Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 27 February 2018
Page: 2040

Mr THISTLETHWAITE (Kingsford Smith) (13:04): I am speaking in support of the amendment moved by the member for Fenner. I want to make some brief comments in respect of two elements of this bill that have been dealt with by the member for Fenner—most notably, the reforms relating to the phoenixing of companies and SuperStream changes as well. Schedule 5 of this bill highlights once again the dithering on regulatory reforms by the Turnbull government that are costing our economy billions of dollars. This hands-off approach to tackling what is basically plain daylight theft—also known as phoenixing—means that workers are losing entitlements, losing redundancies and losing superannuation. Why is this occurring? It's because the Turnbull government isn't interested in being tough on corporate scammers and going after dodgy directors. Instead, it's being distracted by cooking up a scheme to give big corporate business a tax cut, rather than seeking to stop some of these outrageous activities.

Schedule 5 of this bill amends the Income Tax Assessment Act and the GST act to require purchasers of new residential premises and new subdivisions of potential residential land to make a payment of part of the purchase price to the ATO. Currently, suppliers of new residential premises are generally subject to GST, and the supplier remits the GST to the ATO in their next business activity statement. This can be up to three months after settlement. The withholding tax being collected in the manner proposed fits with existing conveyancing practices and is a simple and well-understood mechanism. However, one of the main forms of noncompliance with these obligations—indeed, in some respects it's a scam—involves developers selling properties for a purchase price that reflects their GST obligations but then dissolving their businesses before their next BAS lodgement and thus avoiding remitting the GST. It's a form of phoenixing and it's robbing Australian taxpayers of important revenue.

Phoenixing to avoid paying GST has grown significantly over the last decade. As of November 2017, the ATO had identified 3,731 individuals who had actively engaged in this activity over the last five years. These individuals controlled over 12,000 insolvent entities responsible for $1.8 billion in debt that's been written off. The insolvent entities also claimed $1.2 billion in their input tax credits between 2013 and 2017. The last publicly available phoenixing figures, which were from 2012, estimated that this practice cost between $1.8 billion and $3.2 billion annually. The accompanying estimates on the form of tax avoidance by phoenixing targeted in this bill indicate that it's up to one-fifth of all phoenix activity, or that the cost of phoenixing is underestimated.

It was only in September 2017 that the Turnbull announced it was taking action on phoenixing activity, including that it would finally introduce a director indentification number to take action on illegal phoenixing activity. Because of the slow-coach nature of the Turnbull government on implementing this reform, directors have been able to continue scamming honest businesses, employees and taxpayers. Phoenixing has already cost our economy too much, while workers have lost entitlements, lost redundancy, lost superannuation and lost other benefits. Enough is enough. The Turnbull government hasn't clarified whether acquiring a director identification number will require a 100-point identity check, a fundamental aspect of the proposal that was announced by Labor in May last year.

The Turnbull government keep missing deadlines on the register of beneficial ownership, something they're yet to commit to publicly, and questions remain over the public release of updated modelling of the costs that dodgy directors impose through phoenix activity. The Turnbull government is continuing to use figures from five years ago, despite receiving updated costs in 2015. The 2012 estimate put the cost of phoenixing activity at $3 billion a year. No doubt it's risen since then. Labor's been calling for the introduction of director identification numbers since May last year. For the sake of Australian taxpayers, workers and honest businesses, the Turnbull government must implement a director identification number.

I want to turn now to some of the other measures in this bill. Most notable is schedule 3, which will amend the APRA Act to enable the government to recover the ongoing costs of the governance of the superannuation transaction network, or SuperStream, from the superannuation supervisory levy. SuperStream is the network that transfers superannuation payments and messages for superannuation contributions and rollovers. It facilitates connections amongst approximately 800,000 employees, 200 APRA regulated funds and over 350,000 self-managed superannuation funds. Before SuperStream, many of these transactions were still processed manually, with an estimated cost of between $5 and $10 per transaction. Today, though, through SuperStream, over 80 million transactions per year are processed in a standard digitalised form.

It's important to note that the SuperStream reforms were commenced by the previous Labor government, and it established this gateway network governance body. They, of course, followed the review that was conducted into the superannuation system in 2010 by Cooper. Last year, the review of SuperStream found that it had led to lower costs, ease of operation in the super system and increased retirement savings. It's estimated that the released efficiencies from SuperStream are approximately $80 million over a year. More significantly, savings for members from their investments are estimated to be $2.4 billion per year.

So the introduction of SuperStream has been a significant project, and it's important to acknowledge the work of the ATO and the industry in implementing this reform. This bill will amend the APRA Act to allow ongoing costs of the gateway governance body to be funded by APRA through a levy and for these funds to be retained by consolidated revenue. There are some other changes contained in this bill that I won't go into, but, once again, I support the amendment moved by the member for Fenner and commend the bill to the House.