Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023 does several things. In September, the Treasury released a two-year roadmap for reform of our tax ecosystem. This bill is part of that reform, the catalyst for which was the PwC tax leaks scandal. In May this year we learnt that a consultancy firm to the government, PwC, had used information gained from its consultancy to promote tax avoidance and evasion. Not only did it fail to report a serious breach of confidentiality, despite having a legal obligation to do so, it then fought tooth and nail, repeatedly, to claim legal professional privilege to withhold information during tax audits.

The scandal exposed serious and apparently systemic problems not just in PwC, where more than 50 staff members were directly involved or had knowledge of this leak, but also in the corporate behaviour of the companies implicated in this scheme. This bill therefore expands the promoter penalty regimes currently used to deter the promotion of tax avoidance and evasion schemes by including those which fall within the diverted profits tax provisions or the multinational anti-avoidance law. It increases the maximum penalties applicable under the promoted penalty regime to levels which will now be significant. They won't just represent the cost of doing business and be brushed off by those who profit from tax exploitation schemes.

The bill prolongs the period during which the commissioner can take action against an entity, and it extends the scope of the promoter penalty laws to apply to all ATO rulings. It extends at the whistleblower protection to eligible whistleblowers who make disclosures to the Tax Practitioners Board and permits disclosures to people who may assist whistleblowers, such as psychologists or medical practitioners, or those who might be prescribed by future regulations such as professional associations.

The bill introduces reforms relating to the operation and powers of the Tax Practitioners Board. It extends the default period in which the TPB must conclude investigations, giving it an extra 18 months. It also permits the TPB to publish the results of investigations with more information about the investigations than they can presently divulge. The bill will permit taxation officers and TPB officials to share protected information with Treasury about breaches or about suspected breaches of confidence with the Commonwealth. It will allow taxation officers and TPB officials to share protected information with prescribed professional disciplinary bodies.

These are all important measures and decisive action is warranted. However, the period for consultation with industry about the way that the changes suggested in the bill will operate and interact with existing state and territory regimes has been very limited. A two-week period is far too short for a quality consultative process. For example, the Law Council of Australia, which acts on behalf of 16 law societies and bar associations and 90,000 lawyers, has said that a truncated consultation process risks introducing laws that are not fit for purpose and which may require subsequent amendments. A two-week consultation period does not require, represent or provide adequate time for effective consultation, especially for representative bodies such as the Law Council. Similarly, Chartered Accountants Australia and New Zealand have said that brief consultation time frames do not promote the achievement well-considered and workable policy outcomes. They suggested that objective integrity and governance reforms cannot be achieved efficiently unless the measures are designed carefully and implemented appropriately by all stakeholders.

As a person on the crossbench in this place, I can appreciate the criticisms by others in relation to legislation made on the run, and the often extremely limited opportunities that we're given to review proposed new laws. Again and again, we are denied the opportunity to consult with experts in the field or with our communities—to consult broadly and consider the broader application of these laws and how they impact on other policy areas. Sadly, we've seen that again in this House in the last few weeks—and even in the last 24 hours. Today we find ourselves in the invidious position of having to vote for a bill that contains provisions which been arrived at too quickly and with limited consultation—a bill which responds to a problem which is undermining public trust and which must be addressed urgently. As parliamentarians, it is our responsibility to scrutinise the work of government—to represent the interests of the public in decisions and laws which are made here. I take that obligation very seriously and, frankly, I feel that the opportunity to fulfil it is far too frequently stymied by this government.

But wait: there's more! This bill, oddly—and randomly—also deals with an amendment to the Petroleum Resource Rent Tax Assessment Act 1987. The PRRT currently allows very generous deductions for capital investment. This limits significantly the revenue raised from fossil fuel companies like Santos and Woodside—gas companies which are currently reaping billions in profits. The bill, as it is, caps the availability of deductible expenditure incurred in relation to a petroleum project for a tax year. As it's being proposed today, this bill means that the offshore LNG industry will pay more PRRT more quickly than it would under the current regime. But the bill will cap deductible expenditure to a maximum value of 90 per cent of assessable receipts in respect of each LNG project in the relevant tax year. So a company will have to pay PRRT on only 10 per cent of its income after an initial seven-year grace period. While this change is consistent with the recent recommendation from the Treasury's gas transfer pricing review—which was, let us remember, commissioned in terms made by the former government—in my view it does not go anywhere near far enough. For the last 18 months I have been calling for changes to the way that the PRRT is levied in this country. The government is talking about an additional $2.4 billion income from our fossil fuel industry over four years. While of course we welcome all positive changes, this is a piddling sum! I can only imagine the amount of lobbying by the oil and gas companies that took place to ensure that this government adopted this 90 per cent price cap.

Our government is selling us short. What can we do? As a start, I would suggest that the deductions cap should be 80 per cent, not 90 per cent. Doing so would increase our fiscal balance by about $2.9 billion and the underlying cash balance by about $2.6 billion over the 2023-2024 forward estimates period. My constituents regularly express their extreme frustration at the inadequacy of the tax paid by multinationals, especially by offshore oil and gas companies. We have a weak resource tax regime; it's far too generous to the oil and gas companies. The windfall profits that these companies receive are grossly unfair and they're selling us short. Norway has amassed a $2 trillion sovereign wealth fund. On 1 September 2023, our equivalent, the Future Fund, was worth $205 billion.

The bill is extremely problematic. It conflates two separate but individually important matters, which should, more appropriately, be treated separately. They've been bundled together in what might cynically be suggested as preventing a veto to the more contentious elements of the bill.

The Albanese government has to stop presenting omnibus bills of this nature to the House. This combination of disparate policy issues deserving of much greater and more mature interrogation and consideration than is currently allowed by the time frame of the legislation development, and for the debate allowed in this House, is undermining the Albanese government's credibility. It is detracting from the government's capacity to present clear and coherent policy, and it is detracting from other members of the House's ability to hold the government to account, to provide useful suggestions for improvement of legislation and to represent our constituents to the best of our abilities.

The Australian public is already experiencing a crisis of trust in government. A Roy Morgan report in September this year referred to the moral blindness displayed by many of Australia's corporate leaders. This lack of professional integrity has been enabled by a culture of contempt for process and for principle. We can restore trust only by acting ourselves with the utmost respect for due process, by acting with consideration and judiciousness in our composition and our consideration of legislation. I'm very disappointed that the government is failing to do this and that it is depriving other members of this place of the ability to do so.

I cannot commend this bill to the House.

Zoe Daniel (Goldstein, Independent) Share this | Link to this | Hansard source

There are two key questions here: of process and of ambition. First, to process. This bill, the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023, is an absolutely ridiculous document. Euphemistically titled 'tax accountability and fairness', the bill bundles together two miscellaneous and completely unrelated measures. This is a wedge if ever there was one. In what universe, other than a political one, does it make sense to put integrity changes relating to the PwC tax leaks scandal into the same bill as the government's lowballed tax changes to the PRRT. Other than the word 'tax', these two issues bear zero relationship to each other.

When it comes to the PRRT element of the legislation, what the government is proposing is far from adequate and is therefore difficult to support. This means that members of this place, again, have to choose between voting for the bill because of some of the positive measures in it or rejecting it because it has a major flaw.

The government has lowballed the opportunity to get a real return to the Australian people from the mega profits our gas producers receive. The gas giants, predominantly foreign owned, have had more than a free ride over recent years. Indeed, since Vladimir Putin's illegal invasion of Ukraine, they've been making windfall profits they could never have factored into business or investment plans. This is free money for them, and a wasted opportunity for this government, at a time when the community is facing a severe cost-of-living crisis. The government is paying the political price for being seen as having failed to address it as comprehensively as the public thinks it should.

As I've been saying for more than a year now, we should be taxing these multinationals on their windfall profits, not letting them make megamoney via the exploitation of an asset owned by all of us: the fossil fuels deep underground and underwater. The value of LNG exports rose by more than 60 per cent in the past year to $90 billion, but the revamped PRRT is forecast to bring in less than one per cent of that. Something isn't adding up—or maybe it is, given the historical relationships between governments and big business, especially fossil fuel companies. Woodside, for instance, booked a record profit of $9.65 billion after tax in the last financial year. Broad based tax reform and appropriate taxation of what lies beneath our feet would assist budget repair. Minerals in the ground and under the sea are publicly owned assets exploited for private gain.

Australia's prosperity has been built on public access to affordable energy—not anymore. Energy consumers, households and businesses are feeling the squeeze as never before. The government has provided some relief, but, while energy bills are not as high as they might have been, households and businesses are still feeling the pain. As we manage a precarious but essential shift to clean green energy, consumers deserve insulation from the undeserved bonus that gas producers have received because of the death and destruction that Vladimir Putin has wreaked upon the people of Ukraine. As I've said before, we need to end subsidies on the use of fossil fuels, we need more substantial reform of PRRT to ensure greater returns to the taxpayer, we need a road user charge and we need support from the Commonwealth to reform tax measures as they relate to property. I will be supporting the member for Warringah's second reading amendment.

In the lead-up to the budget, the Treasurer had three options in front of him on the PRRT. We discovered, courtesy of the Australian Financial Review, that he chose the option the gas producers wanted. What a surprise. Obviously it was the option that would cost them the least. The government estimates that its new approach will raise no more than $2.4 billion over the next four years—a drop in the bucket. Treasury presented the Treasurer with two other options, one of which would have effectively seen an 80 per cent deductions cap for the petroleum resource rent tax, as specified by the member for Warringah's amendment. The AFR calculated that, at current prices, that option would have brought in $21.9 billion in 2023-24 alone. Instead, as the paper put it back at budget time:

The big gas producers can go back to what they do best—exporting huge amounts of Australian gas and printing money …

The government may wonder why it's on the back foot and losing support with the public. Well, here is one of the reasons: they're doing the gas giants' bidding rather than doing more to help hard pressed households put food on their tables, pay for their kids' education and keep a roof over their heads.

In short, as I and several other Independent crossbenchers have been urging, the government should be looking at targeted initiatives as investment rather than merely a budget impost. For example, earlier this year I proposed lifting Commonwealth Rent Assistance by 40 per cent rather than 15 per cent. This measure had the support of the Grattan Institute and a number of eminent economists. They advised that it would not significantly add to inflation while easing cost-of-living pressures on low-income households. The cost over the forward estimates according to the PBO was not insubstantial—less than $5 billion—but that is affordable given the improved budget position and even more so with proportionate resource taxes. This would also reduce the downstream cost to the economy of the impact on the health and employment prospects of these hard pressed renters. As we saw during COVID, assistance to those who are struggling most eases a range of costs on the system and, in doing so, lifts all of us.

There is other low-hanging fruit. For example, the take-up of rooftop solar in my electorate is lower than it should be. I'm investigating how we can incentivise solar batteries and other household improvements, electrification, insulation and double glazing because, as the climate change minister has acknowledged, we're still struggling to get to 43 per cent by 2030, and these measures would also reduce household expenses. Then there's mortgage stress. AMP estimates that the greatest risk is among the 62 per cent of outstanding home loans taken out between 2020 and mid-2022. Pollster Kos Samaras says that, by the middle of this year, over 1.1 million borrowers in just New South Wales and Victoria were experiencing negative cash flow. In other words, their income wasn't enough to make repayments and meet other household expenses.

One idea worth a closer look is an idea dubbed 'HomeKeeper' by historian Chris Wallace. She suggests a program to allow the government to take a small equity stake in a property where the mortgage holder is suffering mortgage stress. The equity would then be held in a government housing trust until repaid on market terms. The assistance would go straight from the government to the bank, ensuring it didn't add to consumption and inflation. I plan to run the ruler over this idea and see whether it stacks up. One thing is for sure, without braver action and without taking some bigger steps, the widespread and growing alienation of voters from our democracy will worsen. I saw it in the United States under Donald Trump, and I'm seeing worrying signs of it right here now.

I also campaigned during the election for an independent, well-resourced inquiry into our tax system. That was not just about stage 3 tax cuts, but if inflation is going to be higher for longer, as RBA governor Michele Bullock predicts, surely they need to be in the mix. Labor lost the support of aspirational voters in the election, and the signs are there from research by Kos Samaras and the latest Roy Morgan survey of stress among mortgage holders. The government surely wants to get out from under this. There is only so much I can do is an Independent, but, as we've just seen with the government's decision to split the closing loopholes legislation, good ideas and persistent advocacy can make a difference for the better, even without the balance of power. In this case it goes to the revenue available here that could be put to good use should be government decide to tap it properly.

There is another important element to the member for Warringah's amendment. It says:

… the Government must stop presenting omnibus bills of this nature to the House combining complex, disparate policy issues that require greater interrogation and consideration …

We saw it with the closing loopholes legislation, and now here we see it again. It's an insult to the House and an insult to the voters we represent. Throwing everything, including the kitchen sink, into a bill is not good practice.

There are elements to this bill to provide some, but not much, more protection for whistleblowers, through extending protection for eligible individuals who report to the Tax Practitioners Board and reversing the burden of proof for certain protection claims. It is part of the government's response to the PwC tax leak scandal. The government deserves a small hand clap for this action. These reforms are needed, but, coupled as they are with the damp squid reform to the PRRT, I will not be voting for this bill. I note that we still don't have the broader protections for whistleblowers foreshadowed by the Attorney-General at the time the legislation passed through the parliament to establish the National Anti-Corruption Commission.

In 2019, Labor went to the election promising a whistleblower protection authority. Mysteriously, despite rising public concern about corruption, rorts and pork barrelling, that promise disappeared from Labor's platform for the last election. Without a whistleblower protection authority and assistance for those with the courage to call out corruption, whistleblowers will remain a threatened species, as we've seen so recently with the appalling treatment meted out to David McBride.

As I said, this is a small step in the right direction, but, again, if the government wants to regain the initiative it should go the whole hog on pork barrelling: establish a whistleblower protection authority or, at the very least, a properly resourced and funded commissioner to the NACC with specific responsibility for whistleblowers and whistleblowing. For the reasons outlined in this speech, I will not be supporting this bill.

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

The biggest issue in the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023 is that it rams together two important but unrelated issues: addressing the PwC tax scandal and increasing the petroleum resource rent tax. It's hard to see the combination of these two unrelated issues in this bill as anything other than a blatant political wedge. Many on the crossbench want to see Australia earning better royalties from gas companies and think that this amendment to the PRRT is wholly inadequate. At the same time, many on the crossbench want to see greater transparency and accountability for tax advisers and consultants.

My first concern is that, when unrelated issues are combined, the values of the electorate are not able to be expressed accurately in a simple vote. This is not fair, and it does not result in better legislation. That issue aside, I'll speak about PwC and the PRRT in turn. We learnt from the PwC tax scandal that the regulatory responses we have at our disposal to deal with misconduct by tax advisers are sorely inadequate. It's important that we hold people who offer financial and taxation advisory services to very high ethical and professional standards, and, where they fall short or where there's misconduct, we need to know any regulatory response will be appropriate and timely.

This bill includes a suite of amendments to address the regulation of tax advisers and their conduct, and I'll comment on a couple of those. Firstly, on tax avoidance schemes: the existing legislation to deter tax advisers from promoting tax avoidance and tax evasion schemes is clearly no longer fit for purpose. Sophisticated financial advisers and tax promoters are always on the lookout for ways to outsmart and exploit the legislation. These amendments will allow the ATO to widen the net to apply these laws to a broader range of persons who are advisers and promoters and to entities, as well as to a broader range of schemes, and they significantly increase the civil penalty regime and the maximum penalties available. This is a good thing.

Secondly, on the disclosure of alleged misconduct: in light of the PwC scandal, these reforms will also capture any tax adviser or practitioner who discloses or misuses confidential information. The proposed amendments that pierce the secrecy provisions are particularly welcome. Ordinarily, regulators at the ATO or Tax Practitioners Board would not be permitted to disclose details of serious misconduct that they're investigating. In cases that involve breaches of confidentiality of a government agency, there's currently a significant delay before the alleged breach is reported to the government and, consequently, an inevitable further delay in any appropriate interim regulatory response, by which time the public interest has likely not been served. These amendments now permit the ATO or Tax Practitioners Board to disclose suspected breaches direct to Treasury and/or to the appropriate professional disciplinary body and will give us some confidence that the regulatory or disciplinary response at an agency or ministerial level might be more appropriate and timelier.

Thirdly, on whistleblowing: the amendments include better protection to eligible whistleblowers who wish to report and disclose alleged professional misconduct to the Tax Practitioners Board. Currently, disclosure of information to the ATO commissioner attracts whistleblower protections but disclosures made to the TPB do not. This makes no sense. It's an important part of maintaining integrity in our democracy that people who bear witness to wrongdoing feel comfortable and safe to speak out.

I've spoken about this on numerous occasions, and I particularly welcome any amendment that recognises the valuable role whistleblowers can play in our democratic process, the personal cost to themselves in doing so and the appropriate protections we should be offering them, but I don't understand why the government has seen fit to prioritise this whistleblowing amendment when the pressing amendments to the public interest disclosure legislation remain outstanding. This represents a piecemeal approach to protecting whistleblowers, and I continue to call for a more holistic approach so that whistleblowers are protected no matter which agency they are speaking about.

I also want to talk about what's missing in this PwC response. While these changes go part of the way to addressing the loss of trust in the government's use of consultants, they don't go far enough. A big part of the PwC scandal was public horror at the cosy relationship between consultants and the government. We heard some astounding numbers. Over the last 10 years, donations from the big four consulting companies have amounted to $4.3 million, and during that time the value of the contracts awarded to big four firms has quadrupled—and that's just the direct donations.

There are also mutually beneficial arrangements, like PwC hosting the annual post-budget dinner for the government. Everyone wins in this arrangement, except, possibly, the taxpayers. PwC pays for a fancy dinner—a fairly modest in-kind donation in the scheme of things. PwC makes these tickets available to its clients, proving it has exclusive access to government ministers on budget night. Its clients buy tickets for thousands of dollars, which go straight to the political party in power at the time. This is not considered a donation because you get a dinner for it. So the politicians win, the consultants win and the big companies who use the consultants win—cash for access. This cosy relationship must also be addressed if the government wants to move on from the PwC scandal.

Now to the PRRT: this Treasury bill also addresses amendments in relation to the petroleum resource rent tax, introducing a cap to the availability of deductible expenditure incurred per project per taxable year. The government says that this means the offshore LNG industry will pay more PRRT sooner than under the current PRRT regime. It's a start, but it's a very small change in the scheme of things. Clearly, the PRRT is currently failing to deliver a proper return to Australians. This is something I've talked about for some time. Australians should be entitled to get fair value for the resources that are extracted from our country.

We have the weakest resource rent tax in the world. In 2022 two-thirds of the gas extracted in Western Australia was not taxed at all. It's worth drawing comparisons with Norway, which has a significant resources industry. Norwegians receive a bigger share of the profits from its oil and gas sector through a 22 per cent corporate tax rate as well as a 56 per cent special petroleum tax. Norway has taxed these profits at the combined rate of 78 per cent since 1996, with the result that Norway's state pension fund is worth $1.9 trillion, or $350,000 per citizen. By comparison, in Australia, we calculate our PRRT at a lower rate, which amounts to a total combined tax of 58 per cent, versus Norway's 78 per cent

Oil and gas projects have significant upfront capital expenditure over many years, amounting to billions of dollars. This expenditure is carried forward as deductions against any revenue, so these projects don't make a profit for some time. The PRRT has been designed so that oil and gas companies don't have to pay anything for the oil and gas they're extracting until they've effectively paid off their capital costs. In the context of a warming planet, driven by the use of these fossil fuels, this doesn't make a lot of sense. This legislation creates a 90 per cent deductions cap, so fossil fuel companies have to pay at least 10 per cent of what they're supposed to. This is still extremely low. It was the lowest of the options considered and, unsurprisingly, the option preferred by the gas industry. There's also a seven-year exemption to the deductions cap, which encourages new fossil fuel development, contrary to our commitment to the Paris Agreement. Given the damage these fossil fuels—

A division having been called in the House of Representatives—

Sitting suspended from 10:32 to 10:50

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023. To begin, I want to draw attention to the illogical and cynical way the government has constructed this bill. I say 'illogical and cynical' because in this bill the government bundles two fundamentally separate yet extremely important issues into a single piece of legislation. The first part is to close the regulatory tax loopholes that led to the PwC tax leak scandal. The second part includes important changes to the fossil fuel tax. This government, especially in the last couple of sitting weeks of this year, has demonstrated a continued pattern of rushing legislation, tacking important reforms onto totally unrelated bills and attempting to wedge members of parliament on nationally important issues.

I know it is not unusual for Treasury laws amendment bills to often have many schedules, sometimes on widely disparate matters, but in this particular case it's clear the government is trying to wedge members, particularly the crossbench, who want to see improvements on integrity and whistleblower matters but who also see this poor excuse for a petroleum resource rent tax for what it truly is. This is not good legislating. This is playing political games, and members of the Australian public deserve much better from their government and from their elected representatives. I will be opposing this bill on its content, but I will also be opposing it on the principle of poor governance. I call on the government to separate this bill so that the parliament can scrutinise the two issues carefully on their individual merits. This is what conscientious legislators do, and, right now, this bill falls significantly short.

I'll now address the four schedules of the bill that implement the government's response to the PwC tax leak scandal. This scandal was an outrageous breach of confidentiality by a government hired consultancy. PwC used their privileged access to confidential tax law reforms to help corporations avoid a law that they were consulted on. It was a breach of trust, and PwC showed a deep lack of integrity. The reforms in this bill are a step towards ensuring that tax advisers and their professional associations do not engage in this corrupt behaviour ever again. This bill does so by increasing the maximum penalties for those found guilty of promoting tax exploitation schemes and making sure the right people can be captured by these laws when they engage in misconduct. The bill improves the powers of the Tax Practitioners Board to investigate and regulate any wrongdoing. The reforms also ensure information about misconduct and breaches of confidence can be shared with Treasury so they can be responded to. The gaps in sharing information are a big reason why it took so long to identify the PwC breaches.

Most importantly, this bill extends protections for tax whistleblowers. If someone wants to disclose information to the Tax Practitioners Board about misconduct and breaches of confidence, they will be protected. Whistleblowers will be able to seek professional assistance—for example, for psychologists—in making a disclosure, and we know this is important because of the personal and professional toll that disclosing wrongdoing can take. Getting help should not be criminalised. These amendments also protect whistleblowers from detrimental conduct relating to their disclosure of misconduct, like job loss.

These amendments are all important steps in the right direction to make much-needed reforms to our whistleblower protection laws, but they do not go anywhere near far enough. This law introduces protections only for tax whistleblowers. Major gaps still remain for all other types of whistleblowers, in both the public sector and the private sector. In 2017 a parliamentary joint committee issued a report on whistleblower protections. They clearly recommended the following:

This recommendation was clear and concise, and yet more than five years later the government is continuing this trend of promising strong whistleblower protection reforms but, in reality, just tinkering around the edges. They introduce some tax whistleblower protections while ignoring other gaping holes. The result is what the Human Rights Law Centre, Griffith University and Transparency International describe as 'a fragmented, duplicatory and inconsistent landscape of federal whistleblower protections'.

The government—and by that I mean the Attorney-General, the Treasurer, the Minister for Financial Services and everyone whose portfolio deals with whistleblowers—must get on with it and introduce legislation that is comprehensive, consistent and holistic. They must also introduce legislation for a whistleblower protection authority—and I acknowledge that the Attorney-General has issued a discussion paper that's open for comment right now. Such an authority is imperative to ensure that whistleblowers can receive the right advice and support. These reforms are essential to restoring public trust across the private and public sectors, and I'm here to work with government on these comprehensive reforms. I sincerely hope that they take up this invitation.

Now, with a slight feeling of whiplash, I must say, I want to address the other part of this bill. Schedule 5 of this bill amends the Petroleum Resource Rent Tax Act. The petroleum resource rent tax, or the PRRT, is a tax on the superprofits of offshore gas and oil projects. This bill places a cap on the use of deductible expenditure to reduce tax obligations under the Petroleum Resource Rent Tax Act. Reform of this tax is sorely needed, as most offshore gas projects are yet to pay any—yet to pay any!—petroleum resource rent tax. The objective of this tax is to return a share of the profits generated from our natural resources to all Australian citizens. To date, the PRRT has failed resolutely to deliver on this objective.

Projects can reduce their PRRT obligations by deducting all expenses incurred in developing a project, such as the exploration expenses. These deductions can be carried forward indefinitely, and are indexed each year at extremely generous uplift rates. For the first 10 years of many projects, exploration expenses were able to be increased by the long-term bond rate plus 15 per cent. This means that over the first 10 years of a project, deduction credits could compound to five times the initial exploration expense. In total, projects have amassed around $280 billion in credits. These credits are currently being used to offset almost all PRRT obligations. In simple terms, the design of the current scheme means that billions of dollars worth of Australia's natural resources are being shipped overseas with next to no benefit to the Australian taxpayer. Even the Treasury review of the PRRT notes the absurdity of this situation, stating:

… the accumulation of a large stock of carry forward deductions, compounded by uplifting, can defer the payment of PRRT indefinitely.

This process of carrying forward and generously indexing initial capital expenditure contrasts steeply with the typical process for business deductions. There's no indexation of the initial capital costs for businesses. There are almost 15,700 small businesses across my electorate of Indi and not one of them—none of them!—benefit from such generous tax treatment, so why should LNG projects be treated so differently?

With this bill, deductible expenditure is limited to the value of 90 per cent of PRRT-assessable receipts. This means that at least 10 per cent of a company's PRRT-assessable receipts in each financial year will be subject to the PRRT. This change would bring forward tax paid by projects subject to the PRRT. I welcome reforms that will increase the returns that Australians receive for the exploitation and export of our finite resources.

But I will not be supporting this reform, because it simply does not go anywhere near far enough. The government states that this reform will increase government revenue in the short term by around $2.4 billion. Now, $2.4 billion shouldn't be sneezed at; no it shouldn't. But over the lifetime of these projects the government's proposed changes scarcely raise any additional revenue for Australians. Yes, you heard me right: these changes will hardly have any impact on the total tax revenue Australia receives from these projects. The deductions companies can't use in a given years due to the 90 per cent cap will just be rolled over to the next year and indexed and rolled over again and again until they can be used. This bill fails to reduce the generous compounded deductions projects can use to reduce or avoid PRRT, and it fails to deliver a better return for everyday Australians.

These offshore gas resources we're talking about belong to all Australians, and we only get one opportunity to sell them. At the moment, we're giving away these resources for a fraction of their real value, and with this bill that's exactly what we're going to continue to do. It's not good enough. We need a fair return on our resources. We need more ambitious changes to the PRRT, especially so in the context of a cost-of-living crisis and a commitment to a transition in our energy system to achieve net zero emissions. More offshore gas projects won't help Australians suffering under higher bills. No, they won't. We have the most LNG export capacity in the world, yet this isn't helping Australian consumers at all. In fact, the ACCC clearly states that LNG projects have increased the cost of east coast gas prices. Despite record-high international and domestic gas prices we are still getting minimal return from the export of our finite natural resources.

The super profits from gas exports should be funding hospitals, roads and schools right across the country. Imagine the public good we could do if we got this right. They should be supporting households and businesses to improve their energy efficiency and use renewables, instead, though, they are funding dividends for shareholders all over the world. This bill fails to reform the PRRT in the best interests of Australians. What a massive let-down. What a massive disappointment. Generally, I am not one to let the perfect be the enemy of the good; I'm not, but I'm not going to just settle for this one. These measures show a complete lack of vision and ambition for our country. They really do, and they let-down everyday Australians right now.

I now move the amendment circulated in my name:

That all words after "acknowledging the" be omitted with a view to substituting the following words:

"House does not decline to give the bill a second reading, it:

(1) notes that the bill has two important, and distinctly unrelated purposes, being to:

(a) implement a response to the PwC tax leaks scandal, which was an outrageous breach of confidentiality by a consultancy hired by Government; and

(b) reform the Petroleum Resources Rent Tax, by establishing a cap on the use of deductions by offshore gas and oil projects; and

(2) notes that the illogical merging of two unrelated, yet equally important issues into the same piece of legislation is not consistent with the principles of good governance; and

(3) calls on the Government to separate out the provisions of the Petroleum Resources Rent Tax changes from the PwC response provisions, so that they may be considered, debated and voted on in isolation on their individual merits".

James Stevens (Sturt, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

I seek leave to continue my comments.

Leave granted.

Given the damage these fossil fuels do to the planet, even with this amendment, our PRRT structure is encouraging development of new fossil fuel projects at a bargain rate. We allow 90 per cent deductions. Deductions can be rolled over. We value the assets at the cheapest point of the supply chain, and we give a seven-year exception to the deduction cap. These are all choices that we're making about how much revenue we earn from our natural resources, which are finite and, in this case, damaging to the planet. To add insult to injury, since the Ukraine war, these fossil fuel companies have generated additional profits of about $40 billion over and above their expectations. Of this, only 1.5 per cent is collectable as PRRT.

In summary, this change to the PRRT is disappointingly meek. You can't change tax regimes too often because it does have an impact on business certainly. This is a missed opportunity to actually get value for the limited resources that are being extracted that damage the planet and ultimately should be staying in the ground. I'll be supporting the amendments to split the bill, to address these two significant issues separately and to strengthen the PRRT changes so Australians get more value for gas in the limited time that it continues to be extracted.

Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Firstly, I thank those members who've contributed to this debate. I haven't had the opportunity to listen to all contributions, but I have had the benefit of listening to the last two speakers and to think deeply about the issues that they've raised in the course of this debate—more of that later.

Schedule 1 of the bill, just to remind members, amends the Taxation Administration Act 1953 to expand the application of promoter penalty laws, to increase the maximum penalty amounts and to extend the time the Commissioner of Taxation has to bring civil penalty proceedings to the Federal Court of Australia for the promotion of tax exploitation schemes. As members would know, this measure improves the ability of the tax office to target tax promoters. It ensures promoters face material consequences for their actions, deterring them from promoting tax exploitation schemes and protecting their clients from the risk of tax shortfalls, penalties and interests.

Schedule 2 extends the tax whistleblower protections in the Taxation Administration Act 1953 to whistleblowers who wish to disclose information to the Tax Practitioners Board, where they believe the information may assist that board to perform its functions and duties under the Tax Agent Services Act 2009. It also expands the scope of professional assistance available to whistleblowers in making a disclosure and aligns the burden-of-proof requirements with those contained within the Public Interest Disclosure Act 2013. Together, the amendments will ensure that whistleblowers can disclose potential misconduct to the Tax Practitioners Board, which will strengthen integrity within the regulatory frameworks and systems related to tax intermediaries.

The related schedule 3 amends the Tax Agent Services Act 2009 to increase the information published on the Tax Practitioners Board's public register. It removes the 12-month time limit for certain information to remain on the register and extends the time frame that the Tax Practitioners Board has to conduct an investigation. It also better targets the Tax Practitioners Board's delegation powers. The measure enables the Tax Practitioners Board to conduct better investigations into potential misconduct by practitioners, and improves transparency in the tax profession by expanding the utility and functions of the important board which regulates these activities, the Tax Practitioners Board public register.

Schedule 4 amends the secrecy provisions of the Taxation Administration Act 1953 and the Tax Agent Services Act 2009 to remove the limitations in the tax secrecy laws that were, obviously, a barrier to regulators acting in response to the PwC breach of confidence—something that has occupied this parliament's and this chamber's attention mightily over the last few months. This schedule allows taxation officers and Tax Practitioners Board officials to share protected information with Treasury about misconduct arising out of suspected breaches of confidence so that the Treasury can then take necessary action to respond to the breach properly and quickly. This schedule also allows the tax office and the practitioners board to refer misconduct to prescribed professional bodies, enabling them to perform their disciplinary functions. Taken together, these proposed amendments will enable any misconduct similar to the horrendous affair involved with PwC's breach of confidence to be reported and acted on in a timely way, and it will act as a deterrent to future misconduct by intermediaries engaging with the Commonwealth.

I'll turn to schedule 5, which amends the Petroleum Resource Rent Tax Assessment Act 1987 to deliver a fairer return to the Australian community from their natural resources. These changes will mean the offshore liquefied natural gas industry pays more tax sooner, and it will provide industry and investors policy certainty to allow sufficient supply of domestic gas and will ensure Australia remains a reliable international energy supplier and, importantly, investment partner. The petroleum industry makes an important contribution to the economy, including through investment jobs and, critically, energy supply, as we manage our transition to a renewable economy. Its contribution to corporate and other taxes are critical, and the changes in this schedule will ensure that this continues.

I note the comments that have been made in the course of the second reading debate about the packaging of this bill, and I want to say a few things about that. Treasury laws amendment bills routinely contain measures relating to different issues within the Treasury portfolio. I've observed, publicly and privately, that about a third of the legislation that moves its way through this parliament emanates from the Treasury portfolio. The approach of bundling these measures is common. It's efficient and it's something that has occurred for many, many years. To put it in context, this year alone, the parliament has dealt with 11 treasury laws amendment bills. Each of those bills, collectively, have contained a total of 58 schedules. If we were to deal with each of those schedules separately, parliament would deal with nothing else. And, of course, as much as I care about the bills that come forward from the Treasury portfolio, I have to yield to other colleagues who also have important parliamentary and reform measures to bring before this parliament. It's simply a matter of the efficient use of parliamentary time.

In this instance, we have joined several measures related to the tax system and combined them. We'll continue looking for ways to support the parliament to make the process more efficient, saving both time and resources—but also carefully listening to the issues and concerns that are raised by all members of parliament, including members of the crossbench. In this instance, we're proceeding as we have moved the bill. Each of the measures in this bill relate to our taxation system and make a substantial improvement to it. With these comments, I commend the bill to the House.

James Stevens (Sturt, Liberal Party) Share this | Link to this | Hansard source

The immediate question is that the amendment moved by the honourable member for Indi be agreed to.

Question unresolved.

As it is necessary to resolve this question to enable further questions to be considered in relation to this bill, in accordance with standing order 195 the bill will be returned to the House for further consideration.