Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015
We just heard, through the contribution by the member for Mallee, why the National Party is utterly irrelevant in regional and rural areas. The member for Mallee went to the last election urging that there be no cuts to education and health in his community, but he has voted for cuts to education and health every single time in this place. He has said there will be no increase in the GST, but his party keeps on dropping stories in News Corp newspapers saying what impact changes to the GST will have on their electorates.
What about the NBN?
He did not talk about the NBN. The cost of the NBN has doubled, and the impact is that it is rolling out more slowly in Mallee and other areas as a result of the failure of the National Party.
Here is exactly why the National Party is utterly irrelevant in modern political life: the member for Mallee just made a speech saying he did not support this particular aspect of the legislation, but I guarantee you that, when this legislation comes to a vote in this place, he will vote for it despite the fact that he said he does not agree with aspects of it—typical National Party.
We on this side of the chamber will not be lectured on the history of the Labor Party by the National Party, who we endured in Queensland under Joh Bjelke-Petersen with its cronyism and all those things. The National Party over there cannot lecture us sanctimoniously.
I will address the legislation before the House today—because the member for Mallee addressed nothing in relation to this particular bill. The Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015 amends a diverse range of taxation laws dealing with work-related car expenses, the zone tax offset, the concessional treatment of salary packaged entertainment benefits and the reporting requirements of third parties to the ATO.
The measures in this bill are expected to save $1.4 billion over the forward estimates.
Labor support this bill, and I commend the shadow Assistant Treasurer for his speech today.
We on this side of the chamber are up for sensible saving measures that will not adversely impact vulnerable Australians. In the two years since the election of the Abbott-Turnbull coalition government, Labor have supported about $20 billion of savings proposed by the government and, as I said, we are supporting the significant savings of a total $1.4 billion here. That is consistent with Labor's fiscal plan to return the budget to balance by delivering more savings than spending across the next decade.
To that end, we have also announced policies for savings in the budget. We heard the member for Mallee going on about what Labor's plans are; if he wants to stand up for his constituents, how about making sure multinational corporations that reap huge profits in Australia pay their fair share of tax to the Australian community? How about standing up to end the unfair superannuation concessions which overwhelmingly favour high-income earners in this country? The member for Mallee could stand up for his constituents in relation to that. So far, the government has been unwilling to support Labor's measures. We are ready to work with the government, should it change its mind.
The government's line here, and we heard it from the member for Mallee, is that the budget does not have a revenue problem; it has a spending problem. This is a favourite statement by those opposite, who talked about the 'debt and deficit disaster' before the last election.
But we know, as the member for Moreton interjected earlier, that this government has one of the highest tax-to-GDP ratios in the history of the Commonwealth.
It has doubled the deficit and it has increased debt by over $100 million, with no plans at all to address those issues. Of course, they never talk about this issue, but before the last election they went on endlessly about it.
We know there are fiscal challenges facing the country, but the government keep spruiking the spending problem, which is code for the cuts they are proposing, which are terrible and will have an adverse impact—and we saw that in the 2014 budget—on middle- and low-income earners, pensioners and those on fixed incomes.
The budget 'spending problem' is a furphy which serves a political objective, one that allows a lazy and predictable attack not just on Labor but on middle- and low-income earners in the country, and it is plainly at odds with the facts.
Just about every economist worth their calculator or indeed their pocket protector is lining up to knock down the government's 'spending problem' furphy.
The International Monetary Foundation has said of the Australian economy:
'While expenditure reduction can and should play a role in reducing the fiscal deficit, there may be limited scope for this avenue since expenditure is already relatively low compared to other advanced economies …'
Even former Liberal leader John Hewson said in response to a question from David Lipson on Sky some time ago:
Well, Scott's first statement as Treasurer— the new Treasurer, the member for Cook— was to say that this was an expenditure problem and everybody in the economics community, business community, sort of groaned 'really?' It's not just an expenditure problem.
That came from John Hewson. The last part really is worth people knowing: according to Dr Hewson, after the Treasurer claimed we had a spending problem rather than a revenue problem:
'… everybody in the economics community, business community, sort of groaned 'really?''
And that groan has been heard around the country.
We have seen story after story in the papers recently about the proposal to increase the GST.
While the government will not give an unequivocal statement, we know that NATSEM modelling has revealed that increasing the GST to 15 per cent would require people in the lowest 20 per cent of income brackets to pay seven per cent more of their income, whereas people in the top 20 per cent would pay just three per cent more.
It is a regressive tax.
The government has floated the idea that raising the GST would fund personal income tax cuts and that it would help the states and territories in terms of education and health. It seems to be the panacea for all ills. It would also, if you can believe the papers on the weekend, solve problems in relation to insurance, house acquisition and other issues.
The NATSEM modelling has found that increasing the GST to fund a five-percentage-point reduction in all tax rates would reduce the progressivity of the tax system even more than raising the GST alone. This scenario would see almost two-thirds of households worse off, the average impact being negative for the bottom three quintiles while being positive for the top two quintiles.
It is a regressive, unfair tax and it is simply wrong.
We are willing to listen to fair and sensible cuts, and the first schedule of this bill modernises the methods used to calculate tax deductions for work-related car expenses.
There are four methods currently, and two of them—the 12 per cent of original value method and the one-third of actual expenses method—will go.
Under the current system, taxpayers can choose the method which delivers the highest deduction. The cents-per-kilometre method is favoured by about 80 per cent of all taxpayers.
This schedule removes both the 12 per cent of original value and the one-third of actual expenses methods. These methods are arbitrary, they are fairly complex calculations and they do not reflect the real cost of operating a vehicle. So it is perhaps unsurprising that these two methods are used by less than two per cent of the 3.8 million Australians who claim the deduction.
In addition to removing these two largely unloved methods, schedule 1 simplifies the operation of the cents-per-kilometre method.
At present, there are three different bases. I will not go through them.
There is no substantiation required for the actual kilometres. It is just a reasonable estimate of the kilometres or the distance travelled for work within a year up to an annual cap of 5,000 kilometres. The bill streamlines the three rates into a single rate of 66c per kilometre, regardless of engine size or vehicle. The rate is based on the average running expenses of the five highest-selling vehicles operating in New South Wales and Queensland.
Interestingly enough, the cents-per-kilometre rate will be available to modern hybrid vehicles for the first time, and that is good news for those vehicles.
One wonders what the former Prime Minister would have thought about that!
Schedule 1 makes no change to the logbook method and will save $845 million over the forward estimates. We are going to support that.
The second schedule relates to the zone tax offset. This is a non-refundable tax offset which was introduced in 1945 to compensate residents in remote Australia for what was then called the climate conditions, isolation and high cost of living in those areas compared to other parts of Australia.
There have been some changes since then, but the last change was in 1993.
There are two designated tax offset zones, zone A and zone B, and special areas. What we are doing here is rationalising this arrangement under the zone tax offset.
In the existing legislation, the claimant must reside or work in a specified remote area for 183 days or more during the income tax year. The residency test associated with the offset does not require the claimant to reside continuously in the area for 183 days.
The mining sector has really changed a lot in the last 70 years.
Treasury estimates that 20 per cent of taxpayers who claim this rebate—180,000 people—are FIFO workers not permanently living in the remote area.
This is contrary to the original intention of the legislation.
Many of these workers also get allowances from their employer to compensate for the remoteness of the employment so we are going to support this measure.
It is expected that this measure will save $325 million over the forward estimates. We already announced in May this year that we would support it.
The next aspect deals particularly with the concessional treatment of salary packaged entertainment benefits.
One of the reasons I wanted to speak on this is that these benefits are significant in my shadow portfolio area of ageing.
At present, most salary packaged fringe benefits provided to employees of not-for-profit organisations are reportable and are exempt from fringe benefits tax, but only up to a set cap. These caps are set at different levels, depending on the type of organisation. However, all entertainment benefits are specifically excluded from this requirement, and many aged-care organisations use these. These entertainment benefits include meals and drinks, staff social functions and sporting and other events.
The government has decided to impose a $5,000 grossed-up cap on entertainment benefits that exempt employers and rebatable employers can provide to employees.
The uncapped treatment of meal and entertainment expenses for fringe benefit purposes has been subject to several inquiries in recent years. I have made it plain to stakeholders in the aged-care sector that Labor would support this.
It comes as a result of Productivity Commission recommendations which have noted:
'The meal entertainment benefit is particularly inequitable, with greater benefits flowing to employees with higher salaries …'
Not everyone in the aged-care sector is enamoured with this particular government proposal. But we have made it plain we think this is a point of equity so we are supporting this particular measure. The government estimates the measure in schedule 3 will raise $295 million over the forward estimates.
The fourth schedule is really about increasing and improving information reported to the Commissioner of Taxation by a range of third parties.
It is information which will improve the ability of the ATO to pre-fill taxpayers' tax returns—a service offered since 2007.
The information includes: wages and salaries, interest and dividends, Centrelink payments, private health insurance and Medicare details.
It is important for older Australians as well.
That is another reason I wanted to speak on this particular amending legislation.
However, the information gathered under the Commissioner of Taxation's current powers have shortcomings in relation to timeliness, data formats and the ability to match information to individual taxpayers.
Schedule 4 creates a new reporting regime requiring third parties to report additional types of transactions: government grants and payments, transfer of real estate, transfers of shares and units in trusts, and business transactions made through payment systems.
The measures will save, according to what I have seen, $123 million over the forward estimates.
The measures were first proposed by the previous Labor government and are now supported by us in opposition.
Our support for this bill reinforces our commitment to sensible budget savings and helping the budget bottom line without hurting vulnerable Australians—a lesson which could be learned on the other side of the chamber more often.
The $1.4 billion in savings supported by Labor in this bill add to the over $20 billion in savings we have supported in the government's legislation.
We will take a sensible and balanced approach with respect to savings.
We will support the government when we think they have got it right. We will oppose the government when we think they have got it wrong.
On this occasion, we think they have got it right, and so we support them.