Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026
Senator CANAVAN (Queensland—Leader of the Nationals) (11:34): I rise to largely to indicate the coalition's support for the measures in this bill. Much of it is relatively perfunctory and a clean-up job. I did want to begin, though, by saying there's a little bit of a confusion.
I'm a bit perplexed at some of the practices as to titling bills in this place. As I said, a lot of what's in this bill is a clean-up job—and later I'll come to some other measures. The title of the bill is: Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026.
It's often the case in politics—it's a general rule—that, if a government calls something 'black', it almost certainly is white. It's a pretty strong rule. When politicians and governments go to great lengths to say that they're trusted, they're free and they're democratic, you can pretty much be sure they're actually completely the opposite.
I mean, the democratic republic of Korea to this day—that actually describes North Korea; the official name of North Korea is the 'democratic republic of Korea'. It's anything but democratic there in that country. Likewise, here, we have a government that just passed the biggest tax grab in Australia's history, based on a lie to the Australian people, coming into this place with the affront of saying they're delivering a trusted tax system.
Well, trust in our tax system has been demolished by this government, which didn't have the guts to take its tax policies to the Australian people last year. In fact, not only did they not take these policies to the Australian people; they explicitly told the Australian people they would not increase taxes on capital gains, on trusts, on negative gearing and then, within a year, turned around and broke that trust, broke that promise and therefore broke the Australian people's confidence in our tax system.
How can there be trust in our tax system? If you had made an investment early last year based on thinking, 'This'll be the capital gains tax regime; this will be the negative gearing regime; this is the trust structure that my accountants and lawyers have advised that I set up,' and done so on the basis that the government and all the politicians were of the same view that none of these taxes should change, the longstanding arrangements in all of these areas—so you make those investments.
For a small business, you might mortgage your own home and put your livelihood at risk to follow a dream. And then, a year later, the government turns around and does exactly what it promised not to do, which completely throws into chaos your life plans, your business plans. We've seen the reaction of so many small businesses to what's happened here.
I've spoken to many of them in the last couple of months. I held four small-business roundtables in the fortnight we had away from this place a couple of weeks ago and just had small business after small business tearing their hair out and wondering why they have hocked themselves to death and put at risk their own livelihood when the government in Canberra just doesn't back them.
It doesn't just not back them; it's not even upfront with them. It just constantly tells fibs. Now, on top of that, rather than recognising that and being sorry for that, the government rubs salt into those wounds with titles like this saying that they're delivering an efficient and trusted tax system—an absolute joke.
This bill does not do any of that. It's nowhere near as significant as the title might make out. As I say, there are a number of provisions in this bill that we will and can support.
The government is making changes to clean up parts of the tax act. The government added some extra changes here to this bill after it was put in place which do some routine business, such as increasing and indexing the thresholds for the Medicare levy. There are some very small changes, like removing the $2 minimum you must have for a tax deduction.
Obviously, with the way electronic transactions work these days and bank fees and all these things, sometimes that minimum is too high, and that's being removed. We support that. That's a sensible change, albeit hardly earth shattering.
This bill does make the reporting mechanism for trusts a little bit more efficient, although—going to my introductory comments—this particular change does nothing to make up for the fact that the government has broken the trust of the Australian people in terms of how we tax trusts. As I said earlier, the government said last year it wouldn't change the taxation arrangements for trusts.
Instead, in the budget released a few weeks ago and passed last week through this parliament—rammed through—the government will put a minimum tax on trusts, completely undermining the promise they made last year. But we do support this change, this part of this bill, which reduces some duplication and allows for tax returns to be prefilled with trust beneficiary information, like tax file numbers and the like.
And then there are some very, very small technical amendments that just fix up some minor drafting corrections and clarifications in schedule 3. We support all of those things. Schedule 4 make some changes to the R&D tax credit system.
Again, these are things we won't oppose. They're a little bit more significant, but we're happy to support some workable changes here, including restricting R&D tax incentives for tobacco and gambling activities. I think we've got to be careful that this does not become a general rule.
The R&D tax system has strengthened that system, I believe. It is broad based, and we don't seek to pick winners here. We offer R&D incentives to all types of businesses in the country, and it is that flexibility that has been the strength of the system.
I don't think we here in this place know best how to make a business more efficient or grow or develop. It's best to leave that to the people who actually run businesses and who put their livelihoods and their mortgages on the line. We give them broad authority to innovate, which we want them to do, and claim a tax deduction for that.
In this case, there is going to be a restriction here on tobacco and gambling, I understand. They're certainly activities that we don't seek to promote in the same way we want to promote the development of manufacturing, agriculture or mining et cetera. I would just note that the risk here is that, once we do something like this, different political parties will seek to use this vehicle.
I don't want this to be a precedent where we believe that we should seek to restrict the R&D tax incentive just because we don't like a particular industry, because we think this industry is bad and shouldn't be developed. If it's a legal activity, it generally should be able to do this. If it's adding value to our GDP, whether you like it or not, like mining or like agriculture, and if we're happy to tax it into oblivion and make money from those industries, we should allow them to grow and develop in the way they see fit, using a very effective scheme.
The R&D tax incentive scheme has been a core part of our tax system now for multiple generations. Schedule 5, as I mentioned briefly earlier, increases the Medicare levy tax thresholds. This is routine business that's often done here to make sure that those on low incomes are not subject to the Medicare levy.
Certainly with inflation in recent years under this government, the inflation rate here has been the highest in the developed world. Let me say that again. We have the highest inflation rate in the developed world here in Australia.
That was the case before the Iran war; it wasn't Donald Trump or the Iran war that caused that. The inflation was homegrown in this country thanks to this government's lack of discipline on its budget. Given that inflation, there's obviously a great need to lift these thresholds, otherwise people on very low incomes will be hit with a levy.
So we support that, but we support it while making the broader point that if it's good enough for the thresholds for the Medicare levy to be indexed, why isn't it good enough for the thresholds across the tax system to be indexed? The government is effectively supporting the coalition's policy here, albeit for a very small part of our tax system, which relates to the Medicare levy, a two per cent surcharge.
Well, how about the tax rates of 20 per cent or 30 per cent or 45 per cent that relate across the income threshold—much higher rates of tax that now kick in at very low incomes. The tax-free threshold, for a start, has not changed from $18,200 since the early 2010s. For over 10 years now that's been stuck at $18,200.
Again, thanks especially to the inflation unleashed by this government, $18,200 doesn't buy what it used to buy, so that number is a bit low. The government's tax is coming to families and households at what is now in effect a much lower rate, albeit at the same number, $18,200, as it was back in 2011, when this was changed. That's 15 years ago now.
It's same number, but it's not really the same number in inflation adjusted terms. So that surely should go up too. Why isn't that going up?
Why is the government taking in more tax from low-income people when it's happy to change these thresholds? That's why we in the Liberal and National parties proposed that actually what we should be doing is have those thresholds increase each year, and have them go up with inflation, so the government doesn't get away with stealing your money silently through inflation.
That's what happens. They unleash inflation, they spend more of your money, they waste more of your money—which is clearly happening in this place right now; there's massive waste happening here right now—and that forces up inflation, and that means you're then forced up the tax scale. You don't necessarily have to jump tax brackets.
Even just earning more within a tax bracket means you pay more tax thanks to inflation, because of that extra income you're getting. Your wage will go up with inflation, as it largely has. We just had a minimum wage decision which effectively just kept up with inflation—4.75 per cent increase across most awards.
Inflation is actually projected to be five per cent this year, so they're actually going backwards a touch, but it's roughly the same. They're not really getting a 4.75 per cent increase in income because, of course, the price of everything has gone up, plus those people are forced into the higher range within their tax bracket, and they pay more tax. In fact, inflation at a normal level would take $250 a year off you every year.
You just get it taken off you thanks to the inflation tax that funds Labor's waste. Well, we think that's wrong. We think it's unfair.
It's inequitable. It's a silent tax that most people don't realise that should be stopped. If the government wants to tax you more, they should have to bring in a law to get that passed.
They should have to take it to an election, like they didn't last year, and ask for your consent, not silently take money off you. We support these thresholds going up, but a question has to be asked. If the government supports the Medicare levy income thresholds going up, why aren't they supporting the increase in the income tax free threshold and the 45 per cent tax-free threshold?
Why aren't all of these going up with inflation so that we create lower taxes and more incentive and return more money to people at a time of a cost-of-living crisis? So what we will be doing is supporting this policy. We will seek to help people in this situation.
Finally, the last schedule of this bill makes some changes to the pension supplement while people are overseas. We support these too. They're a little bit more significant changes, but they're somewhat sensible.
The supplement is meant to be there for pensioners to help them with the cost of living here in Australia. Again, it is something that is desperately needed. We fully support this.
However, at the moment it can continue to be paid to pensioners who are living away from Australia. The idea is that this is a supplement for people who are facing the costs in Australia. The current situation is that after six weeks people still get it but get a lower rate.
The government here will end that, but they'll now give it to people at the full rate for 12 weeks. So, if they're overseas visiting family or have to go overseas for a funeral or something reasonable, fine—three months. But after three months you won't get the supplement at all, which I think is fair and reasonable.
If you're a resident, this is a supplement. It's only a supplement. It's not the pension as a whole.
The supplement should be reserved for those people. I want to finish, though, where I started off. We have to restore trust in government.
It'll be the key way we restore confidence in the economy and keep things moving. I'm very worried about where the economy is headed under this government right now, but we've got to restore trust. One way we can restore trust is do as we say.
This government last week rammed through some tax laws which are clearly incomplete and ham-fisted. The government put through tax laws which would effectively give a capital gains tax bill to someone who's lost their spouse. If you have a death in your family or your wife or husband dies and you have some investment properties, under this government that triggers a change in assets, and you can potentially face a capital gains tax bill or rather a negative gearing change to your arrangements.
That should end. This so-called widow tax should end. I just want to flag that during debate here the coalition, the Liberal and National parties, will move an amendment to that bill to fix that.
We will give the government a chance to do what it says it wants to do—get rid of the widow tax. So we'll move an amendment to remove the widow tax to ensure that people facing heartbreak with the loss of a loved one don't also face a tax bill. We will stand up for fairness.
We'll stand up for trust in our system on this side. (Time expired)