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Thursday, 11 May 2000
Page: 16259


Mr KELVIN THOMSON (10:07 AM) —This issue of fringe benefits tax has come back to the House after being the subject of some considerable community debate and some considerable debate in the Senate. Members will be aware that the Labor Party have taken the view that there should have been an inquiry into this fringe benefits issue as it affects the charitable sector. We wanted to establish the costs, the benefits, the current practice and the impact of what the government was proposing with its various measures on the charitable sector, on hospitals and the like. That has not happened. As a result, we feel that we are dealing with legislation without having proper and appropriate information. That is a matter of concern to us. That is just the way it has evolved. The government and the Democrats have come to an agreement or an arrangement. Obviously, the government wanted to get on with its legislation and the Democrats, like the Labor Party, were seeking to protect the not-for-profit sector from what would have been very adverse effects of the original proposition, that is, the original legislation. The Labor Party accepted, after hearing evidence during the GST inquiry, that there would be serious and adverse effects for the not-for-profit and charitable sector as a result of the government's original proposition and that the government needed to change their policy and look at ways of protecting the charitable sector from these adverse impacts.

We are pleased that the government have taken note of the very strong community campaign conducted by the charities concerning these issues. One of the key things coming out of this is that we will have a delay until next year in the implementation of the government's proposals. That is important. We had the most unsatisfactory situation where the not-for-profit sector simply did not know what was going to occur. This would have made for a complete shambles for a whole range of people who had been salary packaged both in the public system and in the not-for-profit system. They were going to have those whole salary arrangements renegotiated in a very short time, without proper information. That would have been very stressful for a lot of people and organisations, and I suspect it would have made for difficult industrial relations. So the delay is important in enabling these things to occur in a more measured way. The Labor Party acknowledge that the amendments moved by the government and the Democrats have produced a better outcome for the not-for-profit sector. As I say, we welcome the government's response to a very strong community campaign about these things.

I want to note that Labor shares some of the concerns raised in the Senate about how arrangements concerning public hospitals will work in practice, given that the arrangements for the fringe benefits tax concession's use in public hospitals has varied from state to state and from hospital to hospital. We need to understand just how the compensation package is going to be administered. We, on this side of the House, want to ensure that it gets through to the intended recipients and that it is used for the purposes identified—that is, to allow them to continue to employ high-quality staff and to compete with other providers.

I also note that as part of the arrangements between the government and the Democrats it is understood that there will be two inquiries held. The first deals with the question of indigenous health organisations and the impact on them. I am pleased, as other members would be, that that issue has been identified and that it is to be the subject of an inquiry. The second proposed inquiry concerns the definition of charities. I reiterate the point that the Labor opposition would have preferred a broader inquiry into the impact of fringe benefits tax on the charitable sector. Nevertheless, the definition of charity and not-for-profit organisations and the taxation treatment of them are important issues. There is no doubt that the government have gradually drawn the charitable and not-for-profit sector into the taxation net. I do not think that there is any doubt that that has had some adverse consequences for them. I have had quite a lot of representations from charitable and not-for-profit organisations in my own electorate. (Extension of time granted) Many of the charitable and not-for-profit organisations are very disappointed, even astonished, to find that there are those in the government who take the view that there should be a level playing field between their activities and those of private companies, that they are to be expected to compete on the same basis and that any taxation advantages they have enjoyed over the years ought to be withdrawn from them.

Clearly, many of these organisations perform a very important role providing services to some of the most needy and disadvantaged people in our community, and to strip them of taxation benefits and advantages makes it more difficult for them to provide those services. There needs to be a debate about those issues. On the other hand, it has always been my view that a charity should be just that and not something in the realm of bogus charities; nor should it be something masquerading as a charity while providing benefits for other organisations. In recent times, we have had a discussion in this place about the Greenfields Foundation and whether that is a legitimate charity or a Liberal Party front. There is clearly a need to have a proper definition of charity that ensures that it is not in any way abused. The Labor Party does not intend to oppose any of the amendments or arrangements entered into between the government and the Democrats.

I would like to make two more points before concluding. One is that we welcome the recognition of the special circumstances for police housing in the fringe benefits tax reporting legislation. This is overdue. I think the original situation should never have occurred. We note with concern that the government's new rules still impose fringe benefits reporting requirements on some benefits which are in fact necessary for police to undertake their proper duties. This is a counterproductive approach for law and order in our community, especially in regional Australia.

The final point I make is that the fringe benefits tax changes to charities come at the same time as charities are being expected to deal with the introduction of the goods and services tax. I have, and I expect every member of the House will have, received representations from various charitable and not-for-profit organisations about the way in which the goods and services tax will impact on them and their capacity to do the things they have done in the past. I remain very concerned about the impact that the goods and services tax will have on this sector and that it will make it much harder for them to attract volunteers to carry out their work, that it has been made immeasurably more onerous and complex as a result of the government's so-called simplification of the tax system and that this government has dealt charities a very harsh blow indeed with its goods and services tax legislation.

Question resolved in the affirmative.