Wednesday, 20 June 2012
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; Consideration in Detail
I present a supplementary explanatory memorandum to the bill. I move:
(1) Clause 2, page 2 (table item 11), omit the table item.
(2) Schedule 4, page 65 (lines 1 to 21), omit the Schedule.
This amendment removes schedule 4 from the Tax Laws Amendment (2012 Measures No. 2) Bill 2012. This schedule relates to the managed investment trust final withholding tax rate and will be reintroduced to parliament at a later date.
This is the third roll-back on the budget and we are six weeks in. It has been six weeks since the budget was delivered and this is the third change to a budget that has not even started. Aren't you embarrassed? You cannot hold a budget for six weeks! Company tax cuts back on the agenda, dumping the CPI increase on the passenger movement charge and now you are dumping your own tax increase on interest withholding tax. What sort of rabble are you guys? We used to joke that the Labor Party could not hold a policy from Lateline to lunchtime. Now you cannot hold a budget for six weeks. How embarrassing! Where is Swannie? Here he is! How do you feel about that? So much for the surplus.
I am talking to the amendment, Madam Deputy Speaker. The Labor Party is dumping and trashing its own budget and now, without any explanation whatsoever, the Labor Party amends a bill it introduces from the budget. They roll back before they get a chance to roll forward. The Labor Party reduced interest withholding tax from 30 per cent to 7½ per cent and they are so committed to getting back to surplus they said, 'We're going to have to increase interest withholding tax to 15 per cent. But wait, there's more. We're going to pull it back. We're not going to tell you what we're gonna do.'
This is the confusion. This is the indecision. This is the incompetence that has writ large of Labor in government. This is what the Labor Party is about: absolute total taxation incompetence and absolute total policy incompetence, whether it be the carbon tax or the mining tax or employee share schemes or the alcopops tax or company tax cuts, which the government was so determined to deliver that it dumped them when it came to the budget. But wait. The Prime Minister, in a moment of great revelation to the business community, came down from the top of the mountain and said: 'Our top priority is company tax cuts.' But then the Passenger Movement Charge, and today they are dumping the interest withholding tax changes.
It is the Labor Party dumping a key budget commitment to increase the tax on managed investment trusts, and today they are dumping it. The Assistant Treasurer has not even got the guts to explain why. So come on: the Assistant Treasurer should get up here now and explain why the Labor Party is dumping its own budget promise.
Why is the Labor Party doing this? I thought this was your budget. The Treasurer stood up here six weeks ago and said this was a key component, and now the government is dumping and trashing its own budget. It is okay to dump a Labor leader, but your budget—come on, guys, what is this?
But I am straying to the right place, Madam Deputy Speaker. The budget has not lasted six weeks and already there are three amendments. The Treasurer said solemnly at budget time that 'if there is anything that is going to affect our $1.5 billion surplus, you know what, we're going to increase taxes'. So far they have had three measures that have affected their $1.5 billion promised surplus. This is why you cannot trust Labor. This is why Australians believe the government is incompetent. Don't blame us for the negativity out there: it is all at the hands of the Labor Party. Now Assistant Treasurer, get up here and answer: why are you dumping your own budget today?
Mr Pyne interjecting—
Madam Deputy Speaker, I will keep talking until I get an answer: why is the government dumping this measure from the bill? Why is the government doing it? Is this policy on the run again? The Assistant Treasurer and the Treasurer owe an explanation to the parliament and the Australian people: why is this major budget measure being dumped from the bill today; why is it being dumped from the budget? Answer the question.
I ask again—don't be mute; answer the question: why is the government dumping its own budget measure today? Why—for what reason? Answer the question. Have the courage of your convictions. Have some guts. Answer it now.
The member for North Sydney will resume his seat. He is now abusing the process of consideration in detail. This is consideration in detail; it is not question time. There is no automatic right under the standing orders in consideration in detail for anyone to answer a question. The question is that the amendments be agreed to.
This amendment goes to the fact that this government has now compiled a litany of sovereign risk issues and this is another classic symbol to investors both in Australia and overseas that this is no longer a safe place, a stable place or an effective place in which they can trust investment dollars. There is a great onus on the Assistant Treasurer and the Treasurer to come to this dispatch box and explain why they would trash further our reputation as a safe and stable destiny for investment in this country.
This is a government that has introduced a carbon tax against an iron cast commitment. They have introduced a mining tax with a level of incompetence that is incomprehensible plus it is something that does not exist anywhere else in the world. They have handled the live cattle job in a way which has added to sovereign risk. They have introduced retrospective taxation in this very bill, more retrospective taxation. In doing so, they have again added to the litany of sovereign risk issues in this country.
Thanks, Madam Deputy Speaker. I suspect the conversation reflects the attitude that is now prevailing across the community. No-one can take anything that this government is doing seriously. People have made up their minds. There is a level of crisis of confidence, and no-one is prepared to engage. Even their own backbench, their own frontbench, have not got the commitment to engage in these sorts of substantive issues. Even the Assistant Treasurer has spent most of his time jaw-boning—probably about football or something else.
These issues are not taken seriously, yet they have caused an amazing crisis of confidence in this country. It is absolutely critical that a decision such as the doubling of the withholding tax on investment funds—a decision that some four years ago received great commendation from both us and investors around the world—now without any explanation, they increased it. Now without one scintilla of explanation, they are going to dump it. What other deals are going on behind the scenes? What more responsibility can you have than to explain the actions that you have taken?
You have dumped measures in this budget. If you put it together with yesterday's decision on the indexation of the departure tax, we are now talking a $400 million hole in the budget. What was the surplus? $1.5 billion. What have they now in the space of 12 hours sacrificed? $400 million. Could you explain, Assistant Treasurer, where you are going to get that $400 million to deliver the $1.5 billion surplus?
Nearly one-third of the surplus has gone as a consequence of two decisions taken in less than 24 hours. More than one-third of the surplus is gone. What a joke! And now on the front page of the Financial Review the Reserve Bank is saying that the surplus is not worth the paper it is written on, that the whole thing is a series of money shuffles. What has everyone been saying? Exactly that. And now we have the Reserve Bank saying that not only was this budget never an accurate account; this government is even making that case worse; $400 million has gone out of their budget literally in the last 12 hours. Now we have, on top of that, an addition to the great sovereign risk that this government has created, with endless decisions, and this final one, this one of dumping the 7½ per cent and increasing to 15 per cent the withholding tax.
We need an answer to this. The Assistant Treasurer cannot just sit there with a bland look on his face. Come to this dispatch box and tell us why. Give us one reason why you would dump this, why you would create a black hole in your budget surplus?
The government is not abandoning or dumping anything. The government remains committed to the managed investment trust withholding tax arrangements that were outlined and proposed in the budget. We will be separately reintroducing those measures as part of a separate bill. In relation to the matters that are being raised—
The member opposite says 'at 15 per cent'. He should remember that when they were on the government benches, the rate was 30 per cent; not 15 per cent, not 7½ per cent, but 30 per cent. They came into this place—I remember the debate well—the member for Casey came in here and started quoting some of my comments. I remember it well. I said that we need to make sure that we have a competitive rate, and we will have a competitive rate. Once these amendments are passed—and I am confident that they will be passed by the parliament—then we will have a competitive rate.
At 15 per cent we will be competitive. It is exactly the same rate as Japan and the United States; and the UK is 20 per cent. But, most importantly, our rate will be very competitive with the rate that existed when they were last in government—30 per cent. It will be much better than that. So, on the question of the competitiveness of the rate, we are confident that there will not be any difficulties.
The member for North Sydney in his haste—amid all the hyperbole that we often get, the huff and puff and the bluster that we get from him in this place—started talking about interest withholding. That demonstrates that he either does not get it, he does not realise that we are talking about withholding tax rates in respect of distributions from managed investment trusts—distributions, not interest—or he has not read the bill. I am not sure which of the two it is. People can go back and have a look at the Hansard if they like and have a look at some of the comments that he made there, which betrayed a fundamental lack of understanding about the key measure. He does not know the difference between interest and a distribution from a managed investment trust. He wants to hold himself out as the alternative Treasurer, but he cannot get a fundamental issue like that right. It is no wonder he has a $70 billion black hole.
I withdraw. It took the Assistant Treasurer four occasions, in a government dealing with a tax bill, to answer a question on an amendment that he moved. The shadow Treasurer asked him on three occasions to justify why this amendment has been moved. The shadow minister for finance had to ask him. But the default position of this Assistant Treasurer is to sit there at the dispatch box in this parliament and say nothing. That speaks volumes about the Assistant Treasurer's incompetence and the incompetence of this government on tax policy generally.
The government made a great fanfare four years ago of the fact that they had cut this tax rate to 7½ per cent. They were like a band of brothers, they were better than anyone else, and the reason they did that was they wanted to send a signal to the international community that Australia would be a financial services hub and this is where they wanted people to invest.
They also made the point that they needed to take that step to show that we were different. They made the point that you could not tinker around or muck around with this. As the shadow minister for finance rightly pointed out—and nothing illustrates it more than their conduct and their actions on this issue—the signal this government has sent time after time on tax policy is uncertainty. They have sent uncertainty right around the globe. Even when they change their minds, they cannot explain it.
The Assistant Treasurer sits at that dispatch box with the shadow Treasurer asking him for a simple explanation of why they have moved an amendment to delete an entire schedule from their bill, an entire schedule that was a major budget announcement just six weeks ago. And the Assistant Treasurer in this government says nothing for three occasions. That was his default position; like a battery operated kid's toy run out of batteries. Maybe the parliamentary secretary at the table changed the batteries. Sitting there with a glum look on his face. There might be an explanation. Let's give him a break. Perhaps the shadow finance minister has been too hard on him. Perhaps he does not know why the amendment has been moved in his name.
The one thing this Assistant Treasurer can do is go around Australia on this issue and he can say, 'Whatever your position is, I have adopted it at some point in time.' He came into this House four years ago, and proudly advocated the 7½ per cent and said why that was important and he introduced the legislation to double it.
As I said earlier in the debate, this is an important part of the government's budget, as the shadow finance minister pointed out. I do not think you will find it in the Treasurer's budget speech, though. That is the best indication of any significant measure the government is moving that they think might be unpopular; just like the time the Treasurer forgot to mention the debt and deficit. It was only when the shadow finance minister spoke after the shadow Treasurer had spoken three times that the Assistant Treasurer was prompted to get up in the debate—not to tell us, but to tell the public and the parliament. Here in the House of Representatives we have an Assistant Treasurer who will not explain and will not talk. I will tell you why: it is because he is not sure that it will not change again. And he meekly says that they will be introducing separate legislation. Finally, when pushed, he talked about 15 per cent being competitive. I would like him to confirm that the separate legislation will be 15 per cent. I think the international community would like to know from the Assistant Treasurer what today's policy position is.
As the shadow minister pointed out, uncertainty is toxic in the international community. The Assistant Treasurer will not take the word of the shadow finance minister—I know that—but he ought to take the word of international investors: people like David Denison, the President and CEO of the Canadian Pension Plan Investment Board. Mr Denison said:
... in fact, Australia’s budget that was tabled last week effectively doubled the tax burden on our real estate and infrastructure holdings in that country.
I am pleased to rise in the consideration in detail stage of this bill to seek some further clarification from the Assistant Treasurer as to precisely what the government is doing here. As all in this House would be aware, at this stage of the process the opportunity is presented for ministers at the table to explain to the chamber the details of the merits of the particular amendments that are being moved by the government.
It tends to raise eyebrows when the government is moving amendments to its own legislation at this late stage. It tends to suggest that it is a government that is making things up on the run. It tends to suggest that it is a government that is not certain that it is able to deliver what it is seeking to deliver, because of the need to engage in constant negotiation with the Independents.
Unfortunately, what goes on in this chamber has enormous implications for the economy of Australia, for the financial services sector of Australia and for international investors who are considering investing in our country. It is an uncontentious proposition—it is shared by all here in the chamber—that the rate of withholding tax is a question of the highest importance in determining the incentives for foreign investors to invest in Australia. That was the basis on which the government announced changes to its policy some years ago. That has been the basis on which questions have been raised about the policy change announced with not very much fanfare during the budget recently.
We now find ourselves, here in the House of Representatives—the people's house—weighing up, as we are charged to do, the merits of legislation put before the House by the government, particularly the merits of a specific amendment put before the House now by the government. We find ourselves charged with assessing the merits of a particular amendment, when it is very difficult to understand the full intent of what is proposed.
Let us remind ourselves that the government in its budget announced that there would be a change in the withholding tax for these kinds of vehicles—managed investment trusts—which are, as we all know, of the first importance as a vehicle for foreign investment into Australia. The Treasurer announced on budget night that this withholding tax would increase from 7½ per cent to 15 per cent. As we all know, that was consistent with a budgetary strategy of seeking to return the budget to surplus.
That is an aspiration with which we can all agree, even if, on this side of the House, we entertain very serious doubts as to the government's capacity to deliver on that stated aspiration. We now find that an element of the strategy laid out by the Treasurer only a few weeks ago which was going to be used by the government to achieve its stated objective of a surplus of approximately $1.5 billion is, by virtue of the amendment put before the House this afternoon by the Assistant Treasurer, going to be removed. That is to say, the measure which the Treasurer announced only a few weeks ago, under which the withholding tax rate will increase with a view to securing additional revenue for the Commonwealth, is now to be removed. Yet we have no clear explanation as to why that is happening. We have no clear explanation as to what the implications are for the budget and the achievement of that promised $1.5 billion surplus. We have no clear indication as to whether the government is now abandoning its policy of increasing the withholding tax rate and we have no clear demonstration of a government calmly and consistently implementing a strategy.
On the contrary, we have all the indicators of a government making it up in a panicked rush as it goes along, apparently impervious to the disastrous implications that that has for confidence in the Australian economy on the part of foreign investors. So I repeat the question to the Assistant Treasurer which has been put by colleagues on this side of the House: what on earth is going on here? Please give us an explanation.
I rise in this consideration in detail debate in absolute amazement as to why we cannot get a simple answer out of the Assistant Treasurer. I, too, ask the question: why? I think the whole principle of this comes back to trust. Managed investment trusts make a conscious decision to come into our country to invest. As a nation we are net importers of capital. We are net importers of funds. They have been a fundamental building block in creating the quality of life that we have.
In the Standing Committee on Economics hearings we took evidence from Martin Cordina of the Financial Services Council. This may help in understanding why the government has chosen to offer the amendment today. In response to a question at the hearing, Mr Cordina said:
We were disappointed that we were not consulted prior to the announcement being made on budget night.
This bloke is from the Financial Services Council. Whenever I have the opportunity to take evidence from the Taxation Office or from Treasury, their words are always: 'We have consulted extensively with the market. We have consulted with industry.' Guess what—industry did not have a clue that this was coming. Mr Codina went on to say:
Since this government came into office in 2007, we have issued something like 10 media releases which were supportive of subsequent changes that have been made, either to our tax system or regulatory-wise, that essentially had their origins in the Johnson review. We were one of the leading participants in the Johnson review, involved in much of the work that was conducted there. So I guess all I can say is … in this area, that the announcement was made without any prior consultation.
So here you have it—Martin Codina from the Financial Services Council saying that they were not aware that we were going to see, overnight, a doubling of the rate, from 7½ per cent to 15 per cent.
We are asking the Assistant Treasurer why. When you listen to the rest of the evidence provided by Mr Codina, it becomes crystal clear. He was asked:
Is there any evidence for that flight of capital occurring?
That was asked by a member of the government, and he was inquiring whether or not, if there were an increase from 7½ to 15 per cent, there would be a flight of capital out of this country. Mr Codina replied:
There is absolutely evidence of that. Collectively we have quantified in excess of $1 billion, some of which has been made public and some of which is highly sensitive, because of the nature of the foreign investors. In some cases you have sovereign funds—in other words, it would be akin to a foreign government being critical of the Australian government as a consequence of the change.
When you look at the wafer-thin budget surplus that has been forecast and when the Financial Services Council of Australia—a body not to be dismissed or taken lightly—have identified in good faith a potential flight of $1 billion of capital out of this country, it is no wonder these guys are now standing up and saying, a couple of weeks after the budget, 'We got it wrong,' and that we are now having to make amendments.
All we need is for the Assistant Treasurer to stand up and answer our question as to why, because it does come back to trust. Foreign investment in this country is raised on the back of us providing good government. What happens in this room fundamentally underpins the confidence of foreign investment markets in our nation—it is what happens in this room, the way we carry ourselves, our integrity. Business confidence is at an all-time low. Do not take my word for it; have a look at the Australian Chamber of Commerce and Industry-Westpac survey for the last 17 consecutive quarters. The biggest inhibitors of investment in business at the moment are government taxes and red tape. We in this room need to get it right. The shadow Treasurer needs to get to his feet and explain the backflip made a couple of weeks after the budget, because we have to gain the trust of other nations—they have to know they can depend on us—if we want investment in this nation.
The Deputy Speaker is doing a terrific job in current circumstances and I think being polite to someone doing their job in these circumstances as well as she is doing deserves that. I congratulate her for it. Deputy Speaker, while your circumstances, acting in this position, are unique, this is also a unique event in the history of this House—a budget unravelling before our eyes, a budget which was only delivered some six weeks ago, in the current parliamentary session. The normal procedure of bills following the budget to implement the measures announced on budget night by the Treasurer is unravelling, without explanation.
I think it is extraordinary of the Assistant Treasurer, who is not known for not wanting to talk and explain the government's views or his own views on things like immigration policy up near Darwin. In fact, he is such a detailed researcher that he looks in great detail into issues which affect his constituency. We know during the last election he took the trouble to travel all the way to Darwin to see about the situation in relation to—
We are still working through it, David. On this occasion we are utterly surprised that he has decided not to explain to the House why the government's budget is unravelling in front of us. Why is it? The most important statement that a Treasurer can make, arguably—in effect, Australia's own version of the state of the union speech—made just six weeks ago, is now falling apart before us, without explanation. We know there are lots of discussions going on privately within the government. We just saw that in the chamber during the division—lots of small chats and quiet discussions working out what to do next. Obviously this is happening with their budget as well.
On budget night, the Treasurer announced a plan to deliver a surplus. He did not deliver a surplus. He delivered a plan to deliver a surplus—unlike the misleading information being sent to some constituents around the country, which I find very concerning, that they have delivered a surplus. Of course, the Australian Labor Party has not delivered a surplus for 20 years, so the member for Lindsay in his capacity as the local member is telling his electorate that is of course wrong. And now we have this bill, this backdown, without explanation—
I will get a copy and have a look at it, and I will give it good consideration from my own material, because we on our side know what it is like to deliver a surplus. Nine out of 11 budgets under the Howard-Costello government were surplus budgets. That is why we left you money in the bank, Assistant Treasurer Bradbury.
Madam Deputy Speaker Burke, you were here when Peter Costello was Treasurer. You remember those days very fondly, I know. You would remember that Peter Costello, when he announced a budget, followed through with the budget. He put the bills into the parliament, followed them through and had them delivered in the face of unrelenting opposition from the Labor Party, which opposed every decent measure. He delivered the budget. He did not come into this place, or send his Assistant Treasurer into this place, to unwind budget revenue measures without explanation. Why is it that this measure, which was announced on budget night, is being unwound without explanation? This is a very important question because it gets to confidence in the budget and to the ability of the government to deliver its surplus. Will the government have enough money to deliver its surplus? Will foreign investors know what the withholding rate will be when they invest in our country? We need this investment to help develop our great country even further. These are important questions.
The Assistant Treasurer—soon to be shadow Assistant Treasurer—has announced that there will be another piece of legislation. What will be in that legislation? Answer us that question. Will the revenue be the same? Give us an explanation—that is all we ask. (Time expired)
May I commend you, Madam Deputy Speaker Burke, on the very fine job you are doing in the chair since your ascension to this high office. I look at these amendments to the Tax Laws Amendment (2012 Measures No. 2) Bill 2012 with some amazement. On page 65, lines 1 to 21 were written and printed only weeks ago. The ink is barely dry on this document and we have an amendment to the government's own budget. The ink is barely dry on the legislation and the government is amending it. What does that say to the Australian people? It says that we have a government that lacks the competency to implement the budget that it handed down just back in May.
One of the really interesting things about that budget night was looking around the galleries when the Treasurer was delivering the budget. What did we see? We saw galleries that were half empty for the Treasurer's speech. I have never seen that before. I have never seen a Treasurer deliver a budget where he could not even fill the galleries. I think that is because the Australian people have no confidence in this Treasurer. They have no confidence in this government. The fact that this amendment is being put before this House to effectively rescind a proposal within the government's own budget—delivered only six weeks ago—shows the lack of competence in this government. It shows the lack of ability of this government to maintain a policy position. It shows the lack of ability of this government to follow through and provide the sort of certainty that the Australian people need.
These amendments are a worry not only because they rescind a measure announced in the budget but also because they reflect the wider competence of this government, and that is why consumer confidence is so low. That is why business confidence is so low. The Australian people lack confidence in this government. It is quite astounding.
We have had the promise: 'There will be no carbon tax under a government I lead,' and no sooner did the Prime Minister get into office than—what do you know?—the government changed its mind. In this case, we have a proposal to change the withholding tax contained within the budget and only weeks later the government has changed its mind. How can business plan for the future when we have a government that cannot maintain a position for more than a few weeks? Australian business needs to make long-term decisions based on sound policy and we have a government that is doing backflip after backflip on its own budget document. That is hardly inspiring the sort of confidence that Australian business needs to make the investments that are going to drive future jobs and employment within this country.
No wonder small business is doing it tough. No wonder the customers are not coming through the door. They are concerned about the competence of this government. They are concerned about the fact that they cannot rely on the word of this government, the Prime Minister or the Assistant Treasurer. I think the Assistant Treasurer will go down as Nostradamus: being able to forecast and claim a budget surplus when he has not delivered it. He is, indeed, showing up Nostradamus, because we will not know whether this government has delivered a budget surplus. It has so far delivered the four biggest deficits in this nation's history. Now we have the Assistant Treasurer already claiming a surplus, but we are not going to know whether that surplus is delivered until September next year. I do not know that the electors of Lindsay will accept this rather Nostradamus-like prediction that this government is going to deliver a surplus. We see the sorts of measures contained in this amendment eroding the very surplus that this government is claiming to be able to deliver over the next financial year when the Australian people have no faith in that at all. They do not have confidence in this government. They do not have confidence in the ability of this government to maintain a policy position. They are certainly showing that they are concerned about this economy through poor consumer confidence and poor business confidence, and this government is at fault on all counts.
On the Australian political landscape there is one big set piece speech given every year and that is when the government brings down its budget. The budget is the most important document that any government brings down. It outlines the government's priorities and where expenditure is going to be. It really is a blueprint for how the government is going to govern in the following year. Indeed, it is a blueprint for how the government is going to govern in the following few years after that as well. It is a vitally important document.
If I cast my mind back to the budgets for which I have been in this parliament, the idea of Prime Minister Howard or Treasurer Costello bringing down a budget which they would subsequently amend would be completely and utterly unthinkable. Unfortunately, the unthinkable has become the norm under this incompetent Labor government. We are debating a bill here today and, astonishingly, the next bill we are debating is going to show the government moving to amend its own budget document within 1½ months of that document being brought down. I think a government that cannot bring down a budget—
I remind the member for Stirling that this is consideration in detail on the amendment before the chair. I have allowed a very wide-ranging debate, but we do need to get back to what is before the chair, which is the amendment we are now debating.
I appreciate that, and I am dealing with the withholding tax on managed investment trusts. I am concerned about the fact that we have a government that is unable to produce a document for the Australian people which is supposed to outline its priorities, which is supposed to outline where the expenditure is for the coming year and for the forward estimates period, which is supposed to provide some certainty for both domestic investors and international investors. When a government cannot do that, you really have to wonder whether it has forfeited the right to continue to govern.
I think that this bill and other debates that we will be having in this parliament later on today are a great indicator for the Australian people that minority government is a failed experiment.
The member for Stirling is now straying considerably from the amendment before the chair. I have allowed a wide-ranging debate, but this is an amendment and the bill cannot be canvassed again, nor can whole ranges of things. It is a very defined piece of legislation we are looking at.
I do believe it is important to establish the context in which we are having this debate today. What is very important is that a government can set a course and stick to it. It is important that they can provide certainty for investors in Australia. What business needs when it comes to making investment decisions, the time frames of which can sometimes be years or even decades out, is knowledge that when a government gives its undertakings about what is going to happen, those undertakings will actually be delivered. When you have a government that cannot even deliver a budget document six weeks after it has been brought down, clearly that investment climate is being sabotaged.
Sovereign risk is a very important issue. It is not one which investors in Australia traditionally would need to be concerned about. Something that we as a country have been able to go out and sell as one of the vital parts of the investment climate in Australia is the fact that, when you invest in Australia, you are not subject to the types of sovereign risk that you would be subject to if you were investing in other parts of the world. That reputation for stability is being trashed by this government. It is being trashed by the fact that they cannot hold onto a budget document for even six weeks after it has been brought down. It has been trashed by the fact that the Assistant Treasurer cannot even today give some certainty to investors about what is going to happen going forward with this particular measure. It has been trashed by the other measures that the government has taken to destroy the investment climate in Australia. You wonder why consumer confidence is low in Australia. You wonder why people who have the money are not prepared to invest it. This amendment we are discussing here today is a great example of why.
This government cannot even bring down a budget and hold on to it for six weeks. This is the greatest indication that minority government has failed, and the only way to address that is via an election.
As the previous speakers have touched on, once again we see the government succeeding in adding to the uncertainty in the business community rather than adding to certainty. As I touched on in my earlier speech, one of the key things that has allowed us to grow our economy well over the past 20 or 25 years is some certainty and understanding about the direction of tax policy. Again we see a schedule or bill put up to double the tax rate on managed investment trusts and all of a sudden have it pulled. As numerous speakers have asked, where is the explanation from the Assistant Treasurer? Why can the government not explain the rationale?
This removal of this schedule and the inability for this government to stick to its plans is adding continually to the uncertainty in the business community and the international community that is looking to invest hundreds of billions of dollars in this country over the coming years in the mining industry and in a number of other areas.
How many shares have you guys bought in the clean energy companies? None. That is how confident you are about the clean energy market. The hypocrites sit over there. But let me get back to this.
It is another backflip of this government and the trashing of the budget. We see $400 million being removed from the surplus that we are supposed to see in September 2013, yet there is no explanation of how that is going to be made up and what the rationale is for pulling it out of this bill and seeking to maybe reintroduce it at some point in time. There is no certainty about when it is going to be reintroduced or what tax rate it is going to be reintroduced at. It is just another of the myriad examples of the inability of this government to create certainty and a clear direction for the future of this country and the future of our economy. In addition, we have seen the retrospective nature of a number of things proposed in bills last night and again today. It is just a sad indictment of the failure of this government to engender any confidence in our economy for the future.
I certainly welcome the opportunity to speak again on this amendment, because it does raise an area of concern for me with the issue of certainty. It is a matter that I have raised previously, in an earlier contribution, but one that cannot be reinforced too much, because when you look at markets they are adversely affected by a lack of confidence. This amendment before the House today can only reduce the confidence that exists in our financial markets and the confidence with which foreign investors will view this country. Heaven forbid! We have a situation where Australian consumers have virtually given up hope and Australian business is losing hope, and now we want to encourage overseas investors in Australia to lose hope as well. That is a very worrying trend—all because this government cannot maintain a policy position from budget day to the present. The ink was barely dry on this document, and they are already making amendments. It shows a lack of competence. It goes to the very heart of the problems that have beset this government since it was first elected. When the Australian people have lost faith and international investors are losing faith, what does that leave us with? It leaves us with a very poor outcome for the people of Australia.
This government is charged with the responsibility of governing wisely for all Australians. What we have is a government that governs incompetently on its own behalf. It is governing for the Australian Labor Party rather than for the people of Australia. It is incompetent in the extreme. It cannot manage its own budgetary process, as we see now. Not only does it run up massive deficits; it cannot even manage the budgetary process, let alone the finances of Australia. We have seen you cannot manage the finances of Australia, and now we find you cannot even manage the budget process. That is, I think, a new low point in public administration, even by this government's already low standards.
But we do have some optimism. We have the member for Lindsay, the Assistant Treasurer, doing his Nostradamus impression and claiming a surplus 13, 14 or 15 months before we are going to know what the outcome is. That is a very brave and very courageous minister—to claim a surplus now, Nostradamus, when you do not have one shred of proof or evidence based on your past performance that you are actually going to deliver a surplus. So we have the Australian people and Australian business in a state of dismay at the performance of this government, we now have overseas investors disillusioned as a result of the performance of this government, and they still try to claim somehow that they can maintain some shred of credibility in the economic community or the international community. I think that that is pure delusion.
We have a government that has failed the test. It has failed the test in relation to delivering a balanced budget over the time that this government has been in power. It has failed the test with regard to the degree of competency that is required in the budget process. It has failed the test with regard to the need for consistency of policy announcement and policy implementation. This is a government that has failed spectacularly. It is a government that continues to fail, and it is of great concern to the Australian people. That is why this amendment is so significant. It goes to the very heart of the lack of confidence in this government and this minister, who is boldly predicting a surplus that he has little prospect of delivering.
Yes, at least he is optimistic—thank you, Shadow Minister. He is at least optimistic. That is more than can be said for the Australian people and Australian business, who have lost faith in this government. I know that as time goes on the continued failings of this government, unfortunately, are only going to grow and grow and grow. The people of Australia will have their chance to decide on their level of competence at the next election.
I am surprised that the Assistant Treasurer has not explained yet why the government has decided to go down this path and pull this particular measure—
Mr Bradbury interjecting—
No, the government simply moved an amendment to its own bill. He has not explained, after all the encouragement we have given him. We want to encourage you, old sunshine! We want him to get up there and tell the truth. Let the sun shine in—that is what we say. Let there be a transparent hung parliament. Let the Independents—like the member for Lyne, the member for New England and the member for Denison—come in and help the sun to shine, because now the government is amending its own bill and it will not tell us why. Oh, dear. Do you know why? He does not know why. He does not know why they are amending their own bill. Given that we have had five assistant treasurers in 4½ years, you would think that by the time they get to the fifth they would get it right. But no. We have him coming to this place. Old Swannie has wheeled him out. He said, 'You go out and do it, Admiral. You tell them that we're pulling this out of the bill.' The old admiral, taking instructions from the 'chief of defence', says, 'Righto, sir. I'll do it.'
The minister interjects 'we are not dumping it'. So what is it going to be? What is the interest withholding tax going to be?
Mr Bradbury interjecting—
Say it in the chamber now. What is it going to be?
The minister is interjecting across the table that he said it all. I invite him to get up again and say it so that not only the whole of Australia can hear it but, most importantly, so all those international investors can hear it. I have just been handed a press release from TTF Australia. TTF Australia was headed by Chris Brown, who was well known to the Labor Party—he was even a member of the Labor Party. It is now headed by Mr John Lee, the brother of Michael Lee. I would not necessarily say John Lee was a card-carrying member of the Liberal Party. In fact, I seriously doubt he is anything other than a card-carrying member of the Labor Party. Perhaps he has torn up his card because he says that the decision not to proceed with a doubling of the withholding tax rate for managed investment trusts will go some way, not all the way, to restoring foreign investor confidence. He said:
The proposal to double the withholding tax rate for managed investment trusts stopped foreign investment in tourism in its tracks.
That is exactly what we said.
As investors were suddenly facing a tax bill twice the size jeopardising their returns. This announcement in the federal budget came as a complete surprise to industry—
it has obviously come as a complete surprise to the Assistant Treasurer as well—
as there was no consultation on this issue despite repeated requests for any changes to at least be flagged with the sector.
It also flew in the face of the release less than a week earlier of the tourism investment guide, which detailed 100 investment opportunities to improve Australia's tourism product offering. Following consultation with members, TTF raised its concerns about the impact this would have on tourism investment and has been actively pursuing this issue with MPs.
This is the part—get ready ladies and gentlemen—where he said:
Thanks must go to the coalition for its recognition of the impact this measure has caused and will continue to cause in the future.
This is from a strong Labor member.
While some damage has been done to Australia's reputation as an investment destination, the decision not to proceed with doubling the withholding tax rate will help to restore investor confidence and renew interest in Australian tourism products.
We welcome this amendment because it dumps it. But you know what? The Assistant Treasurer now says it is not dumped. He now says it is coming back. What is it? Is it morning or night or afternoon or evening? I do not understand where the Labor Party is going. But what I do understand is it is not the Liberal Party, Tony Abbott, Joe Hockey or Andrew Robb who are raising these concerns; it is in fact the Ivan Glasenbergs, the Marius Kloppers and the Jac Nassers. It is the Gerry Harveys, the John Symons and the John Singletons and now the John Lees. These are the people who, by their own words, are saying this government is incompetent.
This is a government that is inconsistent. This is a government that simply does not understand that what investors are crying out for are stability and certainty and predictability and reliability. So when the Treasurer stands at the dispatch box and gives a budget speech, Australia and the world do not expect that within six weeks three key components of the budget will be dumped before the financial year has even started. And yet our Prime Minister has the gall to go overseas and give them a sermon on the mount about the Australian way. The Australian way, as Labor defines it, is to have three different policies in three days and to have a budget that does not last six weeks. It is their policy to dump and rebirth leaders from time to time and now it is their policy to add to the sovereign risk of investment in Australia.
So I say to you: do not start giving us a lecture about negativity. Do not give us a lecture about poor consumer confidence. Do not give us a lecture about poor business confidence. It comes back directly to the actions of this incompetent government, a government that cannot hold the policy, a government that cannot be consistent, a government that deliberately and intentionally misleads people when it comes to core policy responsibilities of a day-to-day government in Australia. Shame, Labor, shame! Shame on you for being incompetent. Get out of the way and give us an election so we can give Australia a predictable, stable, reliable and trustworthy government again. (Time expired)
Question agreed to.