Susan Templeman (Macquarie, Australian Labor Party) Share this | Hansard source

I'm really pleased to be rising to speak about a range of the elements in the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 and the Capital Works (Build to Rent Misuse Tax) Bill 2024, and I'm going to work through them. First of all, I want to talk about the incentives in here for build-to-rent developments. We need to build more homes, and it goes without saying that we need to do it quickly, right across Australia, including in Macquarie. Our ambition is 1.2 million homes by the end of the decade, and the $32 billion in new commitments that we've made is aimed at stimulating construction in housing in a variety of ways—homes for buyers and homes for renters.

One key element is homes that are built to rent. It's where developments are specifically designed to be rented out, rather than sold off to individual buyers. This is an underdeveloped market in Australia compared to other places, including the US and the UK. Currently, here it's been more focused on luxury housing, but we want to see it used to increase rental housing supply more broadly—including, and especially, in the area of affordable housing. These moves we're making are designed to supplement, not replace, other forms of rental housing with this build-to-rent element so that we are actually expanding the housing supply.

For eligible new build-to-rent developments, there are a number of provisions that are in there. One is that we're reducing the final withholding tax rate on eligible fund payments from managed investment trust investments to 15 per cent. This is to provide an incentive for those trusts to do this work. We're also increasing the depreciation rate for capital works in eligible projects to four per cent a year. That's up from 2.5 per cent—another incentive. While that might not sound earth-shattering, what we know is that they're the sorts of incentives that we need to get people to really look at this sector as an asset class and genuinely invest at scale.

The way build-to-rent developments will work is that there has to be a minimum of 50 apartments or dwellings, with a minimum lease term of three years for each dwelling. So they are large developments, and they're big investments. The development must be held under single ownership for at least 15 years, and at least 10 per cent of the dwellings in new developments assisted by these measures must be tenanted on an affordable basis so that we're delivering a more long-term, affordable rental supply.

The affordable dwellings must have their rent set at 74.9 per cent or less than the market rent of a comparable dwelling in the same project. For tenants to be eligible for affordable housing, their household income must be under the required income limits, which are set according to the composition of the household. The affordable dwellings are required to be comparable to the non-affordable dwellings, ensuring that affordable and non-affordable dwellings are of equal quality—because that's what people deserve. They have a right to have quality housing.

These measures will apply from 1 July this year. This is yet another piece in the suite of programs and incentives that we're providing, because housing is a priority. Increasing the housing supply is a huge priority for us, and I am pleased to see that this aspect is covered in this bill.

The second schedule of this legislation relates to buy-now pay-later. Buy-now pay-later is something that's actually been around since the 1800s, and back then Singer, the sewing machine company, established the 'a dollar down, a dollar a week' plan in order to buy your sewing machine. That's a little bit before my time, but I well remember lay-by. In the 1970s and 1980s I was a big fan of lay-by, and the way lay-by has moved to buy-now pay-later is the evolution to the 21st century. There's way more instant satisfaction in being able to take the goods with you, and unsurprisingly it's been a hit with Australians. We were early adopters of it, and in fact roughly 40 per cent of Australians have used buy-now pay-later, according to the latest data, and it's especially popular with younger people.

But what we know is that it can lead people into some difficult situations, and a study a couple of years ago by Good Shepherd found that 73 per cent of financial counsellors said their clients had missed other payments, cut back on essentials or even gone without in order to pay and service their buy-now pay-later debt, and the risks of that impact are disproportionate for vulnerable Australians, including First Nations Australians and those who are struggling financially. Right now there is no regulation of buy-now pay-later under consumer laws, and, while other products like credit cards and personal loans are regulated under the credit act, that hasn't been the case for buy-now pay-later.

Of course it's fantastic for small business to be able to offer the tool of buy-now pay-later, and so the regulatory framework that we're putting around it is designed to operate in a way that's flexible, adaptable and proportionate to the risk of consumer harm. The buy-now pay-later arrangements generally involve a third party providing the consumer finance to cover the goods and services, the buy-now pay-later providers paying the merchant the value of the purchase upfront and then those providers collect the repayments in instalments from consumers. That leads to some challenges because there can sometimes be poor product disclosure, inadequate dispute-resolution processes, excessive default fees and unaffordable lending practices.

These proposed amendments will require buy-now pay-later providers to hold an Australian credit licence and comply with existing requirements under the credit act, including in relation to product disclosure, dispute resolution and hardship assistance. The buy-now pay-later providers will also be subject to responsible lending obligations. However, providers of products that meet strict fee caps, meaning that they're categorised as low-cost credit, will have the option to comply with a modified responsible-lending obligation framework that allows certain requirements to scale down in proportion to the risk of the product. We want to see people be able to access products and have a different form of credit—in fact a cheaper form of credit. That's what buy-now pay-later has done; it's really brought competition into that market in a lot of ways. But these changes will ensure that Australians can continue to enjoy those benefits while receiving appropriate protections.

Another part of this piece of legislation is around multinational tax transparency. This is one element of a suite of things that we are doing to make sure that multinationals pay their fair share of tax on the profits that they derive from Australians. There's an exposure draft out for legislation to implement the global and domestic minimum corporate tax rate of 15 per cent to make multinationals pay a fair share, and that also builds on legislation to stop multinationals claiming excessive debt deductions that see them reduce or avoid tax in Australia. But this part in this piece of legislation is around transparency.

The bill ensures multinationals are held to account on their tax affairs by requiring large multinational enterprises with a material presence in Australia to publish certain tax information related to the jurisdictions in which they operate. This measure delivers on our election commitment to ensure multinationals pay their fair share of tax by enhancing transparency around those large multinationals operating here.

We've listened to the feedback during the process of this legislation moving through parliament, and there have been some key changes based on stakeholder feedback to more appropriately balance the compliance burden associated with complying with these rules and to better align Australia's regime to existing public country-by-country reporting frameworks—things like delaying the start date by 12 months and introducing a materiality threshold to be subject to Australia's regime. That's a $10 million Australian sourced turnover.

This bill is due to come into effect from 1 July, assuming it passes this place, and the changes, which have been welcomed by stakeholders, mean that our country-by-country reporting rules represent a significant step forward in global tax transparency by improving the quality and accessibility of tax information in the public domain while minimising unnecessary compliance burdens on reporting entities. It really builds on that global trend to help inform the public debate on the tax affairs of large multinationals.

I want to make mention of one of the entities who will, as a result of this bill, be listed and eligible for DGR status, and that is the International Campaign to Abolish Nuclear Weapons, ICAN, Australia. ICAN is a homegrown Australian organisation that has gone to the world and achieved a treaty that 70 nations have ratified and more have signed, to adopt the UN Treaty on the Prohibition of Nuclear Weapons. It's an amazing organisation. I'm very proud to have worked with them. They rightly deserve the recognition that they have received, and I hope this supports the ongoing work they do so that we can achieve the objective of having a world that is free of nuclear weapons.

The last part of the schedule that I'd like to refer to is the $20,000 instant asset write-off for small-business entities. What this does is extend by 12 months the ability of small businesses to access the $20,000 instant asset write-off. As a small-business person, I have certainly benefited by using instant asset write-offs in my business, buying small pieces of equipment or things that you can get an instant tax deduction for, rather than have it depreciate over many years. This will allow small businesses with aggregated annual turnover of less than $10 million to be able to immediately deduct eligible assets costing less than $20,000 until 30 June 2025. It'll apply on a per asset basis so small business can buy multiple assets and be eligible for this tax write-off. This was something that Labor invented. We are the first government to bring this in, and it has been embraced by both sides of parliament. The assets costing $20,000 or more can continue to be placed into the small-business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. So, for larger assets, there is still an ability to have some additional tax benefits in buying those.

As a small business, coming up with the cash is often a challenge for reinvesting in your business, but I know being able to do it at the end of the financial year and get that asset write-off makes a real difference. We will continue to look for ways that we can support small business in the good times and the tough times.

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