the opposition did not oppose or indeed support, in the express words of the honourable member for Chisholm (Dr Wooldridge), at that time the Deputy Leader of the Opposition in the House of Representatives, the principle that we, in this legislation, are now seeking to apply.

  So, that fact being uncovered in the debate, principally by Senator Bell in his reflections on the coalition, the coalition has jumped forward and tried to remedy that in reverse by an amendment from Senator Watson which, I might say, the government will oppose. The government will oppose the intent—that is, the merit of the intent—to knock out this original principle in the first place, but it will also oppose it because the amendment proposed by Senator Watson is misconstrued. It goes far beyond what I believe is opposition policy and intent. If it were carried in the plain form that it appears before the Senate, it would completely remove the HECS from any assessment at all. I am not sure that that is opposition policy. If it is, the amendment does reflect it. But if it is not, the amendment is misconstrued and the opposition should withdraw and re-examine it. I counsel it to do so before this is put to a final vote.

  Before I turn to the case on merit as to why the HECS amendment should fail, I must tell the Senate that we will oppose all the amendments. We will not accept them, which means that that part of the bill will be referred back to the House of Representatives where it will be supported again. The Senate will have a chance to reflect and hopefully analyse more deeply, and not as superficially as the debate has revealed, the merit of the government's argument. Then perhaps it will come to its senses and support the measures finally, lest there be set up and lest it be the intention to set up a trigger for a double dissolution at some other time.

  With those words I now return to what has been the core of this debate and the one I acknowledge that has entertained the minds of most senators. As a final word before I actually go to merit, I point out that no-one has opposed the other elements of the bill and I thank the Senate for that. I thank the opposition and the Democrats for their support in this regard.

  The first and most fundamental point that I need to make on HECS is one that I have referred to already. On 19 October 1993 the then Deputy Leader of the Opposition, the honourable member for Chisholm (Dr Wooldridge), supported legislation which appeared before this chamber as well under the title of the Higher Education Funding Legislation Amendment Bill 1993. His speech is recorded in Hansard. He said, referring to the changes which will allow HECS to be provided under PAYE—and this is the important part of the quote:

. . . the coalition is happy to support this.

The Higher Education Funding Legislation Amendment Bill—in section 18, application of Income Tax Assessment Act; and in section 19, disallowable instruments—adopted the principle that HECS can be payable—

Senator Watson —Can be changed.

Senator COOK —Yes, and payable under provisional tax and under PAYE. This was supported at that time by the opposition. In this bill we are merely having that principle applied in practice, but the opposition is now opposing what in fact in principle it supported. Interestingly, it is not opposing it because of some defect in our drafting or some clumsy way of applying the principle. No argument whatsoever to that extent has been raised. The opposition is opposing the principle. It is rebounding from and renouncing the principle that it originally supported.

  This is a very difficult argument for the opposition to sustain. It has performed pirouettes and contortions in order to do so. Nonetheless, the point I make is that the opposition here is renouncing its own policy. Interestingly, Senator Watson's third amendment will be moved despite the fact that this situation did not arise in the house where the honourable member for Chisholm is, of course, a leading figure in the opposition.

  The second point I need to make is that there appears to be some confusion in the minds of many people who are engaged in this debate. There is a constancy in opposition and Democrat speeches in respect of the alleged fact that this bill will deal with the payment of HECS under the PAYE system. Of course, it does not. It deals with it under the provisional tax system. We have announced that we intend, as would be appropriate, to change the regulations to reflect the principles we have adopted and which this parliament supported last year in the PAYE system. We will do it this month and, as I said, that will come forward by way of regulation. I make the point in passing—it is not one I want to dwell on—that at the moment we are speaking about provisional tax and not about PAYE tax.

  Let me turn to some of the arguments that I think should be advanced to cause the opposition and the Democrats to reconsider. At the present time, if students under HECS meet the payment for HECS when it finally falls due, they do so as a lump sum payment at the end of the tax period. What this legislation would do is deal with that from a provisional tax point of view. But, as I have indicated that we intend to deal with it from a PAYE point of view, let me give a PAYE example. If students are on a minimum threshold of, say, $26,853, then under PAYE they will meet their tax obligations at $16 per week. As the situation currently stands, they would most likely meet it as a lump sum payment of $800 at the end of the tax period. If students in fact are on a higher threshold of $42,722, then the lump sum cost to those students at the end of the tax period would be $2,106.

  What the opposition and the Democrats are effectively saying is that that is better than doing it by weekly instalments. But I might say that every student I have ever talked to about this subject would much prefer to deal with it on a week by week basis than by way of a big slug at the end of the year. To insist that they cop it as a big slug at the end of the year is to overlook what the needs and desires of the students themselves might be. I say that with some confidence, not on the anecdotal evidence I have gathered in discussions with students over the years on this matter but because, as well as the government being of this view, so is the Australian Vice-Chancellors Committee, representing the vice-chancellors of Australian universities, and so is the National Union of Students, representing Australian tertiary students.

  So one is led to this entreaty to the opposition and to the Democrats: who do they think they represent when they try to prevent this method of tax payment? The National Union of Students supports the government, not them. The Australian Vice-Chancellors Committee supports the government, not them. They are the two groups which have the keenest and most focused interest in this matter. So, if they support us and we give effect to this measure, who do the opposition and the Democrats represent? Is this a fixation in their minds as to what should be the case rather than a reflection of what are the desires of those who are taxpayers and are affected by the measure?  I would suggest to members of the Liberal-National party coalition that before they proceed they should at least consult with the National Union of Students and the Vice-Chancellors Committee, gain confirmation of what I have just said, and reflect the views of those affected in legislation rather than pursue an ideological bent of their own which is not related to the interests of those affected.

  To the Democrats I would say, `Well, at least you are entitled to half a mark on the grounds of consistency. Whenever HECS has arisen you have opposed it. It can be argued'—and I will not make this argument now—`not always as rigorously as you would pretend, but nonetheless you have opposed it. So anything that comes forward that has the infamous initials H-E-C, in your eyes, you will stand up and, in a knee-jerk reaction, oppose. But you need to recognise reality. The reality is that it exists and it will continue to exist. Therefore, if it does, why don't you find some generosity of spirit in your soul and give effect to what is a measure supported by the Vice-Chancellors Committee and by the National Union of Students?'

  During the course of the debate on this legislation an observation was made, I think by Senator Watson, that the Commissioner of Taxation was avoiding parliament by sending out letters to students advising them of the new arrangements under PAYE, and doing so as though they would apply from 1 July 1994. This was canvassed in the debate as some sort of bureaucratic jumping of the gun and as a bureaucratic way of sliding around the intent or will of the parliament. Of course, it is nothing of the sort.

  The Commissioner of Taxation has an obligation to observe the acts and statutes of this parliament, and his actions on this occasion have been informed by the passage through the parliament in 1993 of the principle I referred to before to have HECS recovered from PAYE from 1 July 1994. As a consequence, there is a need for the administrative arrangements to be put into place for that time. The commissioner is not overriding but simply ensuring that the parliament's—and that is the government's—approach to these discussions is properly implemented. I think that might now be recognised by Senator Watson as a reasonable explanation.

  Let me conclude my remarks by saying, as I did when I started, that there is a host of amendments of which all except a group dealing with HECS are supported, or not opposed—whichever formulation of words the opposition and the Democrats would care to use, and I do not baulk at any of them.

  I think I have made a case which ought to give pause for thought. I invite the opposition and the Democrats to reconsider their position, but signify that if they wish to press their amendments, I will oppose on behalf of the government all three separate sections of amendments circulated—one in the name of Senator Short and two in the name of Senator Watson. Although it may well be the case that the government may not succeed in those votes, we will nonetheless persist with our task of sorting out taxation in this area of law to make it simple, more effective and more user friendly. We will therefore return this bill to the House of Representatives, but I suggest we will see it here in this present form in the very near future, with all the implications that that involves. I commend the bill to the Senate.