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

I rise to speak on the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024. I want to specifically address the measures in this bill which will introduce mandatory climate reporting requirements for large businesses regarding climate-related governance, strategy, risk management and emissions targets, including for greenhouse gases. This will include reporting emissions from supply chains, so farmers in regional elections like mine will be impacted by this bill. Businesses who must comply would meet two out of three thresholds: one, that they have over 100 employees; two, that the value of their consolidated gross assets is $25 million or more each financial year; and, finally, that the business's consolidated revenue for that financial year is $50 million or more.

I welcome measures that Australia's major companies must now be transparent with and can be held accountable by investors and consumers when it comes to climate change. We must measure how businesses are progressing as they transition to net zero emissions. We're now living in a world impacted severely by climate change. This is accepted internationally. Indeed, this bill makes sure we are in step with international requirements for a credible climate disclosure regime.

Even though these measures are necessary, which is why I will ultimately support the bill, I want the House to hear and I want to acknowledge that they will be challenging for some sectors. In particular, the measures will be challenging for the agricultural and primary production sectors. Although some farming businesses won't meet the thresholds for mandatory climate risk reporting, it's important to acknowledge that they are part of the supply chain for larger businesses that will. Emissions from the supply chain are known as scope 3 emissions, and scope 3 emissions reporting will require farmers to report on the emissions from production, including diesel and farm machinery in transport, fertiliser and even methane emissions from cattle. This bill is setting out what is going to happen with or without legislation.

Farmers are increasingly required to provide the emission profiles for insurance and banking and to identify opportunities for emissions reductions on their own farms. This may be the case, but I do hear farmers' concerns about meeting emissions reporting requirements. Many farms struggle to calculate and disclose their farm emissions. It's a relatively new part of farming practice. It can be costly, confusing and time-consuming. Many farmers I speak to across my electorate of Indi also tell me that they want to do their fair share in reducing our national emissions but they must be mindful about the expense to their livelihoods. They talk to me about the challenge in balancing these factors.

To get the balance right, it's critical that governments provide the resources and support to get farmers up to speed on emissions reporting and don't leave farmers carrying the cost of compliance. Hearing farmers' concerns about emissions accounting and reductions is why, in the 2022 election and last year, I advocated for federally funded agricultural extension officers. Extension officers would work with farmers one-on-one to adopt the technology, products and farming practices that would help them calculate and then lower their emissions to achieve net zero. These extension officers would translate the science into practice, delivering the research on how to accurately measure soil carbon or what nutritional additives could be used to reduce methane emissions in livestock, for example. The advice must be from local, trusted, neutral, independent officers who know the specific environment that the particular farmer is working in, because the techniques applied in low-rainfall, poorer soils will be different from those in high-rainfall, organically rich soils.

Government funded extension programs have been used historically to help farmers navigate changing times and changing technology. Extension programs have fallen by the wayside in recent times, but I was pleased to see, in last year's budget, the take-up of my idea and the funding of a network of sustainable agriculture facilitators. These facilitators will provide extension services to farmers to build their knowledge of climate-smart practices. This directly replicates my policy, which, I heard from farmers in my electorate, would indeed help bridge this significant knowledge gap. I understand that the design of the sustainable agricultural facilitators is in the final stages and will be delivered by regional development partners, including natural resource management organisations. I very much look forward to learning more as these agriculture facilitators are rolled out, including in my electorate of Indi.

Sustainable agriculture facilitators sit within the broader $302 million Climate-Smart Agriculture Program. This program is all about driving agricultural sustainability, productivity and competitiveness by reducing emissions, building resilience to climate change and conserving national capital and biodiversity. Under the latest budget, I was pleased to see an additional $63 million to support the reduction in emissions in agriculture, including $28.7 million to improve greenhouse gas accounting. The National Farmers Federation welcomed this announcement, saying it aligns with what the farming sector has been calling for, giving them much-needed independent advice to make informed decisions about their businesses. More money to help farmers calculate and reduce their emissions is a timely announcement when considering the bill before us right now. It's common sense that the government supports farmers in this way if it is also requiring them to report on climate risk issues like the scope 3 emissions I've just outlined.

I support the bill, and I will watch the government closely to ensure that they continue delivering the support farmers need to calculate and reduce their emissions. This, in turn, produces sustainable, productive and profitable food and fibre needed to feed and clothe our nation and to remain competitive in international markets.

Allegra Spender (Wentworth, Independent) Share this | Link to this | Hansard source

I rise in support of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024. I will focus my comments on schedule 4, which provides for the introduction of mandatory climate related financial disclosures, a positive and long-overdue reform.

I have spoken many times in this place about the risks posed by climate change, and these are getting greater every day. A few weeks ago, the Guardian revealed that hundreds of the world's leading climate scientists expect global temperatures to rise by at least 2.5 degrees, 'blasting past internationally agreed targets and causing catastrophic consequences for humanity'. Climate change poses huge risks to our society, and there are specific risks for our business community and the financial sector. This includes both the physical risk of a warming planet, like increased fires and floods, and the transition risks associated with moving to a net zero world.

Internationally, one of the tools being used to manage these risks is mandatory climate related financial disclosures. These disclosures are a key enabler of corporate climate action because they help companies identify and manage the genuine risks that climate change poses to their businesses, because they provide the transparency that helps shareholders and the public invest in the net zero economy, and because they hold companies accountable for setting and meeting their climate goals. This work has been led globally through the Task Force on Climate-related Financial Disclosures and, subsequently, the International Sustainability Standards Board—global progress to tackle a global problem.

Mandatory standards are now in place in economies worldwide. The UK introduced a mandatory climate related financial disclosures requirement in 2022. The European Union has a directive in place covering both large European firms and more than 10,000 non-European companies. In March this year, the US introduced its own long-awaited disclosure requirements. Once all pending disclosure rules are enforced, it is estimated they will cover nearly 40 per cent of the world's economy, also including Brazil, Canada, Hong Kong, New Zealand and Singapore, so it is absolutely time that Australia acts.

Whilst many large corporations listed on the ASX are already preparing sustainability and climate change reports, these disclosures are not consistent, not mandatory and not adapted for the Australian context. If we want a future to be made in Australia, if we want to attract the kind of capital that is critical to becoming a green energy superpower, if we want to meet even our modest climate targets, then investors need transparent and consistent information, and this is what this bill seeks to provide. It requires entities to make an annual climate statement which identifies the climate risks and opportunities they face, outlines their plan for managing these and sets out their climate related metrics and targets, including entities' scope 1, 2 and 3 greenhouse gas emissions.

The bill takes a phased approach to introducing these standards, with the very first reporting period starting on 1 January 2025 for 729 very large companies categorised under the legislation as group 1 entities, which are broadly comparable in size to those listed on the ASX. There are further grace periods for the so-called group 2 and group 3 entities, with medium-sized entities in group 3 not required to provide full disclosures if they can show they have no material exposure to climate change. This phased approach is appropriate, particularly when it comes to the group 3 entities, the smallest companies captured by this regime. I urge the government to take the lead from countries like Singapore, where significant support has been provided to help comply with the new reporting regime.

This bill is particularly relevant for my community in Wentworth. Over the past two years, I've spoken to many constituents, from those in the banking sector to venture capital investors to clean energy companies, who recognise the importance of this kind of transparency and disclosure being provided for in this legislation. I want to commend the government on the broad support for this legislation which exists across the financial, business and non-government sector. When this bill was introduced, 15 of Australia's most influential organisations representing business, finance, and investors came together to support the passage of schedule 4, including the Business Council of Australia, the Australian Institute of Company Directors, the Property Council, the Investor Group on Climate Change and the Australian Sustainable Finance Institute. Together, the group represents more than 900 companies, investors with over $80 trillion worth of assets under management and 7.7 million retail shareholders. It is great that they're backing the bill, as are those across the climate and environmental community.

But, whilst this is a good bill, I do have some concerns about the unintended consequences of certain provisions in the legislation, specifically the modified liability provisions. Under the legislation, entities must report on matters including their scope 3 emissions, scenario analysis on the impact of climate change on their business, and, critically, their transition plans—that is, the set of steps they are taking to transition their business to a net zero world. These are incredibly important disclosures. They may be challenging to put together in the first instance, but they go to the heart of the kind of transparency and accountability that this bill seeks to mandate.

However, the government has inserted modified liability provisions into this bill, which means that no legal action can be brought against entities in relation to these disclosures for the first three years of the new regime. ASIC will still be able to bring actions against businesses for claims that are misleading or deceptive, but the right of third parties, including investors, to do this has been removed. The weakening of this legal check and balance may undermine some of the policy intent of the new regime. As currently drafted, the bill may prevent action such as the 2021 case against Santos for misleading and deceptive conduct, which was brought when Santos claimed they had a credible pathway to net zero by 2040, despite plans to open up new major gas projects. This bill should enable companies to be more accountable for their climate transition plans, not less.

I understand there are practical difficulties for businesses having to meet new reporting requirements. It's not easy to get things right the first time, and there are inherent challenges with calculating scope 3 emissions, choosing the right scenarios to analyse climate impacts and plotting your company's path towards net zero. Large ASX listed companies, such as the group 1 entities captured by this bill, have the resources to comply with these new reporting requirements, and many have been making similar disclosures for some time. I'm not sure if they need three years to get it right.

I have much more sympathy for medium-sized businesses like the group 3 entities covered by this bill. As a former small-business person, running a small business myself, I don't underestimate the challenge of meeting new reporting requirements. When you're cash-strapped and short-staffed it won't always be easy to get your sustainability disclosures right the first time.

When it comes to the modified liability provisions in this bill, it's a mixed bag. I think it's appropriate that companies, particularly those in group 3, have some protection in the early years. I think it appropriate that these projections go to scope 3 emissions and scenario analysis in particular. And I think there is a role for these projections in helping companies make the most ambitious disclosures possible, rather than focusing very narrowly on regulatory compliance and needing to pull back on their disclosed decarbonisation plans for fear of litigation. I note the strong community support from the business community for modified liability provisions. I also note the bar for litigation for misleading disclosures in comparable regimes such as the UK is far higher than that provided for in this legislation. I'm also concerned that the provisions may make it easier for large fossil fuel companies like Santos and Woodside to greenwash for the next three years and to claim that they're committed to net zero whilst investing in new fossil fuel projects. I'm hesitant about removing these protections entirely, so I urge the government to look at whether they have achieved the right balance between these two competing priorities as this bill moves forward.

This is an important piece of legislation, and I commend the Treasurer and his colleagues for the broad support it has received. In closing I also urge the coalition to reflect on the support this bill has from the financial and business sectors and to support the provisions in schedule 4. If you're serious about taking action on climate change and seizing the opportunities of the green transition, you need to support legislation like this.

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I move the amendment circulated in my name:

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

"the House declines to give the bill a second reading, and notes:

(1) Australia is in an entrenched GDP per capita recession and almost 17,000 businesses have gone insolvent since the government came to power;

(2) Treasury analysis confirms this Bill imposes $2.3 billion in compliance costs in its first year of operation, with no productivity benefit;

(3) ASIC and the Australian Small and Family Business Enterprise Ombudsman have confirmed to Senate Estimates that this compliance cost will be passed on to small businesses;

(4) the United States, Canada, Japan, and most of Australia's trading partners do not require the reporting of scope 3 emissions. The Productivity Commission has confirmed to Senate estimates that this sort of misalignment in regulation will harm investment and make Australian business less competitive; and

(5) while the Coalition is not opposed to reasonable disclosure regimes, this legislation is a red tape bomb that will hurt Australian farmers, small businesses, and ultimately raise prices."

This is not about being pro- or anti-climate. It's not about being pro-emissions reduction or otherwise. This bill, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, unhappily, is about being pro- or anti-small business. This is an anti-small-business bill. The bill puts an unacceptable compliance burden on the Australian economy at a time when the government is claiming it will reduce their compliance burden. It puts compliance obligations on Australian companies that are completely out of line with our international peers—with the US, with the UK and with Canada. Sadly, the bill creates the risk that small businesses will only be able to contract with, bank with or sell to larger businesses. It accelerates the trend of debanking we are seeing amongst our farmers, miners and resources industry more generally.

If we are to get this economy back on track we have to get back to basics, and right at the heart of that is getting red tape, getting regulation, getting compliance burdens—which is what this will be, of $3.2 billion, and I think that's a conservative estimate—out of the way. We have to allow small-business people to get on and do what they do—invest, create jobs, take risks and create opportunities for themselves and all their stakeholders like their customers, their suppliers and their employees. You can't do that when you're wrapped in red and green tape, which is exactly what this is about.

Schedules 1, 2 and 3 of the bill implement recommendations of the financial market infrastructure regulatory reforms to strengthen the financial market infrastructure. We support these changes but we have grave concerns about the proposal to remove parliamentary scrutiny of changes to voting power on the ASX. Currently, changes in voting power to the ASX are limited to 15 per cent and any change requires regulations to be altered and subject to disallowance. This amendment instead confers this power to ASIC, with ministerial approval—so the power of disallowance is removed, and we have concerns about that.

Turning to the mandatory climate disclosures, schedule 4 of the bill generally requires that entities that lodge financial reports under chapter 2M of the Corporations Act meet certain minimum size thresholds or have emissions reporting obligations under the NGER Scheme to make disclosures relating to climate in accordance with relevant sustainability standards made by the AASB. Schedule 4 implements a climate reporting regime that is stricter, more onerous and more widely applied than that of any of our trading partners. ASIC chair Joe Longo has described the changes as the biggest change to corporate reporting in a decade. At maturity, the scheme will require all companies with turnovers above $50 million to disclose audited and assured scope 3 disclosure statements. ASIC will have full enforcement powers from commencement, but there will be a safe harbour from private litigation for just three years.

I made the point that this is about disclosure of emissions—not just scope 1 and scope 2, which is what you typically see around the world, but scope 3. What are scope 3 emissions? They are the emissions of those companies that are reporting on their customers. It's a bank having to disclose the emissions of its customers. It's a fertiliser supplier having to disclose the emissions of its customers. It's a merchandise provider or a livestock agent having to disclose the emissions of its customers. Every farmer in Australia should be deeply concerned about where this is going, every tradie in Australia should be deeply concerned about where this is going and every small manufacturer should be deeply concerned about where this is going, because their banks and their other service providers and suppliers are going to have an obligation to start reporting their customers' emission.

No doubt every activist in the country is absolutely salivating at the opportunity to say to that bank, 'I tell you what? We're going to do everything we can do to put you out of business unless you tell your customers how to run their businesses.' They will be telling beef producers how to run their businesses. They will be telling wool and lamb producers how to run their businesses. They will be telling tradies and builders how to run their businesses. They will be telling small manufacturers how to run their businesses. This is what the government is doing here: they're going to outsource activism to the banks and to other major service providers. When I say 'major', it's only companies over $50 million. The red tape compliance bomb here is unimaginable, and I am deeply concerned about where this is going.

For a Labor Party that thinks the only good business is a business that's fully unionised, I guess it's completely understandable. It's completely understandable that small business is your enemy when you are in the Labor Party. Small business can't be easily controlled by activist union officials, so what do you do? You wrap it in red tape until you throttle it. You asphyxiate it, and that is exactly what this bill is doing. There is so much that Labor has not explained in what they are planning here. How are they going to prevent activists saying to the banks, 'Stop lending to a farmer who doesn't do as they are told'? That is exactly where this is going to end up.

What is most extraordinary about this is that even the US, with a government that's not on our side of the political aisle, is not going down this path. The UK is not going down this path. New Zealand is not going down this path. The inclusion of scope 3 emissions is a step beyond what is reasonable for small businesses. They will pay a very, very high price.

How do you deal with a cafe owner selling coffee in the lobby of a big company? How is that going to work? They're going to have to disclose their emissions to that big company. Quite seriously, the way this is being done is just beyond laughable. A building supplier—a small tradie—providing office fit-outs to a big company is going to have to work out the emissions from his or her ute and report that to the company they're doing the fit-out for. If you're a manufacturer buying ingredients or components from a big company, or selling them—either way, actually—the law will eventually get you.

This is a kind of outsourcing of activism, which this government seems to love. We know that Labor are funding environmental activists, like the EDO, to ensure that they get what they really want. They get what they really want: the shutting down of some of the most important projects for the future of this country. Labor don't like these industries, so they will asphyxiate them.

ASIC made clear in its evidence to the Senate Economics Legislation Committee that these compliance costs will be passed on to small businesses. They've made that clear; ASIC haven't sought to hide that. They have confirmed that these concerns are so extensive they have been raised with ASIC by the Australian Small Business and Family Enterprise Ombudsman. The Securities and Exchange Commission in the United States has noted exactly the same concerns, and it's why the US are not proceeding with scope 3 emissions in their regulations.

So Labor need to see sense here, and we've attempted with this amendment to lay out a sensible pathway forward on this—a pathway that respects the role of small businesses in our economy, that recognises they are actually the engine rooms of so many of our electorates. I know members here, when I look around, would say small businesses and farmers are the backbone. I suspect that's true of those on the other side of the chamber. I know it's true of those on the other side of the chamber. But they have never been inside the Labor tent, so they're not going to get looked after; in fact, they're going to be hit hard by this. At a time when we've seen almost 16,000 businesses go into insolvency since Labor came to power, this is the wrong law. It's the wrong law at the wrong time. We are in the midst of a cost-of-living and cost-of-doing-business crisis, and it's absolutely the last thing that is needed.

Independent research shows that red tape costs the economy more than $176 billion a year, and this is going to add very significantly to those costs. We heard through Senate estimates this week, from Treasury and agency officials, who will bear the brunt of this cost. It isn't big businesses. They'll pass it on. They're not the ones who are going to bear the brunt of it. They have big departments doing this, they hire consultants—they do all of that so they can manage it. Those costs are relatively small in the scheme of the budgets of big businesses, but small businesses, who no doubt are going to have to report all of this to their suppliers and service providers, are not in a position to do it. It's not the multinational companies that are going to bear the brunt of this; it's small businesses.

Treasury analysis confirms that this bill imposes $2.3 billion in compliance costs in its first year of operation. Of course, there's no productivity benefit whatsoever in it, but productivity is not something that those opposite seem to care about. That's why productivity has gone backwards savagely under Labor. It has flatlined, according to the latest national accounts. Someone among those opposite is going to have to explain to me how you get inflation down and the economy growing at the same time as labour productivity is in freefall. The truth of the matter is that it is just not possible. It is just not possible to achieve that, and when we wrap small businesses in more red tape, as this legislation is doing, we just make the situation worse.

There is a better way than all of this. There is a better way to get the country back on track, and it is getting back to basics. It's recognising that you've got to get the productive side of your economy right, and the heart of that, as I said earlier, is small businesses and farmers, which are the engine room of our electorates, the engine room of our economies, the engine room of our communities. Every local member knows—we regional members in particular see it—that it's a few terrific, outstanding businesses, led by great businesspeople, in our local areas—

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

That's right—the risk-takers.

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

They drive the economy, because they're taking risks, creating jobs and creating opportunities. They give the young people in those regions the chance to get into a job, take it on as an apprenticeship and learn. And then, over time, those young people themselves often become the small-business people who are the leaders in our local communities.

Australia's 2.5 million small businesses make up 98 per cent of all businesses and employ almost half of the private sector workforce. As I said, without them, our economy is in deep and dire straits. I commend the amendments made here. We ask the government to actually give them serious consideration and see that getting the economy back on track means making sure we are doing the right thing by the small-business people and farmers of this great nation.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

David Littleproud (Maranoa, National Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I thank the shadow Treasurer, the member for Hume, for his amendment and wholeheartedly support the commonsense, back-to-basics solutions to what is a draconian bill that's going to have a significant impact on every Australian. This is going to drive up your cost of living. In the middle of a cost-of-living crisis, this government is going to add an extra $2.3 billion worth of red tape costs to those people in particular who are producing the food that you enjoy every day. This mandatory reporting around scope 3 emissions means that farmers in my electorate, little old Maranoa, such as a beef producer in Roma selling their beef to Woolworths, will have to be able to disclose to Woolworths and to their bank their emissions profile. That's an enormous cost. There's not even the science for these farmers to do that at a reasonable cost, so that cost is going to have to be borne by you, the Australian taxpayer, because you're going to have to pay more at the checkout.

Why would you impose an extra cost on farmers when there are families today that are making real decisions at supermarkets? They're putting fresh produce back on the shelf because they can't afford it. They can't afford a meal. They're actually feeding the kids rather than themselves because they don't have the money to go to the supermarket to have three meals a day. In a country of 27 million people, we produce enough food and fibre for 80 million people, and we have a cost-of-living crisis where people are making those decisions in this country today.

We as legislators have an opportunity to do something about that, to reduce the costs, not increase the costs. We had the Minister for Climate Change and Energy and the Minister for Agriculture, Fisheries and Forestry turn up to Toowoomba about a week and a half ago for a sustainability conference with the agricultural industry, telling them that we would never impose mandatory reporting of scope 3 emissions of farmers—'We wouldn't impose that on you.' Well, in this bill they're not, but they're doing it by stealth. They didn't have the courage to look those farmers and those industry people in the eye and tell them, 'Well, actually, we are, because, when you go to the bank, they're not going to be able to lend you a cent unless you can give us your emissions profile.' They are doing it by stealth. If you believe so passionately in this ideology, then have the courage to look Australians in the eye and tell them the truth: that you are going to ask little old farmers out there that are producing the food and fibre that you want. You're going to hit them with another cost. 2.3 billion dollars a year—that is what's going to be added to everything we do in this country.

Now, no-one's against us trying to reduce our emissions, but there is a uniquely Australian way of achieving it. Part of that should be common sense. Unfortunately, what this bill fails to achieve in any way is common sense. To actually impose this on primary producers when you've already had 16,000 small businesses go into liquidation since Anthony Albanese came to government—you've got to ask: why would you continue to put pressure on those that employ people in our country? Governments don't create jobs; small businesses do. The only jobs that are created here the poor old taxpayer pays for. So you should be creating an environment for our small businesses—and that includes farmers—to be able to employ people. If you impose this type of ideology on our primary producers, then it has to get passed on to taxpayers. I say to this government, when you go and look people in the eye and you give them a promise that you wouldn't be mandating around climate disclosures, and you do that publicly, then you should follow through. What this means is it's not just the banks; is also the Elders agent and the Nutrien agent who sells them chemicals or cattle, because they get caught up on this. They have to report the scope 3 emissions of their customers. That's the little old farmer in Roma and the little old farmer in Wagga sitting there producing your food and fibre. The ideology doesn't meet the practical reality of what it's going to cost the Australian taxpayer.

You can have all this grandiose ideology but, ultimately, there's one simple principle in life: someone's got to pay. That's what this mob is forgetting—someone's got to pay. There's also a little chestnut in the top drawer of this government that they've been in consultation with the agricultural industry around. It's around the safeguard mechanism and methane and the fact that they signed up to an international pledge of a 30 per cent reduction in methane by 2030. The agriculture and meat industries are all for trying to reduce emissions, but the safeguard mechanism was put in place to allow technology to be created and then adopted over time by 2050 to allow industry to reduce their emissions. There is no technology, no scientific way to reduce methane from cattle. We can't do it yet. Instead, the consultations with this government—and on their past record of what they did in Toowoomba a couple of weeks ago, saying, 'No way in the world will we mandate this,'—have been telling them that the big beef producers in this country will fall into the safeguard mechanism. They must reduce their methane emissions by 4.95 per cent every year between now and 2030. There's no technological solution to do that, so the only way to do that is to reduce your herd numbers, and if you reduce supply, prices go up. If you think it's tough buying meat at the checkout at the moment, wait until that little chestnut hits you.

This is the insanity of it. Our 20 biggest beef producers are now being threatened with effectively being put under a safeguard mechanism that will actually drive up the cost of food. At some point, the ideology has to get to the practical reality about food security for every Australian. They should be able to go to a butcher or a supermarket in this country and not have to miss out on a meal. I would have thought this place, this great institution that we have been given the privilege to stand in, would have thought primarily that that is one of the core responsibilities that we have been given—to ease that burden on our fellow Australians so that they can have three meals a day. I think it's a shame on all of us that there are families making those heart-wrenching decisions at supermarkets every day today. So why would you make it worse? Why would you add $2.3 billion of extra costs onto farmers in this reckless race to try to achieve a goal by 2030?

There is a human toll to this. That human toll is those young families and those young people who are at university or in low-paying jobs who are making those decisions today. I would have thought it was up to every one of us to make sure the decisions they make at that supermarket is about making healthy choices, about having the freshest and best-produced food in the world—from Australian farmers. Unfortunately, this government is going to put that continually out of the reach of those people. That's the human toll the decision this government is going to make today will have. That's why Australians need to understand the ideology of this government. While I respect they have a different view to me, and I respect their ideology is different, I just believe there's a different way we can achieve this. There is a uniquely Australian way. We can use some common sense. We can use the sovereignty of the resources that we have been blessed with in this country to achieve all our international commitments without the human toll—without the heart-wrenching human toll that people right around this country are making every day. But if this government is hell-bent on this ideology, understand that human toll will grow.

That's not what we should be about in this place. That's not what we've been given the privilege to come and do. We've been given the privilege to come here and make Australians' lives better and easier. But, instead, an ideology has got in the way of the practical reality. So I commend the amendment that the shadow Treasurer has made, because that is the basic common sense that we've got to get back to. You can't keep spending Australian taxpayers' money to solve the nation's problems and you can't keep taxing them into submission, because there is a human toll and that human toll will be squarely at the feet of the Albanese government.

Kevin Hogan (Page, National Party, Shadow Minister for Trade and Tourism) Share this | Link to this | Hansard source

I rise to speak in favour of the amendment moved by the member for Hume. There's a lot in this bill, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024. Some of it we agree with and some of it we would wave through. I'm going to touch very briefly on the payments reform part of this bill, and then I really want to go in and talk about the mandatory climate disclosures and what that is going to do if this bill goes through as drafted by the Labor Party.

Firstly, with the payments reform, as the member for Hume said, we're very concerned about the proposal to remove parliamentary scrutiny over the changes to the voting power on the ASX. Currently those voting powers are limited to 15 per cent, and any change requires regulations to be altered. We've moved amendments on that.

But let's go straight to the mandatory climate disclosures. I think that, if you were to look at any bill and any legislation that passes through this parliament, somewhere in there you'd see, I hope, good intentions or something altruistic that is good for the community, good for the country, good for businesses and good for families. I suppose, in some way, you can see what this government is trying to do here, and you can see an altruistic plan that they have about this. But, again, as the Leader of the Nationals just articulated, what this bill does and what this really quite extreme left-wing government that we have in power at the moment—I'll actually say this is probably the most extreme left-wing government we've seen in this country for many, many decades.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Since the last Labor government.

Kevin Hogan (Page, National Party, Shadow Minister for Trade and Tourism) Share this | Link to this | Hansard source

I think they're much more extreme than the last Labor government, with all due respect, Member for Riverina. They're more extreme than the last Labor government. They're more extreme than the Hawke-Keating Labor governments. This is an extreme left-wing Labor government, and I think that this legislation is showing that and proving that. Why am I saying that? Well, let's go through it.

I think the terminology that's been used is quite accurate. Their ideology is making them blind to common sense. Their ideology about what they want to achieve altruistically means that they don't have any regard for what that means on the ground for the men and women of Australia, whether that be families or businesses. They are oblivious to that because every form of legislation that they have is completely fixated on ideology. They say: 'This is what we want to achieve, and we're going to go for that even if that decimates business or makes the cost of living higher. Whatever the cost is, we don't care.' That's what makes this government so dangerous.

They get up every day and talk about the cost of living and say that dealing with the cost of living is the No. 1 topic on their agenda and that they are working every day as a government to deal with the cost of living. This bill alone increases the cost of living, and there are many other examples. In fact it's the case for most of the legislation they move through this place. So they can say what they like. They can say whatever they want in here to try to get a sound bite that they think may resonate on a news clip with the families and the business of Australia. That news clip might be what they think Australians want to hear, and it probably is if it's a grab. But let's look at what they're doing here in practice and what they're doing with this bill in practice. This bill that we are debating right now that was drafted by the Labor Party and that they want to pass is going to increase the cost of living for every Australian—full stop. I don't think you'll hear any of them try to get up and defend it and say that it won't. This is not us saying that; this is independent analysis about what the cost of this bill will do.

It is going to cost over $1 million for any business that does this. I'll repeat that. This was said in Senate estimates this week: it will cost over a million bucks for a business to go through this. Again, we have moved an amendment, but we will be opposing this bill without that. I note other speakers have said this as well. The ASIC chair, Joe Longo, has described the changes as the biggest changes to corporate Australia in over a decade. This is not a minor bill. This is not just something little going through with Labor trying to do the right thing. What they are doing is making a drastic change to the reporting requirements of businesses in Australia that is going to cost the economy billions of dollars. Guess who'll pay those billions of dollars in extra costs? It will be the Australian family and the Australian consumer. Well, thanks for that. The next time you get up and bleat on about the fact that you think that the cost of living is important, have a look at the legislation you are passing every day on the back of this. It is just ideology. They don't have common sense. It's ideology over everything else.

Let's just go through this and talk about it. I know a lot of people in Australia might not necessarily understand what we're talking about. We've talked about scope 1, scope 2 and scope 3 emissions. Scope 1 emissions are reasonably easy for a company to determine. It's really just, if you're making something—say, you're a small manufacturer—you measure the emissions that you put out. Most companies do that now and have a fairly good idea about that. Scope 2 emissions are the electricity ones, and most electricity providers have really good systems for measuring the emissions they put out. That's not complicated. But scope 3, which is what this government has in this regulation, is where the problem is. This is where the reporting is going to be difficult. This where the cost is going to be put onto business. This is a higher compliance than in places like the US, New Zealand and the UK. They haven't got it. The US didn't go there. Look at how left-wing Joe Biden and his government are. They haven't done this. They haven't regulated this. But this extreme left-wing government, this exceptionally ideologically driven government, don't care about the increased costs, don't care about the onerous compliance costs, don't care about the cost this is going to put onto small business and don't care about the costs that are going to be transferred to Australian consumers, families and businesses. That's what we're talking about here.

I am going to repeat some figures because it is important that we hear them again. This is a $2.3 billion-a-year compliance cost. This is at a time when cost of living is really difficult. Small businesses are doing it really tough. We know that everyone's electricity bill has gone up. Inflation is very high in Australia, most of it homegrown. This government does not care. If this government cared about the exceptionally high inflation rates that we have in Australia, it wouldn't be throwing on top of us a $2.3 billion-a-year compliance cost to strangle business and which will be passed on to families.

I want to talk about the type of people who are affected by this as well. With scope 3, all the financial institutions will be starting to look. All the activists will be on this. The government is also funding the Environmental Defenders Office to make sure this is done properly. That's just a team of activists—talk about ideologically driven. I don't think they will care if a business is shut down if they don't like what the business does or they don't think that business is doing the right thing. They don't have any compassion for the business or the people who work there. They will be the police of this. This will part of the requirement of this, which will be disastrous as well.

As has been said, this will be a creeping thing. So this will not just affect big business. Big business is obviously the first round of this. If you are over a certain size of turnover and staff you will have this obligatory reporting. Those financial institutions and some of those businesses will be looking down their supply chain for some scope 3 issues. They will be coming to farmers, small manufacturers and a lot of other businesses and saying, 'You need to measure and tell me what emissions you have in your business.' I say to those opposite: you are talking with a forked tongue when you say you care about cost of living when in the same breath you are passing this legislation and other legislation, which we might be talking about later today, which is the same thing.

You were saying you care about cost of living, your words say that, but your actions say something exactly the opposite. Australian families and Australian businesses are going to suffer, because of this legislation and other legislation that you're putting through. Your words do not match your actions. Your words say you care about cost of living, your actions say you do not care about the costs and the extra costs you're putting on Australian families and Australian businesses. They will be worse because of the government you are—the extreme left-wing government you are—and the legislation you keep passing.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It's a pleasure to follow the member for Page's contribution and I also note the contributions from the shadow Treasurer and the leader of the Nationals earlier in this debate. We were just upstairs in the Federation Chamber talking about the appropriation bills and reflecting on the vast difference there is between what this government says and what it actually does. I say frequently to people, 'Don't listen to what they say, look at what they do, because nine times out of 10 they are two completely and utterly different things.

As the member from Page has quite rightly pointed out, this bill will not help reduce the cost of living. It will actually increase the cost of living for each and every Australian. We've moved a set of amendments to try and make this bill better. I doubt the government is going to support those amendments we will move, because we don't support this bill because we think it's fundamentally antibusiness. As you look at this bill it reaches into every aspect of our economy.

Most people probably don't realise that we already have some reporting requirements for large businesses in terms of scope 1 and 2 emissions, which are emissions that they've either directly generated or indirect emissions from the purchase of electricity or other inputs into the business. What we're talking about essentially in this bill now are scope 3 emissions, which are indirect greenhouse gas emissions that aren't included in the scope 2 greenhouse gas emissions but occur in the value chain of an entity including both upstream and downstream emissions including financed emissions.

Medium-sized business could be caught by this. There are three groups of entities. Group 1 entities have consolidated revenue of $500 million or more or consolidated group assets of a billion or higher, group 2 entities have consolidated revenue of $200 million or more or consolidated gross assets of $500 million or higher, while group 3 have consolidated revenue of $50 million or higher or consolidated gross assets of $25 million or higher. All of those entities are required to report or will be required to report the scope 3 emissions from all of their suppliers upstream and downstream.

What happens to a small manufacturing business in the electorate of Forde that supplies four or five of these companies? How do they account for the emissions that they generate? By the way, they don't have to do this currently. They're exempt from the current scope 1 and scope 2 emissions regime. So, they've got to bring in a set of consultants to go through their entire business and work out what their emissions are so they can start to report them. How do they account then to each of their suppliers what the emissions component of the goods that they supply them are?

I know that in this bill there's an estimated cost of $1.3 million per year for these large businesses that have to comply with these requirements and an overall estimated economic cost of some $2.3 billion dollars in regulatory impost for no productivity gain whatsoever—zero. We're already in an environment where productivity is declining. We're seeing a new set of regulations that's only going to make productivity worse because it is of no productive value to the country whatsoever, unless you're consultancy business that actually has to calculate these emissions for all of our small businesses across the country.

These are small businesses that don't have HR departments and don't have in-house accounting teams. They get up each and every day and open their doors, putting that families' livelihoods and futures on the line to employ Australians and produce goods that those opposite say they want produced in Australia under their Future Made in Australia goal. But, again, what are they doing? They're just putting another roadblock and another hurdle in the way of the small businesses in this country, which take the risks to innovate, grow and develop the ideas that will benefit this country into the future.

At the same time that they want to spend several billion dollars on their made in Australia fund they're actually making it less attractive for business to stay in Australia. The Assistant Treasurer, who's in the chamber at the moment and I'm sure will sum up after I've finished, made a comment in the Federation Chamber earlier, in consideration in detail, about where we want products to be manufactured. I can tell the House that I want products to be manufactured in this country by Australia so that they can afford to keep a roof over their heads, feed their families and build the wealth and creative capacity of this country. That's what I want to see, but as I look at this bill I don't see that happening, sadly.

I was talking to one of my local manufacturers, a textile manufacturer, quite recently. That manufacturer is actively discussing shutting down and moving overseas because it is just becoming too difficult to do business in Australia. What is one of the key inputs that is becoming so expensive for them? It is electricity and gas. Yet this government promised before the last election that they would reduce electricity and gas prices. They've done nothing of the sort. Rest assured, that business that I just mentioned will be caught in this legislation, which will make it even less attractive for it to stay here in Australia.

I can assure the House that the estimate of a $2.3 billion impact on our economy is so far short of the mark that it is beyond funny. I would suggest that that $2.3 billion cost has been calculated on those group 1, group 2 and group 3 businesses. I doubt very much that the government or Treasury has done the work to identify the economy-wide costs for every single business in our economy of having to comply with the regulation in this proposed legislation. This is on top of the myriad of other things that this government is doing to make life difficult for business. Whether you're a small manufacturer in my electorate of Forde or a farmer in the electorate of Riverina, you are going be impacted by this.

Nobody has really talked about or mentioned at this stage what is also potentially going to happen. We have seen it occur overseas or at least raised as a question overseas. What are the banks going to do with their finance facilities and businesses that are caught up in this? What reporting will businesses have to provide to their banks as part of their loan application process? What if they have an existing finance facility rollover or upgrade of their finance facilities? What about at review time? What additional information will they have to provide? If the bank doesn't like the questions that the business is providing—bear in mind that the banks are caught in this, potentially—what is the risk that the bank says, 'We don't want you as a customer anymore because we don't believe you're doing the right thing with reporting your emissions,' or, 'We don't think you are reporting them properly,' or, 'There is an increased risk to your business because of your emissions profile'? What happens in that case? Can they go to another bank and get their finance facility refinanced or not?

There are so many holes in this piece of legislation and so many risks being introduced into our economy as a result of this that it is beyond belief that those opposite can stand there, hand on heart, and say that they're a government that supports small business, as we saw the Minister for Small Business do this morning. Virtually each and every piece of legislation they bring into this place—and this is a classic example—says exactly the opposite. When 98 per cent of businesses in this country are small-to-medium businesses that employ more than 50 per cent of the Australian workforce, what is the economic impact of this piece of legislation? I would suggest that it is way more than $2.3 billion. Each and every Australian will pay the price for this. All of those sitting in the gallery, everybody that's watching this and everybody out there in the Australian community—everybody will pay the price for this.

As the member for Page quite rightly pointed out, the government is funding environmental activists, like the Environmental Defenders Office, to ensure that these regulations are complied with. We know their track record. We know what a court said about the Environmental Defenders Office recently, and I can say that it wasn't very flattering. It wasn't very flattering at all. To think that the government is empowering a group of people that want to shut down our economy or shut down particularly businesses they don't like because they don't fit within their zeitgeist, with the economic consequences for our country that that entails, is extraordinary. I thought they were supposed to be a government that govern for all Australians, not just their selected vested interests.

I am pleased that we as a coalition are opposing this bill, and we will make every effort to try and ensure that it doesn't pass this parliament, because of the cost-of-living consequences and the risk to business in an already difficult business environment where electricity costs have been going up and rent costs have been going up. If you think there's a rental crisis in the housing market, which there is, there is a rental crisis for many small businesses as well, with the inflation rates that they have been subject to by this government, which doesn't seem to know how to get inflation back down to any sensible level. It's now stuck at one of the highest levels around the world. This is only going to compound this. As these costs flow through the economy, businesses will put up their prices. If they can't put up their prices, they're going to let people go. Where we already have the situation where households with average mortgages in my electorate and across the country are $35,000 a year worse off as a result of this government's inaction, what are the broader economic consequences of this legislation? I think the government should take this and go away and rethink it, or actually put it in the bin, because it will be extraordinarily detrimental to our economy and will make the situation worse, not better. I'm pleased, as I said, that the coalition opposes this bill.

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

For the benefit of all members of the House and any members of the public who might be listening in, I thought I'd draw people's attention back to what the subject matter of this legislation is, in complete contrast to the febrile contributions from the member for Hume, followed and backed up by the member for Page, who painted a very dark picture of their own imaginings.

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 does two things. The first thing that it does, through schedules 1, 2, 3 and 5, is that it amends the Corporations Act 2001 and makes a bunch of consequential amendments to establish a crisis management regime for clearing and settlement facilities in Australia. It's absolutely critical we do this, because clearing and settlement facilities play a critical role in the smooth operation of our financial markets. It's important that the Reserve Bank have the powers that it needs to move decisively to resolve, if needed, a crisis at a clearing and settlement facility. Any unmitigated crisis at a clearing and settlement facility could rapidly spread across the financial sector and into other areas of the economy.

Given that, I was astounded that the member for Forde, who is generally sensible on matters concerning financial markets regulation, has vowed to fight tooth and nail against the passage of this bill, a bill which empowers the RBA to deal with a crisis in our equities market, particularly in relation to clearing and settlement facilities. The bill does empower the RBA to, amongst other things in the event of a crisis, appoint a statutory manager to take control of domestic clearing and settlement facilities, transfer the business or shares to a third party and issue binding directions. In certain circumstances, these powers can also be used in relation to related bodies corporate of a domestic clearing and settlement facility. The bill also empowers the RBA to assist a foreign regulator to resolve a crisis in an overseas clearing and settlement facility.

Schedule 2 to the bill strengthens the regulatory powers of ASIC and the RBA in relation to financial markets infrastructure, giving them further powers to monitor, mitigate and reduce risks. Stronger day-to-day regulatory powers will help the regulators to take necessary action to mitigate risk and head off a crisis before it happens. I repeat that: to head off a crisis before it happens. Against that background, it beggars belief that somebody who wants to be the Treasurer of Australia and somebody who wants to sit on the front bench of an alternative government would vow to block the passage of this legislation. If your party espouses the principles of sound financial and economic management, it seems to me that this is rudimentary housekeeping business that any sensible government would want to do. Indeed, the Council of Financial Regulators has recommended these changes to the government and asked that we pass them as a matter of priority, and we will.

I want to deal with schedule 4 of the bill, which seems to have sent a wave of excitement, if not understanding, across members of the coalition parties. It deals with provisions for corporate climate risk disclosure. I just want to read a quote about the importance of this:

To maintain Australia's place in the global economy, the group considers it's essential there is a climate reporting framework that incentivises high quality, useful and internationally aligned climate-related disclosures.

I'm going to read that again:

To maintain Australia's place in the global economy, the group considers it's essential there is a climate reporting framework that incentivises high quality, useful and internationally aligned climate-related disclosures.

Many members of this House, after listening to the febrile contributions from the member for Page and the member for Hume, might be asking themselves: Who is this group that is recommending and saying that it is absolutely essential that we introduce this framework as proposed by the government? Could it be the International Socialist Network? Could it be the Australian Greens, whose leader has had a fair bit to say in this House and elsewhere over the last 24 hours? Could it be the Trotskyist internationals advocating such, according to the member for Page, 'a radical, left-wing, extremist Communist proposition'? It must be, given what we've heard from members opposite.

Well, I'm delighted to inform the House that this group is the peak bodies of 15 organisations, which include the Business Council of Australia, that far left-wing group of businesses; the Financial Services Council; the Governance Institute, the Property Council of Australia—now there are a bunch of red-rag, left-wing extremists. The Property Council of Australia—if ever we've seen an extreme left-wing organisation, you'd have to include them in the brackets, wouldn't you? The Business Council of Australia and the Property Council of Australia are amongst the 15 peak organisations who are recommending these changes.

The very simple reason why they are recommending these changes is that all of the concerns that members opposite have expressed about what's going on in financial markets—decisions and questions that are being asked by operators within financial markets about the businesses that they are investing in—are happening right now, but they are happening in the absence of a set of clear understandings, standards and reporting mechanisms upon which everybody can agree and through which everybody can make investment decisions and their credit decisions. They're happening overseas; those standards exist overseas. They don't yet exist in Australia.

You ask why we're doing this and why the 15 business organisations have issued a press release saying that these standards are absolutely essential and the government's got it right. You ask why they support this proposition. It's quite simple: they want the rest of the world to buy Australian goods and they want the rest of the world to invest in Australian businesses. Any party that proclaims itself the party of business and sensible economic management would have to understand that and support those two propositions.

That is why we are introducing this. We're doing it in a graduated way that understands there is a difference between large listed entities and large private corporations and small ones. There are graduated entry points. There's been extensive consultation and discussion with business, including finance businesses and the production sector, before we brought these measures before parliament.

I make these points simply to inform those members of the House who might have been listening to the disingenuous, febrile contributions by those members opposite which speak to the dark imaginings of their minds. This bill has nothing to do with what they're talking about, and the bizarre consequences that they seek to excite members about have nothing to do with what is proposed and what will operate as a result of this legislation. I say that with confidence. You don't have to accept my word on this. You don't have to accept the words of the government on this. You don't have to accept the words of the investor community on this. Just accept the words of the peak business organisations throughout this country, who are saying to this government, to this parliament—not just to Labor but also to the coalition—'For gods sake, will you get on with it, because we need to join the rest of the world and ensure that our standards are internationally aligned. We want to do it because we want the rest of the will to buy our goods. We want to do it because we want capital markets internationally aligned to be investing in our businesses.' With that contribution, I commend the legislation to the House.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The immediate question before the House is that the amendment moved by the member for Hume be agreed to.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The question before the House is that this bill be now read a second time.