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

I move:

That this bill be now read a second time.

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 implements the government's commitment to regulate the buy now, pay later—otherwise known as BNPL—sector as a form of consumer credit.

The Albanese government is acting to ensure that our credit laws are up to date and respond to changes in credit markets.

In 2022, we passed legislation to make payday loans and consumer leases safer and better regulated for people who use them.

Now, the Albanese government is taking action to ensure that BNPL products are appropriately regulated.

BNPL is an Australian innovation that has benefits for businesses and consumers. It can provide Australians with access to cheaper credit and bring new customers to merchants.

It's provided competition and alternatives for consumers.

However, BNPL can cause financial harm for some Australians.

A study conducted by Good Shepherd in late 2022 found that around 73 per cent of financial counsellors said their clients have missed other payments, cut back on essentials, or even gone without them, in order to pay and service BNPL debt.

The risks of BNPL disproportionately impact upon vulnerable Australians, including First Nations Australians and those struggling financially.

Currently, BNPL is not regulated by Australia's consumer credit laws.

This means that BNPL providers are not subject to the affordability checks that apply to things like credit cards and other loans. When consumers do get into trouble, they might not have access to effective dispute resolution and hardship processes.

Most Australians would think of BNPL as form of credit and that it should be regulated accordingly. We are acting to do that.

Schedule 2 will achieve this by amending the National Consumer Credit Protection Act 2009 (Credit Act) so that it applies to BNPL.

This means that BNPL providers will need to hold an Australian credit licence and will be required to comply with credit legislation, bringing BNPL into line with other kinds of consumer credit.

We know that one size doesn't fit all. BNPL is different to credit cards, which are different to personal loans, which are different to home loans. As BNPL products carry lower risks than other forms of credit, this legislation regulates BNPL in a proportionate way that provides necessary consumer protections while maintaining the essential benefits of BNPL.

A new category of regulated credit called low-cost credit contracts will be introduced, which most BNPL products will come under. These products will be able to opt in to a modified responsible lending framework, which will allow regulatory requirements to scale down based on certain factors, such as the nature of the product and the provider's harm mitigation procedures.

This will not change the underlying obligation not to provide credit unless it's affordable and meets the consumer needs.

The fee cap requirements for a low-cost credit contract will be finalised through the regulations.

BNPL products that do not qualify as a low-cost credit contract will be regulated as a different type of credit currently captured in the credit act—for example, a small-amount credit contract or a continuing credit contract.

Our approach to better regulating BNPL strikes an appropriate balance between preserving the benefits of access to low-cost credit and addressing the risks of consumer harm.

Schedule 1 to the bill contains two tax incentives which help increase our housing supply to deliver more homes for renters by encouraging investment in the build-to-rent sector.

We need to build more homes and we need to do it more quickly, in all parts of Australia. That's why the Albanese Labor government has an ambitious national goal of building 1.2 million homes by the end of the decade. We're working across government, and with states and territories, on our plan to help meet this target.

The government has made $32 billion in new commitments since coming to office, including $6.2 billion in the 2024-25 budget, to address historic underinvestment in the Australian housing system.

Incentivising construction of new build-to-rent developments will increase rental supply at scale at a time when there is acute shortage of new rental stock.

Build-to-rent developments are specifically designed to be rented out rather than sold to individual buyers.

It's a model that has been used successfully overseas to increase housing supply and is designed to supplement and not replace other forms of rental housing or home ownership.

Build to rent is still a nascent industry in Australia and to date has generally been more focused on luxury developments. Our changes are intended to increase rental housing supply more broadly, including in the area of affordable housing.

For eligible new build-to-rent developments, the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments will be reduced from 30 per cent to 15 per cent.

The depreciation rate for capital works in eligible build-to-rent developments will also be increased from 2.5 per cent to four per cent per annum. This will cut the depreciation period from 40 years to 25 years for eligible developments.

Build-to-rent developments will need to meet criteria to be eligible for the concessions. Key requirements include a minimum of 50 or more apartments or dwellings and minimum lease terms of three years must be offered for each dwelling.

Build-to-rent developments must be held under single ownership for a minimum of 15 years. At least 10 per cent of dwellings must be tenanted on an affordable basis, delivering more long-term affordable rental supply.

We need to make use of every lever available to improve the supply of housing, which is the only long-term solution to Australia's housing challenge.

Schedule 3 to the bill amends the Medicare Levy Act 1986 to exempt eligible lump sums payments in arrears from the Medicare Levy from 1 July 2024.

This measure forms part of the government's response to the Senate Economics Committee's inquiry into unlawful underpayment of employees' remuneration.

It ensures that taxpayers who receive an eligible lump sum payment, such as to remedy the previous underpayment of salary and wages, do not incur an additional Medicare levy liability.

I'll turn to schedule 4 of the bill, and pay credit to my colleague the Assistant Minister for Competition, Charities and Treasury. This schedule establishes Australia's public country-by-country reporting regime. Assistant Minister Leigh has been working hard on these provisions to implement the government's election commitments. It will require certain large multinational enterprises operating in Australia to publish selected tax information on a country-by-country basis for the jurisdictions in which they operate. This implements a key election commitment of the government and will establish one of the world's most comprehensive public country-by-country reporting regimes.

Why are we doing it? Public country-by-country reporting will provide the community with a better understanding of how much tax multinationals pay relative to their activities. It puts the onus on large multinationals to be upfront about where they pay tax and how much they plan their tax strategies.

These are entities who have annual global income of A$1 billion or more, and with at least $10 million of Australian sourced (aggregated) turnover.

Public country-by-country reporting represents a major step forward for tax transparency and maintains global momentum towards improved tax integrity.

Driving better corporate tax transparency will improve public policy frameworks by enhancing the public debate on taxes paid by multinationals and, in turn, the appropriateness of current tax settings.

The government has ensured this measure is appropriately balanced. For example, exemptions will be available to protect entities from disclosing data that is commercially sensitive or has national security implications. However, to ensure the integrity of the public country-by-country reporting regime, the exemptions will be at the discretion of the Commissioner of Taxation. The Australian Taxation Office will provide comprehensive guidance on this exemptions process to assist taxpayers in complying with the new regime.

The schedule applies from 1 July 2024 and entities will publish their first public country-by-country report within 12 months after the end of the first reporting period.

The government will finalise the specified jurisdictions list to be subject to disaggregated country level reporting by legislative instrument, subject to passage of the bill. This list will complement the European Union's directive on public country-by-country reporting.

Schedule 5 to the bill amends the income tax law to specifically list the following entities as deductible gift recipients. The following organisations will be listed and have DGR status:

The listing of these entities encourages philanthropic giving and supports the not-for-profit sector as donors may claim income tax deductions for donations to organisations with DGR status.

Schedule 6 to the bill amends the Federal Financial Relations Act 2009 (FFR Act) to support Commonwealth payments to the states in accordance with the new National Skills Agreement (the NSA) and any successor agreements.

The NSA took effect from 1 January 2024, replacing the National Agreement for Skills and Workforce Development with improved co-funding arrangements and reforms agreed with states and territories.

The bill will replace section 12 with section 12A, which will allow the minister to determine funding to be paid to the states that is consistent with their entitlement under the National Skills Agreement. States will be required to use funding in accordance with the terms and conditions of the agreement. The bill also provides for NSA payments under section 12A to be treated in an equivalent way to similar payments in the FFR Act.

Finally, schedule 7 to the bill will support small-business growth and investment through a targeted 12-month extension of the $20,000 instant asset write-off.

Up to four million small businesses, with aggregated annual turnover of less than $10 million, will be able to immediately deduct eligible assets costing less than $20,000 until 30 June 2025.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

For assets for eligible small businesses which cost $20,000 or more, they can be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.

This measure builds on the Albanese government's record of delivering measures to assist small businesses.

Full details of the measures are contained in the explanatory memorandum.

Debate adjourned.