Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024. With these amendments, the Albanese Labor government is working to protect consumers by implementing much needed regulation for the buy-now pay-later sector of the credit market. Buy now, pay later—or BNPL, as it is commonly known—simply means you can purchase a product but delay paying for it. A third party pays the merchant for the goods or service, and then the consumer makes payments in instalments over a period of time. Consumers are not charged interest but are charged a fee for the service. It's a variation on the hire purchase agreement that was around back in the sixties and seventies. It does sound pretty good. There's no doubt it's an attractive form of credit, especially when times are tough, like during the current cost-of-living pressures that many people in my electorate are currently facing.

It's true that there are a lot of benefits to this Australian credit innovation. It provides cheaper access to credit in comparison to credit cards and expands the customer base for goods and services providers. The availability of buy-now pay-later increases competition and choice, and this is backed up by the statistics. Data released in March this year indicates that two in five Australians had used buy-now pay-later in the previous six months. However, some Australians are experiencing financial harm as a result of using buy-now pay-later services. The Australian government service Moneysmart cautions consumers that it can be easy to overspend and overcommit to spending what you can't afford when choosing BNPL. It can also be hard to manage multiple services at the same time and keep track of different payments. The biggest concern is the fees that are applied. Consumers are attracted by the 'interest free' or 'zero per cent interest' advertising. However, BNPL service providers may charge late fees if payments are missed, and these can be around $5 or up to $15, and then there are things like a monthly account fee of around $10. Some providers charge a payment-processing fee of around $3 every time a payment is made, and other providers charge an establishment fee to set up the account. This can be up to $110. Obviously all of these hidden costs can add up.

Moneysmart further advises consumers to be careful when it comes to late payments, as they can form part of a credit report, affecting the ability to get a loan for a car or a mortgage, something much more substantial, later down the track. The number of Australians paying late fees has increased significantly from January 2020, when about five per cent of Australians were affected by those fees. In 2023 and more recently, we have been at 20 per cent of BNPL consumers having to pay late fees, which has increased the cost of the capital. As the Minister for Financial Services said, 'The risks of BNPL disproportionately impact upon vulnerable Australians, including First Nations Australians and those struggling financially.' Obviously that is significant.

You can trust a Labor government to enact protections for consumers. In 2022 we made payday loans and consumer leases safer and applied better regulation to that sector. Now, with this bill, we're going after buy-now pay-later—that part of Australia's consumer credit regulation laws. This will bring buy-now pay-later products into line with other forms of consumer credit such as personal loans and credit cards. The current lack of regulation for BNPL can lead to poor product disclosure, excessive fees if the consumer defaults, unaffordable lending arrangements that lead to stress and hardship, and limited access to dispute resolution services. These reforms will require buy-now pay-later providers to have an Australian credit licence. They will also be required to comply with the requirements of the credit act, which implements standards for product disclosure, dispute resolution and, more importantly, hardship assistance.

The measures are proportionate as well. Buy-now pay-later providers must meet responsible lending obligations. However, providers of products that have strict fee caps which fall into the category of low-cost credit will be able to comply with a modified responsible lending obligations framework. These amendments mean Australians can still benefit from buy-now pay-later, while receiving enhanced consumer protections.

The bill also contains six other schedules. The first of these focuses on encouraging investment in the build-to-rent industry. Build-to-rent housing is typically multiunit buildings, where all of the units are rented out through a single management organisation. This is an established practice in places like the United States and Great Britain and only an emerging industry in Australia. In the past, it has primarily been used for luxury developments, but, with these amendments, the Albanese Labor government is focused on more affordable housing. As I'm sure all MPs know, there is such a housing crisis at the moment. Encouraging the development of build-to-rent dwellings will increase rental supply at a time when it is most needed, part of the Albanese Labor government's drive to build 1.2 million homes by the end of the decade.

This bill contains two tax incentives for new and eligible build-to-rent developments. Firstly, it reduces the final withholding tax rate on eligible fund payments such as distributions of rental income and capital gains from management investment trust investments to 15 per cent, bringing it down from 30 per cent. The second tax incentive increases the depreciation rate for capital works in eligible projects to four per cent per annum. That's up from two per cent per annum. This will cut the depreciation period from 40 years to 25 years.

There are also specific conditions which must be met in order to guarantee housing supply. Some of the aspects are that the buildings must contain at least 50 or more units and the minimum length of lease must be three years, giving a stable roof over people's heads. At least 10 per cent of the units must be tenanted on an affordable basis as we need to guarantee a long-term, affordable housing supply. This means that the affordable homes must have their rents set at 74.9 per cent or less than the market rental of a similar home in the same building. The affordable and market-rate dwellings in the same building must be comparable and have equal quality finishings and fittings. To be eligible to rent an affordable dwelling, the household incomes of the tenants must be under the required income limits.

Labor's housing reforms are the most significant in a generation. Our ambitious housing reform agenda has already made significant progress in tackling the housing challenges that were left to us by the opposition, where not as many houses were built. As we know, supply is the issue. Labor is helping more Australians into their own homes, and we're committed to our partnerships with the states and territories to keep doing this necessary work. It was good to hear from the housing minister today that the Queensland government is onboard and there will soon be more roofs put over the heads of people that are doing it tough. Bolstering the build-to-rent sector is another important way of building more homes for Australians. I want to particularly say that this week I've been dealing with one of my cousins, who is the same age and has had similar opportunities in life but is now living out of his car. So things can go off the rails very quickly.

Schedule 3 of the bill concerns an amendment to the Medicare Levy Act 1986. It will exempt eligible lump sum payments in arrears from the Medicare levy from 1 July this year. The unlawful underpayment of employees' remuneration was identified in the Senate economics committee's inquiry from March 2022. The amendment ensures that taxpayers who receive an eligible lump sum payment to fix a previous underpayment do not incur an additional Medicare charge.

Schedule 4 meets a core election commitment to ensure increased transparency in the tax dealings of large multinational corporations. Certain of these corporations will be required to publish tax information related to the jurisdictions in which they operate. This will provide Australians with more information about how much tax these corporations pay relative to their activities. That is the old 'set up a subsidiary in another country and then charge for the IP' or all those shonky practices—sharp practices, I should probably say, but close to shonky—that corporations were getting away with. Well, the world is now turning its gaze to corporations that do that.

The affected corporations are those with an annual global income of $1 billion or more and with at least $10 million of turnover in Australia. These new rules for public country-by-country reporting put Australia at the forefront of a global trend for increased transparency and accountability for the tax affairs of multinational corporations. We are the 13th biggest economy in the world, so we can be a responsible leader when we work with like-minded countries, making sure that we hold these corporations to account.

Schedule 5 of this bill adds several new entities as new deductible gift recipients, bolstering the not-for-profit sector and encouraging philanthropy in our community. Schedule 6 of the bill concerns the new National Skills Agreement. This bill amends the Federal Financial Relations Act to implement Commonwealth payments to the states and territories in accordance with the National Skills Agreement. Labor is directing $12.6 million in the voc ed and training sector to address skills shortages. The final raft of changes of this bill implement the 2024-25 budget initiative to extend the $20,000 instant asset write-off for small businesses by 12 months, something welcomed by many small businesses. So those small businesses in Moreton with an annual turnover of less than $10 million will be able to deduct eligible assets until 30 June next year. This will provide cash-flow support and simplification benefits for up to four million Australian small businesses, helping to ease some of the financial pressure they are currently enduring.

The wide-ranging measures in this bill provide additional protections for Australian consumers, and they'll lead to additional rental supply and require more transparency from big business while supporting small businesses. I commend this legislation to the House.

Terry Young (Longman, Liberal National Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 and the Capital Works (Build to Rent Misuse Tax) Bill 2024. This proposed legislation again highlights the stark difference between the two major parties. In fairness, I want to say that I believe that the government actually believes that what they have proposed is a good thing and will benefit the Australian public. However, as always happens, starting with an ideological view—that bigger governments and more government control of individual citizens' rights and lives is a better way than allowing people the freedom to choose with as little government interference as possible and to be masters of their own destiny—is always going to create policy that limits freedoms in our democratic nation. The build-to-rent component of the omnibus bill is a classic example of this ideology at work.

The greatest solution for rentals is to legislate and fund pathways for ownership, not rental schemes. Yes, there are the odd individuals who make a choice to rent and never want to own their own home—I understand that—but in my experience, of talking to hundreds of people, this would be less than one per cent of those people. The vast majority of people would love to own their own home and take away the uncertainty that comes with renting: the uncertainty of your landlord selling what has become your home; the uncertainty of being able to make changes like hanging pictures, buying a pet, painting a wall or planting a garden; and the uncertainty of your rent increasing, mainly due to landlords having to meet mortgage repayments that have increased, in some cases, by $400 to $500 per week.

Most of us, including me, started our journey after leaving home by renting until we were in a position to buy our first home. But this dream is evaporating. With the rising cost of dwellings; interest rates that have risen 12 times since Labor came to government; and the difficulty in living week to week, let alone saving for a deposit on a home, no wonder this generation see no hope in owning their own home. Rather than work on initiatives that encourage and give people hope when it comes to the great Australian dream of homeownership, the Labor government instead comes up instead with ideas on how to push more Australians into the rental market. It's astonishing. It smacks of a government that has simply given up or run out of ideas when it comes to the next generation of Australians owning their own home.

I say to these young Australians—in fact, all Australians regardless of their age—that the coalition hasn't given up on you or your dream of owning your own home. Although the numbers according to the ABS say that the percentage of first home buyers dropped from 23 per cent in 2020 under the coalition to just 19 per cent in 2023 under the Labor government, I'm saying to you: don't stop believing. When the coalition are back in government, homeownership will be a reality again for all Australians.

One of the many reasons Australians can't buy their own home is affordability. This legislation will only exacerbate this problem. The vast majority of investors in the scheme will be superannuation funds and foreign investors, both who have much deeper pockets than the average Australian family. Imagine a young twenty-something person or couple going to an auction to buy land to build a new home on, and bidding against a superannuation fund or foreign investor with deep pockets. I wonder who will come out on top there.

The deputy leader got it bang on in his budget reply speech when he said that, if the coalition were elected, we would freeze foreign investment on housing for two years to free up stock, allowing Australians to buy these homes, not foreign investors, who then rent the same home they purchased to those Aussies who actually wanted to buy it in the first place. This, coupled with another policy announced by the Leader of the Opposition in that same budget reply speech, of allowing Australians to use part of their super for a deposit to get into the housing market, will again give Australians hope they can buy their own home. I cannot see how anyone could honestly believe that a family that wants to buy a home having to rent their whole life with their own money locked up in super—which means the first home they will buy will be when they retire and get their super—can possibly be better than using that money to get into the market when they're younger and, in all likelihood, owning the home when they retire. It makes no sense to me.

The reduction of the instant asset write-off back to $20,000 is another kick in the guts to many already struggling small businesses. COVID showed us the benefits of having unlimited asset write-off. The purchasing of equipment went through the roof. The problem with Treasury is, quite simply, a very good accounting acumen but what I would say is a pretty poor business acumen simply through lack of real-world experience in business. I can tell you from personal business experience and from speaking to the business community that any money the government thinks they will lose based on Treasury advice by going to an unlimited instant asset write-off will be more than made up in the extra tax generated on purchases made by businesses through GST, the tax made on additional profits made by said businesses, the income tax paid by the extra employees on the higher sales made by these businesses and supplying the goods to the businesses that have placed the orders. The other issue is that, in defence of Treasury, they are simply not allowed to include estimates of any perceived secondary benefits. That could be changed by government if they had any guts to take that risk.

The difference here is that we have actual data from the pandemic when we introduced these measures. I know that, in one of the small businesses I had ownership in during the pandemic, we had held off buying some equipment for years due to the size of the expenditure and the fact that we would have to wait four years to receive the full tax benefit under the depreciation schedule. The business and employees suffered because we couldn't afford to invest the money in equipment that would have made our lives easier and improved our customers' experience. The company we were looking to purchase the equipment from missed out on a sale of around $200,000. The government missed out on $20,000 in GST, the tax on the profit of the company supplying the goods, the income tax from the extra staff the supplier could have hired and all the benefits around the logistical and installation work, all because of stupid depreciation.

When COVID hit and the coalition finally took the limit off the amount of the asset you could write off, the first thing that that business I was involved in did was buy that equipment, so the government got the $20,000 in GST, tax from the profits of the supplier and the extra income from all associated workers. Our business increased by 20 per cent with the new equipment, which meant we paid more tax as a business, with more GST collected and more profits made. We employed more staff to handle the extra sales, and of course they all paid tax. If we had not had the unlimited instant asset write-off, none of this would have happened.

A division having been called in the House of Representatives—

Sitting suspended from 17:12 to 17:25

Depreciation has got to be the most single-minded, stupid policy ever instigated, and someone needs to have the courage to get rid of it altogether. Whoever does will reap the benefits of that courage. Tradies and other businesses will upgrade their equipment, like their utes, more often if they can write off the entire amount and not depreciate it. This creates greater tax income for the government through extra GST and other associated taxes I have already mentioned. That's not to mention that this will increase the supply of second-hand vehicles and therefore reduce the price of these used vehicles for those starting out or not in a position yet to purchase a new vehicle. Again, it is all winners and no losers in this scenario.

The buy-now pay-later scheme is something I have personally seen the development of in my previous life in retail. I can remember the days of Avco and AGC CreditLine in the 1980s, when interest rates from those companies and those credit providers were in the high 20s. I can see one of the clerks smiling there who might be familiar with that. For a generation who had mortgages of up to 20 per cent, this wasn't a deterrent. Slowly, we have seen this market evolve to interest-free programs where the retailer and, really, all consumers pay. It's now just another cost of doing business. A business has to put in their budget the cost of doing these interest-free programs when pricing their goods or services, now that we're at the buy-now pay-later offering made by companies like Afterpay and Zip Pay.

The preferred option, of course, is that people would not require any type of loan to pay for goods and services. We'd much rather that they just pay cash and pay for the goods. But the reality is that, in times just like this, when we have a cost-of-living crisis and the average mortgage holder is paying an extra $500 a week on their mortgage due to this Labor government's management—or, should I say, mismanagement—of the economy, they now more than ever need access to fast, easy, affordable credit that allows them to purchase essential items. I would much rather that they use these reputable buy-now pay-later lenders than the payday lenders. It should be noted that these buy-now pay-later lenders and the providers of all other interest-free credit in the main are far more ethical, in my experience, than these payday loan sharks, who prey on the vulnerable in our communities with exorbitant interest rates and destroy innocent Australians' credit ratings. These companies, in contrast, are paid fees by retailers and employ over 140,000 Australians, and they do not impact the credit rating of their customers.

The coalition did much good work in this space, with a minister specifically dedicated to this space to ensure the fine balance of ensuring consumers were protected from unscrupulous finance companies while ensuring Australians were not deprived of receiving their goods and services. In some cases, they are desperately needed. This is just another example of government interference and overreach in a space that, in the main, has been working well. Of course, this government interference will increase the cost to providers, which then will need to be recouped by these companies. And you guessed it—it will be the already stressed average Aussie that will bear this cost in this cost-of-living crisis. Australians need legislation and policies that cut red tape and therefore the cost to businesses so that this can flow through to financially stressed Australians, not legislation that adds to financial stress.

When the coalition is next in government, whenever that is, we have got a plan to get Australia back on track as far as the economy goes. We will rein in inflationary spending to take the pressure off inflation. For example, we will not spend $13.7 billion on corporate welfare for green hydrogen, which many experts say is completely a myth, and critical minerals. We will wind back Labor's intervention and remove regulatory roadblocks, which are suffocating the economy and stopping businesses from getting ahead. We will condense approval processes and cut back on Labor's red tape, which is killing mining, jobs and those who have an entrepreneurial spirit. We will provide lower, simpler and fairer taxes for all, because Australians should keep more of what they earn—as to which, I'm so flattered that something we coined four years ago is now being taken up, with gusto, by the Labor Party. We will deliver competition policy, which gives consumers and small businesses—not lobbyists and big corporations—a fair go. We will ensure Australians have more affordable and reliable energy, as well as cleaner energy. Our economic plan, with its tried and tested principles, will restore competitiveness and rebuild economic confidence.

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

I am pleased to be speaking on this bill, the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, which continues our government's delivery when it comes to financial matters—making a difference to consumers, as well as delivering on important issues that we committed to at the last election.

I will start with buy now, pay later. The changes in this bill are really focused on the government protecting Australians from the risk of financial harms. We are putting in place commonsense protections that will make it safer for consumers who choose to use buy-now pay-later schemes. Buy-now pay-later schemes can be very useful for many consumers, but we do need to realise that there are also risks involved, and I think we also need to realise the types of uses that people are using buy now, pay later for. There is often a sense that someone may be buying that new jacket or dress that is just a little bit out of reach. In fact, what a lot of the data shows us is that it is people on quite low incomes often trying to buy essentials. We don't want those people left in a more vulnerable position than they already are.

Primarily, what this bill does is to ensure that Australia's credit laws are appropriate for current needs. It responds to trends we're seeing in the credit markets. In our first six months in government, we delivered on legislation that made payday loans and consumer leases safer, with better regulations in place to protect people using them. Now it is time to, similarly, deliver this appropriate regulation on buy-now pay-later schemes.

As I said, while buy-now pay-later schemes can benefit both consumers and businesses, they can also cause financial harm. Research conducted by Good Shepherd Australia New Zealand in 2022 found some concerning points in relation to how buy-now pay-later schemes were being used by many people in Australia. Around 73 per cent of the financial counsellors working for Good Shepherd said that their clients had missed other payments and had cut back on or gone without essentials in order to pay and service their buy-now pay-later debt. It is people on lower incomes that are using buy now, pay later for essentials—more so, as I said, than it is people using it as a tool for that discretionary spending.

So there is a need for sensible regulation that provides appropriate consumer protections while also allowing consumers to continue to benefit from buy now, pay later. This bill brings buy-now pay-later products into line with other products like credit cards and personal loans, ensuring they are regulated under the credit act. The regulatory framework is designed to operate in a way that's flexible, adaptable and proportionate to the risk of consumer harm.

Buy-now pay-later arrangements often involve a third party providing consumer finance to cover purchases of goods and services and the payment of bills. Providers in this space pay the merchant the value of the purchase upfront, and they then collect repayments from consumers in instalments.

Despite this, really, functionally, being a form of credit, as I've said, buy-now pay-later products are not currently subject to the regulatory framework that applies to other credit products. So we have a gap here which has been exposing people to potentially harmful outcomes. It can lead to poor product disclosure, inadequate dispute resolution processes, excessive default fees and unaffordable lending practices that lead to hardship and financial stress.

These amendments will require buy-now pay-later providers to hold an Australian credit licence and comply with existing requirements under the credit act—including in relation to product disclosure, dispute resolution and hardship assistance. And buy-now pay-later providers will also be subject to responsible lending obligations.

These are really reasonable changes. They are not overly onerous. They are about ensuring there is the appropriate level of consumer protection in place for products that we know a lot of people use. They will ensure Australians can continue to enjoy the benefits of buy-now pay-later while also receiving those appropriate protections, making sure we keep up with the technological change that we see, recognising that these types of credit products are increasingly popular, and all the while making sure that we keep the focus on how we support consumers in this space.

Another important part of this bill that I want to highlight is the work we are doing on build-to-rent investments. This will be important in helping to expand Australia's housing supply. It will help to increase rental supply at scale, at a time when there is an acute shortage of new rental stock. That 'at scale' part is actually quite important in this. We know that we need more rental houses in this country—just like we need more affordable houses, more social houses, more houses in general—but we absolutely need more rental supply at scale. Build-to-rent is already an established practice in the United States and the United Kingdom, but it has been a relatively small industry here in Australia. There is significant scope for build-to-rent developments to now contribute to increasing our nation's rental housing supply at a time when we really need it.

This bill provides two tax incentives which encourage investment in the build-to-rent sector and increase housing supply. It will increase the depreciation rate for capital works in eligible projects to four per cent per annum, reducing the period these costs are depreciated over from 40 years to 25 years. And it reduces the final withholding tax rate on eligible fund payments from managed investment trust investments to 15 per cent from 30 per cent, increasing after-tax returns for foreign residents who invest in eligible projects.

In addition, at least 10 per cent of dwellings in the new developments assisted by these measures must be tenanted on an affordable basis, again delivering more long-term affordable rental supply—much needed and much needed at scale. These affordable dwellings must have their rent set at 74.9 per cent, or less than that, of the market rent of a comparable dwelling in the same project. For tenants to be eligible for these affordable houses, their household income must be under the required income limits, which are set according to the composition of their household. The affordable dwellings will have to be comparable to the non-affordable dwellings, making sure that the affordable houses are of equal status as the non-affordable houses. This will be really important in picking up an area that has been underdone in this country, where we have scope to expand and where we desperately need investment in more rental housing. These measures will apply from 1 July this year.

There is a lot more in this bill, including a Medicare levy exemption for lump-sum payments, multinational tax transparency, and DGR status for more organisations. There is some work on the National Skills Agreement. There is the instant asset write-off. There are a lot of important commitments that our government has made and is delivering on. I will conclude my remarks there and commend the bill to the House.

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

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 is an omnibus bill, addressing a wide range of topics. I won't address all schedules, but I do want to draw attention to and speak to a few of the changes. I will start with schedule 1, build-to-rent developments. The Australian rental market is in one of the tightest periods of supply that we've ever experienced. The private rental market is already deeply unaffordable, with nearly 70 per cent of renters experiencing rental stress. Addressing our housing crisis will require a lot of different actions being taken, by governments of all levels. There is no silver bullet, and incentivising build-to-rent projects will not fix it, but every bit helps.

Build-to-rent projects are an important addition to our housing mix. Build-to-rent is as it sounds: a developer builds a multiunit building and then, rather than selling individual units, the developer retains ownership of the building, and the units are rented to tenants. Rents may be set at market rates or, in the case of affordable housing, may be discounted with appropriate government support. The figures are debated, but in Australia the build-to-rent sector is somewhere between only 0.2 per cent, according to the Property Council, and three per cent, according to REIWA, of the housing market. Interestingly, I discovered that Australia's first build-to-rent project was opened in 2019 in my electorate's suburb of Subiaco. It was built by an American real estate investment management firm. Since opening their first project, they have gone on to open two more apartment buildings, providing 264 one-, two- and three-bedroom build-to-rent apartments. These apartments have been at near 100 per cent capacity since opening, which goes to show we need more.

Schedule 1 of this bill will reduce the managed investment trusts withholding tax rate from 30 per cent to 15 per cent and increase the capital works deduction from 2.5 per cent to four per cent. It's using the tax system to create a more attractive investment environment for developers looking at buy to rent. That's going to make it more attractive to investors. Across the board, stakeholders are pretty supportive of this measure. I'm particularly supportive of the requirement for 10 per cent of dwellings in a build-to-rent development to be affordable housing. In 2022 the WA state government announced a 50 per cent exemption from land tax for up to 20 years for build-to-rent developments. Since then, the WA government has announced two projects that will go ahead, with three more projects progressing through a shortlist of offers.

Secondly, I'd like to address schedule 2, buy now, pay later. I also support the measures in this schedule, which regulate the buy-now pay-later industry to provide appropriate and proportionate protections to consumers who enter buy-now pay-later contracts as a type of low-cost credit contract. It requires providers of low-cost credit contracts to hold and maintain an Australian credit licence and comply with the relevant licensing requirements and licensee obligations. Buy now, pay later has slipped through the cracks until now, and I'm pleased to see it being regulated appropriately to protect people.

Financial regulations are particularly important when they affect people who are vulnerable. The catchphrase for buy now, pay later is that it's easy and accessible. Unfortunately, this includes being easy and accessible to people who are already in or at risk of financial hardship. Buy now, pay later is not marketed as credit, but with no affordability assessment it can easily get you into debt. The Review of the small amount credit contract laws final report, from a review which was established to consider and report on the effectiveness of these laws, was published in March 2016. Some of the recommendations have been implemented, and this legislation implements some more, including enhancing consumer protections for buy-now pay-later schemes and creating more robust anti-avoidance provisions so that all buy-now pay-later schemes are regulated equally.

Regulating this market will protect people like Alex and Ash in Perth, who've sought support from financial counsellors through the Financial Wellbeing Collective. Alex and Ash were 19 and 20 when they presented for financial counselling accompanied by their parents. At the initial appointment, a total of 12 buy-now pay-later accounts and four loans were disclosed, amounting to more than $20,000 between them. All loans were obtained online, with no financial assessment or proof of income required. The credit was accrued largely for retail items like clothes and shoes. These young people were employed, earning under $20,000 each per year, supplemented by Centrelink allowances. As their parents considered them financial dependants, they had paid to clear their previous debts. But, as this was a recurring issue, they sought help through financial counselling for advocacy and education.

All buy-now pay-later providers insisted on repayment arrangements, with some matters having to be escalated to internal dispute resolution. The financial counsellor revisited the budget based on the repayments. With the repayments, their expenses exceeded their fortnightly income. These young people were fortunate to be supported by their parents, who would cover the cost of food and housing. While this was just a learning experience for these young people, it's also an example of the consequences of easily accessible credit online.

That is just one of many stories. Data from the Financial Wellbeing Collective for the last 12 months in Perth shows that 47 per cent of buy-now pay-later users were on government benefits, 60 per cent of users were earning under $60,000, and 30 per cent were not in the labour force. Many of these clients presented for financial counselling as they were struggling to maintain their household budgets with the rising cost of living. They were on a low, restricted or inadequate income. Many were impacted by mental health as well.

Financial counsellors and financial coaches from the collective shared their concerns about buy-now pay-later. Buy-now pay-later services are used to supplement insufficient income. Many clients report purchasing gift cards from buy-now pay-later providers to purchase essential items, including food and petrol. For users on low incomes, a significant percentage of income goes towards meeting buy-now pay-later repayment obligations, impacting other financial obligations and leading to higher reliance on emergency relief as well as contributing to growing utility debt and rent arrears.

It's too simple to access buy-now pay-later, with no safeguards such as income, serviceability and/or credit checks by various providers. Financial coaches have observed the behavioural change in mindset as buy-now pay-later services have become more popular. This has prompted a potential decline of long-term savings habits as buy-now pay-later enables impulsive spending and overcommitment.

There's heavy advertising of buy-now pay-later in stores and online. Many clients reported having multiple accounts and do not view buy-now pay-later as credit. Clients are hesitant to seek hardship assistance for buy-now pay-later debts and generally prefer to prioritise these instalments and seek hardship for utilities and essentials. Buy-now pay-later is often shrewdly marketed as a budgeting tool. Clients view it as a contingency plan and don't want to risk losing access. The tightening of the regulations around accessing buy-now pay-later is long overdue, and this bill is definitely a welcome step in the right direction.

Thirdly, I have some brief comments to make on a schedule 4, multinational tax transparency. Transparency and disclosure of multinational tax information is essential, both for investment managers in making decisions about the companies in which they invest and in contributing to public debate on tax issues. For this reason, any data provided should also be comparable to disclosures in other significant jurisdictions. I support the introduction of new country-by-country reporting measures which align with the international EU directive. Stakeholders have told me they're pleased this schedule in the bill has been updated with amendments made after government consulted with interested parties. This is a good example of effective consultation resulting in a better piece of legislation.

Across the board, stakeholders are supportive in principle of this bill, but I note there are some unresolved issues that could be addressed either through delegated legislation or through ATO guidance. These include the following. CBC disclosure requirements should be consistent with both international and domestic rules. Commercially sensitive information that's released under reporting requirements should be protected. The materiality threshold should include a minimum dollar value and a proportionality test based on an entity's presence in Australia. Clarity is needed on the administrative aspects of this proposed measure regarding how to submit information to the commissioner and what constitutes a material error, and it requires proactive engagement from the ATO. I urge the government to consider these issues when they draft implementation regulations. I also recommend the government conduct a review of the legislation a year after implementation to address any operational issues if they arise.

Finally, I want to speak to schedule 7, the $20,000 instant asset write-off for small business entities. Small businesses serve as the engines of innovation and economic vitality in Australia. This schedule is welcome and is an additional temporary 12-month extension of the $20,000 instant asset write-off. Like the previous instant asset write-off, small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 first used or installed ready for use between 1 July 2024 and 30 June 2025.

Australian businesses require consistency and certainty to plan and invest in the future. While the temporary extension is welcome, I urge the government to legislate a permanent increase in the instant asset write-off threshold rather than this bandaid approach of ever-changing temporary threshold increases. Similarly, it should apply to medium-sized businesses as well. Extending this instant asset write-off to business entities with aggregated turnover of between $10 million and $50 million—that is, all base rate entities—would incentivise further investment with a practical and reasonable threshold. I'd support an amendment to this effect.

I won't comment on the remaining schedules to this bill. I commend this bill to the House.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to this | Hansard source

As we've heard, the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 is a number of schedules—I think seven—which deal with a range of financial measures and changes to the way our laws work to ensure that we can deliver on our election commitments and our commitments in government. I will be talking in detail on two of the schedules and then might touch on some others towards the end. I believe two schedules in particular are really important for dealing with some financial matters and our housing crisis. This legislation represents a crucial step forward in addressing the urgent housing crisis. One of the schedules also deals with greater consumer protections in the buy-now pay-later sector. By focusing on the critical area of build-to-rent developments in the regulation of buy-now pay-later services, we're trying to create more affordable housing options for Australians and ensuring that Australians are not left vulnerable to unregulated credit practices, which seem to exist in the buy-now pay-later sector at the moment. This bill is about fairness, security and future wellbeing for all Australians.

On schedule 1: it's no surprise to anyone in this place that Australia is grappling with a housing and rental crisis. The availability of affordable rental housing is at an all-time low, and many Australians are struggling to find secure, long-term rental housing. This government has made the decision on a policy front for all housing to increase supply, because we know that increasing supply is one of the best ways to help with affordability. In the last two years, we've introduced $32 billion in measures as part of our Homes for Australia Plan, primarily to increase supply. An important part of providing more housing supply is that we provide a range of different housing types.

So pervasive is this crisis that we need all types of homes in all areas. We need houses that people can buy. We need houses that people can rent. We need social housing right across the country and we need affordable housing. We need market rates. We need non-market rates for housing.

An important part of the housing mix is build-to-rent, so schedule 1 of this bill introduces critical incentives for the build-to-rent sector, a model that has proven very successful in countries such as the United States and the United Kingdom and one that is just getting off the ground here in Australia. Build-to-rent housing provides flexible housing types where one development can have both affordable rental properties and market rental properties and will provide much-needed rental stock for Australians. As the housing stock in build-to-rent can only be rented, it is often the case that rental agreements favour tenants much more than traditional rental arrangements. Build-to-rent enables tenants to have longer-term rents, which works very well for families who want to establish themselves in a neighbourhood, particularly when sending their kids to a local school. With one-year tenancies it is really hard to establish yourself in a neighbourhood, and build-to-rent can provide longer-term tenancies, like five- or 10-year tenancies.

I am sure build-to-rent will become a really important part of our housing mix, and this bill provides two significant tax incentives to encourage investment in this housing type. This bill increases the depreciation rate for capital works in eligible build-to-rent projects to four per cent per annum and reduces the depreciation period from 40 years to 25 years. It also reduces the final withholding tax rate on eligible fund payments from managed investment trust to 15 per cent from 30 per cent. It halves it. Therefore, it increases the after-tax returns for foreign investors in these projects. These tax withholding rate changes that are proposed in this bill—as I mentioned, halving them—puts build-to-rent, puts housing, on the same footing as other important infrastructure investments. This is important because Labor sees housing as critical infrastructure. These tax withholding changes will treat build-to-rent housing just as they usually would railway lines or highways, really important nation-building infrastructure.

Measures in this bill are designed to make build-to-rent developments more financially attractive, encouraging an increase in rental housing supply, which we desperately need. In my electorate of Bennelong, Macquarie Park stands as a prime example, soon to be Sydney's home of build-to-rent. The Goodman Group has proposed two major build-to-rent projects in my electorate, featuring a total of 1,236 apartments, as well as retail spaces, recreational facilities and parking. These developments aim to repurpose underutilised commercial land to address housing demand. Additionally, Stockland have put forward a new proposal for the second stage of their MPark precinct, in Macquarie Park, to include build-to-rent as part of a commercial and residential housing mix. Their proposal includes approximately 485 apartments, delivering a mixed-use precinct that includes build-to-rent, retail and commercial.

Since the pandemic, people want to live close to where they work, and I'm not surprised that Macquarie Park will be home to build-to-rent in the future. These developments are not just about increasing the number of available rental properties to help with the housing crisis but also about creating vibrant, balanced communities with both residential and commercial spaces supported by enhanced public transport, as we have in Bennelong.

Importantly, this bill mandates that at least 10 per cent of the new dwellings in a build-to-rent development that takes advantage of these tax concessions need to be tenanted on an affordable basis. That means the rent for these units must be set at a 25 per cent discount from the market rental rate. Traditionally those affordable rental dwellings have gone to key workers and people on low to moderate incomes, which is really important. This measure ensures that more long-term affordable rental options are available, directly addressing the needs of key workers like nurses and teachers and those on low to medium incomes. By providing these tax incentives and by requiring that affordable housing forms part of these developments, this bill strikes a balance between encouraging investment in this new housing type and ensuring that the benefits of these investments are shared with the entire community. Diversity of housing is incredibly important, and build-to-rent will help with that.

I'll now go to schedule 2, which makes some long-overdue and important changes to buy-now pay-later products like Afterpay, Zip Pay and humm—there are quite a few of them now. Buy-now pay-later is a great Aussie invention and one that we should be pretty proud of. It has provided much-needed disruption in the short-term credit market, which has been typically dominated by credit cards and in some instances by payday lenders—and we've all dealt with some constituents who have had issues with payday lenders, and that led to reform in that sector. Buy-now pay-later has helped small businesses sell more and has provided an affordable short-term credit option for consumers who would have otherwise only had payday loans at ridiculously high interest rates or credit cards as their options.

However, like all good innovations, it has avoided regulation. Essentially buy-now pay-later is a credit product, and, rightly, the government should regulate this sector, and that's what this schedule seeks to do. To their credit the buy-now pay-later sector have worked with government to ensure that they are appropriately covered by this credit regulation. Schedule 2 brings buy-now pay-later products into line with other credit products by ensuring that they are regulated under the National Consumer Credit Protection Act 2009. Without proper regulations on these services, many people could face poor product disclosure, leaving them unaware of the true cost of the services they use. Additionally, inadequate dispute resolution processes mean that, when problems arise, consumers often struggle to get fair and timely resolutions. Excessive default fees, as we know, can quickly escalate, turning a convenient service into a financial burden.

By bringing these buy-now pay-later products under the credit act, the government's aim is to protect consumers, ensuring that they have clear information, fair resources in disputes and access to credit that does not compromise their financial stability. The amendments in schedule 2 will require buy-now pay-later providers like Afterpay and Zip Pay to hold an Australian credit licence and comply with existing requirements under the credit act, including product disclosure, dispute resolution and hardship assistance. Many of those providers are doing elements of this already, but regulating it is an incredibly important step.

Buy-now pay-later providers will also be subject to responsible lending obligations, which is an important reform. Providers of products that meet strict fee caps and are categorised as low-cost credit will have the option to comply with a modified responsible lending framework, and this will ensure that, while consumers continue to benefit from buy-now pay-later—something that I know is really popular, particularly for younger people—they will be protected from potential financial distress. They are accessing a credit product. That product should be treated as such. This approach provides appropriate and proportionate consumer protections, while maintaining the accessibility of buy-now pay-later and ensuring that the sector continues to innovate.

In conclusion: lots of people find these TLABs pretty boring and dry—there are lots of numbers, lots of schedules, lots of stats—but this one here today shows that we are about supporting housing and that we want to support people who are accessing credit products. There are even measures in there to help small business, with the extension of the instant asset tax write-off. Ensuring that we encourage more investment in housing is about helping families right across the country—but particularly in Bennelong—who are struggling to find affordable rent. It's about helping families move into great places like Macquarie Park, where they will have access to amazing jobs, amazing public transport and more rental housing options. And, of course, as I mentioned, the bill will help people who use the very popular buy-now pay-later services and ensure that they have some protection afforded to them by regulation. I commend the bill to the House.

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

I rise to speak in support of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 as a whole, but I will raise particular concerns I have with parts of the bill. It's almost like an omnibus bill when you're not having an omnibus bill.

Initially I'd like to talk about build-to-rent schemes—multiunit buildings where units are rented out through a single management entity. These are commonplace throughout Europe, the United States and Japan, where institutional investors build houses, and they are managed by a professional landlord. The benefit is that it encourages long-term investment in housing purpose-built for rent. The Property Council articulated that benefit. The challenge is relatively low rental yields for investors. Tax reforms such as those included in this bill will help to address this. Reducing the final withholding tax rate on eligible fund payments—rental income and capital gains from managed investment trust investments—from 30 per cent to 15 per cent is a welcome step, as is increasing the deduction rate for capital works in eligible developments from 2.5 to four per cent per annum. This should encourage investment in build-to-rent, which I support as a means to foster a global proven model to address housing affordability and availability. We need to have lots of different options out there to build our stock.

I've previously tabled a housing report which recommended reforms to help build-to-rent take off in Australia. The bulk of these reforms is that investors must provide for at least 10 per cent of dwellings in new dwellings accessing these measures to be rented out on an affordable basis, to deliver long-term affordable rental supply. That's really critical. We need to make sure that we have a really robust tenant mix.

A measure that I have been championing for seven years in this parliament is buy-now pay-later. I'm really pleased to see that it is part of this bill. This bill is a good start, but I believe that the consumer protections that are in this bill could even be improved further. I have, as I said, advocated for many years on this. Really my advocacy for this came from about 15 years ago, or maybe more than that, when I was working in an electorate office. We had a lovely elderly gentleman come into the electorate office. He had a television. He had had this television for about 15 years, and it was one of those tiny 36-centimetre televisions. I calculated that, with what he had spent in renting this television, he could have bought a huge flatscreen television. The problem was that every month he would make a payment—I think it was $10 a week—but he was never able to pull together the money to do the balloon payment at the end, which was $150. This was for a product that, if he had gone to sell it on Gumtree or Facebook Marketplace or whatever, perhaps would have only got $40 or $50 at the time.

It was heartbreaking to see somebody who I felt had been taken advantage of in this system, so I'm really pleased that we are going to have some protections around here. With respect to that gentleman, I contacted the organisation and did a bit of a full Karen on them, and they managed to waive the rest of that contract. But, for all the people that don't come in, that don't visit a member of parliament and that keep paying those amounts, it is heartbreaking.

The government estimates that there are now seven million buy-now pay-later accounts in Australia. I have previously identified concerns in consultation with consumer advocates, including the accumulation of buy-now pay-later contracts which were not able to be effectively serviced, resulting in millions of dollars in late fees every year. And that's where they're making their money—the late fees. Yet not until now have lenders been bound by responsible lending obligations, which is extraordinary. Applying the credit act to buy-now pay-later contracts is a move in the right direction.

Providers will now be required to hold Australian credit licences and to comply with new credit regulations created for a new category: low-cost credit contracts. Low-cost credit providers will choose between a modified responsible lending obligation framework or the existing framework under the credit act. They will be under an obligation to determine that any credit they provide is affordable and meets the consumer's needs, and that's critical. Regulatory impact will depend on risk factors such as the nature of the products and the provider's harm mitigation strategies. Small amounts below $2,000 will be regulated less rigorously as a small-amount credit contract or continuing credit contract. The government states that this will provide appropriate and proportionate consumer protections.

Concerns have been identified, however, regarding the levels of consumer protections in this bill. The Consumer Action Law Centre and CHOICE say that they intend to provide a joint submission to the Senate economics committee, which will be inquiring into this bill. It is often the case that the government wants to appear to push the bill through the House. I appreciate that, and I appreciate the time constraints in front of us. It's frustrating that that often happens before a Senate committee reports, but hopefully we may see some further amendments to this. In the interim, I have consulted with the Consumer Action Law Centre, and they are keen to see this bill passed in this place.

We need to see some regulation in the credit space. Those hardships are particularly keenly felt with those who have the least opportunity to access legal advice and consumer advice and those who often desperately need the funds to be able to get out of a very tight spot. Or, in many cases, they are young people. When I've talked to young people and we've talked about the amount of interest with the late fees and what it equates to in interest, many of them are completely shocked. Honestly, I would love to see this as part of our education system. When we're doing maths, particularly in high school, we should have a good understanding of credit card interest and interest on other things, such as payday lending, and even how to calculate that interest. I think that we need to do more in that space to ensure that a lot of the next generation do not fall into debt traps.

With respect to this bill, this bill grants concessions to the buy-now pay-later sector by not subjecting them to certain requirements, and consumer advocates argue that this concession is not necessary. I think we can do more in this place to strengthen this bill. Under watered down credit obligations for buy-now pay-later, only a partial check would be required—and for under $2,000 contracts just a negative credit check is required. Two thousand dollars is quite substantial when you start adding in late fees and other payments, and very quickly the amount can balloon. A partial or negative credit check is not a holistic measure of a person's capacity to pay. They may capture red flags. If it's above $2,000 it will allow them to see what other money is loaned. However, they won't capture payday loans and other scenarios. A person with a good credit score may still be in financial difficulty, leaving them open to unsuitable buy-now pay-later lending. So this is a big, ugly and harmful concession to the industry.

My final concern is with respect to higher value buy-now pay-later products because the legislation places no caps on how much can be lent to a consumer. I think that is troubling in the buy-now pay-later sector. The lesser, watered down regulatory regime is based on the idea that providers can't charge fees. However, as I've said, even with low fees, if a person takes out a $30,000 loan the repayments will be significant. It would be better to have an upper cap of $5,000 or perhaps a maximum of $10,000, which is the bankruptcy threshold. If you can be made bankrupt by a loan, then the provider should comply with full credit regulation requirements.

I'm advised that this is an emerging issue in relation to solar panel sales, for example, through buy-now pay-later, resulting in buyers being signed up to loans that they have no capacity to repay. Consumer advocates like the Consumer Action Law Centre and CHOICE then hear through financial counsellors that borrowers are panicking that they may lose their house over a loan that they just can't afford.

I note the banking sector didn't express a strong or unified position on this, perhaps because some banks are now also providers of buy-now pay-later products as well as credit. However, I do support the bill and hope that it can be strengthened in the debate.

Regarding other provisions that are part of this larger piece of legislation, I support the Medicare levy exemption for lump sum payments to ensure that the Medicare levy is not payable with respect to eligible lump sum payments in arrears, such as compensation for underpaid wages.

Multinational tax transparency is another good, solid measure with country-to-country reporting. Tax transparency across jurisdictions for large multinationals with an annual global income of $1 billion-plus—which will be set by legislative instrument by Treasury ministers—will help improve information sharing and assist in the effectiveness and appropriateness of current tax settings as well as enhance and inform public debate. This is a very good measure.

There are also measures with respect to deductible gift recipients. I support this and support the expanded list. I do think we can do a lot more in the philanthropy space. We know that there are a lot of people and organisations that aren't even aware of DGR status. Some organisations don't know how to apply for it, and it is a very burdensome thing to apply for. We can do a lot more in this space around education. We could, perhaps, even make it a little bit easier for organisations, and share information with people who may wish to make a donation on how they can do that. The National Skills Agreement payments is another measure I support.

One area I think is really lacking is the $20,000 instant asset write-off for small businesses. This is a tokenistic approach, if we genuinely want to see small businesses thrive in this nation. You can't buy even the most simple, basic piece of equipment for $20,000, you can't buy a vehicle, you can't buy much at all. We know that many small businesses are having a very, very challenging time at the moment, so I think this threshold of $20,000 really needs to be looked at by government. If we genuinely want small businesses to grow, to stretch and to invest huge sums of money, why would we not lift that threshold to make it more attractive for them to do so? Twenty thousand dollars—I can't remember the last time it was so low. During COVID, it went up significantly. Prior to that, it was around $30,000. I just think that $20,000 is very low, and so I would urge the government: if you are genuinely there for small businesses in our nation and you want to see them thrive and you want to see them grow and employ more people and take on new technologies, then you need to look at the instant asset threshold limit and adjust it accordingly. Thank you.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

I'm really pleased to be rising to speak about a range of the elements in the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 and the Capital Works (Build to Rent Misuse Tax) Bill 2024, and I'm going to work through them. First of all, I want to talk about the incentives in here for build-to-rent developments. We need to build more homes, and it goes without saying that we need to do it quickly, right across Australia, including in Macquarie. Our ambition is 1.2 million homes by the end of the decade, and the $32 billion in new commitments that we've made is aimed at stimulating construction in housing in a variety of ways—homes for buyers and homes for renters.

One key element is homes that are built to rent. It's where developments are specifically designed to be rented out, rather than sold off to individual buyers. This is an underdeveloped market in Australia compared to other places, including the US and the UK. Currently, here it's been more focused on luxury housing, but we want to see it used to increase rental housing supply more broadly—including, and especially, in the area of affordable housing. These moves we're making are designed to supplement, not replace, other forms of rental housing with this build-to-rent element so that we are actually expanding the housing supply.

For eligible new build-to-rent developments, there are a number of provisions that are in there. One is that we're reducing the final withholding tax rate on eligible fund payments from managed investment trust investments to 15 per cent. This is to provide an incentive for those trusts to do this work. We're also increasing the depreciation rate for capital works in eligible projects to four per cent a year. That's up from 2.5 per cent—another incentive. While that might not sound earth-shattering, what we know is that they're the sorts of incentives that we need to get people to really look at this sector as an asset class and genuinely invest at scale.

The way build-to-rent developments will work is that there has to be a minimum of 50 apartments or dwellings, with a minimum lease term of three years for each dwelling. So they are large developments, and they're big investments. The development must be held under single ownership for at least 15 years, and at least 10 per cent of the dwellings in new developments assisted by these measures must be tenanted on an affordable basis so that we're delivering a more long-term, affordable rental supply.

The affordable dwellings must have their rent set at 74.9 per cent or less than the market rent of a comparable dwelling in the same project. For tenants to be eligible for affordable housing, their household income must be under the required income limits, which are set according to the composition of the household. The affordable dwellings are required to be comparable to the non-affordable dwellings, ensuring that affordable and non-affordable dwellings are of equal quality—because that's what people deserve. They have a right to have quality housing.

These measures will apply from 1 July this year. This is yet another piece in the suite of programs and incentives that we're providing, because housing is a priority. Increasing the housing supply is a huge priority for us, and I am pleased to see that this aspect is covered in this bill.

The second schedule of this legislation relates to buy-now pay-later. Buy-now pay-later is something that's actually been around since the 1800s, and back then Singer, the sewing machine company, established the 'a dollar down, a dollar a week' plan in order to buy your sewing machine. That's a little bit before my time, but I well remember lay-by. In the 1970s and 1980s I was a big fan of lay-by, and the way lay-by has moved to buy-now pay-later is the evolution to the 21st century. There's way more instant satisfaction in being able to take the goods with you, and unsurprisingly it's been a hit with Australians. We were early adopters of it, and in fact roughly 40 per cent of Australians have used buy-now pay-later, according to the latest data, and it's especially popular with younger people.

But what we know is that it can lead people into some difficult situations, and a study a couple of years ago by Good Shepherd found that 73 per cent of financial counsellors said their clients had missed other payments, cut back on essentials or even gone without in order to pay and service their buy-now pay-later debt, and the risks of that impact are disproportionate for vulnerable Australians, including First Nations Australians and those who are struggling financially. Right now there is no regulation of buy-now pay-later under consumer laws, and, while other products like credit cards and personal loans are regulated under the credit act, that hasn't been the case for buy-now pay-later.

Of course it's fantastic for small business to be able to offer the tool of buy-now pay-later, and so the regulatory framework that we're putting around it is designed to operate in a way that's flexible, adaptable and proportionate to the risk of consumer harm. The buy-now pay-later arrangements generally involve a third party providing the consumer finance to cover the goods and services, the buy-now pay-later providers paying the merchant the value of the purchase upfront and then those providers collect the repayments in instalments from consumers. That leads to some challenges because there can sometimes be poor product disclosure, inadequate dispute-resolution processes, excessive default fees and unaffordable lending practices.

These proposed amendments will require buy-now pay-later providers to hold an Australian credit licence and comply with existing requirements under the credit act, including in relation to product disclosure, dispute resolution and hardship assistance. The buy-now pay-later providers will also be subject to responsible lending obligations. However, providers of products that meet strict fee caps, meaning that they're categorised as low-cost credit, will have the option to comply with a modified responsible-lending obligation framework that allows certain requirements to scale down in proportion to the risk of the product. We want to see people be able to access products and have a different form of credit—in fact a cheaper form of credit. That's what buy-now pay-later has done; it's really brought competition into that market in a lot of ways. But these changes will ensure that Australians can continue to enjoy those benefits while receiving appropriate protections.

Another part of this piece of legislation is around multinational tax transparency. This is one element of a suite of things that we are doing to make sure that multinationals pay their fair share of tax on the profits that they derive from Australians. There's an exposure draft out for legislation to implement the global and domestic minimum corporate tax rate of 15 per cent to make multinationals pay a fair share, and that also builds on legislation to stop multinationals claiming excessive debt deductions that see them reduce or avoid tax in Australia. But this part in this piece of legislation is around transparency.

The bill ensures multinationals are held to account on their tax affairs by requiring large multinational enterprises with a material presence in Australia to publish certain tax information related to the jurisdictions in which they operate. This measure delivers on our election commitment to ensure multinationals pay their fair share of tax by enhancing transparency around those large multinationals operating here.

We've listened to the feedback during the process of this legislation moving through parliament, and there have been some key changes based on stakeholder feedback to more appropriately balance the compliance burden associated with complying with these rules and to better align Australia's regime to existing public country-by-country reporting frameworks—things like delaying the start date by 12 months and introducing a materiality threshold to be subject to Australia's regime. That's a $10 million Australian sourced turnover.

This bill is due to come into effect from 1 July, assuming it passes this place, and the changes, which have been welcomed by stakeholders, mean that our country-by-country reporting rules represent a significant step forward in global tax transparency by improving the quality and accessibility of tax information in the public domain while minimising unnecessary compliance burdens on reporting entities. It really builds on that global trend to help inform the public debate on the tax affairs of large multinationals.

I want to make mention of one of the entities who will, as a result of this bill, be listed and eligible for DGR status, and that is the International Campaign to Abolish Nuclear Weapons, ICAN, Australia. ICAN is a homegrown Australian organisation that has gone to the world and achieved a treaty that 70 nations have ratified and more have signed, to adopt the UN Treaty on the Prohibition of Nuclear Weapons. It's an amazing organisation. I'm very proud to have worked with them. They rightly deserve the recognition that they have received, and I hope this supports the ongoing work they do so that we can achieve the objective of having a world that is free of nuclear weapons.

The last part of the schedule that I'd like to refer to is the $20,000 instant asset write-off for small-business entities. What this does is extend by 12 months the ability of small businesses to access the $20,000 instant asset write-off. As a small-business person, I have certainly benefited by using instant asset write-offs in my business, buying small pieces of equipment or things that you can get an instant tax deduction for, rather than have it depreciate over many years. This will allow small businesses with aggregated annual turnover of less than $10 million to be able to immediately deduct eligible assets costing less than $20,000 until 30 June 2025. It'll apply on a per asset basis so small business can buy multiple assets and be eligible for this tax write-off. This was something that Labor invented. We are the first government to bring this in, and it has been embraced by both sides of parliament. The assets costing $20,000 or more can continue to 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. So, for larger assets, there is still an ability to have some additional tax benefits in buying those.

As a small business, coming up with the cash is often a challenge for reinvesting in your business, but I know being able to do it at the end of the financial year and get that asset write-off makes a real difference. We will continue to look for ways that we can support small business in the good times and the tough times.

Simon Kennedy (Cook, Liberal Party) Share this | Link to this | Hansard source

I come from a town called Charters Towers, which is under the Mining Act. There are about 12,000 people there, and it's an hour's drive away from Townsville, where the population is only 300,00 people. You could buy a piece of land there for $7,000. You just went in, made an application and handed in your survey. Within about half an hour, you could sell the block of land.

Now, the land price was $7,000 for a vacant piece of land.

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

Order. I do apologise, Member for Kennedy. It being 6.30, the debate is interrupted in accordance with standing order 192(b). The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting day. The member for Kennedy will have leave to continue speaking when the debate is resumed at a future date.