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Wednesday, 16 October 2019
Page: 3072


Senator STERLE (Western Australia) (09:53): The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 contains seven separate measures dealing with various Treasury laws and tax activities. Schedule 1 prevents certain tax deductions from arising when a newly privatised entity repays a concessional loan. Schedule 2 amends the tax law to prevent small-business CGT concessions from being available for assignments of the income of a partner and other rights or interests in the income or capital of a partnership that are not a membership interest in the partnership. Schedule 3 limits deductions for losses or outgoings incurred that relate to holding vacant land under certain circumstances. This would essentially end negative gearing in relation to vacant land.

Labor supports action to improve the integrity of our tax and superannuation system. We support the intentions of this bill. Over the course of the Senate inquiry into this bill, however, it became clear the government has mishandled the drafting of this legislation. The government has, on occasion, used its numbers on legislation committees to prevent a committee from taking the time needed to properly consider a bill, either by frustrating proposals to hold public hearings or by forcing compressed timetables that make it difficult for stakeholders to engage. The inquiry into this bill shows why that is very poor practice. The inquiry has revealed a number of problems in the drafting of the bill. Labor will be moving or supporting amendments that remedy these. The inquiry process played an important role in surfacing those issues.

I want to go to schedule 3 and vacant land. The committee inquiry shone a light on just how poorly this bill was drafted. Where schedule 3 of the bill intends to address the application of tax concessions on property tax—that is, vacant land—the drafting leaves much to the imagination. The definition of vacant land is ambiguous and could leave the door open to problematic consequences. For instance, the Chartered Accountants Australia and New Zealand highlighted that newly-constructed apartments that were impacted by structural defects could be classed as vacant land. In their submission to the inquiry they state:

In light of the recent problems in Sydney with newly constructed apartments impacted by structural defects (e.g. Opal Towers and Mascot Towers), it has been brought to our attention that these buildings could be inadvertently caught by these provisions as they are no longer lawfully able to be occupied due to the structural defects.

Coalition senators agreed with Labor in recommending that the bill be fixed to deal with this botched definition of vacant land in the schedule 3.

There are concerns with schedule 5 of the bill. Submissions to the Senate inquiry raised concerns around the adequacy of resourcing in regard to the Inspector-General of Taxation and Taxation Ombudsman. For the IGTO to become an effective organisation, they require the appropriate powers and resources. Labor supports recommendation 2 of the committee report, which could see the ATO engage with the IGTO to address concerns around potential privacy implications, notification time frames, disclosure time frames and the potential risk to businesses from disclosure errors made by credit reporting bureaus or the ATO. Labor agrees with the committee on this matter but also wants to see the bill go further to fix the drafting problems. Firstly, we want to see an extension to the notice period, currently at 21 days. The ATO's ordinary service expectation of 15 business days or 21 calendar days would not allow a sufficient period for affected taxpayers to dodge—not dodge, sorry; how did that slip out!—to lodge a complaint to the IGTO within the 21 day notice period. The government has rushed the drafting of this bill and missed glaring gaps in the practical application of the bill. Labor will be moving amendments recommended by the Inspector-General of Taxation to improve the ability of small business to deal with the ATO. Yoo-hoo!

Schedule 7 of this bill relates to salary sacrifice super contributions. Schedule 7 of this bill would prevent employers from underpaying superannuation when an employee chooses of their own volition to salary sacrifice into superannuation. This is a loophole that is well past due being closed. Compulsory superannuation is a central pillar to our retirement system. It affords every working Australian the ability to save for their retirement. Another pillar of our retirement system is the ability for workers to build their superannuation balance by making additional contributions to their super account outside of the mandated superannuation guarantee. Employers who seek to use workers' additional contributions to top up their own obligations are in effect taking money from their workers, and this bill will finally close the loophole that makes it possible for them to do so.

Industry Super Australia gave evidence at the Senate inquiry on the impact that closing this loophole will have on the retirement savings of Australians. They suggest that by fixing salary sacrificing arrangements about 370,000 workers will be paid more than $1.5 billion in entitlements that they are owed. This is based on 2016-17 figures alone. That warms the cockles of my heart, I can tell you! Given the scale of this problem, it is surprising that the government hasn't acted sooner, but that is what happens when you have a government that is asleep at the wheel.

This loophole amounts to around 16.6 per cent of the unpaid super problem. This is an important measure to ensure that wage theft and superannuation theft is stamped out. But more needs to be done. The problem of unpaid super has increased by 25 per cent in the last three years. My God, that's alarming! Action needs to be taken now to end the ingrained practice of wage theft. Labor will be supporting amendments that achieve this outcome. Workers impacted by wage theft are already falling behind. By missing out on entitled contributions, they are also missing the compound interest that would have been applied to those lost contributions. When it comes to superannuation, every additional year has a noticeable impact at retirement. Superannuation theft is costing Australians nearly $6 billion a year, and the government cannot delay getting entitled super back to workers.

Labor wants to ensure that there is integrity in the tax system and will ensure tax integrity bills brought before this parliament are the best bills they can possibly be. This means engaging with the substance of legislation, as we have done through the committee inquiry into this bill. The matters addressed in this bill are important. That is why Labor is happy to support it. Let's be very clear: it falls short of being part of a real plan for our tax and transfer system, let alone a plan for our economy.

We are still waiting to hear from the government what their plan is to grow the Australian economy. Didn't we just have something leak out about how they had some plan? That's right; it was a joke! As I said, we're still waiting to hear what they're going to do. Maybe you might be able to help us, Senator Brockman. We want to diversify our industry to secure Australian jobs and living standards. What's your plan? The reality is the coalition is in their third term of government with absolutely no plan. Australia cannot afford to continue coasting. Oh my, we need a Prime Minister who has more than a sales pitch; we need a government with a plan.