HANSARD EXTRACT
|
Tax Laws Amendment (2005 Measures No.6) Bill 2005: Second
Reading |
| 27 February 2006 |
Mr
HAYES
(Werriwa) (6.15 p.m.)—I
support the second reading amendment moved by the opposition. The
Tax Laws Amendment (2005 Measures No. 6) Bill
2005 before us reflects, in my opinion, some habitual
problems experienced by this government, particularly with respect
to delays, mismanagement, recognising problems caused by clumsy
drafting and failing to meet and recognise international
obligations. This bill is the government’s attempt to clean up a few
things. It is a bill that is necessary, because the government over
the last 10 years in office has been getting tired and lazy. It is
particularly timely that today we are debating a bill about the
cleaning up aspects of the Australian tax system, certainly hot on
the heels of the Treasurer’s announcement yesterday that he has
decided it is time to internationally benchmark the Australian
taxation system.
After 10 years of looking after the Australian
tax system, the Treasurer has now decided it is time to have a look
at what the rest of the world is doing. What I find most interesting
about this review are the two people the Treasurer has chosen who
will put together and examine the international position. I am
particularly interested in what Mr Peter Hendy, Chief Executive
Officer of the ACCI, will bring to this matter.
Mr
Hendy, quite frankly, is not known for being absolutely independent.
In fact, I recall him making comments at the time the WorkChoices
legislation was being debated in the Senate that there should be
absolutely no amendments made to that piece of legislation.
I will be particularly interested to see the
product of the review as it seems to me that, once again, the
government has come up with relatively short-sighted terms of
reference, coupled with an absolute lack of representation from
groups such as small business, who have probably become the largest
group of tax collectors, thanks to this government, and groups
consisting of ordinary taxpayers. Those people are just not
represented in this review. So it will be interesting to see what
Mr
Hendy and others come up with as they focus on prioritising our tax
system to meet the competing needs of various groups. It remains to
be seen, but that is not what this bill is about.
Probably the most single important aspect of
this bill is the section that deals with the restoration of
mutuality or the principles of mutuality. The restoration of this
principle is significant to the ongoing financial viability of clubs
and other organisations. People fulfil very responsible community
positions which are so important to communities in our respective
electorates. This bill clarifies, for instance, the tax-free status
of clubs that has technically been claimed illegally since the
Federal Court decision on the Coleambally case. Taxation, as we all
know, is based on income received from external sources. This has
been a longstanding and long established principle, certainly in
common law. But for 120 years, under the principle of mutuality,
revenue derived from members was exempt from corporate income tax,
while revenue from nonmembers was fully taxable under the corporate
tax system. When it came to clubs, members’ income was not classed
as external and, accordingly, under the principle was tax exempt.
However, this principle has now been deemed to apply only when
members’ funds are distributed upon the winding up of the entity. In
most cases, it is not provided for in the articles of association of
clubs; therefore, for some time clubs have been illegally claiming
tax-free status.
Actually reversing the tax-free status when it
comes to members’ income places most, if not all, clubs in a rather
precarious financial position. The value of the mutuality principle
is difficult to quantify precisely but there is no doubt that, given
the concerns raised by the clubs’ industry about the Coleambally
case, it is significant enough to place a number of clubs in
financial distress should the principle not be restored. It is for
this reason that I support these provisions of the bill so that
clubs in my electorate are not placed in financial jeopardy.
There are a number of fantastic clubs and
community assets operating in my electorate, including the Liverpool
Catholic Club, the Ingleburn RSL Club, the Ingleburn Bowling and
Recreation Club and the Western Suburbs Leagues Club. Just outside
my electorate but just as significant as community organisations are
the Campbelltown Catholic club and the Campbelltown RSL club—and the
Mounties Club; let’s not forget them.
All these fine organisations make a significant
contribution to the community and are certainly very strong
supporters of events and activities. You only need to visit a local
club in my electorate to get a good understanding of the character
of the area and the diverse nature of the people who live there.
While these clubs provide excellent facilities and play an important
role as a social outlet for local residents, they also give back to
the communities they belong to. That is why the retrospective
aspects of the changes contained in this bill are so important.
The significance of one club in my electorate
was brought home to me when I was discussing the tax issue recently
with one of the club’s chief executive officers. The Western Suburbs
Leagues Club in Leumeah has a long history of involvement in the
community in the south-west of
Sydney.
In one form or another it has been involved in just about every
community event that I can remember. It was certainly the focal
point of our community last year when the Wests Tigers, as everyone
will remember, took out the National Rugby League premiership. While
it is often a focal point for social activity, it is also
contributes directly back into the local community. Last year Wests
contributed $1.1 million to local sporting groups in my area. Some
of this was as a requirement of
New South Wales
legislation that provides for a proportion of poker machine revenue
to be donated back to the local community, but the contribution that
Wests made was $800,000 more than the statutory requirement. When it
comes to community sport, $800,000 certainly goes a heck of a long
way and is deeply appreciated by those groups in my electorate that
receive it.
However, as a result of the Federal Court
decision that this bill seeks to correct, Wests has incurred a tax
liability of half a million dollars. Next year, their liability is
estimated to be $1.5 million. So the club faces a $2 million tax
liability unless this bill is implemented. Naturally, a tax
liability of that magnitude would prompt a review of all the local
involvement by a club the size of Wests, and that would have an
absolutely deleterious effect on local sporting and community
organisations. That would hardly be a great outcome for anyone
involved. I am pleased to see that, as a result of this bill, levels
of support by clubs like Wests and others in my electorate can
continue—of course, subject to the other financial constraints
placed on clubs. The passage of this bill will mean that Wests will
continue to support the various groups within the area.
You can see that I am a one-eyed Wests
supporter, but, since I was at the annual general meeting yesterday,
I would like to mention that the efforts of
Mike
Semchyshyn were recognised and life membership was awarded to him by
the club. Originally, Mike worked on the Snowy Mountains Scheme at
Jindabyne. He went to Campbelltown in 1971, where he became involved
with the local Rugby League club, which at the time was known as the
Kangaroos Football Club and subsequently became Wests Campbelltown.
Over a long period he has served the club in many capacities and has
always had the club’s interests at heart. He has been on the board
for all but approximately two years since 1971.
Mike
has also been instrumental in expanding Wests’ assistance to local
sporting organisations. When he took on the role of sports
secretary, 12 associated bodies came under the banner of Wests in my
electorate. This has now grown to 39, which shows the extent of
growth in local clubs and the important role played by a major club
such as Wests.
This is yet another reason why the amendment to
support the clubs industry needs to be supported. Earlier I referred
to this legislation being the result of lazy and clumsy drafting by
the government which, in my opinion, has come to characterise
various aspects of the
Howard government of late. In driving through its ideological agenda
last year there was some very clumsy drafting, and it seems the
prevailing view is almost to get it through and sort the mess out of
later. We saw it with the WorkChoices legislation, to which more
than 300 amendments had to be made to tidy it up before it was
passed into law.
In my view the WorkChoices legislation should
never have been introduced—but, then again, my views are pretty well
documented in that regard. That legislation, like the bill before
us, was put forward with incomplete drafting and, as a consequence,
contained serious flaws which had to be amended, not to satisfy my
position or that of Labor but simply to satisfy the government
itself. That is only one example. It seems that now the government
has worked out that Labor got it right when it pointed out problems
with the new activity test. It has worked out that Labor correctly
identified that there were problems between the interaction of the
activity test for the child-care benefit and the child-care tax
offset.
Under changes to the activity test, eligibility
for child-care benefit is now based on a test of 15 hours per week
of work, study or training. When the new test was introduced Labor
pointed out that the change would restrict eligibility for the
child-care tax offsets. While I am pleased to see that this bill
corrects the problem, it is a problem that, quite frankly, should
have been avoided in the first place.
The bill before us also includes changes to the
Medicare safety net. I cannot in good conscience stand in this place
and comment on more changes to the Medicare safety net without
pointing out the fact that under this government one million
Australians miss out under the extended Medicare safety net despite
all the ironclad guarantees that we were given leading up to the
last election. Access to high quality health services is absolutely
essential to modern life.
My electorate of Werriwa is one of the fastest
growing areas in
Western Sydney, and its residents are struggling to
access GP services in a number of the new and expanding suburbs.
Under these changes, cosmetic, medical and dental services are being
removed from the safety net. I agree that paying for purely cosmetic
procedures is not necessarily the most effective use of taxpayers’
money, but it is not the first set of reductions in the types of
services paid for under this government’s changes to the health
system either. Although it has not received a great deal of
publicity through the media, one of the biggest problems with our
health system people are facing today is as a direct result of the
changes to the PBS that were introduced in October last year. Under
those changes the safety net threshold increased and a new 20-day
rule was introduced which excluded the resupply of medications
within a 20-day period from the calculation of the safety net
entitlement.
The purpose of the bill before us today is not
to change these arrangements further—and I am sure that sick people
and their families are breathing a collective sigh of relief about
that—but they do point to a gradual erosion by this government of
the coverage under Medicare. While the Minister for Health and
Ageing is more than willing to get his rubber stamp out and approve
more increases in private health insurance premiums, as we saw on
Friday, he remains absolutely unwilling to tackle the fundamental
problems of our health system. He is unwilling to consider the value
for money aspects of private health insurance and he is certainly
unwilling to take on the $3 billion a year Australian taxpayer
subsidy of the private health insurance industry.
I read that, in an effort to smooth the path
for Friday’s further premium increases, a number of health funds are
going to offer cheap consumer goods as a benefit of membership. One
such fund that I looked at last week offered the consumer benefit to
its members of a kid’s
Barbie suitcase, amongst other things. I do not know about you, Mr
Deputy Speaker, but this tells me one thing: that the private health
insurance industry has absolutely no desire in the short or medium
term to address the problems of value for money. I do not know if
the demand among people with private health insurance is for Barbie
suitcases for their kids, but I would have thought that consumers
would have preferred getting more value for their dollar than cheap,
gimmicky, consumer items.
The government has to act, and it has to act
now, so that value for money in this industry can be restored. It
seems to me that the Minister for Health and Ageing has two rubber
stamps when it comes to our health care system: one is to give the
go-ahead to price increases for the private sector and the other is
to deny public benefits to those who most need it. This government
has failed to deliver the most affordable and attractive health
scheme that it promised during the course of the last election. It
has delivered a massive subsidy to the private health insurance
industry, it has delivered increases in the cost of health care to
the taxpayer, but it has not delivered for health consumers.
It is about time this government set about
focusing on the health system and health consumers. Despite the fact
that for the rest of this week we will hear from members opposite
singing the praises of a decade of the
Howard government, some should stop and consider why
we are debating a bill like this today. This bill is the
manifestation of the arrogance of this government. It is a bill that
has only been introduced to clean up a mess that the government has
created and to overcome problems that it has created for itself by
not acting earlier on things like mutuality, industry compliance
with tax rules—(Time expired)
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