Mr RAMSEY (Grey–Government Whip) (17:31): I rise to speak on this bill to amend the Income Tax Assessment Act 1997 and Taxation Administration Act 1953. Largely, changes to these acts are noncontentious. I thank the previous speaker for his support even though I must admit I was a little bemused when he congratulated the member for Hunter for extracting the agriculture white paper out of the government-something that he was unable to do for the six years they were in government. There were no agriculture white papers at that stage. It gives some idea of just how much attention the Labor Party applies to agricultural issues in the general matter.
This is a fairly small adjustment to law which allows a primary producer to re-access taxation averaging arrangements after a period of 10 years. It might be worthwhile, considering that not everybody in Australia is a farmer, to try and just briefly explain what averaging is about. Farming is an industry of highly fluctuating income lines. It is mostly driven by season, but international prices can be a pretty precarious beast as well. Averaging enables farmers to not average their income but to actually generate an average percentage of taxation that should be levied from their income so that it is on a more steady and regular basis. This means that if they have had a couple of particularly high income years which have come after a period of drought they will not be taxed at the extraordinarily high levels that marginal tax would normally generate in that case.
What has happened in the past is that it has been a one-way street. If a farmer opts out of this averaging they cannot come back, which of course makes people pretty reluctant to step away from it in the first place. I have had a number of constituents over the years come to me and say: ‘Our circumstances have changed greatly since the day we stepped out of the averaging system. We’ve accumulated more land, we’ve changed the production platforms and we’ve changed the mix of the farming enterprise. So why can’t we get back onto the averaging system?’ I think this is an overdue reform. It is not huge and it will not affect thousands of people, but it is a good reform.
It goes along with the government’s excellent efforts in other areas to assist farmers-in particular, the reforms to the farm management deposits, which operate on personal taxation schedules on income generated from primary production. It actually provides a financial haystack, if you like, for farmers. I was a farmer when these farm management deposits were first introduced, and I can say it was one of the greatest assistants to good management in farming that I have seen. Previously, farmers would near the end of a financial year and then go rushing into town to buy some merchandise that might help reduce their taxation. Now they can plan for those arrangements and push the money to one side as a full tax deduction in the year in which it is generated, and then bring it back in the years in which their farm income is not so high. But because of a rise in costs of farming, the limits that existed on the farm management deposits were starting to really impact on some of the bigger farming operations. That was a great reform for the farmers in my electorate of Grey. We have some very large farmers, as indeed we do in a lot of the more marginal areas in Australia, in particular where their incomes fluctuate so much and can be of a very high nature or of a great loss in any particular year.
It is not the only thing this government has been doing for farmers. We have made some great changes to tax write-offs for things like water storage, fodder storage and fencing, which are all aimed at making farmers more efficient and able to deal with the vagaries of the weather. These policies go hand-in-hand with recognising Australia’s agricultural position and its special relationship with our economy-the accelerated tax write-offs; the $100 million we put into agricultural research; reform of laws surrounding foreign acquisition of agricultural land and business; extra support for biosecurity; and of course, as has been talked about at length in this place, the free trade agreements with China, South Korea and Japan. It is worth pointing out in these free trade agreements-particularly the one with Japan-we are also granted most favoured trading nation status, which means that if they should strike a better deal with another nation Australia will get the same, thank you very much.
These bills, outside the issues of agriculture, also deal with the luxury car tax to provide an exemption from the luxury car tax to certain public institutions that import or acquire luxury cars for the sole purpose of public display. This is a very small condition but is plainly common sense. It does raise the issue of the luxury car tax generally and the appropriateness for us to have a luxury car tax at all now that we are on the verge of not having an Australian car manufacturing industry. If the purpose of tax is to provide some kind of protection to our local car builders, then surely it is time for it to go. If it is purely a means of raising tax dollars from those in our community who are better off, well, yes, it works, but one would have to question its efficiency. If someone who has dollars has a penchant for purchasing cars and likes to own motorcars, it seems to me that they should not be any more highly penalised than someone who likes boats or, indeed, likes taking expensive and extensive holidays. The abolition of the luxury car tax is not on the table at the moment, but, as this government works to bring our budget back into order, it is something that we should give attention to. It seems hardly justifiable to me.
Other bills in the omnibus bill refer to giving the power to the taxation commissioner to amend rulings within the spirit of the original legislation by means of a disallowable instrument, basically to give the commissioner remedial powers. It is an obvious amendment allowing the commissioner to manage the dynamics of tax payments and avoidance. The bills also make some technical amendments to 10 acts and repeal 45 excise acts, including the Income Tax (War-time Arrangements) Act 1942 on its 75th anniversary, so it is probably high time that one at least was pensioned off.
By and large, it is good work of government. These are common-sense things to do. I appreciate the fact that we have the support of the other side of the House. From the government’s point of view, we continue, particularly from my interest, to support Australian agriculture.