SUBJECTS: Employee share schemes, Budget, MP Entitlements
Chris Bowen, the Government wanted to close a tax loophole but it ended up shutting down a lot of employee shareholder arrangements – that was not the plan?
Well we were faced with a situation in the Budget where we support employee share ownership schemes, but we also needed to protect the long term revenue base and make sure everybody is paying there fair share of tax, and also to ensure a return to budget surplus, and contribution to that from this particular measure.
So we are going to proceed, but of course with all our tax measures - a regime this government put in place when we came to office - is that we consult on the implementation. And what I have said that of course as we consult, if we find in consultation with the industry that there are ways we can achieve that same result which assuages some of their concerns, that would be the sensible thing to do, and of course we would do it.
So in an ideal world it is better to consult before you make a decision than after surely?
Well look we have instituted a very comprehensive regime of consultation on our tax changes, we did that when we came to office, but the tax industry accepts that budgetary matters will always be different, that budgetary matters are announced on Budget night and then there is discussion after that. That is well accepted.
In such a big budget, where we have spent so many hundred of millions of dollars, you are always going to get an element of fine tuning here and there in consultation to meet the same objective, to raise the same amount of money to ensure the integrity of the revenue base, but to assuage peoples concerns which in some cases may be misplaced, but certainly to deal with those concerns as we go through.
So you still believe there is a problem there, with these schemes that tax is avoided and deferred improperly?
Even the strongest supporters of the scheme, and I am a very strong supporter of the schemes, but even outside the government, the very strongest supporters of the schemes, several of them have said 'we acknowledge the problem, we support your efforts to fix the problem, we have different ways of fixing it, but we acknowledge what you are trying to do'.
So I think that is pretty well accepted that there are some people, and with any scheme you can get really good schemes, that some people try and use as tax loopholes and give everyone else a bad name. What we are seeing now is a recognition from the sector that there is an issue, and their willingness to work with the government to fix it, which I certainly welcome.
And when you are looking at fixing it, is the essential element in these employee share schemes, this threshold of $60,000, is just to low?
Well look, we will be talking that through. As I say the bottom line for us is we what to raise the same or a very similar amount of money for the budget. We also want to ensure that the opportunities for tax minimisation are minimised and we have put in the budget this measure to do it.
I will be consulting on the detailed implementation and it would be wrong to do otherwise, wrong not to consult, we have said for some time that we would consult, and what I have said is that if there a sensible way forward which comes out of that consultation which enables us to achieve the same or a very similar result, of course we would do that.
Now let me just ask you quickly about another economic issue, which are calls for an audit on the electoral allowances that go to politicians separate from their pay. $32,000 a year, $8 million a year in total. It is going out, it is not being audited, no-one knows really how it is being spent – do you think it is a good idea to audit that?
Look at the end of the day it will be a matter for the Special Minister of State and the Prime Minister, but look I would just say this - across the board, politicians of all parties, Labor Liberal and the others, I don't think there is any that is out there actively rorting or trying to make money in an untoward fashion.
There are a lot of checks and balances already on politician's entitlements, and that is appropriate, that is the system we live in, and we have a very different system to systems overseas that you have seen recently, have been in the news.
There is a lot of accountability in our system, but look, matters of further tightening at the end of the day are a matter for other ministers.
Okay Chris Bowen, thank you very much.