Feb 15, 2007

Costello drops the ball on infrastructure

COSTELLO DROPS THE BALL ON INFRASTRUCTURE

Joint Media Release

Anthony Albanese – Shadow Minister for Infrastructure and Water

Manager of Opposition Business

Chris Bowen MP – Shadow Assistant Treasurer

Shadow Minister for Revenue & Competition Policy

15 February, 2007

Questioning during Senate Estimates has confirmed that reform of the tax treatment of infrastructure investments is simply not a priority for the Government.

A Treasury bureaucrat indicated that there were ‘other priorities’ ahead of introducing the long awaited tax reforms to infrastructure financing that were originally released for public comment on the 26th June 2003.

This is despite the former Assistant Treasurer saying in 2003 that “these provisions are in urgent need of reform.”*

“If this is how the Government deals with urgent reforms, I’d hate to see how they deal with something that is on the back burner,” said Chris Bowen, Labor’s Shadow Assistant Treasurer.

“This Government has become expert at legislation by press release, but press releases do not help industry in dealing with these provisions which stifle investment.

“The Treasurer has had three-and-a-half years to bring forward the legislative changes that would reduce the tax barriers to private investment in infrastructure,” said Anthony Albanese, Labor’s Shadow Minister for Infrastructure and Water.

“The time for talk is over. The time for action is now.”

The Howard Government first committed itself to reforming Section 51AD and the associated Division 16D (ITAA 1936) in May 2002 and to introducing the required legislative changes into the Parliament in the Spring Sittings in 2003.*

In delivering the 2004 Budget, the Treasurer said:

‘Mr Speaker, the provision of quality physical infrastructure is crucial to increasing efficiency and productivity in the economy.’

“The Treasurer acknowledges the linkage between infrastructure investment and productivity growth but when given the opportunity to act he does nothing,” Mr Albanese said.

The Australian Chamber of Commerce and Industry (ACCI) has been arguing for reform in this area since at least 2004, stating that:

‘Section 51AD and Division 16D of the Income Tax Assessment Act should be reformed as they impede investment in infrastructure.’**

“The Treasurer or the Assistant Treasurer should bring in a Tax Bill into the Parliament as a matter of urgency,” Mr Bowen said.

* Media Releases – Ministerial from Assistant Treasurer Senator The Hon. Helen Coonan (14th May 2002 & 26th June 2003)

** ‘Business Calls for Second Wave of Tax Reforms’, Statement by Peter Hendy CEO, ACCI (16th November 2004).

SENATE ESTIMATES – SENATE STANDING COMMITTEE ON ECONOMICS

TREASURY PORTFOLIO

14th February 2007

Subject: Discussion on proposed reforms to Section 51AD and the associated Section 16D of the Income Tax and Assessment Act 1936.

Senator Sherry: What were the reasons…it’s been a lengthy process, are there any reasons in particular, for the length of that process?

Mike Callaghan (Executive Director of Revenue Group, Treasury): Hard to point to particular factors. It’s been extensive consultations, there’s been other …(inaudible) it’s fitting in terms of other priorities that both the government and taxpayers are working on.