QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS

Senator SCARR (Queensland) (15:20): I must say I'm delighted to rise to contribute to this debate, and my heart is filled with joy after hearing Senator Bragg's address to the National Press Club. It was a terrific address, and I invite everyone to watch it on our wonderful ABC. Now, Senator Whiteaker asked, 'Why did the coalition raise these questions during the course of question time?' I'll give you three answers.

The first is that the Labor government introduced a whole range of tax policies in the last budget which, before, the last election they said they weren't going to do. So they broke their promise. That's the first reason why we're raising them.

The second reason is we've come back from winter recess. Certainly in my case, in my home state of Queensland, I've heard from so many small businesses who are telling me about the kick in the guts the Labor budget delivered to them, especially because of these tax changes. That's the second reason we're raising these questions.

The third reason is we're finding that there are a whole raft of unintended consequences flowing through these tax changes because there was insufficient consultation. In relation to that third point, my dear friend Senator Dean Smith raised the issue of the impact on charities. I want to explain how this works.

At the moment, a small business that has a discretionary trust can give money to not-for-profits and can give money to organisations engaged in charitable purposes which don't necessarily have the benefit of tax-deductible status without there being a tax impact. That's the benefit of discretionary trusts. You can allocate that money to a not-for-profit organisation.

You don't pay tax on that income. The not-for-profit organisation gets 100 per cent of the benefit. That is the current situation.

If you are going to tax everything coming out of discretionary trusts at 30 per cent, that is necessarily going to have an impact on the amount of money that is received by not-for-profits and charitable organisations across this whole country. That impact has been estimated by Mark Fowler, who's a specialist in charity law, to be—listen to this—$2.9 billion a year.

That's $2.9 billion a year of contributions which will not be received by not-for-profits and charities that don't have DGR status in relation to gifts that are made to them. Those organisations engage in a whole raft of charitable-type activities, and that includes human rights organisations, charities focused on prevention of disadvantage, religious institutions or charitable work that they undertake.

It can be community service organisations, cultural organisations or sporting organisations. A whole raft of organisations are going to be impacted by this ill-thought-out discretionary trust tax proposal, and that's before you even get to the cost of administration of all those discretionary trusts that are going to have to be converted into corporate structures and the changes to their insurance, their business registration, their employment arrangements—a whole raft of changes.

It is going to cost hundreds of millions of dollars in restructuring changes—hundreds of millions of dollars as a result of this ill-thought-out policy which has been proposed by the Labor government and was introduced in the last budget. That is why, Senator Whiteaker, we are asking questions, and we will continue to ask those questions and hold the Labor government to account.

(Time expired)