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Wednesday, 23 March 1994
Page: 2021

Senator PANIZZA (10.37 a.m.) —I support my colleagues in this debate on the Taxation Laws Amendment Bill (No. 4). The bill has half a dozen purposes, but I intend to address only the calculation of fringe benefits tax for employer-provided car parking and the provision of a rebate equal to the fringe benefits tax paid by certain non-government schools. But, as I said, the bill contains many other measures. It arises because the government is finally trying to implement some of the tax measures mooted in the last budget.

  On the payment of fringe benefits tax for an employer-provided car parking space, in the debate following the budget we on this side of the chamber certainly made several points. We said that it would be hard to administer and that it would be unfair to some employers and some employees compared with others. We pointed out the implications and certain ways to avoid the situation. Colleagues of mine, such as Senator Watson, Senator Short, Senator Kemp and Senator Troeth, pointed this out but, as usual, the government took no notice at the time, so we now have a tax amendment bill before us.

  As we all know, fringe benefits tax is paid on parking when an employer provides car parking at his premises and when those premises, or the entrance to those premises, is within one kilometre of a commercial parking lot. At the time I pointed out that when that parking is fairly close to being within one kilometre there could be certain abuse of it. I termed it abuse at the time, but I do not consider it to be abuse. By changing the entrance to a business parking lot by 20 or 30 metres the entry may be altered from under a kilometre to over a kilometre.

  Of course the government laughed at that situation, but I know it is happening and, as far as I am concerned, legitimately so, because the siting of an entrance to a car park is up to the persons or companies that own the building. They are things that we pointed out, but the government took no notice whatsoever.

  Now there is what the government calls a problem with companies using the night rate rather than the day rate car parking charges. As I far as I am concerned, these figures are commercial in that they are what is charged at commercial parking stations. I believe that all 24 hours should be considered in car parking stations. This government believes that car parking charges have been reduced from $16 to $4 in some cases because $4 is the all-night parking rate, and that is what it is intending to legislate around. As I have said, FBT is payable where the employer provides car parking for at least six hours between the hours of 7 a.m. to 7 p.m.

  Furthermore, the government does not accept parking meters as being a commercial parking station. They are certainly not a commercial parking station, but I believe they are a commercial parking lot. Local governments set up parking meters on ground vested in them by state governments. They provide parking inspectors to make sure that cars are not left standing by parking meters with no credit. What is more, there are certain places where a meter can be bought for the whole day. If an employee buys a meter for the whole day and is reimbursed by the employer, that is the figure that should be used and not the figures of a commercial parking station which has far more overheads than a parking meter.

  A parking meter is sited on ground owned by or vested in the local government, money is put in and parking inspectors come and go. Commercial parking stations are bigger businesses with higher costs and larger infrastructures. More people per car are employed in keeping those commercial parking stations going than with a parking meter. I cannot see the rationale behind the government banning the use of a parking meter as being commercial. Perhaps the minister will explain why it is that parking meters can be used.

  These are the unintended consequences of the government's ill-conceived FBT on parking. As I have explained, that is why commercial parking stations are dearer.

  A similar situation happened with government and non-government schools. We all pointed out on this side of the chamber that it was not totally fair that government schools were treated in one way and non-government schools were treated in a different way. Once again, the government did not take any notice of what was said and went ahead and did what it liked. These are schools run by religious institutes.

  One can go further and look at hospitals. Government hospitals are not caught in the net of fringe benefits tax on car parking but private hospitals are. I know of some hospitals, hospices and other caring organisations that are run privately, but not necessarily as profit-making organisations. The government should look at relieving them of fringe benefit taxing measures. No doubt this chamber will be looking at that again.

  Government and non-government schools are covered. Then there is the scientific, charitable or public education of adults; the trade unions and registered employee or employer organisations; and the non-profit organisations and societies. In those situations the government is now making sure—whether it has been done in the past or is being done by this amendment bill—that fringe benefit tax does not operate. But the government has a long way to go, especially regarding hospitals. We have pointed this out continually and hopefully the government will have something to say about these points.

  The fringe benefit tax has been highly criticised by our side, and it is operating as a mishmash. In this morning's Financial Review there is a good article by Peter Freeman on how judicious spending can keep the FBT bill down. The article centres on meals and whether they are for the sustenance of employees or entertaining clients. I would hate to be an accountant these days trying to work out these situations.

  I will give an example of how meals can be treated in so many different ways. The article deals with the cost of business meals from 1 April 1994, which is when the new fringe benefit tax becomes law. A meal classed as sustenance of employees is one provided in the workplace as finger food, sandwiches or whatever. If no alcohol is provided—and if work is continuing in the workplace, I presume that alcohol would not be provided—the after tax cost will be $67 per $100. If a client is provided with the same meal, the after tax effect of spending $100 will again be $67.

  Providing food for an employee through an in-house dining facility again will cost $67. Sustenance supplied to an employee when travelling will cost $67. But when an in-house dining facility is provided for a client, the after tax cost of the meal will be $100. In other words, there is no upward factor or downward factor. Under the new tax regulations coming in on 1 April this year, any FBT paid by an employer will be a tax deduction. The legislation made sure that all FBT paid worked out at the nominal rate of the taxpayer at the time, which was generally the top rate.

  Returning to the figures in the article, one sees that in-house entertainment of an employee works out at $100, so there is no net upward or downward factor. In-house entertainment of a client is $100; external entertainment for a client is again $100. But when travelling and entertaining—in other words, when an employee who is travelling entertains a client—the amount goes up to $130. Frankly, I cannot see the difference between entertaining in-house or out of house. If people entertain their spouse when he or she happens to be travelling with them, the amount is $130—in other words, a $30 uplift. The amount for external entertainment of an employee is $130. This shows how far these fringe benefit tax anomalies have been thrown around. No doubt there will be more amendments in this place in the months ahead to fix these anomalies. I believe this is a total fiasco and the government should be looking at the position.

  In light of the budget that will be announced soon, I would like to make a few comments on what we know about it at this point. As honourable senators may remember, yesterday Senator Gareth Evans refused to rule out the banning of lump sum superannuation payments. In a response to a question from me he gave a non-answer, so I would say that is quite likely to be in the budget.

Senator Sherry —Senator Watson started that story.

Senator PANIZZA —It is not a story; it is a legitimate question which has not been ruled out, that is the point. Senator Watson is a good forecaster of what goes on in relation to taxation not only in this Senate but in the whole of Australia. I am glad Senator Sherry made that interjection because now I can put it on the record that Senator Evans has not ruled out that the government might ban lump sum superannuation payouts.

  It is not only worthwhile pointing out what the government may be doing in relation to that; in the few minutes I have left to me in this debate, it is worthwhile pointing out to Australia exactly what the Greens and the Australian Democrats are thinking at this time. The Greens of Western Australia, who represent the state that provides 25 per cent of Australia's export income, have suggested that the government do away with the diesel fuel rebate—as if the government is getting that rebate out of its pocket and giving it to industry, farmers or whoever. Past governments have given that rebate for diesel fuel that is used off road—that is, that which is used on mines and farms mostly. This government, by compulsion, borrowed around $325 million from farmers and miners without giving them interest for that money. Now the Greens of Western Australia are advocating that the government should do away with that $325 million.

Senator Sherry —Why did you give them your preferences?

Senator PANIZZA —Unfortunately, I do not run the Liberal Party of Western Australia. I can tell Senator Sherry that its management has learnt a lesson and, as far as I know, the Greens will not be getting preferences from us again.

Senator Ian Macdonald —You are not going to give them to the Democrats?

Senator PANIZZA —We are not going to give them to the Democrats either. I have mentioned what the Greens are advocating. Before my time in this discussion expires, I will tell the people of Western Australia and anyone else who is listening what the Democrats have in mind. They have in mind increases of $7.8 billion, but of course they did not mention business and personal tax concessions of $2.8 billion. People can see for themselves that the Democrats are advocating a net gain of $5 billion for the government. Those cuts were stolen straight out of Fightback. The Democrats stand for high taxes, driving business people out of business, driving farmers from their farms and of course stopping resource development that is so vital to taking Australian projects off the drawing board and into practical completion and operation. That is what the Democrats are doing.

  If we were to lump together the figures suggested by the Greens of Western Australia and the Australian Democrats, we would have a total disaster. All these suggestions of raising more money and spending more may give us a warm inner glow, but the Greens and the Australian Democrats have not told us about what they will do with farmers, miners and their employees. After all, in case anyone does not know, for every job in a mine, four jobs are created in the major city closest to the mine. I would like know what the Greens and the Democrats will do with those people as well as the ones put out of employment in the actual mines themselves. Perhaps when Senator Coulter gets up to speak in this debate he will tell the people of Western Australia exactly what he has in mind. The idea of turning them into tourist guides and that sort of thing has not worked in the past.

  I would like the government to take note of my comments on the fringe benefits tax. Hopefully, the government will bring some amendments back in time. I support what my colleagues have said and the amendment moved by Senator Watson.