Minority Report - Senator Sherry
OVERVIEW
The Opposition does not
support the majority recommendation that the bill be passed in its current
form.
Whilst Labor does not oppose
this legislation, the Opposition members are of the view that the policy
underlying this Bill is seriously flawed in a number of aspects.
The evidence presented to the
Committee has reinforced that view. Accordingly Labor will be recommending a
number of amendments to the Bill.
DISCUSSION
This Bill seeks to enact the
measures announced by the Treasurer in his Press Release of 14 February 1997,
namely the immediate termination of the Infrastructure Borrowings (IB) tax
concession arrangements. The Opposition considers that the announcement was a
gross-over-reaction to the situation faced by the Development Allowance
Authority (DAA) and was certainly not the only sensible reform option that
could have been pursued.
This Government increasingly
categorises tax concessions which are being effective as being rorts. This was
the same scare campaign that was raised in the debate on the research and
development concession. When the Opposition pursued actual evidence to justify
the Treasurer's claim that the concessions were being rorted none was provided.
Similarly, there has not been
substantive evidence provided either by the Treasurer at his press conference
nor in evidence before the Committee yesterday of actual rorting on a scale to
justify the complete abolition of the IB arrangements. Despite these
limitations, the Opposition does accept that the provisions could be abused and
consequently will not oppose the Government's proposal to redesign the IB tax
concession.
That said, there remains a
significant issue concerning the equitable treatment of those projects who
would, in the normal course of events, have been certified by the DAA. These
projects, referred to hereafter as transitional projects, have been
unreasonably affected by the pre-emptive announcement of the Treasurer.
The Opposition sees two
distinct categories of transitional projects. 1) Those which had applied to
the DAA before 14 February 1997 and have had their application certified after
14 February 1997; and 2) those which had applied to the DAA before 14 February 1997
which still await certification.
Evidence provided to the
Committee shows that six projects fit into category one; namely the Parkeston
Power Station, the Brisbane Airport Rail Link, the Bairnsdale Co-generation
project, the Port Stephens Sewage Processing Facility, the Redbank Power Station,
and the Oakey Power Station.
That is, these projects have
complied fully with the law and have been certified as such by the relevant
authority. Despite this, the Bill seeks to retrospectively nullify the
certification of all of these projects except for the two projects which had
section 93P letters from the DAA prior to the Treasurer's announcement on 14
February 1997. These two projects are the Bairnsdale Co-generation project and
the Brisbane Airport Rail Link.
The Opposition does not
accept the rationale proposed in the Bill.
We regard it as unarguable
that the de-certification of projects under this legislation amounts to
retrospective legislation. Whilst there is sometimes justification for moving
retrospectively against blatant tax avoidance, there is no justification for
undertaking this extraordinary step in the case before the Committee.
Understandably the project
proponents are appalled at the way they have been treated. Many of these
category one projects were approaching commencement and some had even entered
into contractual arrangements. Now they are facing a completely different regulatory
regime.
The Opposition members notes
that evidence given to the Committee yesterday was that one of the projects,
the Redbank Power project, would have actually commenced construction on Monday
26 May 1997. That is, at least one of the se projects would have actually
commenced by now had it not been for the over-reaction of the Treasurer.
Evidence before the Committee
indicated that around 1,000 jobs, jobs that are sorely needed in the Hunter
Valley - especially given the tragic decision regarding the future of the steel
industry in Newcastle - have now been put at risk due to the proposed
de-certification of the Redbank project.
Clearly the Bill has already
cost jobs and will continue to cost Australia jobs unless it is amended.
The Opposition is concerned
that the de-certification of the other projects mentioned above will involve
further job losses which will impact on regional development. Accordingly, we
will be moving to amend the legislation to ensure that all category 1 projects
will be able to retain that certification.
Secondly, the Opposition is
concerned that other projects which fall within category 2 will also be
unfairly disadvantaged by the current Bill. Many of these projects are
especially important in the context of regional development.
Evidence was provided
concerning one such project at the Committee hearings, namely the Central West
New South Wales Gas Pipeline. Planning for this project has now been severely
interrupted due the decision to exclude such projects from eligibility.
The Opposition opposes the
blanket exclusion of this and all other category 2 projects from the IBs program.
We note the Government's intention that these projects will be able to qualify
for the new IB arrangements, however, given the inadequate funding and the
inevitable delay involved in any new arrangements the Opposition remains
sceptical of the Government's proposals.
We do recognise, however,
that not all of the applications lodged with the DAA should be automatically
certified. Accordingly, arrangements need to be made to allow certification to
proceed for those category 2 projects.
RECOMMENDATIONS
That the bill be amended to
ensure
- that all projects
which have been certified by the DAA retain that certification
- that there be a further opportunity for
certification for those projects which are important for regional development
and regional employment, do not involve aggressive tax structures and which
will be ready to commence within a reasonable timeframe.
Senator Nick Sherry
Australian Labor Party
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