Tax Laws Amendment Bill 2014


Senator IAN MACDONALD (Queensland) (10:34): I commence my contribution to this debate on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and related bills by indicating that I totally support the government's drive to address Labor's debt crisis—the $650-odd billion of debt that Labor has left us. Whilst I support the measure in this bill that introduces a levy on income earners on above $180,000, I have trouble in supporting the bill, not because I do not agree with that aspect of it but because I do not believe it goes far enough.

I indicate to the chamber that I want this bill to be debated in the Committee of the Whole so that I can seek answers from the government minister in charge of the bill, Senator Cormann. I have indicated to Senator Cormann, as I have to others in my party, my concerns around why, when Australia needs additional money, the government is introducing a levy on individual taxpayers but not on corporate taxpayers. I have to say that this is not a new position for me. I spoke against Labor's flood levy. I was criticised by Labor for not wanting to impose a levy to help the flood victims in my state of Queensland, but, as with most things the Labor Party do, that was complete rubbish. Of course I wanted to help the flood victims in Queensland, but I wanted to know then, as I want to know now, why we are taxing individual income earners additionally but not companies that earn a certain amount in profits.

Nobody likes paying additional tax, and I certainly do not want to gain a reputation of calling for increased taxes. You might recall that not long ago I was seeking to broaden the GST. The Labor Party and populists got on the bandwagon and said, 'There's Macdonald wanting to increase the tax poor people pay on their food.' What I said in response to that is that, when the Howard government was elected, it actually went to an election on a GST proposal and was supported by the Australian public. The proposal was that it be a broad-based GST on everything, with commensurate compensation for low-income earners, who would be unduly impacted by the broadening of the GST.

In this day and age, the states are being asked to do more and more in health and education—and I agree they should; I agree that, as far as possible, the Commonwealth should get out of it. But the states need money to do that. They cannot just do it on a wing and a prayer. As a senator supposedly looking after the interests of my state, I take notice of what the Queensland government said in that regard. I thought one way to address that was to expand the GST back to what was endorsed by the Australian public at the 1998 election—nothing more, just going back to what we were elected on at that time: a broad based GST that did not require small business to fiddle with what is taxable and what is not, and that did have appropriate compensation for lower income earners. So I am not calling for an increased tax; I am just calling for the introduction of what we originally proposed, because the states need the money if they are going to do more in health and education, as I believe they should.

In relation to this particular levy bill, I support entirely the increase of tax on those earning more than $180,000. Nobody likes paying increased taxes, and I am like everyone else. To people who complain to me about a tough budget, I say to them, 'Don't complain to me, brother. Here's the address of the local Labor Party politician'—I do not say 'local', because there are none up our way these days. I say, 'Here is the address of the few Labor senators that are left in Queensland. Speak to them about their government's financial mismanagement that has led Australia from something like $60 billion in credit to approaching $650 billion in debt.' There is a debt crisis and I accept the word of Mr Hockey when he says there is a debt crisis. That is why I am surprised when this government, our government, my government, wants to address the debt crisis, but it leaves off the recovery regime a significant set of taxpayers who could contribute to paying off Labor's debt. I have asked for an explanation, as I did with Labor's debt levy. Why do we tax individuals but not companies? In talking about the Labor flood levy, I said, 'You're taxing the butcher and the baker but not their biggest opponents in Woolworths and Coles who compete with them but do not have to pay the tax.' It is okay for the butcher and the baker but not for Coles and Woolworths. I have sought answers. I have not got them, and I am hoping Senator Cormann will be able to answer these questions in the committee of the whole. I have asked why companies do not have to pay it.

I point out that many of the companies earning profits of more than $180,000 in Australia are companies who have shareholders who are not Australians. When I raised the question, the only reasonably sensible answer I got was from a new colleague of mine, who had been a chartered accountant, and he explained to me, 'If you tax companies, it means that the dividend that they pay to their shareholders will be a little bit less.' I can follow that. He then pointed out that many of those who received the dividends were superannuation funds. Many of them were the mums and dads who are perhaps on $40,000 a year and rely on the income from Xstrata, Wesfarmers, Coles and Woolworths for their living. That is probably right. That would mean that, if the companies had to pay a little bit extra tax, their dividends would be a little bit less and people on lower incomes would have that much less money.

I look at the company tax system and I am told that it would be good for Australian investment if we did not have any company tax at all, and I agree with that. It would mean a lot of investment in Australia, a lot more jobs and a much brighter economy. But of course we have a company tax. It is probably higher than many in the world, but we have it. This government, in its wisdom—and I was part of this—agreed prior to the election that we would reduce company tax as a step towards making investment in Australian companies more attractive. I thought that was a pretty good idea. It was only a 1½ per cent reduction, but that is a start. Then, lo and behold, we have a Paid Parental Leave scheme, which is not going to cost anyone anything, except the top 3,000 companies. So the company tax reduction we are taking from one place is added back on. There are all the arguments which I am sure Senator Cormann will raise with me on why we want to reduce company tax, and I agree—they are valid and good arguments; I do not object to them—but why are we putting back a 1½ per cent levy on these companies? It just means that the argument for reducing company tax is blown out of the water. I understand that a decent paid parental leave scheme is a good idea, but I have heard the word of our leaders that we are in a debt crisis, and I think we are. You cannot go from $60 billion in credit to $650 billion in debt and not call that a credit crisis.

I heard the Leader of the Opposition in the Senate, Senator Wong, saying she was going to list the economic achievements of the previous government. Fortunately she did that when she had only two minutes left in her speech, because it would not take more than two minutes to list the achievements of the previous government in the economic area. It is easy to give away money if it is not your money and someone else has to pay for it in the years to come. I will not even waste time arguing the case about Labor's economic mismanagement. Except for the few people who are members of the Labor Party and some of the 10 per cent or so of workers who are members of the unions who now support the Labor Party, nobody else in Australia would, I think, accept it as relevant or reasonable that the Labor government was anything but an awful financial manager. So I will not address that anymore.

There is a crisis, and we have to address it. So, what is the best way to address it? Impose an additional tax on high-income earners—I agree entirely. But why aren't we imposing that same tax on companies? There will be arguments on why we do not want to tax companies, but then why doesn't the same argument apply to paid parental leave? Paid parental leave is a good thing to strive towards when the country can afford it. You only have to go as far as the Commission of Audit for an indication that the country cannot really afford the proposed Paid Parental Leave scheme—at this time; there will be a time in the future. Give this government one or two or three terms, and you can be assured that, as we did in the Howard days, the books will be back in order, the Treasury, if not overflowing with cash, will have enough cash to pay its way. And then we should look at a proper paid parental leave scheme.

I have my concerns about the Paid Parental Leave scheme. I am seeking more information. I am wanting to see how it impacts on people in the constituency I represent, which is basically regional Queensland and Northern Australia. And I want to see how it impacts on stay-at-home mums. My inclination is to vote against the measure, but I am waiting for the arguments. I want to see the fine print of the legislation to see what is actually proposed. And if there is a proposal for stay-at-home mums, if there is a proposal that really makes sure that this rather generous scheme does not apply only to the capital cities, then I would go along with it—except that I am not sure that this is the economic scenario that we should be following. Yes, we have to do it, but not at a time when we are in a debt crisis. I accept that we are in a debt crisis. Why are we bringing that forward now?

So, I desperately seek, as I have sought in the past, answers to why the Labor Party had a debt levy scheme that did not involve corporations and now my party is having a debt levy scheme that does not involve corporations. I repeat: many of the shareholders of these large companies that make more than $180,000 a year are foreign-owned companies. They have Australian shareholders but foreign shareholders too. And I might say, they are companies that to a certain degree also benefited from Labor's lavish waste of money. Why shouldn't all those who make an income out of Australia contribute to the debt crisis? That is what I am desperately trying to understand. And I answer my own questions, but the answers are nonsensical, because if we do not want to tax companies to pay off Labor's debt then why are we taxing them for a paid parental leave scheme that is perhaps a little before its time?

I have grave concerns about this. If I had the wit, I would have moved an amendment to include companies, but I must confess that like Mr Palmer I do not have the staff to do that. And, unlike Mr Palmer, I do not have the private wealth to engage my own accountants to prepare a scheme for me. In any case, I am not sure that we can amend financial bills in the Senate.

But, short of that, I oppose the bill, not because—and I want to make this very clear—I oppose the tax on those earning $180,000 or more, but because I do not think it goes far enough. I think it should also be imposed on large companies who are earning more than $180,000. To those who would say, 'Small business would have to pay,' I say that, unfortunately, after six years of Labor, I do not think there are too many small-business companies earning $180,000 or more, so I do not think it really would attack them. I know from my long-gone practice as a lawyer that most small businesses have corporate veils but in fact really work under some sort of family trust, in which case the corporate veil does not pay the tax.

So here is an opportunity. I do not want to be nasty to these people; I love Coles, Woolworths, Xstrata, BHP, Wesfarmers and all the people who make a real contribution to Australia. Good on them. I am pleased that they do well, but, because they are doing well, why aren't they contributing to Labor's debt crisis? That is the issue I raise.

My crossing the floor might be relevant on some occasion over the next year or so. It would not be today because Labor are actually supporting this. They introduced the flood levy—against my opposition at the time to the levy aspect, not to raising money to assist people affected by floods. Labor are, of course, supporting this new levy but without, I think, giving it the right sort of support. I am not sure where the Greens are coming from, but, with Labor and my own party agreeing, my vote is going to be fairly irrelevant. That is why I wanted to take time today to explain my position—and not just explain my position but say to governments in the future, be they Labor or Liberal: if you are going to need extra money, have the courage to add a little more on top of the general taxation rate for high-income earners. Do not use this levy pretence. Is it a tax or is it a levy? Who cares? I do not care; I think most Australians do not care either. Why do we go for levies when we should just do the right thing? If we need money—if we have a debt crisis; and, thanks to Labor, we do have a debt crisis—then I think all Australians should contribute. Why aren't those people who make their money out of Australia, the foreign shareholders of big, wealthy, multinational companies, contributing as well?

It is a pretty simple argument and I am a pretty simple person, but I have been asking this since Labor's flood levy. I think there were levies in times gone by that I did not quite understand, but I did ask at the time of Labor's flood levy and I have asked at the time of this debt crisis levy. I am still yet to receive any reasonable explanation, bearing in mind that we are going to increase company tax in one particular area for another measure that has been proposed. I look forward to the opportunity to have this discussion with the minister in the Committee of the Whole so that, hopefully, the minister can explain to me why it is that we tax only individuals and not companies.

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