It is a great pleasure to be speaking on the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016, which concerns taxation and superannuation laws amendments.
I want to start by making an observation. If the rumours sweeping their way around this building are true, we have no more than five sitting days between now and the next federal election. That is right: the speculation running rife around this building is that the government are going to rush to a double dissolution election after having secured the agreement of the Greens to their Senate voting reform bill; that they are going to basically gag the proceedings of the parliament immediately after or immediately before budget day and then rush to the polls.
You would think that, if a government had a plan such as this, after three years, they would have an economic story, an economic plan, for the country. But, sadly, this is not the case. You have a 'push me-pull you' approach, where you have half the Liberal Party caucus running in one direction and half the Liberal Party caucus running in the other direction. Of course, we cannot be blaming them for that, because their elders and betters, half the cabinet, are running in one direction on this and half the cabinet are running in the other direction on this. They are divided when it comes to taxation and they are divided when it comes to what you do with the money that you collect as a government.
We have a Prime Minister who is like a man in a room. He knows that he has to get out of that room, but he is busy going around closing off every door and every window that is a path out of the room he finds himself trapped in.
We know that there is a way forward for this country, and we have carefully prepared the policies and are rolling them out and explaining them to the Australian people. Before the last election the government promised us there would be a tax white paper within two years of the new government. The white paper was meant to be a clear and concise explanation of the government's views on this admittedly complex matter. But it is little wonder that they are unable to put that down on paper, because they cannot explain their views. They cannot even agree on the taxation reforms.
The government have spent over a million dollars in consultation fees. They like to talk about waste and mismanagement. Here is a place where they might start: over a million dollars in consultants' fees to produce a tax white paper that will never see the light of day. The finance minister has now described it as 'stationery'. The Treasury secretary, John Fraser, said that he was 'waiting for further direction from the government'. He is a man waiting for Godot. There is still no white paper, because the government are so hopelessly divided that they cannot agree on what they want to do, despite the fact that they received over 800 community and business group submissions. Not surprisingly, these groups are all disappointed at the government's inaction, and Australians are still none the wiser on what the government will decide to do. But, worse still, the Prime Minister and the Treasurer are none the wiser on where they are going to go when it comes to tax reform on this important issue.
Let us deal with the GST. Malcolm Turnbull and co.—the Prime Minister and co.—were keen on having a wide-ranging conversation about tax, but it was a conversation that began and ended with the GST. A proposal for an increase in the GST was being strongly floated and we know was seriously discussed with state premiers and chief ministers around the country. There was speculation about a 50 per cent increase in the GST, which would add 15 per cent to the price of everything, being possible and about broadening the tax base to food, to medicine and even to drinking water. The Prime Minister—we are yet to find out what he does believe or what convictions he maintains on any of these issues—appears to have been spooked by what the Treasurer describes as 'the bedwetters on his backbench' and, after months of deliberation, that one has been ditched as well. At least for now.
Multinational tax avoidance is something that we believe we need to address. We believe we have a problem with base erosion. On one day the government will say, 'We don't have a revenue problem; we've got a spending problem,' and on the other day they will say, 'We've got a revenue problem; we really need to do something about it.' We understand that there needs to be fiscal discipline, which is why we have put in place a range of savings measures, but we also believe there is an issue with base erosion.
First and foremost the area that we need to look at is multinational tax avoidance. Almost 600 of the largest companies operating in Australia did not pay income tax in the 2013-14 financial year. I want to repeat that for all of those hard-working pay-as-you-earn taxpayers, who would be devastated to know, that over 600 of the country's largest companies did not pay income tax in 2013-14. So after talking a big game, the Abbott and now Turnbull government have delivered literally nothing when it comes to multinational tax avoidance. We were promised a comprehensive tax reform that would see the big end of town pay their fair share, but instead the government's own budget papers have a series of asterisks where revenue estimates should be. That is right. They talk a big game when it comes to multinational tax reform, but when we asked them—and, in fact, when the budget processes mandate—in place of their estimates of the revenue that will be gained by their tax changes over the forwards we have asterisks. That is the budgetary equivalent of crickets.
They have not even bothered to predict how much money they are going to raise, because they know they would be held accountable to their dodgy claims and accounting practices. In contrast, Labor's plan, which has been independently costed, will deliver $7.2 billion to the budget bottom line. Under Labor multinational companies will no longer be able to claim up to 60 per cent debt-to-equity ratio for their Australian operations; instead, we will use their global debt-to-equity ratio. We will be cracking down on the common practice of cost shifting from a reasonable tax jurisdiction like Australia to a low- or no-tax jurisdiction, effectively shifting the tax burden to those wage and salary earners who are doing the right thing. Labor will standardise our tax laws with other countries so that companies cannot double dip. A Labor government will improve compliance with the ATO by ensuring that it is properly funded to do the job that all Australians expect it to do.
Labor will also increase the effort when it comes to data matching. We are going to bring forward third-party reporting and data matching early to improve compliance when it comes to tax payment. The Turnbull government have been too scared to take on the challenge of closing the loopholes for multinational tax avoidance. Worse still, on the final sitting day of last year the Turnbull government did a dirty deal with the Greens political party—they trashed tax transparency laws, taking two out of every three private companies out of the tax transparency net. That is right—two out of every three private companies have now been relieved of their obligation to have some tax transparency when it comes to disclosure.
The Prime Minister and the Treasurer—divided, clueless and with no vision for tax reform in this country—surely cannot be trusted with the future of our economy. They cannot even be trusted with each other! When it comes to superannuation the government still have no plan about what they are doing in this area, either. It is often the case that people give their most honest speeches in their last appearance in this place. We had the former Treasurer, the former member for North Sydney, single out this and capital gains tax as areas that are desperately in need of reform. There are 475 people with superannuation balances in excess of $10 million who are earning tax-free income of about $1.5 million a year.
People in the gallery, who I am sure are earning modest incomes, might be surprised to know that there are people—it is perfectly legal; I make no criticism of them, as they are doing nothing that is illegal—who are earning a tax-free income of $1.5 million a year. Surely something has to be done about that, because it simply is not fair. But the government does not want to disadvantage these people. We think—and I am sure that the majority of them think—that this is not a sustainable situation.
Labor has a positive plan that will end the tax concessions the government is currently giving to the very rich. Labor will reform the tax exemption for earnings on superannuation balances that exceed $1.5 million. That is only about 60,000 of the most wealthy Australians. Labor will tax superannuation pensions at a rate of 15 per cent for people drawing down in excess of $75,000 or more per annum, dealing with that issue. I think most people would agree that a retirement income of $75,000 per annum is a very comfortable income, particularly if you are in a position to own your own home, as the majority of people who are earning returns from their superannuation investments of $1.5 million most certainly would.
We will reduce the higher income superannuation charge threshold from $300,000 to $250,000. We will thereby reduce the tax concessions for 110,000 of the highest superannuation contributors. Labor's changes, which have been independently costed, will save over $500 million over the forward estimates and $5.1 billion over the decade. We argue, and the majority of respected economists and financial commentators agree, that these are changes that the Australian government cannot afford not to do. They are responsible, well costed and well planned. These are changes that the Australian government cannot afford not to do, and Labor will do it.
I want to say something about tobacco, because it is important to note that there is still at least one political party in this parliament—and that is the party of the Deputy Prime Minister and, ironically, the Minister for Rural Health—that still accepts donations from tobacco companies. We do not, which means we are unencumbered when it comes to setting policy which is in the national interest and puts the interest of Australian's health at the front. Last year, the Nationals accepted close to $11,000 in donations from Phillip Morris. That is at the same time the coalition government has frozen the Tackling Indigenous Smoking program by cutting $130 million over five years. Labor has not accepted donations from tobacco companies for over a decade. We developed the Tackling Indigenous Smoking program, we introduced plain packaging and we have defended those bans in the parliament, in the community and in the courts.
Labor will increase the tobacco excise and bring us into line with the World Health Organization's view that tobacco taxes should be set at more than 75 per cent of the retail price to be the most effective and cost-effective tobacco control interventions. The policy has been independently costed—again, by the Parliamentary Budget Office—to raise $3.8 billion over the current forward estimates period and $4.7 billion over the medium term. Again, viewed from a revenue point of view, viewed from a budgetary point or view or viewed—as I like to see it—as a health initiative, these are changes that Australia cannot afford to avoid. These are changes that any responsible government would implement, and Labor will do it.
I want to talk about negative gearing. There is a bit of a buzz around Parliament House today. It is one of the greatest horn swallows that we have seen in a long time. I am sure a cartoonist is busy somewhere in the press gallery drawing a picture of the Treasurer with egg on his face, swallowing the horn that he was out there blowing through yesterday and this morning. Labor has a plan for negative gearing. It is a responsible plan that every responsible economist in the country is backing. I think Australians are attuning to it because they can see that it is fair and reasonable.
I want to say something: it is unfortunate that the member for Hughes did not switch on the radio before he raced into the parliament with the government speaking points from yesterday. That is because if he had tuned in to the radio and looked at the government speaking points from yesterday he would have realised that this fantastic report that he was championing as conclusive evidence of some great killer point was actually a study of something else. It certainly was not Labor's policy. In fact, it was a study that was conducted months ago. The Treasurer claims he does not know who commissioned it, but we will interrogate him further on this, because I am sure his fingerprints are all over it.
But seriously, they suggested that a study that was conducted sometime over Christmas was a serious analysis of a policy that was released a couple of weeks ago. A serious Treasurer, a serious government and a serious Prime Minister would not commit such a C-grade error. There are many people in the community who had hoped that the man who rolled Tony Abbott in August last year was a different guy