Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

I rise in continuation on the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021. Mr Speaker, if you hear the Morrison government speak about charities, you'd think there is an outbreak of lawlessness among Australia's charities, yet the facts speak otherwise. Over the past 3½ years, the charities commissioner has deregistered just two of the nation's 59,000 charities for breaking the law in pursuit of activist goals. That means the annual chance of a charity being deregistered for illegal activism is about 10 in a million, which is about the same as the chance that a typical Australian will commit a murder. But facts have never stood in the way of the Liberals' crackdown on charitable activism.

Their latest proposal would go further than the current law, extending the ability of the charities commissioner to deregister a charity for a summary offence or because the charities commissioner anticipates that the organisation will commit a summary offence. A summary offence might include blocking a footpath, trespassing or even failing to close a gate on a private property, and deregistration can occur because a charity promotes an event—for example, hands out flyers about it or simply puts it on their Facebook page.

This is of a piece with the way in which the Morrison government has engaged with the charitable sector—not a partnership working with them at a time when we've got an economic slump, half the nation under lockdown and a pandemic threatening the country, not a partnership that recognises the important work that can be done working with environmental charities on climate change, with social justice charities on poverty alleviation, with health charities on tackling COVID, but instead a war on charities. The Liberals introduced a bill in 2013 to shut down the charities commission. They wanted to kill the Australian Charities and Not-for-profits Commission, a one-stop shop that had been recommended by more than a dozen reviews, including a bipartisan recommendation from a committee in this House of which former Liberal Prime Minister Malcolm Turnbull was a member.

Then, four years later, after they realised that they couldn't get the crossbench to support killing the charities commission, they did the next best thing. They appointed, as head of the charities commission, Gary Johns. When did they do it? In the hours following the same-sex marriage vote, in a period in which they judged that Mr Johns's appointment would get least media attention. This was because they knew that putting Gary Johns in charge of the charities commission was like putting Bronwyn Bishop in charge of parliamentary entitlements. It was like putting Dracula in charge of the blood bank. This is a man who has criticised Indigenous women as 'cash cows', who has attacked charities such as Recognise and Beyond Blue, who has complained that there is a good deal of what he calls 'impure altruism' among charities. So it wasn't surprising that a senior figure in the charity sector described Mr Johns's appointment as charity commissioner as 'bizarre'.

Since the Liberals came to office in 2013, major charities have written three open letters to the Prime Minister complaining about attacks on the charitable sector. The latest attack is one which would reduce the scope for charitable activism. This is because, fundamentally, the Morrison government want legal charities to be talking about individual defendants, not discussing the broader issues of law reform. They want environmental charities to be planting trees, not talking about climate change. They want social justice charities to be running soup kitchens, not talking about the causes of child poverty. Former charities minister Senator Seselja, when introducing the changes, said that this was about a crackdown on 'activist organisations masquerading as charities'. That bells the cat. It's very clear that, in Senator Seselja's view and in the view of the Morrison government, so-called good charities don't do activism; so-called good charities are seen but not heard; they stay out of the way of the government.

This fundamentally misunderstands the important role that charities play in Australia's public debate. It misunderstands the fact that charities, whether they agree or disagree with the government's agenda, enrich the public conversation because they bring the lived experience of the people that they help and their vast experience of working across the sector. At a time when we have the degree of civic connectedness falling to a new low, we need to be encouraging people to join, to volunteer, to engage with their local community groups. At a time when Australian National University data shows that volunteering rates have fallen to an all-time low and data on charitable tax deductions suggests the share of people making charitable donations has fallen to the lowest level on record, we need to be encouraging charities. They are vital to Australia's future.

But charities are shocked by the latest proposals from the Morrison government. The push-back has come right across the ideological spectrum, from Hillsong Church to the World Wildlife Fund. It has come from respected leaders such as Tim Costello, who has likened the change to Vladimir Putin's Russia. The law firm Arnold Bloch Leibler believes the changes are 'fundamentally inconsistent with our democratic system of government'. Law Council president Jacoba Brasch said the changes would 'leave registered charities, including faith based charities, at grave risk of political interference'.

Religious charities are concerned. Anglicare, BaptistCare, UnitingCare and the St Vincent de Paul Society have all criticised the crackdown on charities, and in yesterday's Australian Financial Review there was a full-page advertisement on page 7: 'Don't stop Australia's charities from speaking out.' It read:

We come together as a group of charities providing vital services to the most vulnerable Australians. Charity is not just about helping people in poverty or experiencing disadvantage. It's about creating a country where inequality doesn't exist. Sometimes, this requires us to speak up when we see policy that does not promote the common good.

Our work is driven by our mission, and we speak out with and on behalf of millions of Australians who are denied a voice. We know that positive change comes when people are heard.

New regulations on the charity sector are before the Australian parliament now. These new rules undermine the legitimate and lawful advocacy that is at the core of what we do. They will silence the voices of the people we represent, and stifle our mission to create a just society where all Australians can live their lives with dignity.

The huge administrative and cost burden, red tape and risk these regulations create will divert our time and resources from the frontline services we provide to our communities, hurting the Australians who can least afford it. This is not the partnership the charitable sector wants with the government.

We call on the Senate to disallow these regulations and stand up for Australian charities.

The statement is signed by St Vincent de Paul Society, Catholic Social Services Australia, Anglicare, UnitingCare Australia and others. It recognises the strong, united voice of the sector, speaking out against these retrograde changes. A statement from Hands Off Our Charities on 18 March 2021 said:

As charities, we take our responsibilities to the public very seriously and we want to be accountable to our communities and supporters. We have supported the role of the ACNC in ensuring that public confidence in the charity sector is maintained. However, we already face appropriate penalties for pursuing unlawful purposes and breaking the law. All these proposed regulations would do, is single out charities for disproportionate penalties following minor breaches of a kind that are unparalleled for any other group, including political parties and businesses.

That is signed by a vast range of organisations, including Amnesty International, Anglicare Australia, the Australian Centre for International Justice, the Australian Council of Social Service, Communities Council of Australia, Community Legal Centres Australia, Country Needs People, Foundation for Alcohol Research and Education, Foundation for Young Australians, the Fred Hollows Foundation, Friends of the Earth, Oxfam, Public Health Association, Public Interest Advocacy Centre, RESULTS International Australia, the Queensland Conservation Council, Save the Children, Tearfund, the Wide Bay Burnett Environment Council and many others.

Alice Drury, of the Human Rights Law Centre, said in the Australian Financial Review on 22 July 2021:

These rules would silence charities at a time when their advocacy is more crucial than ever, as charities support Australian communities through unprecedented crises like catastrophic bushfires and the pandemic.

She went on to say:

These proposed laws are a case of extreme overreach, and have no place in a democracy.

Kasy Chambers, the executive director of Anglicare, said:

They are not just an attack on charities. They are an attack on democracy.

We're also calling on the Government to withdraw these changes—and end these attacks for good.

She pointed out that Anglicare employs 29,000 staff and volunteers, and under these changes they would have to think about potential summary offences for every single one of those people, including a volunteer who might work with them just a couple of times a year.

The Australian Institute of Company Directors, representing 40,000 directors, said on 15 March 2021:

… the AICD does not does consider it appropriate that the ACNC Commissioner has the discretion to remove charities from the register in the circumstances proposed. Given the severe consequences that removal from the ACNC register can have on a charity (including losing income tax concessions), such a power is only appropriate if it is proportionate to the misconduct and subject to procedural fairness such as rights of appeal.

David Crosbie, the CEO of the Community Council for Australia, said:

Any suggestion that the ACNC commissioner can act against a charity because he or she believes they may do something wrong—even when there is no evidence they have done something wrong—seems at best to be against every principle of justice, fairness and procedural transparency, all of which should be fundamental values for any regulator.

Mr Crosbie went on to say:

Imagine if ASIC could de-register any company it wanted to just because as a regulator they thought the company might do the wrong thing?

Would business sectors in Australia accept that as a governance standard?

Clearly not, and that's why the Australian Institute of Company Directors has spoken out so strongly against the government's proposed changes.

Tim Costello, chair of the Community Council of Australia, said:

When I first read the proposed changes to governance standards I honestly started thinking about Stalinist Russia and other countries where judgements about which groups can or cannot operate freely are taken solely to protect the powerful.

Mr Costello went on to say:

I think Australia is better than this, and I struggle to understand any rationale for extending this kind of discretion to a charities regulator.

Marc Purcell, the CEO of the Australian Council for International Development, points out:

At a time when we've got military juntas shutting down civil society in Myanmar, Thailand and China … Australia needs to be supporting diverse opinions, the right of free speech, citizens' right to protest and certainly not muzzling charitable organisations.

As I mentioned before, the submission by Arnold Bloch Liebler to Treasury said that the legislation was 'fundamentally inconsistent with our democratic system of government' and that the changes 'are a clear fetter on freedom of political communication and on dissent by civil society'. They have suggested that these changes may indeed be unconstitutional.

Toby oConnor, the CEO of St Vincent de Paul, said: 'The Catholic Church people, generally around Easter, have a parade or walk in support of refugees, and in the new proposal, if some of our people were blocking a public area, if they failed to move on under a direction, then any charity that's associated with that march could be disqualified from being a charity.' Joe Zabar, the former deputy CEO of Catholic Social Services Australia, makes a similar point, saying:

The Church's traditional Palm Sunday Refugee Rally may trigger action against any Catholic charity that promotes or participates in the rally. While it may not be the intention of the government to include such events, the reality is that the framing of the proposed regulatory changes may capture Catholic charities simply exercising their rights to assemble and advocate for causes which matter to them.

The bill before the House makes sensible changes requiring non-government entities seeking endorsement as a deductible gift recipient to be a charity registered with the Australian Charities and Not-for-profits Commission, or be operated by a registered charity. It will improve the consistency of regulation, governance and oversight for DGRs and support confidence in the sector. But this sensible change is being brought in at a time in which the Morrison government is engaging in yet another attack on charities, prompting yet another open letter from charities, now the fourth open letter from Australian charities in the time of the Abbott-Turnbull-Morrison government, crying out as to why the war on charities continues when there's so much good work that could be done by a government that wants to work with charities, rather than against them. Senator Catryna Bilyk's bipartisan Senate report recommended some 2½ years ago that we fix the laws around charitable fundraising that currently require organisations to register in seven different states and territories if they're to fundraise online across the country, wasting about a week's worth of staff member effort for every charity that wants to raise money online every year.

This would be sensible reform. It would remove reporting duplication. It would fit philosophically with the coalition's bent in favour of so-called red tape reduction. Yet that bipartisan Senate committee set a two-year deadline, which expired in February this year. The government hasn't implemented these changes, which cost Australia's charity sector more than a million dollars a month in complying with unnecessary regulations.

There's work that could be done on charitable passports, on making sure that the Australian Charities and Not-for-profits Commission works even more like ASIC, the corporations watchdog, to ensure that charities have a one-stop shop for reporting, on ceding more of those state and territory regulators' powers to the national body and on ensuring that charities are able to minimise the amount of time they spend filling out forms and maximise the amount of time they spend helping the most vulnerable in our community. These would be good changes. The timing for them would be right. At a moment when Australians are more disconnected than ever before in the postwar era, we need a government that will work with charities. Instead, we have a government that's working against charities.

Labor will support the sensible charity reforms in this bill, but we will continue to stand shoulder to shoulder with Australia's charities in opposing the crackdown on charitable activism that has seen the fourth open letter from Australia's charities pleading with the Liberals to stop the war on charities.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Tony Pasin (Barker, Liberal Party) Share this | Link to this | Hansard source

The shadow assistant minister is seeking to suggest to the House, if I followed his argument, that there is some risk that Catholics would be prevented from proceeding with their processions on Palm Sunday. This is complete bunkum, quite frankly. I think we should continue to fertilise and irrigate our palm trees because we'll need them on Palm Sunday because I can't imagine a circumstance in which the ACNC would be out there with bunting to prevent Catholics from processing on Palm Sunday. I was once told by a silk I was briefing, 'That's a great argument, son, till you run it and lose.' I think that was his very nice way of saying to me that it was, in fact, a really bad argument and that, to be fair, it wasn't worth the oxygen in the courtroom, and that's what we just heard from the shadow assistant minister—a nice argument till you run it and lose. It was complete and utter bunkum.

We're here to talk about activism cloaked as a charity, or charitable organisations and the confidence Australians need to have in them. That's effectively the debate here, and I think it would be remiss of me not to reflect on the activities of yesterday in this precinct. I'll be brief, other than to say that what we saw yesterday at what is the home of Australian democracy was a cowardly, criminal act. It takes no skill and no courage to walk onto the forecourt of Parliament House with paint tins and matchsticks and set prams alight and deface this great building and what it stands for, not to mention the similar actions that took place at the Lodge. I say to those who perpetrated those offences and those acts: you do your cause an injustice because everyday average Australians look at those images and know immediately that they're paying for the clean-up. I'll be waiting with bated breath to see what it has actually cost the Australian people.

Of course, this is a continuum of the activity that we see at government offices. The department of agriculture was targeted last week. Individual MPs' offices have been targeted. To those people who think that it's a courageous and noble act to commit these criminal offences I say: the more courageous thing is to run for election, come to this place and make your arguments in this place. Don't go down to Bunnings and buy the red paint, because what you're doing is effectively asking your fellow Australians to pick up the bill for your—I was going to say 'misbehaviour' but frankly it is your criminal behaviour.

Enough of that. Listening to the shadow minister, I was sitting here reflecting and thinking this is really a situation where those opposed to this relatively straightforward reform want to suggest that this is something more than it is. This measure effectively seeks to require non-government entities endorsed as deductible gift recipients—that great gift from this place that enables charities to operate as entities with DGR status and offer tax deductions for donated contributions—to be registered as a charity or be operated by a charity registered with the Australian Charities and Not-for-profits Commission. The truth is that the overwhelming majority of DGR recipients in this country have this requirement on them already, and all this measure does is extend that requirement to general DGR categories.

I think it is quite reasonable that Australians expect that, if you are getting the privilege of DGR status, effectively public funding, you should conduct your affairs in a way that would satisfy the ACNC. It is a regulatory reform to make sure Australians can have confidence that entities that are given this great privilege are conducting themselves in a manner that is consistent with their charitable principles. Instead what we see all too often in my view is what the former assistant minister indicated when introducing the bill—namely, activist organisation seeking to cloak themselves in the protection of charitable organisations. They do that for the gravitas and recognition that comes with being a charity and because of the very clear financial benefits that come with being able to offer DGR status, or tax deductibility, to people making significant contributions.

The shadow assistant minister said that what our government wants to see is charitable organisations in the environmental field planting trees not campaigning or being political actors seeking to influence debate. Yes, we do want to see trees in the ground—practical, pragmatic environmentalism. But no-one is suggesting they can't be actors in the civic debate. The implied freedom of political discourse in this country is not something this bill seeks to undermine—frankly, it couldn't—but if you want to enjoy the benefits of DGR status we want to see those charitable objectives addressed. In the environmental space, that is practical, pragmatic environmentalism. If you want to come to this place and walk the halls and act in a way that aligns itself with political activism then you step out of the charity space and enter the field as political actors. There are rules that apply in relation to that activity—and so they should. This is quite an obvious scenario. We don't want people cloaked in charitable purposes pretending to be charities when in fact they are de facto activists and seeking to influence debate in a political context.

The Assistant Treasurer knows that something I'm very passionate about is DGR1 status for community foundations—I can see him almost cringing!

As a member of a regional community with probably Australia's strongest community foundation, I hope very much that the campaign to see DGR1 status for community philanthropic organisations is something that we can see be successful in the not-too-distant future. Once upon a time, Philanthropy Australia, the peak, didn't support that push, and we had a dichotomy of opinion between Philanthropy Australia and the peak for community foundations, the Australian Communities Foundation. We no longer have that dichotomy. We have those two important peak bodies in screaming agreement that this would be a positive outcome for community foundations, regional communities and individuals seeking their support nationwide.

There are currently about 38 regional foundations across Australia, ranging in size. They do phenomenal work on behalf of their communities. Importantly, the evidence is clear that individuals living in a regional community are more likely to give to a charitable organisation if they know that that charitable organisation is based in their community and will apply the proceeds of that charitable donation to their community. It's also a very effective mechanism for achieving outcomes in communities through a vehicle which perhaps wouldn't attract the attention of some of the more substantive nation-run and very large charitable foundations or, indeed, national charities.

I encourage, as I have done for some time now, the government to give strong consideration to DGR1 status for community foundations. It would be a massive win for regional Australia, a massive win for those living in regional communities. More importantly, it would see more money contributed to philanthropic effort in those communities, which can only mean better outcomes for communities. So, here, debating the benefits or the merits, if you like, of DGR status for organisations who seek to use that on occasion to run politically charged or politically driven interests is a frustration for my community, because my community sees the very great work that Stand Like Stone does in the community. It does that without the benefits of DGR status. It sees the great, pragmatic, on-the-ground, real-world outcomes that can be achieved. It sees that it is very much a charity. It doesn't pretend to be what it's not. It's not seeking to hoodwink the government into giving it DGR status, despite not wanting to apply to charitable principles. That's a great frustration for my community and one that I hope we will deal with.

In the meantime, this bill is effectively about asking organisations to swim in their lane. Bear in mind that the overwhelming majority of DGR recipients in this country are already required to be registered with ACNC or to operate as a registered charity, but we're clearing up and making more consistent the regulation so that that applies to all entities with DGR status. We're effectively saying to the nation: you can have confidence that when you provide a contribution to an entity with a DGR status that it's a contribution to a charity; that those organisations will swim in that charitable lane; and that, if organisations want to exit that lane and enter the lane that's about political activism, that aims to achieve political outcomes through that form of advocacy, different rules apply to those organisations—rules consistent with other organisations which seek to do the same. With that, I commend the bill to the House.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | Link to this | Hansard source

[by video link] I'm speaking in support of the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021, but before I get to the details of the bill, I want to make some introductory remarks about the important roles that charities have played in the community that I represent during this very difficult period of dealing with another outbreak of COVID in Sydney. Over the course of the last three or four weeks I've been ringing a lot of elderly members of our community to check in on their welfare during this difficult time, particularly given that they are not able to get out as much and have as much human contact. I have been blown away by the important work that charities in our community have been performing in supporting not only the elderly but a range of age groups across our community, ensuring that their mental health is in a good state and they are able to access food and groceries, and providing assistance with that; helping with medical appointments; and just improving the general wellbeing of people in our community during this difficult time. I want to congratulate and pay tribute to all the charities in Kingsford Smith and across Australia that have provided support to vulnerable people in our community during this difficult period of COVID. You are the lifeblood of our community and you have helped many, many people through this difficult period. You and your volunteers deserve praise and respect for the work that you do, and we thank you so very much.

In that light, it's a great shame that the Morrison government have been attacking charities over the course of the last couple of years because they may not like what those charities do, what they stand for or what they believe in. If a charities have a different philosophical view to this government, then the government has been cracking down on them and condemning them. The words of the minister, Senator Seselja, highlighted exactly this government's approach, when he said that the government would 'crack down on activist organisations masquerading as charities'. That's code for the government cracking down on organisations whom they don't like, who don't fit with their philosophical view of the world politically and whose activities may highlight some of the wrongdoing and the underhanded tactics of this government, particularly when it comes to issues such as climate change. I think it's a great indictment of this government that they have been attacking charities in that manner over the course of the last couple of years.

Nonetheless, this particular bill is a positive development for charities in that it amends the Income Tax Assessment Act to require non-government entities seeking endorsement as deductible gift recipients to be a charity registered with the Australian Charities and Not-for-profits Commission or be operated by a registered charity. Ancillary funds and, especially, listed entities will continue to be exempt from this requirement. These changes were announced by the government in their 2017-18 Mid-Year Economic and Fiscal Outlook, and the requirement to be a charity already applies to the majority of general DGR categories under our tax law.

This measure will amend the special conditions applying to the remaining general DGR categories and will require non-government entities to maintain charity registration in order to retain their eligibility for DGR endorsement. The amendments include a 12-month transition period, which will give non-charity DGRs time to meet the requirements for charity registration without losing that DGR status, and some DGRs will be able to apply for a longer transition period of up to three years. The measure will hopefully improve consistency in the regulation, governance and oversight of DGRs, in turn helping support continued confidence in the sector and support for DGR entities. These amendments are one part of the deductible gift recipient reforms that were announced in that MYEFO in 2017-18, and the estimated cost for the measure is quite minimal—$0.2 million. That's a reform that we support, but I again reiterate my earlier comments that this government can't pick and choose which charities it likes to operate in Australia. That's a very Stalinist view of the world. All charities, as long as they meet the legal requirements, must be able to register, operate and perform their duties and their responsibilities with their volunteers according to Australian law, free from political interruption from this government.

The second schedule to this bill amends the Income Tax Assessment Act to remove the preferential tax treatment provided for offshore banking units, OBUs, and provides transitional arrangements for existing OBUs. This regime is a concessional tax regime that can be used by the Australian financial services sector to provide banking services to offshore customers. When Labor were in government, we cracked down on this tax break in 2011 to rein in banks conducting structured finance transactions through offshore vehicles. But in 2014 the coalition government decided to defer those key reforms, to help big multinationals pay less tax. This has unfortunately been a common theme of this government over its eight years in office.

The government has been quite lax when it comes to ensuring that we have stringent tax laws that crack down on the ability for multinationals to shift profits overseas to avoid paying tax here in Australia and to structure their businesses to avoid tax in our system. The Morrison government has always been too slow to close schemes that let multinationals take advantage of our tax system. Really, it's been dragged kicking and screaming into looking at this issue and taking it seriously through the OECD. Other OECD nations have seen what damage profit-shifting and tax-minimisation schemes can do to not only the GDP of developing nations but, of course, the livelihoods and living standards of their citizens. Avoiding tax in a particular jurisdiction can have a dramatic effect on that country's revenues and GDP and, ultimately, the living standards of that country.

Unfortunately, particularly in the tech space in Australia, we've had many classic examples of large multinational corporations that are able to structure their tax arrangements to avoid paying corporate tax here in Australia. That comes at a cost to the Australian taxpayer. The Morrison government talk a big game about supporting global reform of the tax system, but the reality is that Australia has been out of the game when it comes to this international reform process through the OECD. They won't close debt deduction loopholes or crack down on tax havens. One-third of large companies still pay no tax here in Australia on their profits, and that's despite promises from the Morrison government to reduce tax avoidance. They've been caught out making announcements but failing to follow through on those announcements with any decent reform that actually cracks down on multinational tax avoidance.

Whilst the government are keen on chasing debts from the average Australian welfare recipient through robodebt, more recently in respect of payments associated with JobKeeper and supplements that were provided during the COVID period, they don't do the same when it comes to chasing multinationals that are avoiding tax or, indeed, asking those big corporations that made profits out of JobKeeper over the course of the last 12 months, and weren't eligible under the criteria for receiving JobKeeper, to make those payments back to the Australian people. It's now more important than ever, given the large deficit that our budget now has and the growing net debt of our nation, that everyone, including large corporations, pay their fair share of tax here in Australia. With many small firms in genuine distress amid the latest round of lockdowns, the Morrison government must adopt a zero-tolerance approach to companies that abuse accounting loopholes to minimise their tax.

What's the legacy of the lack of reform and the failure to act on these tax loopholes and act as a good global tax citizen? The coalition's record is clear from the lives of everyday Australians: stagnant wages, insecure jobs, increased costs of health care and child care, longer waits to see a GP, a trillion dollars in debt and baked-in expenditure for the next decade which is unfunded and will only see the budget deficit worsen over time. The government's own budget forecasts show a decline in real wages over the next four years, and independent analysis by the McKell Institute shows that the policies under this government have made the average Australian worker $13,000 worse off, compared to real terms. After promising eight surpluses and delivering eight deficits, including the largest in Australia's history, the government's legacy will be intergenerational debt, without a generational dividend.

So improving the budget bottom line is very important, and, to achieve that, we must make sure that we are cracking down on tax havens and tax arrangements that allow big multinational corporations to shift profits overseas or to structure their tax affairs to avoid paying tax here in Australia. The government's ability to implement measures that are being pushed by the OECD and internationally—and, indeed, by the Biden administration now—to crack down on profit-shifting and crack down on multinational tax avoidance will be the key to ensuring that we get the budget back on an even keel and in a position where our kids don't inherit a generation of debt and deficit that they can never pay back and that confines them to lower living standards and lower real incomes in the course of their working lives.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

[by video link] I begin my contribution on this bill by echoing the words of the member for Kingsford Smith and paying tribute to the role of charities. Charities have played an incredible role in Fraser over the last 18 months, during the multiple lockdowns that the people of Fraser have endured. Of course, I acknowledge that the people of New South Wales and other states are experiencing lengthy, extremely difficult and traumatic lockdowns as we speak, and I can only imagine that charities are playing an equally important role in those communities.

In Fraser, throughout these lockdowns, charities have helped people in vulnerable positions: people who have English as a second language, elderly people, people with a disability and people who, due to travel restrictions, have been isolated from their families. Charities have helped people in all sorts of ways—in practical ways such as delivering free meals, shopping or buying groceries for people, and helping people navigate government forms which they otherwise would have relied on younger relatives to help them with. And they've helped people to remain socially connected with their communities. Even if it's by Zoom, even if it's by methods which aren't perhaps ideal, charities have been instrumental in helping people to maintain social connectedness during sometimes long periods of lockdown. And I've found it striking that, once lockdowns have lifted, charities have played a key role. People have flocked back to community events at every opportunity. I look forward to that occurring again when the current lockdowns end.

It has been critical that people receive financial support from all levels of government, and we, of course, see that as a key part of providing support to people. But I also think that it's important to recognise the key role that charities play, and that's why I wanted to begin my contribution by acknowledging the role that charities play in Fraser right now and, I'm sure, will continue to do in the months ahead.

I also wanted to make some observations on the provisions of this bill relating to offshore banking units, in schedule 2. Some of my comments in relation to these provisions are going to mirror comments that I may have made in recent times about other provisions. In a sense, it's a rather disturbing and repeating phenomenon that reflects the way this government operates. When we look at the way that offshore banking units have been regulated, what we see—and I'll work through this later on in my contribution—is that they began with a sensible policy rationale but that, over time, the provisions relating to offshore banking units have been misused.

Under the Gillard government in 2011 and in successive budgets, the provisions relating to offshore banking units were tightened. As speakers on this side of the House have pointed out, one of the early acts of the current government, back when Tony Abbott was Prime Minister, was to undo those provisions, to unwind certain provisions which had very sound public policy bases. Now, of course, what we see, many years later, is the government fixing that error. We welcome their fixing the error, but we do think it is important to recognise that we needn't be in this situation where, in 2021, we are basically back in the situation we were in in 2011, with a whole series of errors in between.

I spoke about similar kinds of public policy dynamics in the previous sitting week, when I spoke on a bill related to the regulation of financial advisers. A whole series of very sensible measures that the Gillard government had implemented under the banner of FOFA had been unwound by this government, and now, following the Hayne royal commission, they are being brought back in. I described it at the time as reflecting that this government's term was a 'lost decade'. This government comes into this chamber and trumpets dramatic reforms which really, in many areas of policy, are simply correcting errors it made earlier on in its long eight years, as in the case of unwinding FOFA and then having to bring back many of those provisions in response to the Hayne royal commission and as in the case of having unwound sensible measures that the Gillard government implemented in relation to offshore banking units and now bringing those measures back in. We see the same thing in so many other areas, like social service delivery. We see massive cuts in relation to aged care and the NDIS and then we see this government, in the last budget, correcting some of those cuts but trumpeting it as major reform.

I think it's important to put that context in place—that so much of what this government puts forward as reform is simply cleaning up its own mess. In 2021, so many areas of policy are no further advanced than they were a decade earlier. That's a huge lost opportunity, because if we look at the area of policy that we are focusing on today we see that so much progress should've been made. For us in 2021 to be debating a bill that takes us back to where we were in 2011, but the rest of the world has moved on so dramatically in relation to multinational corporation taxation and the rest of the world has moved on so dramatically when it comes to the erosion of the tax base, it is ludicrous that we are trumpeting it as some kind of success that we are returning to where we were a decade ago, having made so little progress on so many other areas of the tax base.

As other speakers have pointed out, schedule 2 of this bill will amend the Income Tax Assessment Act in order to remove the preferential 10 per cent effective concessional tax treatment and the withholding tax exemption for offshore banking units from 2023-24, making offshore banking units subject to the relevant corporate income tax rate from that time. There are also arrangements that close the OBU to any new entrants from the day after royal assent.

The offshore banking unit regime was introduced in 1987 as a tax incentive to attract and maintain financial sector activities within Australia. This was part of a suite of measures which were introduced to open up the banking sector to competition—not just to open it up to competition from foreign entities but to improve competition within the domestic banking system. This was intended to be one of a number of measures which were designed to incentivise foreign banks to maintain a presence in a world in which there was highly mobile capital that otherwise would have been carried through to low-tax environments such as Hong Kong and Singapore. The offshore banking unit tax incentive facilitated the use of Australia as a centre for offshore trading, investment management and lending. The users of the OBU regime have included hedge funds and major Australian financial institutions. But there has been growing concern that hedge funds have been setting up in Australia specifically to take advantage of the OBU regime, and Treasury figures suggest that the cost to the tax system had been rising. So I think, as earlier speakers have indicated, the cost to the tax system has risen from around $160 million in 2006-07 up to over $320 million in the most recent year.

The changing international environment was reflected in October 2018 in the OECD's Forum on Harmful Tax Practices, which stated that the OBU regime had the potential to harmfully introduce preferential features due to its low-tax rate and the ring-fenced nature that excludes domestic transactions from its scope—that is, the regime was seen to unfairly attract foreign investment to Australia that would otherwise have ended up benefiting another country's tax base. To address the forum's concerns ahead of further reporting from the OECD, the government has decided to remove the preferential tax treatment and close the regime to new entrants. But, as I said, this is something which reflects measures which Labor had introduced some time ago.

The big four banks, Macquarie Group and hedge funds have traditionally been the major uses of the OBU measures for offshore activities. After an expansion of the scheme under John Howard, Labor cracked down on this in 2011 to 2013 to rein in banks that were conducting structured finance transactions known as asymmetric swaps through the offshore vehicles. Labor's crackdown at the time was criticised by the finance industry, and in 2014 the then Liberal Assistant Treasurer, Arthur Sinodinos, implemented more industry-friendly changes to attract mobile financial services.

In the meantime, the OECD's Forum on Harmful Tax Practices has made a number of observations that these practices are eroding the tax space internationally and that this is inappropriate. Indeed, one can look at some quotes from an AFR article which was titled 'Australia's $350M bank tax break enrages EU'. I quote from that article in the AFR, written by John Kehoe:

… if the EU designated Australia as home to a harmful tax practice, EU institutional investors such as pension funds would be banned from buying securitised debt from Australian financial institutions.

This would have particularly affected foreign-owned banks in Australia using special-purpose vehicles for securitised debt deals.

So the government was coming under significant pressure from the EU, and of course from the OECD, about this potentially harmful tax regime. Again, if I can draw a parallel to a bill that I've recently spoken on in relation to money laundering, there are significant areas of noncompliance which the Financial Action Task Force has made reference to over many years, yet this government has been far, far too slow to act.

What we see in so many areas is that this government has either been delinquent in taking action or has in fact, in this instance, unwound protections, and now we find ourselves in a situation where, over many, many years, international agencies, the OECD and the EU, in the case of OBU tax regulation, or, in the case of money laundering, the OECD and the FATF have all criticised this government, and all too often the government belatedly, after having been dragged kicking and screaming, implements reforms.

I want to make some observations about the real cost of what I describe as the 'lost decade' of this government—the fact that we are, in this bill, bringing ourselves back to the situation that we were in in 2011. The lost decade is critical, because base erosion and profit-shifting has only grown. If one looks at many of the companies that the OECD and other international tax experts identify as being particularly problematic, their presence in the global economy is only growing.

Many tax experts argue that one of the trickiest areas to regulate when it comes to international taxation is intellectual property. And we find that companies which rely on intellectual property—for example, in technology, the Apples, the Googles, the Microsofts—are companies whose influence in the economy, whose influence in international transactions, whose influence in international investment flows is growing. That is why the OECD, over years, has been placing a greater emphasis on ways in which we can collectively, across the advanced economies, tax these entities more effectively. There are no simple solutions. It's going to take many years of hard work.

But that's why this lost decade is so critical. While other countries have been investing in this EEPS program at the OECD, which has now gone through multiple rounds of policy work, and while those countries are all working on progressing a policy agenda that is dealing with some very, very challenging policy conundrums for some of the largest and fastest-growing companies in our economy, in Australia we find ourselves with bills like this going back to the future—like Sisyphus pushing the rock up the hill and making no progress. That is the opportunity cost of this government's inaction, of this government's tiny agenda, of this government's delinquency.

We will support the measures in schedule 2, which bring the OBU regime back to where it was, back to where it ought to have been for some time now. But it is worth pointing out that this government's agenda is so limited on so many things, and Australia deserves so much more. We deserve to have a government that has a vision for what our society and what our economy is going to look like on the other side of COVID. We don't want to be a country that is returning to 2011; we want to be a country that has a vision for where we can be advancing to in the future.

Kate Thwaites (Jagajaga, Australian Labor Party) Share this | Link to this | Hansard source

This bill, the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021, addresses some very important areas, particularly Australia's charitable sector. I very much share the concerns raised by the member for Fenner and others about the way the Morrison government are essentially waging a war on this important part of our social fabric. And they are doing this at a time when Australian charities are under huge pressure and have never been needed so much. We are in unprecedented times. We have called on our charities to support us through the bushfire crisis, and now through the COVID pandemic. They are working harder than ever to provide support to Australians and to people in my community, here in Jagajaga, who are struggling at this time.

The charity and not-for-profit sector in Australia makes up eight per cent of our economy, 10 per cent of the workforce and has three million volunteers. We know that during the pandemic charities have had to deal with a dramatic drop in both their volunteer numbers and in their ability to fundraise, and yet these falls come at a time when there is an increase in demand for their services from people who have fallen through the cracks of government support, which we know has been inadequate in so many areas. But despite the challenges that charities are facing through this period, this government is providing little support to the sector and no new initiatives to help them fundraise or to help them recruit and engage new volunteers. On top of that, the Morrison government is proposing to make life even more difficult for the sector by essentially waging a war on charities. We know that charities and not-for-profits need more support from the federal government, not less; they need recognition of what they do to hold the social fabric together, not continued attacks from this government.

Since the coalition government has been in office, major charities in Australia have written three open letters to the Prime Minister complaining about ongoing attacks on the sector. Think about that; three open letters. What a war that this government is waging that this sector has felt it has to operate in that way. We know that the Morrison government has ignored Australian charities' requests to update fundraising laws, which has been a top ask from this sector for many years. Reforming those laws was a bipartisan recommendation of a 2019 Senate committee, which set the government a two-year deadline for doing so, and that time has now passed. After taking two years, the government provided a one-page response and has rejected 11 of the 30 recommendations. So no support for charities to make it easier to fundraise at this particular time

And now we see the Morrison government ramping up its war on charities, to attack advocacy work in the sector. The latest proposal we see from the Morrison government would allow the charities commissioner to deregister a charity merely because he anticipates that it might commit a summary offence. What an overreach that is! We've heard from the member for Fenner of some of the concerns about the decision the Morrison government made to appoint this particular charity commissioner. So not only are there concerns about whether the charity commissioner is someone himself who consults with and supports charities he has now been gifted with these unprecedented powers to deregister a charity because he anticipates it will commit a summary offence.

Things we might be talking about in this space are peaceful protest, blocking a footpath, unlawful entry, malicious damage or vandalism. Again, the member for Fenner raised some of the concerns of the sector about places where this might occur. The Catholic Church, for instance, has talked about its involvement in peaceful events, such as a Palm Sunday protest, which may end up with Catholic charities which talk about such events falling foul of these types of laws. These types of actions would lead to the government taking enforcement action that would include deregistering a charity—absolutely outrageous!

From a party that pretends to espouse the right to freedom of speech, it's clear that it's only freedom of the speech that this government agrees with that it will stand up and protect rights on. When it doesn't agree with the type of speech or the type of advocacy that our charity sector wants to do, they want to shut down that right. They want to shut down the right to protest peacefully because that might make you an activist organisation.

So it's not surprising that Australia's major charities have been very quick to condemn this proposal from the Morrison government. Alice Drury from the Human Rights Law Centre said:

These rules would silence charities at a time when their advocacy is more crucial than ever, as charities support Australian communities through unprecedented crises like catastrophic bushfires and the pandemic. These proposed laws are a case of extreme overreach, and have no place in a democracy.

Marc Purcell from the Australian Council for International Aid Development said that he was:

… really alarmed that there were moves to criminalise the work of charities. … At a time when we’ve got military juntas shutting down civil society in Myanmar, Thailand and China… Australia needs to be supporting diverse opinions, the right of free speech, citizens’ right to protest and certainly not muzzling charitable organisations.

Tim Costello, the Community Council for Australia chair said:

When I first read the proposed changes to governance standards I honestly started thinking about Stalinist Russia and other countries where judgements about which groups can or cannot not operate freely are taken solely to protect the powerful.

I think Australia is better than this, and I struggle to understand any rationale for extending this kind of discretion to a charities regulator.

These are really serious comments from the heads of some of our major charities and charitable groups in Australia—groups that we rely on to do work that's essential in communities across our country.

We know that possible unlawful behaviour carried out by a minority of groups does not amount to a significant issue. This was in fact confirmed by the ACNC commissioner himself. Gary Johns said in a recent Senate estimates that the data did not indicate this was a problem. So there is no evidence of a need for these regulations. Why is the government targeting the entire sector and imposing more unnecessary and alarming red tape on them?

We don't want to see Australian charities silenced, and I urge the Senate to disallow these particular regulations, because they are something that we should stand up against in a democracy. Public advocacy should always play a significant role in our democracy. Asking charities not to be involved in advocacy is asking them to be silent on government failures. Asking environment groups not to put forward suggestions around how we need to tackle climate change is asking them to ignore the biggest part of the work that they do.

It has never been clearer that it's urgent we act on climate change. The IPCC report this week is a message to all of us that this is the time that we must take serious action to tackle climate change before it is too late. And yet it's the message the Morrison government continues to refuse to hear, with no commitment to net zero by 2050, no investment to get us the clean jobs of the future. It's a dangerous position, jeopardising all of our futures. And there is no reason why charities and advocacy groups should not be able to put that position forward and retain a charitable status. Asking charities who work with people in poverty not to advocate for a wider safety net at this time of pandemic and crisis across our country is asking them to ignore the systemic problems they come across. It's ridiculous to ask charities just to hand out a food parcel to someone but not talk to an MP in the government about the broader issues about why that person needs a food parcel. Yet that's essentially what these regulations will suggest to do, so it is really important that they are disallowed.

Schedule 1 of this bill relates to deductible gift recipient amendments, and it does seek to amend the Income Tax Assessment Act to require non-government entities seeking endorsement as a deductable gift recipient to be a charity registered with the ACNC, or to be operated by a registered charity. These changes are part of the reform process the government committed to in the 2017-18 Mid-Year Economic and Fiscal Outlook. These changes are welcomed by the sector, for streamlining regulatory practice and improving oversight. It is a shame that the government is making these reforms that are welcomed by the sector at the same time as it's trying to shut down their ability to advocate on behalf of the people that they represent.

The second part of this bill deals with offshore banking. Global reform of the tax system is needed, but right now Australia is missing in action. In order to be taken seriously on the international reform process of tax, we must improve the fairness of Australia's multinational taxation system. We need to close down the debt deduction loopholes and crack down on tax havens. We need to get multinational tax right. At the moment, there are too many multinational firms that are routing their profits through tax havens. For the past eight years, this government has been too slow to act to close these loopholes. We know when Labor was in government we addressed some of these tax breaks, in 2011-13, reining in banks conducting structured finance transactions known as asymmetric swaps through offshore vehicles. However, Labor's crackdown was criticised by the finance sector, and in 2014 the then Abbott government made changes to attract mobile financial service businesses. After the OECD Forum on Harmful Tax Practices in 2018, Australia's OBU regime was deemed to be a harmful preferential tax regime on the grounds that it provides a concessional tax rate and is ring fenced to exclude domestic transactions from its scope.

We welcome the government's decision to remove the preferential tax treatment and to close the regime to new entrants, and the work that this bill will do to amend the tax law to remove the effective concessional tax treatment for offshore banking units in respect of offshore banking activities. From the 2023-24 income year, the taxable income of an offshore banking unit on its offshore banking activities will instead be subject to the relevant corporate tax rate. The bill will also remove the withholding tax exemption for OBUs for interest paid on or after 1 January 2024 and will amend the tax law to remove the ability of the minister to issue determinations or declarations that a person or an entity is an offshore banking unit.

These changes are welcome, but this government has form. They like to talk a big game on multinational tax, but in reality this government allows practices that undermine Australian employees and government service provision. Tax evasion and avoidance by multinational companies threatens Australia's tax base. When tax loopholes are exploited by multinational companies, Australians ultimately have to pay higher taxes or suffer cuts to vital services. Now is not the time for us to be allowing or promoting tax loopholes. Now is the time for us to be making sure that multinational companies are paying their fair share. In spite of the government's posturing on closing down tax loopholes, tax office data in Australia shows that around one in four large companies pay no tax in Australia. The previous Labor government began the task of tightening these loopholes. In opposition, the coalition voted against Labor's measures to reduce multinational tax avoidance, and in government they have failed to take serious action on this very serious problem.

This government likes to talk a big game on multinational tax avoidance but, as with so many areas with this government, it's all talk and no action, all talk and nothing that follows through and actually does the work of a government to look out for all the people in our community, to crack down on those people who are unfairly taking advantage of others. We must curtail the use of tax havens and tax avoidance schemes by multinational corporations. The Morrison government is actually letting down all of us if it doesn't do this work.

I know that sometimes things such as multinational tax havens can sound like they're removed from the lives of everyday Australians, removed from the lives of people in my community who at the moment are experiencing another lockdown, are stressed about their jobs and are trying to deal with remote learning and all the pressures that are immediate there, but the reality is: allowing these types of tax havens and tax avoidance to go ahead harms all of those people. It means that money that government should have to provide extra services to support people through this crisis is not there.

This government is in fact cracking down on recipients of welfare. It's cracking down on people who may have been overpaid by Centrelink and asking for that money back, with threatening letters. It is a government, though, that can't crack down on multinational tax avoidance, that can't crack down on corporations who've been overpaid JobKeeper. This government always chooses to target the vulnerable. This government always chooses to fight the people who want to make this a better community. It doesn't choose to tackle the big problems. It is incapable of doing the work we need to create a more harmonious, fairer society for all of us, one where Australians are supported and where we are not waging a war on charities and supporting multinational tax havens. This is a very important bill and it is important that this government gets on with tackling these issues.

Andrew Giles (Scullin, Australian Labor Party, Shadow Minister for Cities and Urban Infrastructure) Share this | Link to this | Hansard source

I rise to make a brief contribution to the debate on the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021, particularly in support of the second reading amendment moved by my friend the shadow assistant minister, the member for Fenner. The bill before the House deals with two issues—firstly, with some changes to the DGR regime and, secondly, with the taxation treatment of offshore banking units. I want to make brief comments on both of these and particularly take up some of the matters that the second reading amendment goes to.

I'll start by talking about the tax changes, which, as previous speakers have noted, are changes that Labor welcomes, in that they are of course a journey back to the future. They effectively take us back to changes put in place under the former Labor government really a decade ago. So we do welcome these changes to the Income Tax Assessment Act in respect of offshore banking units, removing the current preferential tax treatment for them. We also note that the changes here follow some significant criticism of the Australian arrangements by the OECD. Certainly I take seriously the work of the OECD, under its new secretary-general, who might have some experience of how Australia came to be the subject of this criticism, in his former capacity.

But the work the OECD has been doing in this regard and indeed its encouragement for us to act on climate are things that this government should pay great attention to. There is a very big challenge here to tackle base erosion and profit-shifting. Australia should be leading the world, not, unfortunately, continuing in its status as a laggard in this debate. We do need to tackle these issues, for all of the reasons set out by the member for Jagajaga briefly. And, while we welcome this contribution, we can't ignore the context within which it takes place. We have lost time. We have lost momentum. We have lost revenue. We have sent the wrong signals to the community. And we are not positioning ourselves as best we can to maximise our capacity to recover from the COVID recession.

The second issue this bill deals with relates to changes to the charities sector. I guess probably all of us in this place have had a greater opportunity to reflect on the contribution of Australia's charitable sector over the last 18 months than otherwise. I want to pay tribute in particular to the contributions that I have seen in my electorate over this period and acknowledge all of those organisations and volunteers and staff who do such an extraordinary job in supporting communities through this. But it is of great concern to me that the government doesn't recognise—in fact, does more than this, is determined to crack down on—civil society and this has been a consistent theme over the life of the Abbott-Turnbull and now Morrison governments. We have seen attempt after attempt to deny our charities the space they need and the space any decent democracy needs to breathe in their advocacy work to government.

The proposal that the commissioner can be granted this extraordinary power to deregister charitable organisations based on the assumption of the commissioning of a summary offence is something that's quite shocking. It is shocking that it would even be contemplated in a democratic society. It is shocking when we think about the world in which we live right now, where we are seeing a very concerning drift in a number of countries from genuinely democratic regimes to regimes increasingly characterised by authoritarian tendencies. As with multinational tax, this is another area where Australia should be leading the world.

We have much in our democratic traditions to be proud of in this country but over the last nearly eight years, the entire time that I've sat in this parliament, the manner in which this government has sought to deal with the charitable sector is deeply concerning. It shows that, frankly, there is nothing liberal about this Liberal Party; it is a profoundly reactionary organisation. As we have seen through the pandemic, whenever an intervention has been made—and we welcomed many of these interventions, such as putting in place a wage subsidy—it only happens too late and generally after it has been dismissed in the first instance by that tone-deaf person who is presently Australia's Prime Minister. The reactionary nature of the current Liberal Party is much deeper than that. Its commitment to the values that Robert Menzies espoused at the founding of the party is nothing more than words on paper these days and that has been exemplified through the mechanisms that those opposite are seeking to be put in place, which I hope those in the other place will move to disallow.

Our democracy is much, much more than an election every three years. Our democracy rests on a vibrant civil society. It also rests, frankly, on accountability and that is something that we have seen very little of in this place, particularly in the stubborn refusal of this government to put in place a national anticorruption commission to hold members of the executive properly to account for decisions. Obviously I think particularly about the extraordinary rorts of the commuter car park program and, indeed potentially, the wider Urban Congestion Fund, as well as the extraordinary behaviour of the Prime Minister, the minister currently responsible and the minister formerly responsible in not fronting up and taking responsibility for their actions.

This underscores why it is more important now than ever that we support the advocacy activities of our charitable sector and our not-for-profits, that we recognise the voices across this sector, a very diverse sector, which has come together for the last seven or eight years to speak with one voice about the need for them to be able to raise their voice and the voice of the community against executive government to make the case on the widest variety of issues. Charitable activity should not be prescribed by this government, as people like the member for Barker seem to think is appropriate, which is quite astonishing. I hope that the minister, in summing up, will at least correct the record on that.

Australia's government should recognise the value of our charitable sector. We should recognise the decency of Australians as they come together in shared interests with a shared concern to make our society better. We shouldn't seek to prescribe how this is done; we should recognise the value this brings to us. A good government should fundamentally recognise that being tested by advocacy organisations is in its interests as well as in the interests of our democracy. I hope that government members will recognise the damage that they are doing to the fabric of our democracy . I hope they will recognise the damage that they are continuing to do to the fabric of our society, too, in seeking to tell Australians how they should come together. They should get a thicker skin. They should think about the principles of liberalism, particularly members of the Liberal Party in this coalition government ; recognise the values that they should be standing up for ; and recognise the full contribution that our charitable sector and the millions of Australians who participate in it make to our community and to our politics.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

[by video link] Thank you for the opportunity to participate in this debate virtually. I am keen to say a few words on the record, particularly in relation to charities and the role that they have played during COVID-19. The issues raised in the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 are raised with me frequently, and I will talk about how the two relate. I will also speak to the second reading amendment that has been moved , because it does highlight how contradictory this government can be.

Firstly, I turn to the situation that we're in. We all have spoken at length about the impact of the pandemic on our community and the vital role that our charities have played on the ground, at the grassroots, helping people each and every day. In my own community of Bendigo , we 've been in and out of lockdown for the past two years, we are faced with restrictions, people have work one week and not the other, and small- business owners who have never in their life required support or charity are reaching out.

During the peak of the pandemic last year , Bendigo Foods hare , which is an organisation that helps agents on the ground , and they are a charity , distributed over 6,000 meals to people in need in my community. They did so through innovative means , not just through the traditional means of food banks that might happen at faith based organisations. Those services still coordinated last year and this year , but they also distributed food through hampers at La Trobe University, Bendigo TAFE and cafes. This pandemic and the way in which it impacted work affected people who 'd never before received charity , i nternational students who had lost hours and work , people who were here on temporary work visas and people who didn't qualify for government support. Without the network of our charities on the ground in Bendigo, many of these people would have gone hungry.

I also need to mention the great work that was done at the Eagle h awk Community House cooking meals. It was lucky that they received a Stronger Communities grant to purchase a new freezer , because last year and this year their kitchen has not stopped cooking, freezing and delivering meals to people in need. They've changed the way that they do their regular community lunch. Usually we gather in their space to share a meal. These days , the community lunch is delivered to people's front doors. But, j ust as vital, there is still that social connection and making sure that people don't go hungry.

Another example that I wanted to share about a charity that is doing work in my community that has been hit hard by the pandemic and is finding ways to get around it is Uniting Vic. Tas. During the peak of the pandemic last year , the Forest Street service delivered over 3,000 parcels to peop le in need in a COVID- safe way. Their food relief program, whilst it is funded by another part of government—and they did receive some top-up from government—is cross-subsidised by the money they make through their op shops. These are op shops that were closed for significant chunks of last year, op shops that are staffed largely by volunteers who weren't engaged or who were encouraged to stay at home because they were in the high-risk category for most of last year. As a result, their donations are down and their receipts are down. It has put the service at risk, and they are now seeking ways as to how they can continue to deliver food relief to people in need.

The charity sector is going through unprecedented change, being hit hard by the pandemic. Whilst there was some support from the government last year, it hasn't continued. It also hasn't been enough. While they are going through these radical changes—changes to the donations that they're receiving, changes and interruptions to how they can support people—now, more than ever, they need a government that's on their side. Now, more than ever, they need to have the confidence to speak up publicly about what their clients and volunteers are experiencing, and be part of the public discourse. That is why it is disappointing that, although, in this bill, the government seek to help charities through these minor changes to Treasury law, they also in another area seek to attack our charities through trying to silence them or limit what they can say. Contributions made by government members don't hide that fact.

As previous speakers on my side have said, we should be embracing our charities being part of the discourse. They are helping to share Australia's story, our narrative. Particularly in these difficult times, we need them to be publicly speaking up and telling us what needs to change. You cannot support charities on the one hand and then say that limits you or stops you from being able to speak publicly about the very sector you are trying to support. It is not just our emergency relief and faith based organisations that are feeling this pressure; it's also organisations who are speaking out about family violence—who are speaking out about supporting women and children who are fleeing domestic and family violence. They, too, do vital on-the-ground work and find it hard to divorce that vital work—the work where they need government support, need government funding—from being part of the public discourse about what needs to change to help their clients. The government shouldn't be afraid of this accountability that's been put forward by the charities and not-for-profit sector. They should be embracing it, bringing them into the fold and helping them be part of the conversation for change.

Our charity sector across our country is what is holding us up through these difficult times. Whilst business is under attack, whilst workers are under attack, whilst we are in this health crisis, our charities are filling the gaps—quite often, gaps that have been created by the complexity of the government's social welfare system, where far too many people are falling through the cracks. I urge the government to consider what we've put forward in our second reading amendment and to drop the attacks on the charities sector that they've waged in other areas. Although these reforms are welcomed, they are only minor and do not make up for the huge attacks on our charities sector, particularly in relation to services like emergency relief, over the last few years that the coalition have been in government.

The second set of changes before us is supposed to target multinational tax. It takes me back to one of the first reports we received in parliament—a representation that was made back then by the United Workers Union, who prepared a report to say who was paying for our Commonwealth. Tax avoidance by multinationals and big business has been on the agenda for years now, for decades, yet all we see from this government are these minor amendments before us today. They just don't go far enough to do the reform that we need. There is an opportunity here for the government, at a time when our country needs it, to be really progressive, to be really bold and to ensure that big companies and multinationals are paying their fair share of tax. Our country needs it. We need this for our economic reform. We need this for our post-COVID recovery. It's simple maths: if wages are down, if tax receipts are down and if GST is down because people aren't spending in small businesses because workers aren't earning what they used to earn, let alone getting a pay rise, then we will have less when we need more.

An area where this government has been lagging has been multinational tax reform and ensuring that companies pay their fair share of tax. The statistics are alarming. One-third of large companies in this country pay no tax on their profits. They can afford the big accountants. They can afford to work out how to avoid their tax. Some of them are paying tax; some of them are making donations through charities—they're choosing where they want their tax to go. That's a debate for another day about whether we think it's fair that they decide where their gifts—their tax, so to speak—go. Whilst it's welcome that they're being charitable, they're also receiving a tax deduction, which means they are contributing less towards the broader Commonwealth.

The Treasurer talks a big game when he talks about supporting global tax reform, yet we've seen very little come forward. It is another one of those great marketing exercises and a lot of spin. We know the Australian people want to see fairness in our tax system. We know that they agree that big companies should be paying tax. Many of these big companies who've paid no tax have also benefited from JobKeeper rorts in the last year. This, again, is money that could be going back into our Commonwealth and back towards the businesses and the workers that have so desperately needed it this year.

As we get to the end of this pandemic and once we reach the finish line of vaccinations, we are going to need reform to our tax sector to ensure that we have the resources, the dollars, that are required for the recovery. If we don't have them, then we will have a patchy recovery. We will have a recovery that sees many continue to miss out on opportunity. We won't have the resources that we need to boost our TAFE, to boost universities and to make sure we invest in industries that will deliver the jobs of the future. There is such opportunity for us if we can just get our tax system right.

For the average worker, it's about fairness. It's about making sure that that large company pays its fair share of tax. It's pretty alarming when we think that it was a group of cleaners, a group of guards and their union that, back to 2014, put forward a paper that challenged our thinking about who's really paying for the common wealth. We live in a broken system when workers who are on minimum wage are contributing more towards our common wealth than big multinational companies or big companies. Just because you have the means, the capability and the smart people to work out how to avoid paying tax doesn't make it right. It just makes you rich and it just makes you able to use the system.

This isn't the politics of envy, as the Prime Minister would say; it's the politics of common sense and it's making sure that everybody pays their fair share. That's how we ensure that our Commonwealth has the resources for a universal health system, which has really been put to the test this year and last year. It's how we ensure that our Commonwealth has the resources for a well-funded university and TAFE sector that ensures that nobody misses out on a university place.

I strongly urge the government to do more work both on tax avoidance and on support for our charities. Whilst Labor supports the bill that has been put forward, there is a real opportunity here to do more. Our charities sector needs support, our charities sector needs fewer attacks and our workers and our Australian community expect the Australian government to do more when it comes to ensuring large companies pay their fair share of tax.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I begin my contribution to the debate on the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 by acknowledging all of the different charities around Australia and everything that they've done to support Australians during this very difficult period with the pandemic and the effects it's had on Australians and Australian families around this country. Australian charities have supported and continue to support so many hundreds of thousands of people, particularly those who have become vulnerable because of insecure work or casual work and those who haven't been supported by the government's actions. At the outset I want to address something that was said by the member for Barker, who was scoffing at the idea of Catholics processing on Palm Sunday. He suggested that it was fanciful that people processing could ever lead to a situation where a government that was overly focused on control and silencing dissent could use this legislation against its own citizens, including those of the Catholic faith—my faith—and other Christian faiths. On Palm Sunday in Darwin we have a procession down Smith Street where Anglicans, members of the Uniting Church and members of the Catholic congregation come together and walk down that street with palm fronds. At times during these processions we speak out against injustice because we are led by the message of Jesus.

Another clear example where this legislation could be used unfairly against Christian charities is also in Darwin, where at the moment we have citizens of Iran who fled their country and came to Australia to save their lives. Some of them are Christian and some are not. Many of them have been in detention for around eight years. Members of various churches, including the Catholic bishop Charles Gauci, go to the fence because every day we have a rally at the fence at 5 pm in solidarity with these people who are imprisoned within the Darwin airport. Some of them have been released into community detention. But there is still one family in detention, and we do not know why the minister is not releasing that last family. Their health and wellbeing have been deteriorating steadily in the time that I've been visiting them. This is a blight on our nation. The people that I represent are sick of the injustice, the wilful damaging of human beings whose only crime, in the eyes of those opposite, was to seek asylum. They will be settled overseas, but until then it escapes us why those opposite would not release them into community detention while they await settlement in another nation. My point is that, if someone at one of those 5 pm rallies in Darwin in solidarity with these genuine refugees were to come into contact with a member of law enforcement because they happened to go onto the road during a rally and that person was a member of a charity such as St Vincent de Paul, a fine charity that I'm a member of, under this legislation that charity could have its charity status taken away. I say to the member for Barker: you shouldn't scoff at the traditions in our Christian faith and you shouldn't try to belittle in any way the passion of the members of these charities for human rights and justice.

This bill amounts to a continuance of the federal government's crackdown on charities. All of us in this place should know how important and valuable charities are to our community. But just think about this for a second: at the moment in the Northern Territory our not-for-profit sector is worth more to our community than mining. I hope that changes in the future as we open up more mines in the Northern Territory, but it is significant. That's the point: it is a significant part of our community and a significant part of our economy. So this is about respect. This is about respecting charities, because where do so many billions of dollars of donations to these charities come from? They come from the Australian people, and the Australian people decide to support these charities because they believe in what they're doing, they believe in advocacy and they believe in holding government to account. So you've got to ask yourself: why is this government, after eight years, continuing to try to crack down and silence charities?

More than 10,000 people are employed by Northern Territory charities, with another 11,000 volunteers on top of that. Out of our relatively small population, that's significant. And the charities sector feeds over $615 million back into the local economy each year. As I said, I'm very proud to volunteer with Vinnies and veterans organisations. Veterans organisations with the deductible gift recipient status—are we saying that if a member of one of those veterans organisation, which are fighting for a better deal for veterans, comes foul of this legislation then the RSL are going to get their charity status taken away? Mates4Mates? Soldier On? Think about it. There is a lot, after eight years of this government, that veterans have endured. We had to drag the government, kicking and screaming, to announce a royal commission when we had more veterans take their own lives than we've had die in combat over 20 years in Afghanistan. So I again say to the government: think. Think about what this sector does.

There are many charities I could mention in the Northern Territory that do not deserve to be cracked down on. An Aboriginal men's shelter that I'm working with; Foodbank; Variety; PAWS, which is looking after animals; and Aboriginal organisations—one of which, a philanthropic organisation, is putting its hand into its own pocket to help the Northern Territory government implement the Aboriginal Justice Agreement. That is new news; it's happened today. That's the not-for-profit sector joining with the NT government to work through and implement the Aboriginal Justice Agreement. I ask the minister that's sitting here with us at the moment: are those opposite really saying that someone who is advocating, using their voice to speak up—as we know, the Closing the Gap update just happened this week—and protest about deaths in custody, about the shocking rates of Indigenous youth suicide and about human rights abuses? Are we really saying that if any of those individuals use their voice to speak out then the deductible gift recipient status of some of those organisations will be taken away? Let's think about this and think about who we're silencing.

I think that the Morrison government's proposed governance changes in this sector are alarming and unnecessary, and I do believe they will do real damage. Unfortunately, they've got form in that they rarely pay attention to this sector, the charities sector, until they want to slap another gag on the sector's ability to speak up for the Australian people.

In the past four years, just two of almost 60,000 charities have been disqualified for breaking the law. That's 0.003 per cent, so you've got to wonder what is driving this legislation. There is no such thing as a charity crime wave. The changes would merely give the coalition another set of tools to shut down any criticism—they want charities to be seen but not heard. Charities can already be deregistered for breaking the law and their staff members and volunteers can face penalties.

The coalition—those opposite—want to go even further. Their proposed unfair new rules go far beyond anything that applies to political parties, businesses or other organisations, and if this is enacted, a charity could be deregistered for the most minor offences imaginable. The member for Barker scoffed at one such minor incident that might have been caused, willingly or unwillingly, by a religious organisation. It's absurd. What's more, a charity could be shut down if the charities commissioner believes a minor breach could occur in the future. That is absurd. It's wading into Minority Report territory. Do you remember that film with Tom Cruise, Mr Deputy Speaker Wallace? They go around and get people before they've even committed a crime. That's the sort of territory were getting into here. It reminds me of another Tom Cruise movie: Top Gun. I know the assistant shadow minister—

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

The member for Solomon is drawing a long bow when he starts talking about Top Gun in this regard, unless he's drawing the reference to Minority Report being from Tom Cruise. I'll allow the speaker to go on a bit further, but I'm going to bring him back to his point.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

Fair enough too, Deputy Speaker. What I was getting at is that I want those opposite to stop using our charity sector as a shield. They see it as good for a photo op but then say: 'Don't say anything. Don't advocate, because if any of your members do anything wrong, we'll take your DGR status from you.' DGR status is the very thing that citizens of our nation use to make donations to those organisations, because they believe in what they're doing. Stop using these shields.

Mr Deputy Speaker, this is the final Tom Cruise reference. It goes to another movie: A Few Good Men. We need a few good men, because they're mostly men on the side, to say: 'We can handle the truth! We can hear what members of the charity sector have to say. We're not afraid of criticism, and we're not going to strip away your ability to operate if you step over the lines that we keep drawing in front of you.' Even the Australian Charities and Not-for-Profits Commissioner himself, Gary Johns, has said under questioning during Senate estimates that he has seen no evidence to support the changes to the regulations. The Liberals' own review recommended the existing regulations around unlawful conduct be scrapped. Instead, the Morrison government wants to expand dramatically the scope of the activities the regulations could capture. I believe these changes will be terrible for our democracy.

Freedom of speech is important. We hear that from those opposite all the time, but that belief is inconsistent with what they're doing with this legislation. Deb Di Natale, the CEO of NTCOSS, the Northern Territory Council of Social Service, which is the peak body for our local community sector in Darwin, said 'the regulations are a case of extreme overreach and that it's not clear what problems they are meant to solve'. With only 0.003 per cent of charities having incidents in this area, it is hard to see what problems they are meant to solve.

Commissioner Johns has criticised Beyond Blue and Recognise—the minister at the table, the member for Hasluck, will be well aware of their work—and sees Australian charities as being rife with impure altruism. Scott Morrison should not give him more tools to strip charitable status. We don't want Commissioner Johns to have more tools to strip the charitable status of organisations that only raise their voices to criticise governments, whether it be the current government or a future Labor government.

In summing up, I've worked in the not-for-profit sector, and I stand with faith groups and the community sector, who oppose these very concerning changes. Labor values the contribution that charities and not-for-profits make to civil society, public discourse and the democratic process, and we'll do everything that we can to protect that important role.

Ken Wyatt (Hasluck, Liberal Party, Minister for Indigenous Australians) Share this | Link to this | Hansard source

Firstly, I'd like to thank those members who have contributed to this debate on the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021. Schedule 1 of the bill amends the Income Tax Assessment Act 1997, the tax law, to require non-government entities seeking endorsement as a deductible gift recipient, DGR, to be a charity registered with the Australian Charities and Not-for-profits Commission, or to be operated by a registered charity. Ancillary funds and specifically listed entities will be exempt from this requirement.

The requirement to be a charity already applies to the majority of general DGR categories, in subdivision 30-B of the 1997 tax law. This measure will amend the special conditions applying to the remaining general DGR categories requiring non-government entities to maintain charity registration in order to retain their eligibility for DGR endorsement. The amendments include a 12-month transition period, which will provide non-charity DGRs with time to meet the requirements for charity registration without losing their DGR status. Eligible DGRs may also have access to an additional three-year transition period. This measure will improve the consistency of regulation, governance and oversight of DGRs, in turn helping to support continued confidence in the sector and public support for DGR entities.

Schedule 2 of this bill contains amendments to the Income Tax Assessment Act 1936 which remove the preferential tax treatment provision for offshore banking units, or OBUs, and provide transition arrangements for existing OBUs. In October 2018, the OECD's Forum on Harmful Tax Practices found that Australia's OBU regime contained harmful features. As a result, the Treasurer announced on 26 October 2018 that the government would seek to address the OECD's concerns. The OBU regime has been closed to new entrants since the Treasurer's announcement. Timely passage of this bill will allow the OECD to confirm that Australia has amended the OBU regime to ensure that it is not a harmful tax practice. This is consistent with the Morrison government's ongoing support for international tax integrity, and will protect Australia from potential reputational damage and other possible consequences. The bill provides for two-year transition arrangements to assist existing OBUs to transition away from the regime.

I commend this bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Fenner has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment moved by the member for Fenner be disagreed to.