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Thursday, 22 November 2012
Page: 9510

Senator CORMANN (Western Australia) (13:05): The Tax Laws Amendment (Clean Building Managed Investment Trust) Bill 2012 follows on from a previous bill implementing the Gillard Labor government's budget measure to double the withholding tax on managed investment trusts from 7½ per cent to 15 per cent—having only very shortly before reduced it to that level. That is yet another example of the constant chopping and changing by this government over the last few years, generating increased levels of sovereign risk.

Because of their excessive spending, the government are constantly chasing their tail, constantly casting around for more cash. Over the last four budgets, the government have spent $172 billion more than they have raised in revenue—despite more than 26 new or increased taxes and despite the fact that those four Labor budgets have benefited from Australia's best terms of trade in 140 years. Despite the best terms of trade in 140 years and despite 26 new or increased taxes, the government were not able to balance their books, they were not able to live within their means and they accumulated $172 billion worth of deficits. That is why they are constantly looking for opportunities to come up with more cash.

A lot of the government's tax measures are ad hoc and ill considered, and of course there are flow-on consequences. One of its budget measures was to double the withholding tax on managed investment trusts. Not only the coalition was concerned about this; on this occasion, quite surprisingly and quite uniquely, even the Greens were concerned about the high-taxing ways of the Labor Party. The government had a problem—Houston, we have a problem. Essentially they did not have the numbers to get their budget measure through the parliament, and so in the end they did a deal with the Greens where the Greens said, 'As long as you give us a lower tax rate for the particular category of investment and infrastructure that we are interested in'— namely, what are described as investments in environmentally efficient infrastructure—'we will go ahead with the rest of it and you can have your increased tax despite all the implications for the sovereign risk profile of Australia; we are not too worried about that—all we want is a lower tax rate for the sorts of investments that we are interested in'.

The bottom line is that we are very sceptical about the motives for this bill. The bill seeks to implement the deal that the Labor Party entered into with the Greens to facilitate passage of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill, and we are very sceptical about the motives for that deal and about the effectiveness of this bill. However, given that the bill does not increase a tax for a change, given that it does introduce a tax cut even although it is for a very narrowly defined asset class, the opposition will not be opposing it. In fact, we are always supportive of tax cuts—we just think that the government should have reconsidered its approach to taxation on managed investment trusts more generally.