Senator RYAN (Victoria) (1:46 PM) —I rise to speak on the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008. I was not in this chamber when the bill first came before the Senate in June last year. The substance of the bill is the same and can be summed up as the government trying to kick with a 10-goal breeze for all four quarters of the grand final, because it is a blatant and disgraceful exercise in self-interest by the Australian Labor Party.
This so-called piece of reform achieves nothing in the way of substantive reform. It cherry-picks key measures that will avoid significantly damaging or limiting the electoral chances of the Australian Labor Party and their opportunity to raise funds at the expense of the taxpayer, assisting their re-election chances while doing much to harm the involvement of ordinary citizens in the political process and to damage the interests of other political parties. An unfair playing field is against the interests of all Australians, it is against the interests of all political parties and this bill should be treated with the contempt it deserves.
As I mentioned, this is not the first time it has been before this chamber and it appeared as Tax Laws Amendment (2008 Measures No. 1) Bill 2008 last June. It will amend the Income Tax Assessment Act to remove tax deductibility of contributions or gifts to political parties, Independent members of parliament and Independent candidates for parliament. It will also ensure that GST treatment of candidates is altered to reflect the government’s policy. The coalition in the past opposed this bill because tax deductibility of political contributions was an ongoing part of a broader inquiry by the Joint Standing Committee on Electoral Matters into the 2007 election and, generally, into political funding. Senator Ronaldson commented extensively on the importance of this broader reform process and on how the government had claimed to be interested in broader reform.
As indicated by the minority report of the Joint Standing Committee on Electoral Matters into the original bill, the coalition strongly believes this issue should be deferred to become part of a broad based comprehensive reform when the committee’s full report comes out. I understand that the committee is meeting at the moment or was meeting at the commencement of this debate. It has released an interim report, but it is still months off its final report and the Senate does not have all the information. Senator Birmingham outlined that the tax deductibility information and the cost of that are very difficult to ascertain. The information about who donates and who makes the claims is very difficult to ascertain, and that is currently before the joint standing committee. Furthermore, it is absurd in the extreme on the government’s part to be bringing a substantive change of this nature before we have actually seen the final report of the joint standing committee and, indeed, the government’s white paper into electoral reform.
What we actually have at the moment, as Senator Birmingham and Senator Ronaldson have outlined, and what we saw over the last two days have had much more dramatic impact on people’s faith in the political system than anything that Senator Faulkner or the government have raised. We have seen an extraordinary amount of money spent over the last 12 months by the government. It was over $100 million and the only way to describe it is ‘American in scale’. The returns were delivered yesterday and were covered in today’s press. As has been mentioned elsewhere, the unions gave Labor $9.2 million in donations and a total of $37.6 million in overall campaign funding—indeed, the direction of the trade unions’ spending was very clear during the campaign.
It takes a degree of ridiculousness, if I could use that word, to actually say that the coalition is holding up electoral reform only a day after the Australian Electoral Commission released such extraordinary numbers to show the impact of trade unions on the last election. Given the lack of adequate or appropriate information about what individuals below that threshold have done, we need to have all that before the Senate.
This legislation has very important ramifications. The rules need to be fair in politics for them to be widely accepted and to generate public faith. There are some very serious impacts in this bill that I would like to cover. We all know that the trade union movement is the industrial wing of the Labor Party or, as it was historically described, ‘the Labor Party was the political wing of the trade union movement’. While it might occasionally, in my home state of Victoria, throw a bit of money towards the Greens it is nothing but scraps off the table compared to what the ALP gets from the trade union movement.
Trade unions do not exist nor funnel their money to support the Liberal Party, the National Party, the Greens, Family First or any Independents. What they do is collect money from their members—in certain sectors, interestingly, through compulsory levies for members—in order to fund political campaigns to see the election of their political wing, from the ranks of which so many members of this government have been drawn.
The removal of tax deductibility entrenches a massive advantage to the Labor Party through the unique position of trade unions. The disadvantage is straightforward and I will provide some numbers: $100 donated from a union to a political party or a candidate is effectively tax free because a union is an exempt body and the money from the member to the union is considered a tax deduction. But if an individual wanted to donate that money and they were on the 30 per cent marginal tax rate it would actually cost them $146. If a business that was paying the corporate tax rate wanted to provide that money it would be $142. It would not matter to whom they wanted to give the money. The point here is the difference in status between trade unions and everyone else in the community because of the unique tax exemption enjoyed by trade unions.
If we apply some of these numbers to the extraordinary numbers we saw released in yesterday’s press, they are even more significant. If we talk about a premium of $46 for individuals, that may not sound like much. But, when we see trade union members from all around Australia being levied $100 here and $200 there to fund political campaigns which are openly partisan and not just political in their nature, these insignificant amounts of money add up. If we actually go through the figures recently released by the Australian Electoral Commission, we have $9.2 million in donations from the various unions: $1.5 million from the Shop, Distributive and Allied Employees Association; $1.3 million from the Construction, Forestry, Mining and Energy Union; $1 million from the Communications Electrical Plumbing Union; $765,000 from the Australian Liquor, Hospitality and Miscellaneous Workers Union; $674,000 from the Electrical Trades Union; and significant sums from the Australian Manufacturing Workers Union, the Maritime Union of Australia, the Australian Workers Union, the Health Services Union, the Transport Workers Union, the Australian Services Union and the National Union of Workers.
We heard Senator Bishop talk, without any sense of irony, about the impact in the United States of setting up tax preferred political action committees, which are allowed to exert influence on the political process. We have those groups in Australia. We call them trade union officials. No-one else has a tax exempt status that allows them to collect millions of dollars to spend on a campaign or donate to their preferred candidates. And let us not forget that with that money come votes on the conference floor of the Labor Party. With the trade unions and the millions of dollars they collect might come 10 per cent of the delegates on a conference floor and a seat at the factional negotiating table, particularly around the Victorian ALP at the moment, where they carve up the seats in parliament—there will be a shoppie here and someone from the NUW there. Even the newspapers now describe members of the Labor Party not just as Socialist Left or Labor Unity but as representing a trade union. In fact, people in this chamber have done that themselves. No other organisation in Australia has this benefit. And let us not let the Labor Party dismiss this: the only groups in Australia that are the equivalent of American political action committees are the executives of our trade unions, who sit around doling out millions of dollars to their preferred candidates, factions and parties. Nothing has been mentioned about the money that we know exists in brown paper bags to pay for the other activities that happen within the ALP.
I would now like to provide an example of what might happen if trade unions were taxed. They donated just over $9 million to the Labor Party. If they had had to pay tax like any other corporate entity at the corporate tax rate or like any individual, they would have paid 30 per cent tax on that money and would have only been able to donate $6.4 million. That nearly $3 million, or $2.8 million, is in effect a subsidy from the Australian taxpayer, not to the political process—I note the comments of Senator Ludlam and Senator Xenophon about public funding—and nor is it a subsidy to all political parties or even to all members of this place; it is a subsidy to the Australian Labor Party. And that is what this bill entrenches.
This bill entrenches a tax advantage for the Australian Labor Party and their industrial wing. If individuals and businesses had got together and tried to run a campaign of the scale of the trade unions’ campaigns in the lead-up to the last election, it would have cost them over $38 million, if you assume a 30 per cent tax rate. Again, this is effectively a $10 million-plus subsidy to the Labor Party or a $10 million disincentive to individuals and other organisations in this country to participate politically, purely because they are not a trade union.
Senator Birmingham outlined the ridiculous argument put by the government that somehow public trust in Australian politics has been reduced by my mother or someone else or by a small businessman coughing up $500 to the local candidate whom they have known for a few years. Yet they are not concerned about the million dollars that the shoppies handed over. It is utterly ridiculous in the extreme to make that accusation.
Senator Birmingham also raised an issue about lobbyists, and again Senator Bishop referred to the power of lobbyists in the American system. We have evidence in the minority report, which Senator Birmingham highlighted, that if you are a lobbyist you can shell out all the money you want if it is an expense you have incurred in business. Is this just an official way of selling access? All this does is say that, if you are buying access as a lobbyist, you get to claim a tax deduction. But if mum and dad who own the local milk bar or the local newsagency or the local pharmacy want to cough up $1,000 to someone they have known for 10 or 15 years who is involved in the community, then they do not get a tax deduction. This is ridiculous in the extreme. This actually skews the political field so far in favour of corporatism that it goes against the little person. It does not matter whether you are an individual, whether you are a small business person or whether you are a shareholder of a company, for some reason under this bill they all get a status in the political process different to that of individuals who happen to be members of a trade union. I know trade union membership has been collapsing, but I did not realise that trade unions would go to this extreme to skew our political process to bring their membership back to higher levels.
I will conclude my remarks. Senator Faulkner talks about ending the arms race. Senator Faulkner is acting like the Kremlin in Soviet Union days. They went around the world preaching disarmament and funding disarmament groups, but what they were doing at the time was amassing arms. Labor want a tax advantage to magnify the outrageous figures we saw yesterday coming from large organisations. They also want to say to Mr and Mrs Australia: ‘You have no role in our political process. The union gets a donation but you don’t.’ This bill should be rejected for the extreme and outrageous proposal that it is, which is to skew the Australian political process in favour of one side at the expense of all citizens.