Anne Stanley (Werriwa, Australian Labor Party) Share this | Hansard source

The PwC scandal—there can be no other word for it—is of such proportions and magnitude that it is unprecedented in this country. It was a catastrophic failure on so many levels, and it highlighted and exposed huge loopholes and shortfalls in the regulatory framework. I suspect there will continue to be fallout from the scandal for years to come. The government inherited the regulatory mess from the previous government, who largely ignored some of these issues for years. Unfortunately we can't ignore it any longer. It's time to act. I'm pleased to rise and speak today to detail the significant steps that this government is taking to ensure that the concerns the scandal highlighted are addressed and the environment that allowed it to continue can't happen again.

The PwC scandal goes much further than just a breach of handling of sensitive government information. If that were all it was—as bad as that is—we would have been grateful, but the issues go much further and are much more dire. What the scandal really shows, and what it exposes, is a total disdain and disregard to our tax laws. Further, it highlights the huge barriers faced by regulators to respond and a regulatory framework that does not provide appropriate oversight in governance. If we are to rebuild trust and restore people's faith in our tax system, then we need to come down heavily on misconduct and build stronger structures and systems. The work to rebuild this trust, to restore the confidence of Australians, has already begun.

To this end, I am proud of the fact that earlier this year we introduced new legislation to strengthen the Tax Practitioners Board and increase the board's funding by $30 million to increase compliance activities. We've also directed PwC to remove any staff involved with the confidentiality breach from contract work until the outcomes of the Switkowski review are known. But more is required, and that brings us to the matter before us today.

Schedule 1of this bill addresses tax agents and others who advise their clients on how to avoid Australia's tax laws. Astonishingly, current tax promoter penalty laws have remained largely untouched since they were created and have only been applied six times. That's not good enough. Schedule 1 will increase the maximum penalty for promoters of tax schemes, expand the scope of promoted penalty laws and give the ATO more time to identify and penalise promoters.

The aim of these changes is clear. Bigger penalties will ensure promoters face the consequences of their actions and, more importantly, it will deter them from acting improperly in the first place.

Schedule 2 extends the tax whistleblowers protections, as those who report misconduct need to feel safe. Consequently, these changes extend whistleblower protections to those eligible who make disclosures to the Tax Practitioners Board, the TPB. This change responds to key recommendations of the independent review into the TPB and the Tax Agent Services Act 2009.

Schedule 3 refers to the reform of the Tax Practitioners Board. Our regulators need the right tools to identify and discipline those who break the law. Therefore, schedule 3 enables the TPB to conduct more thorough investigations and gives it more time to address complex misconduct, particularly relating to large firms such as PwC.

Schedule 4 will amend limitations in the tax secrecy laws and the Tax Administration Act 1953 that were a barrier to regulators acting in response to PwC's breach of confidence. This reform is necessary because the PwC scandal shows that regulators were limited by overly prescriptive restrictions on information sharing. These amendments will strengthen the power of regulators and boost coordination within the government to identify and pursue breaches of confidence or ethical misconduct. It will act as a deterrent to future misconduct by tax advisers.

Finally, schedule 5, which was open to public consultation from 21 August 2023 to 15 September 2023. This schedule addresses the findings of the two comprehensive reviews which were conducted into the petroleum resource rent tax, the PRRT, and whether or not it was operating as intended for the offshore liquified gas industry. To date, not a single LNG project has paid any PRRT, and most are not expected to pay any significant amounts before the 2030s. The change will ensure that offshore LNG projects make a minimum payment sooner by introducing a cap on the use of deductions from 1 July 2023. These changes will be brought forward and ensure a minimum payment of PRRT from the LNG projects. It is expected these changes will increase the Australian government's tax receipts by $2.4 billion over five years from 2022-23.

Time and again over the last 18 months or so, the government has had to address matters largely the result of the previous government's neglect or inertia. This is another one. The bill before us today represents the biggest crackdown in tax adviser misconduct in Australia's history. More importantly, it's about restoring faith and trust in the tax system, and Australians deserve nothing less. I commend the minister and his staff in the department for the work on this bill. I commend the bill to the House.

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