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Thursday, 25 August 1994
Page: 377

Senator SPINDLER —My question is directed to the Minister representing the Treasurer. I refer him to the government's announced intention to subject employee share benefits to the fringe benefits tax. Does the minister recognise that the government's decision would result in a new tax bill for BHP for its 20,000-member share plan of $39 million and a tax bill of $16 million for Pacific Dunlop's 3,000-member share plan?   Secondly, does the minister agree that, given the decision by these and potentially many other large companies to suspend their share plans, the prospect of Australian workers owning a larger proportion of their companies is now more remote than ever before? Given community concerns about the increasing levels of foreign ownership of Australian companies, is the minister prepared to review the government's decision to kill off this avenue for encouraging Australian ownership of Australian industry?

Senator COOK —I think Senator Spindler should re-examine some of the premises of this question. For example, the figures he quoted about BHP and Pacific Dunlop are obviously figures that do not take account of what the government changes have been and, therefore, do not accurately represent the situation.

  This initiative by the government has prevented tax avoidance. Essentially, employee share acquisition schemes were being given to senior executives and highly paid employees of companies, often on the basis that their tax liability was deferred until retirement in order to minimise their tax payments; and the shares did not have to relate to the particular company that employed them, but could relate to the shares of other companies. The changes the government has introduced are to overcome both of those things. That is an appropriate and responsible action by the government.

  The changes announced in the budget will subject remuneration provided to employees through employee share acquisition plans to fringe benefits tax in the same way as other forms of non-cash remuneration but with two important exceptions, which should be noted. Employees taking up shares in their employer company will be able to utilise a $500 per year tax exemption or a $1,500 per year tax deferral for up to 10 years. That is, employees will be able to receive $500 per employee per year in the form of shares tax free or obtain a tax deferral of $1,500 of shares per year per employee. Secondly, these concession schemes will be subject to a range of conditions to ensure that they improve workplace productivity.

  Giving shares to senior executives and highly paid employees does not enhance workplace productivity or improve the industrial relations situation in a company. It does not give employees in a company a sense of ownership and control of their company. But the changes we have made will be conducive to that. In particular, the concessional tax arrangements will be available so long as the shares are those of the employer company and they are provided on a non-discriminatory basis to all employees equally. I am not sure I have answered all the questions I was asked, but I think I have covered most of the ground in the questions by Senator Spindler.

Senator SPINDLER —Mr President, I ask a supplementary question. I thank the minister for his answer. I think he should look at the analyses that show that these concessions are welcome but not enough. We are not concerned about highly paid executives. If the minister can put forward in the future a measure directly directed to rectify that rort, we will certainly support it. But we are concerned about the workers that are affected by it. We are concerned about the survival of these schemes. That is the important issue. I would like an assurance that the minister is prepared to review the arrangements from that point of view.

Senator COOK —I thank Senator Spindler for a presentation of Democrat policy on this issue. Of course, the government has made the appropriate settings here. I cannot give him an undertaking that we intend to review something that is aimed at preventing tax avoidance.