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Monday, 29 February 2016
Page: 1249

Senator POLLEY (Tasmania) (11:35): Labor's position is to support the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016, but this is a bill about economic leadership and we need to speak directly about that issue here today. This bill is a modest reform; but let us not pretend that it in any way constitutes economic leadership, because we know the government of the day has no plan, no vision and no leadership when it comes to the economic future of this country.

Labor will support this bill because it allows small business to restructure with greater ease but we would be remiss in talking about these issues if we did not talk about unfair taxation and did not deal with the question of the capital gains tax discount and negative gearing. We know that Australia has uniquely generous tax arrangements when it comes to negative gearing and the capital gains tax discount. We know that these policies have worked together to make housing increasingly unaffordable for young Australians. Price to income ratios have approximately doubled over the last two decades, and we have seen the share of young Australians owning their own home fall by 25 percentage points in a generation.

For low-income young Australians, rates of home ownership have halved. We now have Sydney as the second most unaffordable city in the world when measured by price to income ratios, behind only Hong Kong, and Melbourne is the fourth most unaffordable city in the world. Yet when faced with these facts, the Treasurer does not talk about acting on negative gearing and capital gains tax to make sure that all Australians can afford their own home. No, instead he is much more interested in protecting tax distortions and loopholes than in good policy.

Labor will always be fair and reasonable when implementing tax reform policies, and Australians deserve nothing less. They also deserve certainty. Our plans for changing the capital gains tax discount and negative gearing demonstrates the importance of giving certainty to stakeholders. But what do we see from this Prime Minister? What do we see from Mr Turnbull? He refuses to do the same. He is the Prime Minister, he has the power, he should have the authority, but he refuses to do the same.

This government is in complete chaos, with the Treasurer in witness protection. We know that the Assistant Treasurer does not have the facts. We know that the government are at odds with each other. We never know what each minister is going to say about their policies. And we see that this Prime Minister is now trying to make up ground on the run. New economic leadership has turned into blindly throwing darts at a list of vague ideas and the government are now in full panic mode. They do not have a plan. That was the whole basis on which we were told that Mr Turnbull knifed Tony Abbott and became the Prime Minister of this country. It was because he said that he would bring agile, intelligent and adult government to this country, but we have seen nothing. And we should not forget how long this government have been in power—it has been 2½ years. So there is no excuse for their not having a plan.

By not having a plan and not being up-front and honest with the Australian community, the government creates uncertainty and distrust. It shows that this government, which has promised no cuts to health and to education and no changes to pensions, is completely willing to say anything it wants and to completely backflip as it did at the last election when it got into government. It is no wonder that Mr Turnbull is not trusted. It is no wonder that his own caucus is in disarray, because from the top down there has not been any real leadership. It is easy to get up and talk for the sake of talking, but at the end of the day the Australian community wants to know where this Prime Minister is taking this country.

The Prime Minister and the Treasurer have no fair and equitable plans or policies to fix the budget or to fund Australia's health and education services. The government, its Prime Minister and its Treasurer—and we know it already has the world's worst Minister for Finance ever—are aimlessly wandering around, talking and filibustering, but they are totally befuddled and they have no vision. When the government has something serious on the table we on this side of the chamber, the Labor Party, will respond accordingly.

Under Labor's budget reforms the capital gains subsidy will be halved and negative gearing will be targeted to new homes. These are good policies. We, as the opposition, have been putting our policies out earlier than any other opposition has for some decades. We have done the consultation and we have done what we needed to do to be able to fully cost the policies we have already announced. Labor's reforms will strengthen the budget by $565 million over the forward estimates and $32.1 billion over the decade. This has been costed by the independent Parliamentary Budget Office. The savings from these reforms will be used to invest in education and health care and to strengthen the budget. At present, only seven cents in every dollar spent on negative gearing subsidies is directed into new housing stock. Negative gearing on existing properties means no new housing supply and no new construction jobs. Under Labor's reforms, negative gearing will be available only on new homes, creating a powerful new incentive to drive investment in new housing and create up to 25,000 new jobs. That is 25,000 new jobs. Our reforms will mean homebuyers will no longer have to compete against property investors receiving generous negative gearing subsidies from the government. This will help level the playing field so that home ownership is within reach of more working and middle-income Australians. This will allow young homebuyers to enter into the market.

Labor will protect investments made in good faith under the existing scheme. There will be no change for those who are already in that investment market; they will be grandfathered—unlike the whispers that we hear about the proposals that this government is currently discussing. There will be no change to the treatment of any property investments made before 1 July 2017. There will be no capital gains changes on the family home or superannuation investments. Labor will limit negative gearing to new housing from 1 July 2017 and all investments made before this date will not be affected by this change and will be fully grandfathered. This will mean that taxpayers will continue to be able to deduct net rental losses against their wage income, providing the losses come from newly constructed housing.

From 1 July 2017, losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment. Labor will halve the capital gains discount for all assets purchased after 1 July 2017. This will reduce the capital gains tax discount for assets that are held longer than 12 months from the current 50 per cent to 25 per cent. All investments made before this date will not be affected by this change and will be fully grandfathered. This policy change will also not affect investments made by superannuation funds. The CGT discount will not change for small business assets. This will ensure that no small businesses are worse off under these changes.

As I said, this bill amends the capital gains tax rules applying to small businesses which transfer assets as part of a genuine restructure. Businesses with revenue below $2 million will be able to defer gains or losses that would otherwise be made as a result of transferring business assets from one type of entity to another. This measure was announced as part of the government's package for growing jobs and small business in the previous budget and will have effect for assets transferred taking place from 1 July 2016. The new small business rollover is in addition to rollovers currently available where an individual, trustee or partner transfers assets to a company in the course of incorporating their business.

Labor welcome measures that allow small businesses to grow and adapt. That is why we support this bill. We on this side of the chamber understand how important small business is to our economy. You only have to look at the state where I was elected and that I represent—Tasmania—to see the importance of small businesses. But we also know—as do my colleagues Senator Brown and Senator Bilyk, also from Tasmania—that it is tough going out there for small businesses in the current economy. It is extremely difficult when you have a federal government that have demonstrated no leadership on the economy. They have shown no leadership on taxation reform. They have shown no leadership on real policies when it comes to small businesses in this country.

This bill is a modest reform, but let's not pretend that it in any way constitutes economic leadership because, quite clearly, the government do not have that skill. It is almost like we have Mr Malcolm Turnbull mark 2. We remember when he was previously Leader of the Opposition. He did not then demonstrate the leadership skills to bring the opposition at that time together. Regrettably for the Australian community, he has not demonstrated those leadership skills since he toppled Tony Abbott. People were rather excited and relieved about Mr Abbott being defeated, rolled and knifed because they were hoping that they would have a Prime Minister who, when he got up to speak either at an international forum or at a national forum, they could be proud of.

But, alas, they have been disappointed. They have been very disappointed, indeed. The shine is now coming off Mr Turnbull. We all like to sit and listen to people speak about things they are passionate about. The unfortunate thing is that Mr Turnbull does an awful lot of talking—some might even say an awful lot of waffling—but, quite frankly, he does not say anything important. He has been unable to articulate and demonstrate that he has a vision when it comes to the future of this country. Whether we are talking about taxation or the economy, he lacks the skills. He is now captive to the most conservative elements of his caucus. He is not the real Mr Malcolm Turnbull that people thought they were getting when he rolled Tony Abbott. No, in fact, he is not a man who stands up for his beliefs and principles, because he had to sell them down the river to be the new leader and Prime Minister.

I can understand ambition. I think ambition is something that all of us—including those of us in this chamber or in the gallery today—should have in different doses. But selling out his principles to become Prime Minister has left a shadow of a man, because he cannot espouse the views that he truly holds on a whole raft of ideas. Therefore, he had a Treasurer who went off on his merry way, talking about wanting to implement a GST increase. What happened to him? He was reined in by the Prime Minister. He was reined in because it all became a little bit too difficult. Quite frankly, it was the wrong policy. We would never, ever support an increase to 15 per cent GST on everything across the board, including fresh food. So I can understand why the Prime Minister reined it in, but it was because he did not have the political fortitude.

We all read in the newspapers when former Prime Minister John Howard spoke and tried to give this current Prime Minister a little bit of a nudge and push and a bit of advice about using some of his political capital to stamp his authority on this government and to lead the nation. But I fear Mr Turnbull does not have what it takes. He does not have the leadership skills. Nor does he have the support of his caucus to take the decisions that need to be taken in this country.

That is why we on this side have announced our policies. That is because we have a vision. We have a plan. We have policies that are costed so that when we go to an election, whenever those opposite decide to call it—whether it is a double-D or only a half-Senate ordinary election and whether it is in July, August, September, October or November—we will be ready. The Australian people are looking for leadership, and they have been hoodwinked by those opposite. Firstly it was when Mr Abbott went to the last election making hollow promises about not raising taxes, not cutting or changing the pension and not cutting education or health.

In my area of responsibility—aged care—the government have left older Australians on the scrap heap. That is what they have done. They have cut aged-care funding. They have failed those people who work in the sector. Those are people, predominantly women, who are on very low wages. The government have not walked away but run away from them, because they are not prepared to show leadership. They want to outsource it, as the minister said at estimates when questioned about the workforce supplement and what they were doing about ensuring that there was a clear path when it came to aged care in this country. The minister said, 'It's not our responsibility, but we will help the sector.' When the sector are not addressing this and are asking you for leadership and assistance, that is what a good government gives.

There is nothing like leadership. If you want to be the Prime Minister of this country then you have a responsibility to show leadership when it comes to the economy, when it comes to taxation, when it comes to creating jobs and when it comes to creating wealth, so that we can afford the world's best education, so that we can afford the world's best health and so that we can afford to support older Australians—who have built this country, after all—and to give them some respect and give them the opportunity to live with dignity. They are the attributes that you need to have if you are the Prime Minister of this country and, quite clearly, this is not the case with the current Prime Minister. He talks a lot and he talks about all the things that Mr Abbott did not do, and I agree with him on lot of those things, but he has not demonstrated, in the last six months, any of that leadership; none of it.

When we are talking about what this bill will do for small businesses in this country it is a modest reform, and, as I said, we will support it. There are over two million small business in Australia employing 4.7 million people. This bill lays the groundwork for a $340 billion contribution to the Australian economy. Small enterprises make up over 97 per cent of all businesses in Australia. From the local cafe, to the dry cleaner, the baker, the sole trader coding software online and the technician installing ADSL, small businesses keep our economy turning. They deserve more from this government. We will wait for the 2016 budget, even though they toyed with bringing it on a bit earlier over the last couple of weeks. We know they could not do that because they still do not have a plan. I doubt they have even finalised their budget, because they are squirming and worming on every avenue when we talk about taxation reform or when we talk about the economy.

We will wait and see what the benefits are to small business in their 2016 budget. We will also be waiting to see what sort of leadership there is from the Treasurer and the Minister for Finance. We will wait and see whether this Treasurer and this finance minister are outside smoking cigars again—I doubt that they will be. We will wait and see whether there is real reform and whether they have the courage of their convictions to actually reform the taxation system in this country. We will wait and see whether they have the courage and fortitude to address the multinationals who skip out on paying what is rightfully the right amount of taxation in this country. We will wait and see—just as the Australian people will wait and see—whether this government has any courage, whether it has any leadership and whether it will be honest. (Time expired)