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senate vote 2023-11-15#7
Edited by
mackay staff
on
2024-06-23 13:44:24
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Title
Bills — Treasury Laws Amendment (2023 Measures No. 1) Bill 2023; in Committee- Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 - in Committee - Schedule 4
Description
<p class="speaker">Dorinda Cox</p><p>The committee is considering the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 and amendment (1) on sheet 2038, moved by Senator Dean Smith.</p>-
- The majority voted in favour of a [motion](https://www.openaustralia.org.au/senate/?gid=2023-11-15.370.4) "*schedule 4 stand as amended.*" In other words, they voted to keep the amended schedule 4 in the bill. This vote was put after West Australian Senator [Dean Smith](https://theyvoteforyou.org.au/people/senate/wa/dean_smith (Liberal) [proposed](https://www.openaustralia.org.au/senate/?id=2023-11-15.305.1) that schedule 4 be opposed.
- ### What is Schedule 4?
- According to the [bills digest](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2223a/23bd063):
- > *Schedule 4 amends the Income Tax Assessment Act 1936 (ITAA 1936) and the Income Tax Assessment Act 1997 (ITAA 1997) so that no part of an off-market share buy-back can be taken to be a dividend.*
- It was further [amended by the Government](https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/display.w3p;query=Id%3A%22legislation%2Famend%2Fr6979_amend_e5a61c87-6fd4-4cc3-aab7-a39486be1b6c%22;rec=0).
<p class="speaker">Dean Smith</p><p>Just so that everyone is up to speed: we are now dealing with two opposition amendments, one of which I have moved, which is on sheet 2038 and would repeal schedule 4. Soon we will move to the second opposition amendment, on sheet 2043, which deals with the removal of schedule 5.</p><p>By removing schedules 4 and 5, the opposition is seeking to hold the government accountable and save the government from itself and the breaking of an election promise—a promise that was given by the former leader of the opposition, now Prime Minister Anthony Albanese, and a promise given by the Treasurer, Mr Chalmers, on not one but five occasions: in January 2021, 30 March 2021, 15 December 2021, 17 January 2022 and 4 March 2022. The two most senior economic people in the government aspiring to win the election, Mr Anthony Albanese and Dr Jim Chalmers, gave a commitment to the Australian electorate that they would not change the franking credit regime. They gave that election commitment because they were worried that, having incurred an election loss in 2019, it was in large part—not solely, but in large part—due to a commitment by the then opposition leader, Mr Bill Shorten, to change the franking credit regime, which cost them that election. To create some immunity from that risk for Anthony Albanese and for Dr Chalmers, they went out into the community and said: 'Have no fear. Franking credits will not change in this country.' They said it five times.</p><p>What we're dealing with today in the Senate with this Treasury Laws Amendment Bill relates to the government breaking that promise. Proposing that two schedules, schedule 4 and schedule 5, be removed is holding the government accountable, saying to the government, 'Don't proceed with yet another broken promise.' Unfortunately I suspect that the government will proceed, will get the votes to break this election promise, supported by the Australian Greens and by some Independent senators in this chamber.</p><p>I just want to stay with the matter of revenue. Senator Bragg asked some questions, but I would like to narrow the commentary and get some commitments and some understanding from the government in regard to my own line of inquiry regarding this matter. I thank the minister for her cooperation to date in making some answers to questions on notice available. I'm just curious to know the time frame in which those questions you've taken on notice will be made available to the chamber.</p> <p class="speaker">Malarndirri McCarthy</p><p>I would say a week is reasonable.</p> <p class="speaker">Dean Smith</p><p>In answer to questions on notice, Treasury has made a number of claims about this particular bill. Senate question on notice 1695 asked Treasury whether it acknowledged that the changes to franking credits in the last budget were a tax increase. The Treasury response to that was, 'No, the off-market share buyback measure is designed to improve the integrity of the dividend imputation system and is not a tax increase.' I'm happy to table that response if necessary, but I don't think that really will be necessary. Does the government maintain that the measures contained in schedules 4 and 5 are not a tax increase on Australian companies, investors and retirees?</p> <p class="speaker">Malarndirri McCarthy</p><p>I'm advised that it it's certainly not a tax increase. It is about closing the loophole.</p> <p class="speaker">Dean Smith</p><p>So, it's not a tax increase; it's about closing a loophole. Senate question on notice 1694 asked how much of the revenue raised through that measure comes from personal income tax receipts. The answer from the Treasury read: 'Over the forward estimates, personal income tax receipts are expected to increase by $150 million as a result of this policy. Does the government maintain that the measures contained in schedules 4 and 5 are not a tax increase on Australian investors?</p> <p class="speaker">Malarndirri McCarthy</p><p>That's what happens when you close a loophole.</p> <p class="speaker">Dean Smith</p><p>You raise taxes?</p> <p class="speaker">Malarndirri McCarthy</p><p>I refer to my previous answer.</p> <p class="speaker">Dean Smith</p><p>So when you close a loophole you don't raise taxes?</p> <p class="speaker">Malarndirri McCarthy</p><p>I do believe that the senator knows the response to his question as I have responded.</p> <p class="speaker">Dean Smith</p><p>The answer to Senate question on notice No. 1694 clearly states:</p><p class="italic">Over the forward estimates, personal income tax receipts are expected to increase by $150 million as a result of this policy.</p><p>Some in this chamber would contend that that reads that this policy increases income tax receipts by $150 million. Do you agree or disagree?</p> <p class="speaker">Malarndirri McCarthy</p><p>I refer to my previous answer.</p> <p class="speaker">Dean Smith</p><p>Can the minister explain to the chamber how it is then that the measure raises $150 million in personal income tax receipts?</p> <p class="speaker">Malarndirri McCarthy</p><p>As I said, in closing the loophole.</p> <p class="speaker">Dean Smith</p><p>Does closing the loophole increase tax receipts by $150 million?</p> <p class="speaker">Malarndirri McCarthy</p><p>McCARTHY (—) (): I refer to my previous answer.</p> <p class="speaker">Dean Smith</p><p>Senate question on notice No. 1692 asked how much of the revenue raised through the measure is realised through increases to superannuation tax receipts. In response the Treasury said:</p><p class="italic">Over the forward estimates, superannuation fund tax receipts are expected to increase by $400 million as a result of this policy.</p><p>Does the government maintain that the measures contained in schedules 4 and 5 are not a tax increase on Australian retirement savings?</p> <p class="speaker">Malarndirri McCarthy</p><p>():  I refer to my previous answer.</p> <p class="speaker">Dean Smith</p><p>How is it then that the policy raises $400 million in superannuation tax receipts?</p> <p class="speaker">Malarndirri McCarthy</p><p>I refer to my previous answer. We stand by our costings.</p> <p class="speaker">Dean Smith</p><p>The government stands by the response to question 1692, which shows that there would be an increase in tax receipts of $400 million. And the government stands by its response to question 1694, which identified that there would be an increase of $150 million in tax receipts.</p> <p class="speaker">Malarndirri McCarthy</p><p>Senator, we stand by our costings.</p> <p class="speaker">Dean Smith</p><p>The answer to Senate question on notice No. 1693 states that there will be no impact on company tax receipt expected as a result of this policy. If this is a crackdown on companies exploiting a tax loophole, as the government claims, and not a broken promise on taxing franking credits, why does it raise zero dollars from company tax?</p> <p class="speaker">Malarndirri McCarthy</p><p>We stand by our costings.</p> <p class="speaker">Dean Smith</p><p>Can you remind the chamber: what are your costings?</p> <p class="speaker">Malarndirri McCarthy</p><p>As we have said previously in answer to questions throughout this debate, Senator.</p> <p class="speaker">Dean Smith</p><p>Minister, if it is not a tax increase, as the first answer reads, how does it increase tax receipts?</p> <p class="speaker">Malarndirri McCarthy</p><p>This is about closing the loophole that we've talked about quite a few times throughout today. That loophole began when the previous government, under Scott Morrison as Treasurer, opened that door in 2016 and never closed it, which is why we are here today.</p> <p class="speaker">Dean Smith</p><p>In that intervening period, there is the ATO direction, I would add. How does the government reconcile a measure that raises revenue exclusively off personal income tax receipts and superannuation fund tax receipts with the government's claim that this will not hit retirees' franking credits?</p> <p class="speaker">Malarndirri McCarthy</p><p>We know that when you consistently come forward with the same questions it is about your side of politics recognising that you failed to close a loophole. We know that this is an important piece of legislation in terms of closing a loophole that your side of government never did.</p> <p class="speaker">Dean Smith</p><p>More fundamentally, it is about a commitment being given by a person who wanted to be the prime minister of this country and by someone who wanted to be the Treasurer of this country saying to the electorate that they would not change the law in regard to franking credits. They made that commitment on five occasions and then decided to break that promise. That's the core issue here. Is it then true—and does the government concede—that this is in fact a retiree tax?</p> <p class="speaker">Malarndirri McCarthy</p><p>Let's talk about commitments, shall we? You clearly do not want to move past the fact that this began under Scott Morrison as Treasurer in the lower house with wanting to see the closing of this loophole. It never occurred under your government. We are now doing it. The answer to your question is no.</p> <p class="speaker">Dean Smith</p><p>If it raises tax receipts from superannuation funds, how is it not a retiree tax?</p> <p class="speaker">Malarndirri McCarthy</p><p>I refer to my previous answers. This is about closing the loophole. The senator knows that, and I refer to my previous answers.</p> <p class="speaker">Dean Smith</p><p>In January 2021 the then opposition leader, now the Prime Minister, gave a commitment that franking credits would not be changed, that the tax law in this regard would not be amended. He gave that commitment. Then a commitment was given on <i>ABC Radio</i> on 30 March 2021. Then a commitment was given in Tasmania on 15 December 2021. The then shadow Treasurer gave the commitment on 17 January 2022. Then the Prime Minister on <i>ABC Radio</i> in Perth on 4 March 2022 gave a commitment that there would be no change to franking credits. Then in September 2022 the Treasury distributed a consultation paper on its exposure draft legislation. In which month between March 2022 and September 2022 did the Prime Minister decide to break his promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>I'm not sure what that has to do with sheet 2038. I refer to my previous answers.</p> <p class="speaker">Dean Smith</p><p>It has everything to do with sheet 2038, because we are seeking to remove from this bill two schedules which go to the core of the Prime Minister's and the Treasurer's commitment. By removing these two schedules, a promise will not be broken. So, on which month? Was it March 2022, April 2022, May 2022, June 2022, July 2022 or August 2022 that the Prime Minister decided to break his promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>I refer to my previous answers. This is about closing the loophole.</p> <p class="speaker">Dean Smith</p><p>Do you concede that this is a broken promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>I believe I've answered the questions appropriately.</p> <p class="speaker">Dean Smith</p><p>Was there an answer? I don't believe I've asked that question before. What was the answer to my question regarding whether this is a broken promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>Senator, just because you don't like my answers doesn't mean they're not answers.</p> <p class="speaker">Dean Smith</p><p>With all respect, Senator McCarthy, I don't know what the answer was that you gave me.</p> <p class="speaker">Malarndirri McCarthy</p><p>I have said that I've answered it appropriately. This is about closing the loophole, Senator.</p> <p class="speaker">Dean Smith</p><p>But my question is, at what time did the Prime Minister decide to break his promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>This is about closing the loophole, and I encourage the senator to move along.</p> <p class="speaker">Dean Smith</p><p>Given the generosity that you've shown me in taking other questions on notice, I'm wondering whether you might take this question on notice as well.</p> <p class="speaker">Malarndirri McCarthy</p><p>I've answered the questions. Thank you, Chair.</p> <p class="speaker">Dean Smith</p><p>Minister, given that this change to franking credits will raise almost half a billion dollars in superannuation and income tax, can you clarify what the Prime Minister meant when he was quoted in the <i>West Australian</i> newspaper as saying:</p><p class="italic">I can confirm that Labor has heard that message clearly and that we will not be taking any changes to franking credits to the next election …</p><p>Given that this policy raises almost half a billion dollars, can you explain to the chamber and to the Australian electorate, who took the Prime Minister on his word, what he meant by that comment?</p> <p class="speaker">Malarndirri McCarthy</p><p>It's not for me to know what is in the minds of anyone when they make any comments. But I do know that the Prime Minister would like to see this piece of legislation pass.</p> <p class="speaker">Dean Smith</p><p>He's happy for the Senate to legislate and give effect to his broken promise?</p> <p class="speaker">Malarndirri McCarthy</p><p>You clearly have an obsession with our Prime Minister, Senator. I think I've answered that.</p> <p class="speaker">Dean Smith</p><p>Would the Prime Minister like this Senate chamber to legislate his broken promise—which he made on five separate occasions—not to change franking credits?</p> <p class="speaker">Malarndirri McCarthy</p><p>Senator, the Prime Minister would like to see this loophole closed, just as your previous Treasurer, Scott Morrison MP, wanted in 2016.</p> <p class="speaker">Dean Smith</p><p>We've had a parliamentary inquiry and a consultation process. A number of those consultation submissions—I'm being generous, as they were in their thousands—weren't released publicly. I'll ask again: can the Treasury name a single corporate law firm, investor group or industry body that supports these franking credit changes?</p> <p class="speaker">Malarndirri McCarthy</p><p>It troubles me that you are trying to imply that there has been a lot of secrecy here when we know that public submissions are exactly that—they are on the public record.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
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