Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015
House of Representatives
16 June 2015
The Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015 contains seven schedules, and I should say from the outset that Labor will be supporting the bill. But the context of this debate provides an opportunity to go to some of the issues raised within this bill which go to the cessation of the first home saver accounts scheme and the government's commitment to housing affordability; to the abolition of the dependent spouse tax offset and the government's view, somewhat inconsistent, on this scheme; and to offshore banking units and the government's frankly lacklustre approach to tackling multinational profit shifting.
On the issue of housing affordability we have seen a great deal of talk from the government, but unfortunately much of that talk has managed to put much of Australia offside. It was only last week that we had the Treasurer telling a press conference that if housing were unaffordable in Sydney no-one would be buying it. As has been pointed out, one can easily take 'housing' out of that sentence and replace it with any noun you like. If diamond encrusted iPhone covers were unaffordable, no-one would be buying them, you might well say. But of course such a statement would be ridiculous.
We have had clear statements now from the Treasury Secretary, John Fraser, who said:
When you look at the housing price bubble evidence, it's unequivocally the case in Sydney.
We have heard from the head of the Reserve Bank, Glenn Stevens:
What is happening in housing in Sydney I find acutely concerning for a host of reasons …
Then, going further still, he said:
Yes I am very concerned about Sydney and some of what is happening is crazy …
When central bank governors use words like 'crazy', sensible policy makers sit up and take notice. But the only response of the Treasurer to these statements from his chief economic adviser and from the head of the Reserve Bank was to say that Australians should go out and 'get a good job that pays good money'. Frankly, that is a little hard to do when you have people like Senator Abetz arguing there is a wages break-out in Australia, effectively arguing for wages to be lower, not higher. We have seen wages growth languishing under this government—perhaps unsurprising given that it is led by a Prime Minister who, in Battlelines, defended the economics of Work Choices, arguing only that the politics was bad. So, when you have got a government of Work Choices, it is going to be pretty tough for Australians to get a good job that pays good money.
Many Australians are concerned about the prospects of those on five-figure earnings being able to afford houses whose prices run into seven figures. Debate about housing affordability is an important debate for Australia to have. Yet, when the question was put to the Prime Minister from this dispatch box as to how he would respond to the Treasury Secretary's concerns about a house price bubble, his first thought was to go to his own house price—not to think about how this was affecting young Australians trying to break into the market, not to think about the fact that the homeownership rate for 25- to 34-year-olds has fallen from 51 to 41 per cent, but instead to think of his own house price.
Australians want more than a Prime Minister whose response on housing responsibility is to talk about his own home. Frankly, we need a serious debate over housing affordability. That is why Labor, through work carried out by Chris Bowen and Jan McLucas, has been engaging with the experts. That is why we have been looking at questions of infill, of making sure that greenfields development is affordable. That is why we believe that urban public transport really matters. It is why we are deeply proud that the Rudd and Gillard governments invested more in urban public transport than every other federal government going back to Federation put together. Where you have got serious investment in urban public transport, you are able to have those medium-density developments which foster housing affordability. But all this government has done on housing affordability is to abolish the first home saver accounts.
The government has no plan for housing affordability. It will not even admit that there is a problem with housing affordability. Instead, you get statements like this from the Prime Minister:
As someone who, along with a bank, owns a house in Sydney, I do hope that our housing prices are increasing.
It is cold comfort for young doctors, nurses, teachers, police officers and firefighters looking to break into the housing market in Sydney to have a Prime Minister whose chief concern is the price of his own home. The government's plan for housing affordability so far is to abolish the first home saver account.
Another part of this bill scraps the dependent spouse tax offset. In office, Labor phased back the dependent spouse tax offset, initially restricting its operation to those born before 1972 and then, in a further measure, restricting its operations to those born before 1952. It is important to note that those decisions had an impact on workforce participation because those born in the cohorts to which I have referred were of prime working age. This change is not one which can be defended in terms of labour force participation. Those affected, born before 1952, are of course aged 63 and over.
It is timely to go back to statements made by the coalition when Labor made decisions to phase back the dependent spouse tax offset. In a speech on 23 November 2012, Joe Hockey, the now Treasurer, described Labor's decision to restrict the dependent spouse tax offset as a 'tax grab'. The now Treasurer referred to phasing it back as a 'tax grab' and yet has now brought forward, in his own budget, the complete repeal of the measure. It is hard to see how this is consistent with statements such as that from the Prime Minister in August 2013 that 'taxes will always be lower under a coalition government' and:
… there will be no overall increase in the tax burden whatsoever.
Yet, if we look at the government's own budget papers, it is absolutely clear: the tax-to-GDP ratio in this year's budget is higher than in any year under Labor.
Labor is prepared to take a sensible approach to ensuring that the budget over time moves back into surplus. We have proposed a package which reduces excessive superannuation taxation concessions for high-income earners, a package which raises $14 billion over the course of the decade. If one looks at budget numbers, it is very clear—indeed, from the government's own Intergenerational report—that pensions as a share of national income will sit at about the same level mid-century as they do now, but that cannot be said for superannuation tax concessions. They are growing extremely rapidly, forecast to double in size over the course of just four years and soon to outstrip the total cost of the pension. That is why Labor has put forward a responsible plan to tackle superannuation tax concessions for high-income earners.
We have also passed more than $20 billion of savings and backed billions of dollars of savings in this budget, including savings which were put forward in a way that Labor would not have suggested. Our support for the approximately half a billion dollars in savings in this bill is emblematic of the approach that Labor have taken to working with the government. Where measures are unfair, we have opposed them. We do not support the idea of taking $6,000 away from sole parents on $60,000, stripping one dollar in 10 out of their wallets and purses. We do not support cutting the wages of the cleaners who clean this office—and I was proud to be out the front of Parliament House yesterday with some of those cleaners, taking industrial action in order to stand up for being paid a decent wage. But we have supported the government on various savings measures.
In this bill are some tentative steps to address the issue of multinational profit shifting. When the coalition were in opposition, they voted against Labor's sensible measures to get multinationals to pay their fair share. They voted against transparency measures. And, when they came to office, they refused to follow through in enacting Labor's multinational tax package, effectively giving $1.1 billion back to multinationals.
Part of the measures that the government failed to proceed with is around offshore banking units. Offshore banking unit changes are timely in ensuring that multinationals cannot take advantage of tax concessions that are unavailable to small businesses. This government claims it is a friend of small business, but, if you want to stand up for small business, you need to stand up for making sure that multinationals pay their fair share, because an Australia in which multinationals are able to access tax loopholes not available to small businesses is an Australia without a level playing field. Labor's multinational tax package, which raises $7 billion over the decade, is a pro-small-business measure because it acts to level the playing field. These measures on offshore banking units raise $41.8 million. That is less than half the amount that would be raised under the package on multinational tax avoidance brought forward by Bill Shorten, Chris Bowen and me.
We have also seen today clear statements from the Assistant Treasurer as to why the government wants to wind back tax transparency. Previously, the government had been suggesting that it was doing so because it was concerned about kidnap risk. It then emerged that the government had sought no advice from the Australian Federal Police about tax transparency increasing kidnap risk. So now we have the Assistant Treasurer writing in The Australian that his real concern about reporting the tax paid by some of the largest firms in Australia is that it might lead to 'envy'—that Australians might be envious when they realise that big firms are not paying their fair share. There was no concern about the feelings of the cleaners in this building when their wages were cut, but, when it comes to cutting the tax transparency for big firms, suddenly the government goes all Dr Phil. Suddenly it is time for inviting them into the office, putting them on the couch, giving them a foot rub and seeing how they really feel. Firms who are doing the right thing have nothing to fear from tax transparency laws. They enable us to have a sensible public debate about our tax laws.
When organisations such as the Tax Justice Network and United Voice bring forward reports which outline how much tax is being paid, the government is quick out of the blocks to try to discredit those reports, claiming they are based on inaccurate data. There is an answer to that: we need to get accurate information into the public domain. We are not asking for everyone's tax affairs to be reported; we are arguing that for firms with a turnover in excess of $100 million, it is appropriate for the Australian Taxation Office to report their total income, their taxable income and their tax paid.
As Justice Brandeis said, not the Brandis of the other place but Justice Louis Brandeis, 'Sunlight is the best disinfectant.' If we are to let the sunlight in on the tax affairs of big companies, we can have a sensible debate around multinational tax avoidance. And it is a timely debate because at a time when inequality in Australia is at a 75-year high, after a generation during which earnings have grown three times as fast for those in the top decile as the bottom decile of wage earners, we have a government that is trying to take $6,000 a year away from the poorest single parents.
NATSEM modelling—done by the organisation which is the Prime Minister's favourite modeller—finds that nine out of 10 of the poorest families in Australia are made worse off by decisions of the coalition. One of the impacts of that of course is to increase inequality, but another impact is to hurt consumer confidence. High-income earners save about a quarter of their incomes. Low-income earners spend it all. So when you transfer resources from the poorest to the richest, you take money out of retail sales. That might help explain why Westpac's consumer confidence index is still seven per cent lower than when the coalition took office. That fall in consumer confidence demonstrates what Australians already know, that the government does not have a plan for confidence, does not have a plan for jobs and lacks a plan for the economy.
In February 2013, Tony Abbott said:
I am confident that should there be a change of government later in the year, there will be an instantaneous adrenaline charge in our economy. There will be an instantaneous surge of confidence because of an incoming government.
The tide has gone out on the surge of confidence. It is seven per cent lower than when the coalition took office. What has been the response of the government to this? Has it been to begin talking the government up, to begin talking about how we can develop a long-term plan for jobs and growth? No. Instead, their plan has been to spend more on promoting the budget and the Intergenerational report. We now know Treasury has allocated $36 million to spend on the budget and promoting the Intergenerational report. Dr Karl Kruszelnicki has now said of his participation in advertisements around the Intergenerational report:
I deeply regret that I didn't get to see the full and final version.
I am sure many Australians deeply regret that $36 million of their money, more than a dollar a person, is being spent on propaganda for the government trying to sell its budget. I have a simple message for the government: if they are concerned about the way their unfair budget is going down in the community, fix the budget; don't start spending money on TV ads.
As respected economist Saul Eslake noted in a budget forum that was run in Parliament House, there have been a number of tricks in the budget papers in order to try to improve those numbers. He notes a footnote on page 3-6 of Budget Paper No.1, which says that from 2020-21 onwards earnings from Australia's Future Fund will be counted towards the surplus and that by 2024-25 that will account for more than half the projected surpluses. Mr Eslake made an interesting statement in that forum. He said:
I point to the influence of a change in accounting policy hesitantly because the last time I was critical of a government for the way it accounted for things in the budget the then treasurer, Peter Costello, rang up the chief executive of the bank I was working for, John McFarlane, (of ANZ) and said that he would take regulatory action that ANZ did not like if I repeated those kinds of criticisms.
(But) I don't think Joe Hockey is as glass-jawed as Peter Costello is, so I am not really worried about that in this context.
But he does go on to say that he is concerned about the fact that more than half of the projected surpluses in a decade's time will come from an accounting change not from policy change.
Saul Eslake also raised his concern about the government's claim that it was offsetting its spending decisions through making savings. As he pointed out, the way the government was able to back up that claim was because they had to put in the contingency reserve $10.4 billion for their unfair Paid Parental Leave scheme. Then when they decided not to proceed with their unfair Paid Parental Leave scheme, they took that money out of the contingency reserve. Why didn't we think of that? Why didn't we think of announcing an unfair policy, throwing the money in the contingency reserve, not going ahead with the unfair policy and then saying we'd made a saving? Frankly, deciding that you are not going to implement a bad policy and calling that a saving would not pass the pub test in Australia.
What we see from this government is that it is at odds with one another. We have seen cabinet leaks, the likes of which we have not been seen in this country for over a decade, and infighting between frontbenchers. And if you want to know what is going on in cabinet, you simply need to read the newspapers. Peter Hartcher's expose of the internal workings of the Abbott government clearly reveal a government that is willing to leak against itself. We saw Christopher Pyne on The Bolt Report on the weekend saying that as a result of the Abbott government leaking like a sieve, he cannot speak candidly in cabinet anymore. That is how dysfunctional the cabinet has become.
The government has no plan for housing affordability, no plan for anything but driving up the Prime Minister's own housing price. We need a government that is able to seriously act on the challenges of the future, challenges like investing in infrastructure such as making sure that more Australians get the coding skills they need at school and the science education they need at university. That plan for the future was laid out in Bill Shorten's budget reply and it is a plan that we will continue to build on over the time up to the election.