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Wednesday, 27 May 2015
Page: 4729

Mr FRYDENBERG (KooyongAssistant Treasurer) (10:38): I move:

That this bill be now read a second time.

Today I introduce a bill to amend the Income Tax Assessment Act 1997 as a step towards repairing the budget.

In our first budget, we announced a plan to repair Australia's financial situation: a plan that makes important government services sustainable and stops borrowing at the expense of future taxpayers.

This government is committed to a stronger and sustainable economy. We are committed to prioritising investment and making tough decisions on spending so that we can redirect funding to where it most benefits Australia.

The measures in this bill will return around $826 million to the budget over the forward estimates period in fiscal balance terms.

These are important savings for Australia's budget, and we believe that the proposed changes are fair and measured.

We inherited from Labor an unsustainable budget position. The former government's economic management is reflected in the deficits they delivered, the six biggest in Australia's history—a quarter of a trillion dollars in actual deficits.

Contrast that shameful record with the Howard government's successful economic management which consistently produced Budget surpluses of one per cent of gross domestic product.

Before we came to office the coalition recognised that taxpayers could receive better value for money from their government, and that is what we pledged to do when we were elected.

We have already put a number of measures in place to make good on that promise.

They include the savings measures included in our first budget and our continuing efforts to both place government finances on a sustainable path and improve workforce participation.

They set the scene.

This bill is a further step towards repairing the budget and providing taxpayers with value for money from the government.

And the measures we are introducing in this bill contribute to restore a sound economic framework.

This government will make sure that our taxation and spending policies meet our needs as a nation and also allow our economy to withstand any adverse, external shocks.

So we will continue to make sure that taxpayers' funds are spent wisely. Australians have every right to expect this from their governments.

There are two measures in this bill.

Schedule 1: Abolish the Seafarer Tax Offset

The seafarer tax offset is a refundable tax offset provided to eligible companies for 30 per cent of salary, wages and allowances paid to Australian resident seafarers who are employed to undertake overseas voyages on qualifying vessels.

Companies are eligible to claim the seafarer tax offset if the company employs the Australian seafarer on such voyages for at least 91 days in the income year.

When the former government introduced the seafarer tax offset, they claimed it would stimulate opportunities for Australian seafarers to be employed on overseas voyages and to gain maritime skills.

We are abolishing the seafarer tax offset because it is not achieving this policy intent. We will not continue to spend valuable taxpayers' dollars on policies that just do not work.

The repeal of the seafarer tax offset will apply to assessments for 2015-16 and later income years.

Only five certificates were issued by the Department of Infrastructure and Regional Development for companies seeking eligibility to claim the seafarer tax offset in 2014.

The Australian Taxation Office estimates that fewer than five companies will be affected by the abolition of the seafarer tax offset.

The low uptake of the offset may be due to several reasons, including the fact that there are significant differences between Australian wages and conditions in the shipping industry and those of some other countries. The seafarer tax offset is unlikely to be sufficient to address these differences.

Abolishing this offset is expected to return $16 million to the budget bottom line over the forward estimates period.

And that is another small step towards repairing the budget.

It is also a step towards simplifying coastal shipping regulation in Australia.

Full details of the measure are contained in the explanatory memorandum.

Schedule 2: Reducing the tax offsets under the Research and Development Tax Incentive

We are also reducing the rates of the tax offsets available under the Research and Development Tax Incentive.

The rates will be reduced by 1.5 percentage points for all income years commencing on or after 1 July 2014.

Changing the offset will not affect the eligibility of companies for the R&D tax incentive or the way companies claim the incentive.

Nor will the changes affect the administration of the R&D tax incentive more generally.

The R&D tax incentive will continue to provide generous and easy-to-access support for thousands of eligible companies in all sectors of the Australian economy.

The amendments included in this bill are in addition to the amendments to the R&D tax incentive in the Tax Laws Amendment (Research And Development) Act 2015, which received royal assent on 5 March 2015.

In repairing the budget, this government will build a stronger economic base—a stronger framework—which will give businesses confidence to invest in the R&D they need to help their businesses reach their potential.

The gain to revenue and savings from this measure will be around $810 million over the forward estimates. This will contribute significantly to the government's task of repairing the budget—a task which will benefit every Australian taxpayer.

Full details of the measure are contained in the explanatory memorandum.


The measures in this bill are responsible. They represent another instalment in our Economic Action Strategy towards a stronger, better and more compassionate Australia.

This bill might seem like a small chapter in this story—but it is a significant element in reducing our debt. As a government, we recognise that we cannot continue borrowing $100 million every day to pay the interest on Labor's debt.

The measures in this bill will return around $826 million to the budget over the forward estimates in fiscal balance terms.

These measures represent a careful and measured approach to re-prioritising government revenue.

This government will continue to make the right decisions to position Australia for future opportunities and challenges.

Debate adjourned.