Article Categories: Speeches, The Economy
Tax Laws Amendment (2012 Measures No. 2) Bill 2012, Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012, Pay As You Go Withholding Non-compliance Tax Bill 2012
Wednesday, 20 June 2012
Mr ROBB» (Goldstein) (10:11): It is always fascinating to follow the member for Blair. He seems to have one theme, no matter what he is talking about. It is always contradictory when you sit and listen. He stands up and, in the most virulent manner, accuses the opposition of endless negativity and then proceeds for the length of his 15-minute contribution—or whatever it may be—with endless negativity. The government seem to be obsessed with abusing this side of politics and the member for Blair is a classic example of that. I think it reflects the fact that, even though they are the government and should have plenty to say because they are responsible for introducing measures and legislation and defending that legislation, they have nothing to say really. The member for Blair read what is contained in the bill and in essence gave no argument of any consequence in support of those measures.
The bill has been in the public arena now for some weeks. There have been some very trenchant concerns and frustrations about some of these provisions. There have been statements made not only by the opposition—let us put us aside—but by the people in the businesses and investors who will be affected by the changes that are proposed. At the very least the lead speaker for the government on this bill should provide some critique of the concerns that have been raised by important members of the community, people who are creating thousands of jobs, looking to promote billions of dollars of investment, looking for certainty, looking for the absence of sovereign risk.
You would think that the member for Blair would address some of these concerns that have been listed over several weeks very prominently in the newspapers and elsewhere, yet he went on an exercise of simply reading out what is in the legislation in between all these histrionic attacks on the opposition and inflammatory language about the way in which we have expressed our concerns over the legislation. I must say it is a pathetic contribution and it adds nothing to this debate. It does reflect the morale that we see on the other side and the concern by the adults on the other side that this government is one of the most inept, if not the most inept, governments in our lifetime. It is a government which has lost any sense of direction, if it ever had any. It is a government that is confusing people all over this economy and, externally, with investors in foreign markets. It is a government that has, at its root—because of its incompetence, inconsistency, flip-flopping and lack of direction—very materially created a crisis of confidence amongst households in this country. They have been saving disposable income at a rate of 12 per cent over the last year because they are afraid to spend. They are building up reserves and paying off the mortgage because of their fear. They are worried about their jobs. There is a crisis of confidence. They have pulled $90 billion of discretionary income out of the marketplace.
No wonder our retail sector is on its knees. It is because of the lack of confidence. It is because they are waking up at 2.30 in the morning worried about whether they are going to have a job. We see endlessly, each week, reports of companies that are going to the wall and putting off thousands of people. Sure, we are blessed with what is going on with the mining boom in the west and in Queensland. Put that aside, and the rest of the country has stopped. The investors, major companies, have got serious money on their balances sheets that they are not investing because there is a crisis of confidence not only amongst households but also amongst businesses.
This sort of legislation is another classic example, another symbol, of the deep sense of confusion and lack of confidence and uncertainty that is now riddled through our economy—at a time when we are blessed with the mining boom. It is a boom that has been going for 10 years and has been wasted by this government. Every dollar of the $800 cheques that are going out is still being borrowed. Can you believe it! After 10 years of a boom and the highest terms of trade in our history—monumentally higher than anything we ever had before—we still have $800 going out to households, every dollar being borrowed. And then there is the flip-flopping that is represented in this bill.
We will not be supporting this set of bills, as my colleague the shadow Treasurer announced, because it adds to the great uncertainty and concern about consistency, flip-flopping and the litany of sovereign risk issues that now confront investors who may be looking to put their money in Australia—or investors in Australia looking to take a risk and invest in and create jobs. The changes proposed under the Tax Laws Amendment (2012 Measures No. 2) Bill 2012and the Pay As You Go Withholding Non-compliance Tax Bill 2011 do not appropriately target phoenix activity. The government has failed to argue a strong enough public justification for the retrospective application of proposed changes contained in schedules 2 and 3 of the tax laws amendment bill. This is in relation to consolidation tax cost-setting arrangements and related changes to taxation and financial arrangements.
My colleague the shadow Treasurer went through in some detail—and with great clarity—the way in which schedules 2 and 3 are a lazy attempt to plug some spending holes that this government has. It is a lazy attempt to use retrospective legislation to grab some tax from years ago. The retrospective application of these changes heightens our sovereign risk profile.
As an opposition we have very strong in-principle opposition to retrospective tax changes and if anything were ever to be done it would need enormous justification. The reasons this government has put forward are very shallow. In fact, if you listened to the member for Blair he gave no justification of any consequence for the retrospection. All he did was criticise and defame the shadow Treasurer and others on this side of the House. Our opposition stems from the fact that retrospective tax changes can change the substance of bargains struck between taxpayers who made every effort to comply with laws prevailing at the time the agreement was entered into. People who acted lawfully are now going to be slugged, potentially some years later, with an unexpected and in some cases highly significant tax grab by this government.
We are opposed to retrospective changes because they can expose taxpayers to penalties in circumstances where taxpayers could not possibly have taken steps, at the earlier time, to mitigate the potential for penalties. We oppose retrospective changes because they may change taxpayers' tax profiles. This, in turn, can materially impact on the financial viability of investment decisions and the pricing of those decisions—years after they were taken, years after people acted in good faith and made a case based on the prevailing legislation. They did their ROI assessments and deals with other companies and took risks based on the prevailing legislation. Now they find they will be lumped with an unexpected, highly material and in some cases debilitating tax bill. It will also leave a mark on their reputation. For many if not all who have acted within the law they will feel they have been unjustly labelled as tax cheats. In some cases, businesses will go to the wall because they took decisions at the time based on the prevailing law. We are opposed to retrospective tax changes because they could increase Australia's level of perceived sovereign risk. Added to these changes is the litany of sovereign risk issues from the introduction of a carbon tax, which was promised never to be introduced, and from the introduction of the mining tax, which exists nowhere else in the world, and, again, the incompetent way in which that has been dealt with over the last 18 months or nearly two years. Then there is the way in which they handled the live cattle job. They have actually created a long-term poisoned pill in the middle of our relationship with Indonesia—our closest neighbour, with a population of nearly 300 million, and a big part of our future, and yet our trade with that country is smaller than with New Zealand and its four million people. Can you believe it? And yet this government has gone out of its way to compromise and frustrate and demean that nation by, overnight, with absolutely no forewarning, announcing, via email, that we were going to cut off 40 per cent of their imported protein, indefinitely, because of a television program three nights before in Australia. Can you believe it? This is the sign of a government which is just amateur hour, and people see all of these things. Now we have a whole raft of changes which have retrospective elements to them.
The final element of these bills is the Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012. We hear rumours now that it is going to be withdrawn and possibly some grubby deal is to be done with the Greens. Maybe we will see it introduced, who knows? Nothing will surprise us. Nothing will surprise the rest of business. It will only confirm the judgment they are making: 'Let's not invest. There's too much uncertainty. This government's got no idea.' They have already made a change, yesterday, in the CPI matter, for the passenger movement charge—only a lazy $140 million! But they have withdrawn that. Now, today, we hear that they may well have withdrawn this bill, which increases the withholding tax on foreign investment from 7½ per cent to 15 per cent—just another lazy $265 million! It is the only reason they introduced it in the first place. It was a measure that they introduced some four years ago and received great commendation, including from ourselves. It was an inspired move, to reduce the withholding tax to 7½ per cent. And it has had a material effect. There have been literally billions of dollars, especially coming into the housing and construction sector. We were starting to see billions of dollars being invested in infrastructure through this mechanism. Now all of that will be put on hold. We are literally sacrificing billions and billions of dollars of investment, and a decision, which got commendation around the world and certainly within this country, has now been turned on its head for a miserable $264 million. We even have a situation where research subsequently conducted by Allen Consulting Group is saying that, for every billion-dollar drop in investment—and there will be billions, many billions—from the increased tax, it will raise $40 million less in revenue from the tax increase in 2015-16, than the $75 million predicted by the government. So it is not even going to raise the money they expected. So they have taken this step which has again materially affected our sovereign risk for no good reason.
So we have a $400 million hole in the budget. And today we see the Reserve Bank has indicated that the forecast sharp swing to budget surplus next financial year mostly reflects shuffling of spending that will limit the scope for further interest rate rises. The RBA has just confirmed that the budget surplus is a hoax—it is a con. It is a fiction. What we have been saying all along—and what businesses suspects, and what everyone suspects, everyone knows—is that the one-and-a-half-billion-dollar surplus is a con. It is never going to happen. Again, it is a sovereign risk issue now.
All of these things are adding up—adding up to a point where this is very dangerous for the country. We are opposed to these bills. This government is out of control. It is all over the place. It must be stopped. The only way this will happen is with an election. (Time expired)
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