Jun 17, 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015 – Second Reading

Mr ALBANESE (Grayndler) (17:28): There is something tragic about watching people lose their sense of reality as they succumb to fanaticism. As Napoleon Bonaparte once said:

There is no place in a fanatic’s head where reason can enter.

This is what has happened to this government when it comes to anything to do with Australian based shipping. There is one element of this legislation that is about removing the seafarer’s tax offset. Once again, this is yet another proposition by the government to increase the taxation that workers have to pay.

I notice that in his second reading speech, the Assistant Treasurer offered the view that abolishing the offset represented a step towards to ‘simplifying coastal shipping regulation in Australia’. Now, that is an extraordinary statement from the Assistant Treasurer, because the seafarers offset has absolutely nothing to do with coastal shipping—with domestic shipping taking freight from one Australian port to another around our coast.

The seafarers tax offset was introduced by the former Labor government in 2012 as part of a package of reforms aimed at revitalising Australian shipping. These reforms included changes to taxation regimes to allow Australian based international shippers to compete with their international rivals on a level playing field. We did that in a very practical way. We did not do it in a protectionist way or in a regulatory way; we did it through micro-economic reform. We did it by introducing two tax changes: by having a zero rate in the form of company taxation for Australian ships that were registered on the Australian International Shipping Register and by having effectively a zero rate on Australian seafarers who worked on those ships.

What is interesting about the government’s approach is that they are not trying to repeal, through this legislation, the zero rate of taxation for the companies; they are just trying to change it for the workforce. That is consistent with the government’s very narrow approach.

This measure provided a rebate to employers of Australian staff for part of the income tax withheld while those staff undertake international voyages. It was a very effective measure indeed, which effectively would assist the companies, as well, which hire Australian seafarers to work on international voyages. The intent in creating the rebate was simple. We wanted to encourage the employment of Australian seafarers on ships. We wanted to see Australians involved in the international maritime industry. We wanted to see jobs for Australians.

What was the logic of this in terms of the debate that we had with Treasury and Finance? I must say that, when initially the proposition was put forward at the extensive consultative process that I established as the minister, Treasury and Finance’s starting instinct was not to support zero rates of taxation. But they did because they acknowledged the logic that was there, because, if Australian ships are going to compete with ships that are based in places like Singapore and other competitor nations—let alone some that are registered under flags of convenience in Third World countries—they have to have competitive rates of taxation. Similarly, if you are a seafarer who works in international waters for a lot of the time, you can very easily simply base yourself in a country such as Singapore that provides for essentially a similar regime to that of the seafarers tax offset—effectively, a zero rate of taxation.

It actually is a false cost to government because, unless you have this sort of policy, you will not have Australian-flagged vessels in international trade and you will not have Australian seafarers based in Australia engaged in that trade. And yet this government is attempting to repeal this, which is certainly not in the national interest.

The Assistant Treasurer in his second reading speech chose to conflate the offset with the ongoing debate about this government’s attempts to introduce Work Choices on water by dismantling Labor’s domestic shipping reforms. What we have here is a case of ideology overtaking reason. Last month, the Deputy Prime Minister and transport minister confirmed his intention to dismantle Labor’s 2012 Revitalising Australian Shipping package, which sought to use tax breaks and other benefits to strengthen the Australian industry. Part of his plan is to allow foreign-flagged vessels paying Third World wages to undercut Australian-flagged vessels operating between Australian domestic ports.

A rational person would accept that, if you work in Australia, whether you are moving freight by sea, air, rail or road, you ought to be paid in accordance with Australian law. But those opposite are not rational when it comes to the maritime sector. So obsessed are they with the Maritime Union of Australia that they are prepared to wreck an Australian industry to ensure that there are not Australian jobs in the maritime sector, because therefore you will not have Maritime Union members. It is an extraordinary proposition that they have.

The particular measure that is in this bill, though, is specifically about international shipping. But it is worth saying that, if you were carrying goods by road down the Hume Highway from Sydney to Melbourne, it would be an extraordinary proposition that Toll or Linfox should have to compete with someone who could bring in a Filipino based truck with Filipino based safety standards and therefore costs and overheads and employ a Filipino based driver with Filipino wages and conditions to drive down the Hume Highway. And yet what this government wants to do is this: if you go from Sydney to Melbourne on the blue highway off the coast, on a ship, you can do precisely that—a foreign ship with foreign standards, employing foreign workers, paying foreign wages and conditions. That is an extraordinary proposition. There is no difference between road or rail or air or shipping in terms of these issues.

The government has also tried to do this through the trade minister, who is still pushing to allow this to happen with foreign airlines in the northern part of Australia. He wants them to be able to come in and compete, and undermine the services that are provided by Qantas and Virgin and Airnorth and all of those operators in Australia’s north. This is nothing more than unilateral economic disarmament. This is saying, ‘Come in, take our jobs, take our economic activity, and we will get nothing in return’. There is no industrialised country in the world that allows a free-for-all around its domestic coast like this government is proposing. The junior minister, the Assistant Treasurer, did not seem to understand that the seafarer tax offset was not a part of that attack. That is a separate attack, I say to the Assistant Treasurer. It must be confusing for him—as he sits in meetings where there is wave after wave of attacks on the rights of the workforce in the maritime sector.

The ignorance of the Assistant Treasurer does not make him a lone soldier. The Deputy Prime Minister and transport minister—the person just a heartbeat away, the person who from time to time is acting Prime Minister of this country—spoke at a Shipping Australia function on 20 May. He surprised his audience when he indicated, in response to a question, that this seafarer tax offset had already been repealed. He did not know! The Deputy Prime Minister was asked if the government would do anything with tax incentives for Australian business, like those in Europe where there is accelerated depreciation in tax rebates for seafarers. And he said in his answer: ‘Of course, there were some taxation measures in the previous government’s framework that have not been used, and I think they were actually repealed in the last budget.’ What an extraordinary statement from the Deputy Prime Minister. The truth is: the government has tried before to abolish this offset, and it was rejected by the Senate for good reason.

So this legislation represents the second time in two years that the government has sought to abolish this seafarer tax offset. Labor opposed this change the first time around and we will do it again. The former government introduced this as a part of wanting to see Australia as an island continent with a strong shipping industry. It is in our economic interest and our environmental interest—and it is in the interests of our national security—to have the Australian flag have a strong presence, not just around our coastline but around the seas, oceans and waterways of the world. We want to see the Australian flag flying on the backs of ships working our coastal trading routes and around the world.

The way the rebate works here is not really targeted just at employees; it is a payment provided to employers to encourage them to employ Australians. Once again, that is something the Assistant Treasurer just did not seem to get at all. The government sees the shipping sector not as an industry but just as an input cost to every other industry. Maritime Industry Australia, known previously as the Australian Shipowners Association, and Shipping Australia both support this offset. They are both industry bodies—the Australian based industries and indeed the foreign shippers that engage in Australia both support this offset, which came after an extensive process.

We will oppose this, as we will oppose the government’s ‘Work Choices on water’ agenda. We believe it is in the national interest to have this proposition opposed. I do say that the major players in the shipping industry, including CSL and ANL, have told the government that the so-called red-tape burden under the post-2012 system is no different to that which preceded it. In a submission to the departmental review of coastal trading last year, CSL said this:

The cost impost on Australian shippers of engaging coastal vessels on coastal trades since the introduction of the Coastal Trading Act in July 2012, as a standalone piece of legislation, is minimal.

ANL also supported the current regime.

We will oppose the abolition of the seafarer tax offset because it is not in the national interest. (Time expired)