Zali Steggall (Warringah, Independent) Share this | Hansard source

Today I rise to speak on the Treasury Laws Amendment (Tax Incentive and Integrity) Bill 2024. For many, this is essentially an omnibus bill that brings together a number of schedules covering the very different areas it touches on. The omnibus bill tries to close loopholes and encourage transition to electric vehicles in one of its schedules. It has three key parts. First, it tightens up the luxury car tax rules, but it really does not go far enough. It introduces that only electric and plug-in hybrid vehicles qualify for tax breaks. I will say more on that in a minute, because there is an issue around this remaining area of plug-in hybrids. The second part of the bill removes the ability to deduct interest charges on tax liability. The third schedule extends the ATO's notification period for retaining BAS funds from 14 to 30 days. Some of these changes are necessary and overdue; however, there are concerns regarding unintended impacts, in particular in relation to the second schedule and the impacts on small business.

First of all, on the luxury car tax changes. We know, from a decarbonisation point of view, transport is a low-hanging fruit. It is an area where we can and must accelerate our decarbonisation. The world is transitioning; we do not have a local car manufacturing industry, so we have to, as a matter of urgency, move towards electric vehicles.

There is a lot of misinformation as to the safety and the range of electric vehicles. Much of that comes from those trying to hold back, trying to hold onto fossil fuels and old combustion engines. The reality is a number of players in the field are improving the issue when it comes to access to charging facilities in our regional and urban areas. I know that the NRMA and others are installing a lot of fast-charging facilities.

The reality is most average users do not do a huge number of kilometres, and the range of electric cars is absolutely sufficient. I have, for example, travelled by electric car from my electorate down to Canberra. I've gone to Jindabyne and to the Snowy Mountains. I've done a number of long journeys and there is a really good network out there. This constant misinformation seeks to drive doubt around range and encourages people to think that they have to hold onto the past when it comes to combustion vehicles and needing ongoing reliance on fossil fuels.

We know the Sector Pathways Review and the Climate Change Authority put out sector pathway recommendations, but they're really not sufficient. They're not driving enough ambition yet. We know, when it comes to our transport sector, that we need to get to net zero. We have the ability to do that. The first and easiest way is around passenger vehicles. That fleet needs to get to net zero. I've been on a number of inquiries, and the amount of misinformation that still gets peddled out there is quite staggering really. The reality is the faster we transition to fully electric vehicles, the sooner we cut emissions, and we reduce our reliance on fossil fuels. We really cannot afford to delay.

There is a silver lining to this as well, which is noise pollution. Anyone who has travelled in an electric vehicle will know that respiratory illnesses, noise and all those aspects are improved so significantly. We are developing more solutions when it comes to electrification of heavy transport as well. But this legislation, whilst it is closing a little bit of the loophole around the tax incentives and definitions around electric and plug-in hybrid—as I said, it's keeping this loophole for plug-in hybrids. I know there are regional members of government that have been lobbying to keep plug-in hybrids in this legislation. To me, it stems from that misunderstanding and the lack of experience of driving electric vehicles to understand that they deliver. For example, when it comes to the utes, I met with an Australian company—ironically in the electorate of the opposition leader, in Dickson. The AUSEV company are transitioning and making sure that we have fully electric, heavy-duty utes that can work on mines and other sites. This is an incredibly positive move, but I don't believe they receive support from their local member.

The reality is we still have too many loopholes. There are still too many people using passenger vehicles and utes that aren't always for commercial or trade use. These are heavy, dangerous vehicles on our roads, and are high-emitting vehicles. This loophole for utes that remains in the legislation is bad and needs to be addressed. I urge the government to address this. Stand up and put forward some serious plans to enable the transition to happen and close that loophole, when it comes to that.

The next schedule addresses the extension of the ATO's notification period for retaining refunds relating to the BAS statements in an important measure to combat fraud. With scams becoming more sophisticated, especially through social media, it's even more critical. As I understand it from the minister, the measure will provide the Australian Taxation Office with the breathing room they need to investigate and crack down on fraudulent statements. I support this. This measure appears to be fairly well founded, especially if it supports efforts to uphold tax integrity.

I am concerned, though, around protecting small business. Many in this place talk a big game in terms of small business, but the reality is, both for the major parties in opposition and in government, big business has their ear and all too often small business is mentioned—there's a lot of talk—but very little action occurs when it actually comes to putting detailed proposals that will help small business. With the question around the removal of interest deductibility on tax liabilities, I support improvements to tax integrity, but we must ensure, when we're closing loopholes, we're not in fact making it even harder for small businesses to survive. Through this change, there is a risk of disproportionately impacting small businesses who are already struggling with cash flow. While under this proposal the ATO will retain flexibility to remit in cases of financial hardships, it will require discretion from the ATO, and the feedback I get from small businesses in Warringah is they are not seeing any discretion or flexibility from the ATO. In fact, they are seeing a crackdown that makes it incredibly hard for them to remain operating.

To ensure that we do actually have sensible things that help small business, I have an amendment to suggest to this legislation to improve it. The government circulated an amendment to extend the instant asset write-off until 30 June 2025. We've been having a debate about this instant asset write-off for some two years now, and it's really unacceptable that the delay has meant that small businesses can't rely on it. They have no certainty, and they cannot make investment decisions for their business knowing that this is going to be available because it simply hasn't been. It's on the table and it's been announced, but then the legislation to give it effect isn't there. So a small business struggling with their cash flow cannot legitimately commit to an investment or to spending on the assumption that they may be able to write off that asset, because they might not be able to because the government and the opposition have not come together to pass the legislation necessary. It's really important that businesses get that certainty. This is a measure that was announced a number of years ago, and I have been trying to amend it for a number of years to give businesses more certainty—not last-minute slapdash amendments, especially now when we're looking at it in possibly the last sitting weeks before an election.

I again support the government introducing it, but I think we need to think about the quantum. In terms of investing in their new machinery and things that will actually make a difference, $20,000 does not really support small businesses. They need that asset write-off threshold, and that's why I will be moving an amendment during the consideration in detail stage to increase that from $20,000 to $50,000. That is what they're asking for. They are saying that, for meaningful investment in infrastructure or anything that will genuinely assist with the efficiencies of their businesses, that is where the threshold needs to be. It also needs to be made permanent. They need certainty.

Small businesses are the backbone of our economy. In Warringah alone, we have over 8,000 small business and 12,000 sole traders. They're driving innovation and creating jobs, strengthening our local economy. Last week I met with a group of small businesses and the chambers of commerce, and they are quite desperate. I can't convey that to the government clearly enough. They spoke of the impact these issues and other changes are having on their operations. They're feeling, with the increasing amount of regulation coming through, that the government is making it impossible to run a small business. They don't feel like they are cared for by the major parties or by the government at the moment. There is no assistance provided to help them wrestle with increasing pressures from an unstable economy. Their issues include the cost of compliance, the IR changes—the amount of changes in the last few years has made it impossible for them to keep up—the ATO being tough, the staffing shortages and the changes that have happened around immigration and visas, for example, which have also made it harder for them to sponsor visas. The cost of sponsoring staff to come and fill vacancies to be able to operate is huge. These are all areas that chip away at the viability of small businesses.

The numbers don't lie. In the last financial year, ASIC reported that small businesses in construction, retail and hospitality made up the majority of insolvencies. There have been many discussions, as I said, in this place about small business, but we need to actually get on to action. The Productivity Commission, in their Advancing prosperity report, as well as, increasingly, business groups, have argued that greater productivity measures are needed to help our economy and get small to medium-sized businesses moving. That can be paired with deregulation measures that favour small businesses, such as meaningful taxation reform and simplification on compliance reporting.

Small businesses have also continued to advocate for an increase to the limit of the instant asset write-off. The Australian Chamber of Commerce and Industry have said that a $20,000 threshold does not provide the necessary economic stimulus needed for small business. The National Electrical and Communications Association has argued that the cost of essential technical equipment far exceeds this limit and that an increase of the threshold to $50,000 is necessary. Whilst $20,000 may enable a small business to purchase small, short-lived assets, such as computers for an office, a fridge for the kitchen and those kinds of items, it's not sufficient for meaningful investment into equipment, plant and machinery, which will provide substantial productivity benefits.

Ultimately, we have growing economic uncertainty and we need to get rid of that risk element by making sure there is certainty. That is why making the instant asset write-off permanent is essential. It's so we don't get into political argy-bargy that means it's on again, off again. We know that that is so damaging. Whilst overall I support this legislation, I will be moving amendments to support small businesses in consideration in detail, and I urge the government to close the loopholes in the luxury car tax and get on with incentivising clean, net zero transport. Don't keep room for dirty combustion engines that do nothing to decarbonise Australia.

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