Second Reading – Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018
Mr PITT: I rise to speak on the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018. This bill addresses unintended loopholes and tightens some of the broad tax concessions that allow foreign investors to get a very low tax rate and a competitive advantage over Australian investors. But while I’m on my feet, we should look at a few things in terms of comparison with those opposite, because we’ve heard over many years their shrill screams about multinationals and companies in Australia that haven’t paid any tax. Well, I’ve got news for those opposite. There are some rules around taxation in this country—some very important rules. And I think the first one is this: if you don’t actually make a profit then you don’t pay any tax. Those opposite have made calls about Australian companies who haven’t paid tax for a particular year. Mr Deputy Speaker Goodenough, I know you’ve been in business yourself, and the minister at the dispatch box is probably in a similar position, and the member for New England in front of me—you have had experience in employing people and setting up business structures and companies, paying tax to the Australian government. But those opposite certainly have it wrong.
There are things that happen to companies and businesses in this country that mean that they don’t make a profit. I was in business for more than 15 years before I came into this place. There were years when I didn’t have a tax bill because I made a loss. At that time, you dip into your overdraft or you dip into your savings or your previous years’ earnings, and you use that to keep your business going, to pay your wages and to keep your staff in their jobs. They are the things that companies in this country do. So, I think these shrill screams about multinationals and for more tax to be paid by companies in Australia need to be tempered by the reality of what happens in business. It is one day of the year when you assess your position, on that day, for your taxation responsibilities to the Australian government, and if you owe them you pay them. It is very straightforward.
In terms of profit shifting for multinationals, we’ve already cracked down on that, and the proof of the pudding is in the eating: more than $5 billion has been recovered. That is an enormous amount of hot dogs down the road for those who might be looking for support. And can I say, we know that those opposite do know something about taxes. They know that they like to hand them out. The proposal that they are taking to the next election is a tax hammer to the Australian economy: $200 billion in additional taxes and costs.
I know, as a previous owner of a business, that you make decisions based on a couple of things. You make decisions based on forecasts and you make a decisions based on confidence and your bottom line. The stronger your bottom line is the more likely you are to invest, to take calculated risks and to employ more Australians. We’ve been successful over the past six years. More than a million jobs have been created in this country. I think that has been incredibly beneficial. We have at the moment one of the lowest unemployment rates for many years. It comes down to the structures we’ve put in place to help businesses be successful, because at the end of the day a profitable business employs Australians in this country—and they all pay tax. But we know that that is not enough for those opposite. They want more money to spend on the things that they want. The difference between us and them is that we want Australians to keep more of their money to spend where they want it, so they can make a decision about where their kids go to school, not necessarily pour it into government coffers for Labor’s ideology.
We know what will happen to running costs. One of the things that I was surprised—in fact, absolutely gobsmacked—about during my period in business was the increase in the cost of electricity. Without a word of a lie, I started with an irrigation tariff of around 12 cents a kilowatt hour. It is now in the high 20s. If you were in business, your electricity bill was not in the top three costs for your operation unless you were a large energy user. It is now in the top two. Minister Angus Taylor and I met with a small-business man last week. Electricity is now his third highest cost after wages and rent. This is a coffee shop. It is not a huge operation that requires enormous amounts of energy. It is unsustainable. You cannot continue to have such high energy costs. Yet, those opposite want to increase it again. They want to implement a 50 per cent renewable energy target, with intermittent wind and solar. We know exactly what would happen. You can go to South Australia. It has the highest electricity costs in the world. What would that mean for regional Australia? It’s pretty straightforward. It would mean a loss of jobs and businesses.
Minister Taylor and I attended the Bundaberg Foundry in recent weeks. They have been in place for 130 years-plus on the Burnett River in Bundaberg, providing training and services. They employ over 100 people and have done for a very long time. On 30 June next year, when their existing energy contracts expire, their costs will go from $1 million to $1.7 million in one year. For a business with a turnover of $40 million—and I know all of those in the House at the moment who have ever had a business know what the margins are—$700,000 is a very substantial amount off your bottom line, and the question will then become one of viability. So I say to the Queensland government, because they are solely responsible: you need to take action. We have called for years to make changes to tariffs. In fact, the tariffs that they are suggesting is 48 cents a kilowatt hour for a commercial business. Forty-eight cents! That is just unsustainable.
I do not want this business to leave my local district. They have trained literally thousands of people—apprentices, trainees—over more than 100 years. We need them to stay because they are a mainstay of what happens in regional Australia. But we need to ensure that our taxation system in fair, so we are reducing the taxation rate, particularly for small business. Those opposite want taxes to increase. We want people to be competitive. We want their businesses to grow. Those opposite want to take more off them to subdue what they do, every single day, week, month and year, to ensure that their life is more difficult and their business is more difficult to operate.
This is a pretty straightforward contest. On that side, they want to take more taxes from every Australian. On this side, we want them to have more in their pockets, so they have more reliability and more money on the bottom line, and so they employ more Australians so our economy continues to grow. It is very straightforward. Taxation for them means changes in negative gearing. The stated goal of those opposite is to drive down the value of every Australian’s home, to drive down the value of their home. The silence is deafening. I admit there are only a couple of us in here, but how is it possible for them to go to every Australian home owner and say: ‘We want the equity in your house to deteriorate. In fact, we want it to go so low that the bank will come and take it off you’? That is just outrageous. These people have invested at a time when they could. They saved their deposits. They work hard. A potential Labor government change in taxation policy that would take their houses away from them is not in the interests of anyone. It’s not in their interest. It’s not in the nation’s interest. It’s not in the economy’s interest. We are deadset against those changes. We need to ensure that a Labor government is never elected in this country, because they will destroy our economy.
You only have to look at what we are doing with the tax offset. My electorate are not high-income earners. In fact, their average every year is around $34,000. It is just $34,000 for their median income. For them, it’s approximately a $500 change. Some 49,000 individuals in my electorate will gain the tax offset of around $500 after the end of the financial year in 2019. That makes a big difference to them. Once again, in comparison, we know the retiree tax from those opposite will take, on average, $2,200 from 5,500 retired Australians in my electorate. They use that to pay their rates bill, they use that to pay their electricity bill and they use that to pay their everyday costs of living. It is not a lot of money. They are entitled to it. Those opposite suggest it is a loophole for someone who hasn’t paid tax. Well, they have clearly paid tax. That’s how they got a return. When they lodged their return on 30 June, their income is either less than the threshold or less than the rate and they get a return on the taxation paid on their behalf through shares. It is very, very simple and very, very straightforward.
The legislation before the House is very straightforward. It is intended to stop double gearing so that foreign investors can’t shift profits to avoid tax. It is about stopping foreign investors from getting tax concessions on stapled structures to achieve tax rates of 15 per cent or less or, in some cases, being almost tax free for Australian business income. We need to ensure that every Australian company has the same advantage as those who want to come from overseas to invest here. Let me be very clear: we need foreign investment. Our country is built on foreign investment. But that foreign investment needs to be fair and should not disadvantage Australian companies, Australian businesses and, in particular, Australian superannuation funds.
While I’m on my feet, I will again put out a call to the Australian superannuation funds: take Australians’ money and invest it in the Australian nation. It can be in infrastructure, housing, hotels or agriculture. To be pretty damn frank and blunt, I don’t care where it is as long as it is Australian super invested in this country for every Australian’s benefit. In fact, if superannuation funds went to their members, put a check box on those forms that they make you fill out every single year and asked them their members they wanted more investment in Australian infrastructure or in Australian agriculture, I think it would be overwhelmingly a yes. For the life of me, I can’t understand why Australian super funds are so hell-bent on investments in agriculture and infrastructure in the United States, in Canada or in other countries, but they are not as interested in investing in this country. I’ve called for Australian investment before, and I will call for it again.
While we are talking about it, the changes to the bill include taxes on foreign investors’ income from Australian agricultural land and Australian residential property other than affordable housing, disability accommodation and management investment trusts at the top corporate tax rate. It provides transitions for periods of seven to 15 years for existing investments. It allows for a 15-year concessional rate for investments in new nationally significant infrastructure, as determined by the Treasurer, and implements the government’s budget commitment to support affordable rental housing by providing a 15 per cent tax rate. As I said earlier, we have already made changes to those multinationals who might be looking to avoid tax in this country. That has resulted in $5.6 billion of additional income from those now taxpayers to the Australian government, which can be used for many, many things that are helpful and beneficial to the Australian people.
In the short time I have left, I want to again put out a call to the Queensland Labor Premier, Annastacia Palaszczuk. Premier Palaszczuk has been sitting on her hands for months when it comes to the national health agreement. Why is it important? Because the health minister has $8 billion on the table for Queensland’s public hospitals. This is not fiddlesticks; this is $8 billion. Can you imagine the nurses, the doctors, the support and the surgeries that can be conducted with $8 billion? Yet she flat out refuses to sign the agreement and even has the gall to say that there have been reductions from the federal government for funding for public hospitals in Queensland. It is an absolute nonsense. In fact, for the Wide Bay Hospital and Health Service area, our funding is up 37 per cent— that’s federal funding. The reduction that is in there came from the state government. The Labor state government dropped $16 million out of my area and tried to claim that it was the feds. Well, this is rubbish.
I say again to Premier Palaszczuk: get out your pen, sit down at your desk, sign the national health agreement and deliver $8 billion for the people of Queensland to support their health, because, quite simply, they need it. And while she’s at it she should sign the Skilling Australians Fund—$240 million just for Queensland. It will deliver 50,000 apprentices and trainees. Anyone who lives in Queensland, anyone who lives in the regions and anyone who lives in the cities knows that we need more apprentices and trainees because we need to deliver those skills into our economy. And there is no more important part of the Australian economy than the regional economy. We have had massive reductions in the number of apprentices and trainees who are coming through the system.
I’m the beneficiary of an Australian apprenticeship. I’m an electrician by trade. I was fortunate enough to land an apprenticeship at a local sugar mill, but that sugar mill is now closed. It is not there anymore. So I say again to the Labor Premier, Annastacia Palaszczuk: sign the national health agreement and sign the Skilling Australians Fund. The sarcastic side of me thinks that she is not signing up only because there is a federal election on the horizon and she wants to stand up with the Leader of the Opposition and complain about how hard done by the Queensland state has been. Sign the agreement. We will deliver the money that is necessary and it will be delivered now. It is ready now. The Minister for Health is ready to put forward $8 billion just for Queensland, on top of what’s already there. This is a massive increase and it is necessary.
The changes to the Treasury laws make substantial and necessary changes that are to the benefit of the Australian country, the Australian people and the Australian nation. Of course, I commend the bill to the House.