House debates

Thursday, 14 February 2013

Bills

Tax Laws Amendment (2012 Measures No. 6) Bill 2012; Second Reading

11:47 am

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

Noting that we were given two minutes notice that this bill was being brought on for debate, I rise to speak on the Tax Laws Amendment (2012 Measures No. 6) Bill 2012, which deals with a range of changes to the taxation system which I will go through in some detail.

Schedule 1 deals with changes to native title benefits and seeks to classify such benefits as non-assessable, non-exempt income so that they are not subject to income tax or capital gains tax. The changes within this schedule also allow impacted taxpayers to amend their tax returns in certain circumstances where the amendment period has expired.

The House of Representatives Standing Committee on Economics inquiry into this schedule of the bill found that opinions shared in the inquiry fell into three broad categories. Indigenous organisations generally supported this amendment, as it provides clarity for relevant income and capital gains tax issues. Indigenous groups also called for the scope of the schedule to be broadened in order to include making investment income generated from native title payments tax exempt. Mining groups supported a tax-exempt vehicle for such payments but felt that this schedule could not proceed in its current form as it may encourage substantial up-front payments to individuals at the expense of longer-term intergenerational goals. The third group comprised the government of Western Australia, which stated that tax exempt status for native title benefits was not warranted outside the normal provisions for charitable trusts.

The coalition have expressed the view, through our dissenting report in the House of Representatives Standing Committee on Economics advisory report into this bill, that there may be unintended consequences of this change. In particular, it may encourage large payments to individuals that would be contrary to the long-term development goals for Indigenous policy. This view was also expressed by the Minerals Council of Australia, which stated:

… we are concerned that the proposed native title payment tax treatment may have a range of unintended consequences. Specifically, we consider that those amendments disincentivise investment in intergenerational wealth creation, as tax will be payable on any transfer of monies to future generations or on income earned. It disincentivises the provision of benefits under agreements to Aboriginal people who are resident in an area but who are unrelated to native title determination and it limits the main tax treatment to the defined beneficiaries.

The coalition also raised concerns in relation to principles which are offended by the operation of schedule 1, making compensatory or any other income exempt from tax and violating the key tax principle of horizontal equity. A dollar earned by one person, regardless of how it is earned or from what activity, should be given the same tax treatment as though it were earned by another person.

As set out in the coalition's report to this inquiry, if this income were to be taxable in the hands of an Indigenous recipient, or recipients, it would likely increase the compensation sought by the amount of tax expected to be paid. As such, the incidence of any tax paid would likely be borne by the compensator. As it stands, the changes contained in schedule 1 make no distinction between native title compensation paid to individuals and that paid to groups or their trust funds. If paid to an individual or a number of individuals with possible inside running, the benefits of native title are unlikely to be shared widely or equitably, which does not seem to be in the spirit of the Native Title Act.

Where such compensation payments are paid to a large group, possibly to a community trust or a fund, then the benefits of native title are likely to be shared more widely and even across generations. That would enhance the justification for allowing these payments to be exempt.

Making this distinction would add some complexity and may appear paternalistic—it could be open to that argument—but it is more the spirit of native title compensation in the act that is worthy of further consideration and debate. The coalition calls on the government to reconsider its approach on this policy matter, and it is for those reasons that the coalition will move an amendment to excise this schedule from the bill.

Schedule 2 of the bill seeks to update the list of deductible gift recipients and extends the listing to another three entities. The coalition is not opposed to this schedule.

Schedule 3 of the bill seeks to extend the immediate deductibility of exploration expenditure provided to mining and petroleum energy explorers. This measure was announced by the government as part of the final design of the mining tax, the MRRT—the minerals resource rent tax—and is therefore expenditure linked to a failure. This measure was raised in discussions between the government and the Policy Transition Group. The Policy Transition Group was established specifically to advise the government on the technical design of the mining tax—gee, that went well! The Policy Transition Group did not include this change as a specific recommendation but, rather, made an observation about the anomaly of the inconsistent treatment for geothermal exploration, noting that the issue was outside the parameters of the terms of reference. The measure was specifically linked to the mining tax in the 2012 budget, on pages 28 and 29. So there is no argument that this is part of the mining tax package. The coalition view this measure as having originated within the mining tax process. We will be moving to excise this schedule from the bill on the grounds that we are opposed to the government's mining tax package and we will not support any expenditure that is linked to this failed tax, apart from the increase in the superannuation contribution rate from nine per cent to 12 per cent.

The Treasurer—what a Treasurer!—has linked over $15 billion worth of expenditure to the mining tax, which has now raised $126 million. Now the Treasurer has no money to pay for the $15 billion of expenditure. The Treasurer has been forced to admit the truth about his handcrafted mining tax—which he, the Minister for Resources and Energy and the Prime Minister personally negotiated, to the exclusion of the Treasury. They personally sat in the cabinet room and negotiated with the heads of BHP, Rio and Xstrata, and what did they come up with? A tax that raises hardly any money and $15 billion of expenditure against that. This will be the government's signature high-water mark. I am reluctant to say that, but I cannot believe that in just a few months the government could come up with any further policy initiative on the scale of the mining tax. The mining tax will be the benchmark for incompetent governments. No-one has encapsulated that better than the member for Griffith, who belled the cat earlier this week by identifying that the people that actually negotiated the mining tax were in fact just the Prime Minister and the Treasurer.

It now looks likely that all the commitments made by the Treasurer in relation to the mining tax will be funded by borrowing money. So the government goes out and borrows money to give it to the Australian people or borrows money to hand it out somewhere. It is clearly unsustainable. We have been constantly saying this, reminding the Australian people. The first version of the mining tax, the superprofits tax, was going to destroy the mining industry. The mining industry said it, and they were right. It is going to have a huge impact. Then they dumped Kev and put in the now Prime Minister. She identified that the mining tax was one of the things she was going to fix—and, boy, she fixed it! Not even the Greeks can develop a tax that raises no money! I apologise to any Greeks in the gallery. It is a great country, it is the home of democracy—

Photo of Stuart RobertStuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | | Hansard source

But it doesn't raise tax.

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

but it has not raised much tax over the years. Obviously the government was upset about the fact that Greece won the international award for introducing taxes that raise very little money, so they came up with a new version of the mining tax! Maybe that is how the Treasurer got his bouquet as the world's best treasurer—he should have a post-politics career in tax design!

We are helping the government to improve the budget bottom line by identifying this as another area that is being funded by the failed mining tax—or isn't being funded, as is really the case. Therefore, we will not support this initiative. We will be moving an amendment to excise this part of the bill so that we can separately vote on it, and we hope that the government gives us the opportunity to do just that.

Schedule 4 of the bill seeks to extend the interim streaming rules for managed investment trusts until the commencement of the new tax system for MITs. The interim rules enable the streaming of capital gains and franked dividends to beneficiaries, subject to relevant integrity provisions, until the new MIT regime commences. The commencement of the new MIT regime has been deferred by two years to 1 July 2014, to coincide with the intended commencement of rewritten MIT and other trusts provisions in the income tax acts.

Originally these interim streaming rules for MITs were to apply from 1 July 2012, but that was extended by two years to 1 July 2014, because the provisions for the new regime were not ready in time—what a surprise! This extension of the transition period is a direct consequence of delays in progressing other announced and anticipated changes in the tax law. It reflects a growing backlog of changes to the tax law which have been announced but not enacted. This process has not been helped by the fact that the Assistant Treasurer's portfolio has seen five different assistant treasurers under Labor in five years. That is a pretty good record! How do those members on the back bench feel? They did not get a guernsey. The member for Canberra over there—is it Canberra?

Photo of Andrew LeighAndrew Leigh (Fraser, Australian Labor Party) Share this | | Hansard source

Fraser.

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

Fraser; I am sorry. How could I forget? He was a Liberal Prime Minister. He delivered the odd surplus.

Dr Leigh interjecting

Gee, that got a reaction, didn't it?

Photo of Andrew LeighAndrew Leigh (Fraser, Australian Labor Party) Share this | | Hansard source

Defamation!

Photo of Dick AdamsDick Adams (Lyons, Australian Labor Party) Share this | | Hansard source

Order! We will come back to the bill, thank you.

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

We are on the bill; I am just paying tribute to the member for Fraser and identifying that he has more economic skills in his little finger than the five assistant treasurers Labor has delivered over the last five years. I mean, it has been a conga line of assistant treasurers. What is it with the Labor Party and this turnover? There has been turnover in prime ministers, turnover in assistant treasurers, turnover in workplace relations, turnover in leaders of the Senate, turnover in a range of areas—

Dr Leigh interjecting

and there is someone like the member for Fraser, who has a very healthy respect for himself, who does not get a guernsey, and I think he should.

Photo of Dick AdamsDick Adams (Lyons, Australian Labor Party) Share this | | Hansard source

Order! I ask the honourable member—

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

I think the gene pool of the Labor Party—

Photo of Dick AdamsDick Adams (Lyons, Australian Labor Party) Share this | | Hansard source

Order!

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

is not so shallow that the member for Fraser couldn't get—

Photo of Dick AdamsDick Adams (Lyons, Australian Labor Party) Share this | | Hansard source

Order! I ask the honourable member, the shadow Treasurer, to respect the chair, and I ask him to come back to the bill.

Photo of Joe HockeyJoe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | | Hansard source

I will, Mr Deputy Speaker Adams, and I, too, respect your contribution to this place over an extended period of time. I would just make the point that one of the reasons there is an enormous backlog in taxation bills before this place—in fact the bills are not even getting to this place—is that there has been enormous turnover in the number of assistant treasurers in the government. There could be no other explanation. How could we have assistant treasurers making announcements about tax changes, creating uncertainty in the business community and yet not being able to deliver the legislation in this place? How does that happen? How could a government be so incompetent?

At any rate, because we are endeavouring, from opposition, to try to repair just a touch of the damage that the government has inflicted in relation to taxation policy, we are going to support the schedule proposed to delay the streaming rules for MITs.

Schedule 5 seeks to apply an income test to the rebate for medical expenses from 1 July 2012. This measure was announced in last year's budget by a government running out of money. The rebate for medical expenses provides taxpayers with a non-refundable tax offset for out-of-pocket medical expenses—which are eligible medical expenses incurred during the year, less available reimbursements from government or private health insurance—above the claim threshold.

The current claim threshold is $2,120 per year for all taxpayers, which is indexed by CPI, with net expenses exceeding this threshold giving rise to a tax offset or rebate worth 20 per cent of the excess above the claim threshold. The parameters of the new income test will generally align with those for the Medicare levy surcharge. For singles with an adjusted taxable income above $84,000, or, for married couples, above $168,000, the claim threshold will instead be $5,000 and the tax offset or rebate will be worth only 10 per cent of the excess above the threshold. The income threshold increases by $1,500 for each dependent child after the first.

This is another tax grab from an imprudent government that cannot seem to deal with its addiction to spending. This means that the Labor Party, since coming to government, has introduced or increased 27 taxes in just five years. Here is another one.

Schedule 6 of the bill makes changes to the 1997 income tax act following the High Court decision in Commissioner of Taxation v BHP Billiton Limited. Contrary to the original intent of the tax law, this decision distinguished between explicit and implicit contractual arrangements in relation to limited recourse debt and the deductibility of capital allowances. To give effect to the original policy intent, this schedule clarifies the definition of 'limited recourse debt'. So we support this initiative.

The changes within schedule 7 of this bill seek to amend the Fringe Benefits Tax Assessment Act in order to remove the concessional fringe benefits tax treatment for in-house fringe benefits accessed through salary packaging. In-house fringe benefits arise when employees receive goods or services from their employer that are identical or similar to those provided to customers by the employer in the ordinary course of business. Quite clearly, the government continues to reduce and eliminate concessions in the FBT system, and it continues to look, rather desperately, for more revenue. This is just another tax grab from a government running out of money. Schedule 8 of the bill makes miscellaneous amendments to tax laws and regulations affecting superannuation and tax legislation generally, and we do not have any issue with those particular points.

So, as I have mentioned, the coalition will be moving an amendment to excise schedule 1 and schedule 3 from the bill. And, as the member for Lyons would know, it is important to give certainty and stability to Australian taxpayers; I think he would know that. He would also know that only the coalition could do that, and only the coalition is prepared to be consistent and predictable when it comes to taxation policy. So we are moving to excise schedule 1 on the basis that we fear unintended consequences will arise from making tax-exempt the payment of large native title benefits to individuals. In the long term—and we do focus on the long term—we believe this will be contrary to the development goals for Indigenous policy. The changes within schedule 1 also violate the key tax principle, as I said, of horizontal equity. The measures contained in schedule 3 are linked to the government's failed mining tax, and we will move to excise this schedule from the bill.

If coalition amendments to remove schedules l and 3 from the bill are not successful, then the coalition will not oppose the bill's passage through the parliament because, ultimately, we aim to be constructive and we want to try to help the government fix its massive self-imposed budget mess. We are feeling incredibly magnanimous when it comes to this, because they have got themselves into a hole. We understand that the easy politics would be to oppose everything, but we are not going to do that, and we do not do that.

Over 86 per cent of the legislation that has passed through this place has been supported by the coalition, and as you, Mr Deputy Speaker Adams—or more particularly, you, as the member for Lyons—would know, the inflated rhetoric from the Labor Party about negativity is just a little unfair given that we have supported 86 per cent of the legislation that has passed through this place. Here is another classic example: we are trying to improve the legislation, we are trying to improve the government's bottom line, but, despite our best attempts, I fear that we will fail at that. Ultimately, the only way we are going to improve the state of the nation's economy and the government's budget is with a change of government, and I am sure the member for Lyons would agree with that.

Photo of Dick AdamsDick Adams (Lyons, Australian Labor Party) Share this | | Hansard source

Order! The shadow Treasurer should not verbal the chair.

12:08 pm

Photo of Andrew LeighAndrew Leigh (Fraser, Australian Labor Party) Share this | | Hansard source

It is my great pleasure to serve as the member for Fraser, a seat named after Jim Fraser, who was the ACT's sole representative in this House from 1951 through to 1970. It is true that he did serve alongside Malcolm Fraser for much of that period, but there are significant differences in outlook between them. Jim Fraser was a proud Labor member, committed to social justice, committed to the rights of workers and a true reforming member of this House. While the shadow Treasurer may seek to model his politics on those of Malcolm Fraser, that is not my role model here in this place.

I rise today to speak about one of the schedules in the Tax Laws Amendment (2012 Measures No. 6) Bill 2012, which provides tax deductible gift-recipient status to an organisation known as Teach For Australia. Teach For Australia is modelled on Teach For America, which is now in its third decade. Teach For America bases its success on two vital truths: firstly, that there is no more important job that teaching disadvantaged children and, secondly, that there is a reservoir of idealism among talented university students. More than one in 10 US Ivy League graduates now applies to Teach For America. Its recruiting is so selective that it is able to take just the top 20 per cent of applicants.

Since starting in 2009, Teach For Australia has sought to bring the same model to disadvantage in Australia's schools. Disadvantage is rife in the Australian school system. A few statistics bear that out: according to Teach For Australia, the most disadvantaged students in Australian schools are three years of learning behind the most advantaged by the time they are in mid-high school. One in five year 9 students living in households with no-one in paid work fail minimum reading standards. In remote schools, 39 per cent of students do not finish high school, and in very remote schools that is 65 per cent. Of those attending university, only 15 per cent of university students come from the bottom socioeconomic quartile, compared with 42 per cent from privileged backgrounds. There is a crying need to get great teachers into disadvantaged schools. The government's Gonski reforms are focusing on improving resources for those schools, but Teach For Australia also plays an important part.

Teach For Australia associates, as the teachers are known, train for six weeks in intensive summer training at the University of Melbourne, and then continue to receive formal education, mentoring and leadership coaching through their two-year placement. Teach For Australia associates are now teaching in schools in Victoria, the ACT and the Northern Territory. Like Teach For America, they are an extremely selective program. Fewer than one in 10 applicants to Teach For Australia is selected. The average university entrance score of Teach For Australia associates is 97.

Tony Simpson, principal of Copperfield College in Melbourne's outer west, describes his Teach For Australia teachers as 'mindblowingly successful'. The way in which Teach For Australia trains their associates encourages students who might not have studied education to combine theory and practice. As Teach For Australia founder Melodie Potts Rosevear put it:

TFA allows select individuals to complete roughly one-third of their degree, and then to combine theory and practice by doing the rest of the degree over the course of the next two years as they are teaching.

Like the UK counterpart, Teach First, independent evaluations support the success of the Teach For Australia model. For example, a randomised evaluation that Mathematica Policy Research did on Teach For America found that the benefits from having a Teach For America teacher were equivalent to an additional month of learning.

But we will not just see the benefits of Teach For Australia in the classroom. Teach For America now, with nearly a full generation having gone by since the first Teach For America teachers went through the system, is beginning to reshape US education policy debates. Two Teach For America alumni have founded KIPP schools, a set of charter schools that focus on teaching American students in the most disadvantaged neighbourhoods. There are more than 26 elected officials in the United States who have a direct experience of teaching disadvantaged students as a result of Teach For America. Like President Obama's Education Secretary, Arne Duncan, who taught in Chicago and Melbourne, these politicians are far better policymakers for having taught disadvantaged students.

The challenge that Teach For Australia faces is to show the same successes in Australia.

As the minister for School Education, Early Childhood and Youth said:

I congratulate these graduates for completing their initial training of the Teach For Australian program and for their commitment to teaching kids in some of our most disadvantaged communities over the next two years. Through Teach For Australia we are giving some of Australia's brightest and keenest graduates the chance to make a real difference in the lives of students who may be struggling because of their social circumstances.

I know the commitment to Teach For Australia is a bipartisan one. I would like to acknowledge the member for Aston, who served on the board of Teach For Australia and who I know is a strong supporter, as am I, of the Teach For Australia model.

Right here in the ACT we have terrific Teach For Australia teachers working in our schools. Imogen Byrne at Belconnen High School has now finished her TFA time and is still teaching at that school, as are Corey McCann at Calwell High School and Igraine Ridley-Smith at Calwell High School, who received the New Educator of the Year Award at the 2012 Public Education Excellence awards—a real testament to her hard work with science and maths students. Felicity Olver at Erindale Secondary College and Lia Van den Bosch at Hawker College have also passed their first two years of the program and are teaching in the education system, which is a clear indication that many Teach For Australia associates stay in the education system beyond the two years they are required to.

Now in year 2 of the program in the ACT are Sebastian Knox at Belconnen High School, Bridget Martin at Erindale Secondary School, Stephen Barnard at Lake Tuggeranong College, Jessica Brunton at Lake Tuggeranong College, Tanya Greeves at Lanyon High School and Helen Baxendale at the Canberra College. Now in their first year of the program in the ACT are Min Kim at Calwell High School, Robert Pickup at Erindale Secondary School, Jessie Snodgrass at Kingsford Smith School, Alpha Cheng at Caroline Chisholm High School, Zed Mancenido at Lake Tuggeranong College and Hannah Brickhill at Melrose High School.

I had the pleasure of having two Teach For Australia associates work as fellows/interns in my office. These people not only work hard in the classroom and work in programs out of school hours but in their school holidays decide to work for a member of parliament. It is a crazy idea but I and my staff delighted in having their ideas and enthusiasm with us in the office. I thank Daniel Carr and Tanya Greeves for that.

The power to change lives is a power that is in the hands of great teachers. I will read a letter from a Melbourne girl to her English teacher Liam Wood. She wrote:

You were the only teacher that believed in me... I was doubted, labelled dumb/stupid and put down constantly in every class, except in Writer's Workshop. You created an environment that made each student special, like they belonged in the class ... I know I never spoke about personal things but you and Writer's Workshop changed my life just before I had given up. Things at home have even gotten better since I joined your class. ... Never forget that by treating young adults/teenagers like equals or as a friend and just simply believing in them you'll give them faith, hope, dreams and inspiration.

That was just one of the several letters that Liam received from his students.

Teach For Australia is a powerful program. It is changing lives among children in disadvantaged schools. I hope that as a result of it receiving tax deductible gift recipient status through this bill it will encourage further philanthropic support for a program which is part of the broader work that all of us in the House have to do to improve the quality of education that the most disadvantaged students in Australia receive.

12:19 pm

Photo of Julie OwensJulie Owens (Parramatta, Australian Labor Party) Share this | | Hansard source

I am very pleased to speak on the Tax Laws Amendment (2012 Measures No. 6) Bill 2012. I quite often speak on tax law bills and have done so since I was first elected nine years ago. I have said in the other place, where they are usually debated because they are usually non-controversial, that I find the TLAB bills, as they are known, really quite interesting. In many cases they incorporate policy decisions made elsewhere and you can see the work of the government in practice as they implement what are sometimes quite small changes. They are usually non-controversial, because usually they deal with a range of largely administrative matters.

This bill deals with a number of matters, seven in fact. Some of them are largely administrative and some are applying decisions that reflect requests from the community. But they are always interesting and they are always worth speaking on. This one has seven schedules. The member for Fraser has already spoken on schedule 2. I am going to skip over schedule 1 because it is the one I find quite fascinating. It is concerned with native title and I am going to come back to that one. I am going to run quickly through the others.

Schedule 2 updates the list of deductible gift recipients; TLABs often do that. These are lists of important organisations that are entitled to tax deductible gift recipient status. This TLAB adds AE1 Incorporated, which seeks to relocate and honour of the crew of Australia's first submarine; Teach For Australia, which seeks to attract top graduates to teach in disadvantaged communities—and we heard the member for Fraser speak very highly of that program; and Australia for the UNHCR, which raises funds to support the humanitarian programs of the United Nations High Commissioner for Refugees. Again, it is a very small schedule that adds three organisations to the list. But if you look at the history of all the TLABs, they reflect the importance these extraordinary community organisations that do such good work.

Schedule 3, which I am very surprised to hear the opposition is not going to support, extends the immediate deductibility of exploration expenditure already provided to mining and petroleum explorers—which they already get, but this schedule extends it to geothermal energy explorers.

The intention of this schedule is to restore competitive neutrality in the sector, and to support a clean energy source.

Earlier, I heard the shadow Treasurer state in this debate that the opposition was going vote against it because somehow it was raised in the development of the minerals resource rent tax. They do not like that, so they do not like anything that was mentioned in the same sentence as it was. But this issue is not associated with the minerals resource rent tax. It was raised by the Policy Transition Group—that is certainly true—but that was completely outside the terms of reference for them. They raised it as an anomaly when they had the chance during the inquiries, and they provided advice to the government that the tax law should be amended to take out that anomaly and restore competitive neutrality. This is something that the industry wants, it is something that other sectors of the industry already have and it is a perfectly logical extension which takes out an anomaly and restores competitive neutrality. It is going to be very difficult for the opposition to explain why they would vote against this, if their only reason is that it was once mentioned in the same room as people discussing the minerals resource rent tax. That is what we heard from the shadow Treasurer earlier.

Schedule 4 extends the interim streaming provisions for managed investment trusts from 2012 to 2014. The government had already made the announcement that they would defer until 2014 the commencement of the new overall regime for managed investment trusts and the new general trust income rules. The purpose was that by providing a coordinated commencement of all the different systems, compliance costs would be reduced for taxpayers. It was an announcement already made and which is now incorporated in the system through this TLAB No. 6.

There was also schedule 5, which applies an income-based means test to the rebate for medical expenses. There has been some argument, particularly from the AMA, that it should not apply to the Medicare safety net. However, it does result in a far better targeting of health expenditure and a more sustainable health system as part of a range of improvements by this government to achieve just that—to ensure that we spend health dollars in the best possible places for the community.

Schedule 6 amends the definition of limited recourse debt. Again, this is quite an interesting one. Following the High Court case in 2011, where BHP Billiton secured double deductions for its iron briquette plant in Western Australia, it appeared that the High Court had interpreted the law in a way that industry and the tax office had—well, put it this way: the tax office and industry seem to have accepted the ATO interpretation for many years, but this High Court ruling essentially affected that interpretation and it made it possible for companies to double dip. This schedule 6 essentially reinstates the ATO's interpretation and, again, it is simply putting back in place what was thought to be the case before that High Court case in 2011.

Schedule 7 removes the concessional fringe benefits tax treatment for in-house fringe benefits which are accessed through salary sacrificing. Again, that is an equity issue that puts employees on a level playing field.

Schedule 1 is the one I want to talk about for the remainder of my time, because it is a very interesting one and a really, really important one. It concerns native title, which is something that should be of concern to us all. It is very much a part of our land and it is very much a part of who we are as a people.

Native title, in the sense of traditional ownership of the land, has been in existence in Australia for tens of thousands of years. Not all of us, including me, understand exactly what that means—I am not sure I ever will—but I have a great respect for the Indigenous owners of this land and a trust in them about the importance and the value of this ancient cultural tradition. We as a nation benefit from the stories, the philosophies and the approach to land management that our Indigenous people bring to the table.

The legal concept of native title is one that was created back in the early nineties to recognise in western law this communal ownership and this ancient cultural tradition—not a perfect fit between western law and traditional Indigenous cultural beliefs, but it was the best we did at the time.

Traditional ownership is communal, of course, and most western law concerning ownership is individual. It is actually quite a complex area, yet there was some very good work done in the early nineties with the Native Title Act 1993 and amendments to that in 1998 which first introduced issues of tax into native title. The first Native Act 1993 was silent on the tax treatment of native title. So, we have come a long way there.

Essentially, this schedule puts into law what the Australian Tax Office has been doing for quite some time on native title. I will outline briefly what it does. It has a very narrow purpose: it simply seeks to clarify that payments and other benefits made under native title agreements are not subject to income tax, and that certain transfers of native titles to trusts do not attract capital gains tax. It sounds very simple, but up until now every transfer of services or cash as compensation for either extinguishment of native title or impairment of native title was handled by the tax office on a one-on-one basis and people had to seek a private binding ruling for every single decision.

What this schedule does is really quite simple: it takes the range of decisions that the tax office has been making, and is continuing to make, and puts them into a form in tax law. So for people who are approaching their compensation payments within that framework it creates a lot of certainty, because that framework is now set in law. It reduces a hell of a compliance burden on a whole range of people who will now know exactly what the law is. People who are slightly outside the range of transactions included in this schedule will still apply for private binding rulings. But there is always a group of people just outside the law, no matter where you put the law, who will apply for binding rulings.

We did have a number of contributions to the Economics Committee which expressed concern that, by formulating it and putting it into law, you might encourage people to move to within the bit that is now covered by the law and away from other options. That is true for any law. But the creation of certainty for a broad range of stakeholders in this matter is something of extraordinary value. I will say it again: no matter where you put the line of the law, you will have movement across that line, with private binding rulings on one side and certainty on the other—that is true for all laws.

The really interesting bit about this schedule is the things that it does not do. The vast majority of people who have commented officially on this schedule have raised issues that extend beyond the range of this schedule—and that, in many ways, is the part that is most interesting. Native title, as a legal concept, is around 20 years old. The previous Liberal government, in 1998, committed to further work on the tax treatment of native title. That stalled, and it essentially stayed stalled until we started receiving, in 2007, a growing number of papers on the intersection between native title and taxation law. That is probably what you would expect because, as a legal concept, it has been around for 20 years and for much of that 20 years Indigenous people have been arguing about whether or not they can get native title—they have actually being fighting for it for 20 years.

When you go to the Northern Territory, as my committee was lucky enough to do when we did the inquiry into Wild Rivers, and you talk to the incredible diversity of Indigenous groups up there, you see that the actual return to country and the confirmation of native title and what that means in a Western legal system is still quite new. So what we are seeing now is some really interesting exploration by some growing and increasingly independent groups—some quite small. The situation in the older days, when we had larger land councils and some of the governing and decision making bodies were city based, is exploding in many ways into a situation whereby we have myriad smaller organisations and powerful local voices. So we are seeing a growth in the range of options that Indigenous people have for converting what is a traditional cultural ownership into an economic asset and benefit for future generations. It is a really interesting time for our Indigenous community and it is a really interesting time for our nation. We are going to see over the next decade, I suspect, a growing range of ways for Indigenous communities to benefit from something they have always owned and of which they can now enjoy the benefits of ownership within Western law.

So I will restate the conclusion that the Economics Committee made by saying that I personally look forward to the next few years, as I hope governments both now and in the future will open up that dialogue with Indigenous communities while they work out exactly the best way to convert that traditional ownership into an economic benefit, and governments work very seriously with them in working out how our tax laws and our definitions of ownership et cetera can be amended to reflect their vision for the future ownership of their very important assets. For our nation this is probably one of the most important things we will do for our soul in the next 10 years. If we have not woken up yet to how valuable these traditions are to us all, and how they do and should impact on the way we think of our own land and the way we walk in it, then we are missing out on something very special that lies within us.

I commend the Assistant Treasurer for this bill. It has seven rather important schedules. I commend him also for simplifying and confirming the treatment of native title as it is currently treated by the ATO in law, to bring certainty to a very important range of stakeholders. I commend the bill to the House.

Debate adjourned.