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Wednesday, 11 August 2004
Page: 2115


Mr CADMAN (5:37 PM) —I hear cries of pain and protest from the minister at the table, and I have to say that I agree with him that the previous speaker has completely misunderstood the government here. This is a very strongly directed and well-guided government that has made decisions in the interests of small business. It has listened to small business. It has an excellent minister listening to small business, understanding what needs to be done and getting the Treasurer and Treasury to understand that some changes were needed—and those changes were made. The Tax Laws Amendment (2004 Measures No. 4) Bill 2004 is an interesting bill. I will briefly run through what is in it and then make some more general remarks.

The proposals in this legislation deal firstly with consolidation rules. The consolidation process is one that has caused some pain to the industry, where there has been some lack of clarity and some unnecessary prescription. These amendments allow greater flexibility, and I am delighted to see that they have been introduced and will pass the House today and the Senate shortly. The bill gives effect to measures that allow certain changes. Where there is an external administration, those certain changes will allow entities to be brought within the consolidation process. The legislation also includes the modification of tax cost setting in relation to finance leases, the application of cost setting rules for certain types of mining expenditure, low-value and software development pools, and notice requirements for inter-entity loss multiplication rules. All of these are applicable under schedule 1 of these changes. I think they are commendable and necessary and will clarify a number of areas.

I understand the provisions regarding the copyright collecting societies, and there seems to be adequate protection. The previous speaker mentioned the fact that there could be some loss of revenue and some opportunity to delay the application of taxation through societies responsible for collecting copyright. I understand that point, and it is one that I agree with. The simplified imputation system and consequential amendments are part of this legislation. In the schedule relating to specific gift recipients, an interesting list is produced of those organisations available to be recipients. I pick up one in particular, which is particularly close to me and the member for Parramatta, and that is St Patrick's Cathedral Parramatta and the rebuilding fund. A marvellous edifice has been built, and I am proud that the government has extended the period for which deductions for gifts to DGRs are allowed and that St Patrick's Cathedral Parramatta was one of those. Previously, gifts must have been made after 24 February 1998 and before 25 February 2004. Now it is proposed that gifts may have been made after 24 February 1998 and before 1 July 2004, which has extended the period, and justifiably so. It is of benefit to that great reconstruction program following the disastrous fire which occurred at St Patrick's.

I want to make some general remarks about taxation, because I think that we need to look at the record of the government in regard to taxation. In particular, I would like to list some of the government's achievements, because this legislation impinges on some of the achievements, and they all point to a government which is in charge, on the job and making changes to get effective results. I refer in particular to the first initiative, which was the $12 billion personal income tax cut which took place on 1 July 2000. It was a massive change to the way in which people could look at their income and predict a certain sustainability. I think that the economic status of Australia—the envy of many similar nations—has been brought about by the freedom that people feel to be able to plan ahead and make investments and decisions.

That initiative was followed by a further personal income tax cut on 1 July 2003, which was worth $10 billion over a four-year period. The tax cuts in the 200405 budget give tax relief to middle-income and higher income tax earners matching the previous decision, and the total value to those people, who missed out on the earlier rounds of tax relief, was $14.7 billion over four years. The tax cuts for older Australians in changes to the 200001 budget provided $4 billion to older Australians over a four-year period. The family tax benefits, which were introduced in July 2000, provide benefits of about $10 billion per annum to Australian families.

These are all parts of a regime giving back to people part of the money that they have paid in the form of taxation. The largest package of assistance to families ever to take place and ever to be put into operation by an Australian government was announced in the 200405 budget at a cost of $37 billion over four years. It included increases to the family tax benefits and a maternity payment of $3,000. The 30 per cent private health insurance rebate provided about $600 million to taxpayers over four years from 1999-2000. Refunding excess imputation credits provides extra benefits to many older Australians, particularly those investing, and is of great benefit to many. The changes to the capital gains tax for individuals are significant, halving capital gains tax.

In comparison, I have to say that the Australian Labor Party has opposed every one of these tax cuts. Prior to the 1993 election, Labor proposed l-a-w law tax cuts which were never delivered. I understand that the Australian Labor Party is reviewing the private health insurance rebate of 30 per cent, and we have yet to hear whether that will be delivered or not.

In addition to these reforms, the indirect tax has been able to provide a direct payment to states and territories, which is a key element in the new tax system. It has only taken four years since the introduction of the new tax system to see that the states and territories are better off than they would have been had tax reform not been implemented. That means that, in 200405, every state and territory will receive more revenue from the GST than they would have under the previous system of financial assistance grants and the state and territory taxes that were abolished by the new tax system.

Under the indirect tax system changes, 10 tax types were abolished. The first was the wholesale sales tax. Another nine have been or are in the process of being abolished. They include the financial institutions duty, the stamp duty on marketable securities, the bed tax and the bank account debits tax—that is, the BAD tax. They will be abolished by 1 July 2005.

An intergovernment agreement has been established for the reform of Commonwealth-state financial relationships. Leases, mortgages, debentures and stamp duties which have been put in place by states on a whole range of products are under review, so further review and change to taxation is on the way. Also, there has been the abolition of the twice a year automatic indexation of petrol excise, which has cut around $2.5 billion from government income over the four years from 200102. This government has also cut excise by 1.5c per litre, which is worth about $2 billion over the four years from 200102. Business taxes have been reduced. There has been simplification and extension of the capital gains tax and rollover relief for small business; CGT exemption for active assets on retirement; measures to promote investment in venture capital; a simplified tax system for small business; a number of integrity measures to improve the fairness of the tax system; and consolidation reforms, which are dealt with by this bill that is before the House today. All of these proposals were opposed by the Australian Labor Party; none was really part of its agenda.

On top of these measures, there has been consideration for families, particularly families with children. From 1 July 2004, new parents have received a non-means-tested payment of $3,000, replacing the existing baby bonus and maternity allowance. This will rise to $4,000 on 1 July 2006, and $5,000 on 1 July 2008. Labor has promised to means test all of these measures.

They are the general measures that I want to refer to, because they are very significant and bring huge changes to the way in which this country looks at taxation. It is no surprise then to find that the government has delivered seven surpluses since 1996 compared with nine deficits by Labor over 13 years. After coming to office in 1996 and dealing with the budget black hole, we are now in the black with $33 billion. When we took office, the Labor Party was $74 billion in the red, which included $69 billion of deficits in the last five years of their office. While we continue to return surpluses, most OECD countries are expected to record budget deficits in 200405. Since reducing this debt from around $96 billion, which is 19 per cent of GDP, to about $26 billion, which is three per cent of GDP, we have found that there has been a $5.5 billion reduction in net interest payments and that has been moved to priority spending like health, education and security. There is no doubt about it: relieving Australians of debt has paid big dividends to the average Australian. There was some hard work in the early years, but we are now reaping the benefits. I commend this government for both this legislation and the general thrust of its policies.