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Thursday, 2 June 1994
Page: 1185

Senator WATSON (12.24 p.m.) —The opposition opposes clauses 93, 94, 95 and 96. In addition, we will seek to repeal parts of division 7 relating to the PAYE provisions which the government, through a backdoor method, introduced in the Higher Education Funding Act 1988. We will seek to insert a new provision, division 7A, which effectively means that the PAYE provisions are removed.

  I think it is rather abhorrent that, in terms of tax and tax commitments, the Taxation Office is using another bill effectively to create a charge which imposes a responsibility not only on HECS payers but also on employers. So we are seeking to remove these new responsibilities, both in this legislation and in another act, on employers and HECS payers, to return to the status quo, which was the contract and the arrangements entered into by these students and by the government. In other words, the government has changed the rules after the agreement and after the contracts were made.

  The government did announce in its 1993-94 budget that there were going to be some changes. We are seeking to oppose those changes and to bring them together in the tax act, where they all should be. People who have tax obligations, employers who have tax obligations, should not have to read other acts such as educational acts when there are responsibilities in terms of penalties of up to $1,000. It is no wonder people are confused. Not only do they have to look at a tax act nowadays, but they have to look at an educational act to find out what their tax responsibilities are. We are seeking to try to simplify this. We are seeking to try to introduce some element of clarity to help the employers and the students. There are enough complications in tax without introducing tax elements unnecessarily in other pieces of legislation.

  What this government has done is to pull the wool over so many people's eyes. The letter that was sent out does exactly that; it does not give the full picture. After all, as we said, these amounts are indexed. How much is the government really going to lose as a result of these new arrangements? Oh, no; it wants to claw back more money from students who are just starting off in life. Not everybody can get a job with an employer. They may start off in a new little business. We know the current provisional tax arrangements almost ruin these young people starting off in life.

  What is being done? Their burden is being added to by also including the HECS arrangements under the provisional tax arrangements. Yes, this is in the bill, all right, but the provisions we are also debating are in the amendments. Yes, we are looking at two issues. We are looking at the provisional payments which are in this legislation and we are seeking to correct the errors and the responsibilities that were unnecessarily placed on people by the government through a backdoor method, by pulling the wool over people's eyes. No, we are not changing anything. Senator Cook is wrong. The government is changing something from a debt which was paid through the tax system to a provisional tax payment.

  The government is garnisheeing people's wages as it has never done it before. It was always available to these students, if they wanted to go along to their employer, to have additional moneys taken out. A lot of people do this today for other reasons. That is still available. Senator Cook misled the Senate today. That provision has always been available. They can still do it as a result of our amendments. If they want to pay it that way, it is on a voluntary basis. But do not let us impose these heavy penalties on students and employers which the government is trying to do today. We are trying to remove these. So Senator Cook knows the intent of what we are after. He has not adequately explained, but he has implied there are deficiencies. What we are doing is taking out all of those abhorrent features. If he does not like it, he can bring it back to us. But he knows the intent of what we are about today. It is quite clear, as it will be clear to these students after this debate, when they re-read the letter that the government has sent them.

  What we are seeking to do is take out the dreadful subsection 106U(4). What we are really doing is moving back to the original obligations, to treat it as a debt rather than as part of the penalty provisions within the income tax system, because the government is changing the rules. What the minister did not do today, and what he should have done, was explain the reasons for the change. What he has not explained is that these amounts are already indexed. If the government is worried about any delay in payment, it will get extra money because of the indexation factors.

  The government is trying to claw every dollar out of this. How else would it get an additional $12 million if not by changing the arrangement—and the government is changing it in a very significant way. Currently, HECS is payable on an annual assessment basis. What is wrong with that? The government has not demonstrated that there is anything wrong with it. The government, as always, is trying to get the last cent out of the transaction. That is why there is so much confusion about the fringe benefits tax regime at the present time, because of this clawing for the last dollar.

  We are attempting to take these added responsibilities away from employers and put them back where they were originally. The government has not demonstrated what was wrong with the old arrangement, so we have sought to get this bill right. Perhaps we could vote on these amendments before we go on to debate other relevant sections of the bill.

Senator Cook —I am happy to deal with this matter in isolation and get it over and done with.