Luke Howarth (Petrie, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I move:

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

"whilst not declining to give the bill a second reading, the House notes:

(1) the Government is failing to support meaningful small business tax reform, including the Opposition's plan to make the Instant Asset Write-Off permanent;

(2) the Government voted eight times against delivering a bigger tax cut to small business in last year's Instant Asset Write Off;

(3) the Government has burdened Australia's 72,000 tax practitioners with unnecessary new regulation and costly red tape;

(4) the Government has broken promises to raise taxes on superannuation, on unrealised capital gains, on franking credits, personal income tax, and end small business tax incentives; and

(5) that the Government's housing policy is failing to meet its supply targets and supporting forever renting, not home ownership".

I rise to speak on the Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Bill 2024. This bill includes modest changes to business tax administration and modifies the foreign resident capital gains withholding regime. After more than two years of pretty well neglecting small business, I commend the government for remembering that small businesses do exist. Small and family businesses are the backbone of this country and employ so many Australians. Making some minor tidy-up amendments in schedules 2, 3 and 4—I appreciate that from the government.

These business focused measures were announced in the 2023 budget, however, as measures to reduce the time spent complying with tax obligations. Unfortunately, the government was not able to reduce the time spent getting these straightforward amendments drafted into parliament, because that budget—when these measures were announced—was 17 months ago. Small businesses are not a big priority for the Albanese government. They've been left waiting for too long. The government's inability to get even the simplest and most noncontroversial legislation drafted in a timely manner is disappointing. If there are sensible reforms which will help during this cost-of-living crisis and doing-business crisis, we want to see them come into parliament and legislate it as soon as possible to help all Australians. Unfortunately, the list of promised reforms in the Treasury portfolio are running out of the runway before an election [inaudible]. Even the minister's top priorities are being left to the last minute, with rushed consultation processes and unexplained delays becoming the norm.

The department, in drafting resources, are constantly scapegoated by this government, but it is becoming clear there is a lack of direction and leadership coming from the top. Worse still is the lack of meaningful tax reform from the government for small businesses. The coalition's policy is to make the instant asset write-off permanent for small businesses. Labor has consistently been slow to provide certainty on the instant asset write-off, and it leaves small and family businesses in limbo and faced with uncertainty when they invest in their businesses. The coalition will end this uncertainty if given the opportunity and elected at the next election, and we'll end the annual stand-off by making the instant asset write-off permanent and lifting the threshold by another $10,000. That's opposed to the mere 12-month extension which is currently in place. We saw how disastrous this was in June, when Labor left the instant asset write-off for the 2023-24 financial year stuck in limbo with just days to go before the end of the financial year. Our position would simplify depreciation for millions of small businesses by cutting red tape, boosting investment in productive assets and lowering business costs and prices. We don't want a piecemeal approach. We would deliver substantive reform for the 98 per cent of Australian businesses who would benefit from the instant asset write-off.

The coalition is committed to lower, simpler, fairer taxes for Australia's 2½ million small businesses. In contrast, Labor has opposed cutting the small business tax rate, opposed extending the instant asset write-off and clawed back business [inaudible] incentives since coming into power. The latest national accounts data shows Australia's private sector is still not growing. Small businesses need a lifeline to drive investment and boost productivity, which has fallen significantly in the last 2½ years under the Albanese government. While the government's modest fix-ups in this bill are welcomed, they do not absolve Labor's bad decisions on the instant asset write-off and failure to deliver meaningful tax reform for small businesses.

Schedule 2 of this bill is described as reducing the administrative burden for employers by allowing them to make a standing declaration for their tax agents to lodge multiple, single-touch payroll forms on their behalf for up to 12 months. Tax agents report there will be a small benefit from this reform, but the ATO has permitted annual authorisations to act since the start of the single-touch payroll in 2019. But I do commend the government for making a regulatory change in relation to tax agents—that isn't aimed at destroying them, I might add. Over the last year, Australia's 72,000 tax practitioners have been subjected to a sustained attack from this government. The regulation was almost disallowed in the Senate; it was 31 to 31. These are local accountants, bookkeepers and tax agents who are some of the most trusted people in Australia. Small and family businesses go to their accountant to help them do their tax, payroll and superannuation. Rick, as a farmer, you'd know. This was a significant attack when this regulation was first made back in July. It has been widely criticised through a grassroots advocacy campaign and the united call f from the leading accounting professional bodies or the regulations to be scrapped completely. I might say: regulation is just strangling this country. The more parliaments there are, the more laws and regulation you keep putting in. You've got to unwind some of that, too, or show a bit of self-control as a minister and don't make regulations to start with. Not every law is needed. Sometimes you just need to steady the ship and actually look at unwinding poor regulation, including that of a previous government on your own side. You need to look at that to unwind it. This was a poorly targeted attempt by the minister within the Albanese government to respond to the misdeeds of a few individuals at PwC which have left 72,000 tax practitioners across Australia as collateral damage and left them with an unnecessary and burdensome compliance nightmare. What happens? Those costs, that extra regulation, gets passed onto every small business and farmer, as the member for O'Connor would know.

The government's approach to consultation and stakeholder engagement has been bizarre and disrespectful. The regulation involved minimal or no consultation and was made without notice, with industry stakeholders only becoming aware of it when the Tax Practitioners Board issued a press release almost two weeks later. The regulation was originally slated to commence a month after it was made, and no regulator guidance was available. Serious concerns raised about the regulation and the lack of consultation were repeatedly dismissed by the Assistant Treasurer, who described it as 'a set of modest obligations'—really?—and said that there had been an extensive consultation period. These claims were immediately rebuffed by the leading professional associations. The Albanese government left it until the day of the disallowance motion, six weeks after the regulation was made, when they knew disallowance was imminent, to start consulting with industry and acknowledge their concerns as legitimate. It's not a way to govern.

After a backflip and previous comments that changes were not required, the government rushed to rewrite the regulation and release it for a public consultation period of five business days. This means public consultation commenced 11 weeks after these obligations were made law. I had held roundtables and meetings with many of these tax practitioners, particularly more recently in South Australia. Some of them were distraught, disappointed and fed up with the Albanese government's treatment of them. Some even considered leaving the profession. I'd say to all current ministers that are here in this place: stop overregulating things. You don't always have to legislate, as I was saying. Dig down into your portfolios and actually look at reducing regulation where possible, because, at the end of the day, it will cost people more money. In a cost-of-living crisis, with 12 interest rate rises and rents and mortgages through the roof, now is not the time to add more regulation.

Accountants in my own area spoke to me. Melinda from Inferno Accounting in Mango Hill said:

This determination that the government has slipped through is horrific. My colleagues and I are now in panic stations because there was little time or consultation. This will decimate the accounting industry.

Robyn from First Class Accountants in Sandgate, in the member for Lilley's area, said:

BAS and tax agents are very concerned that people will be leaving the profession in droves due to this added pressure—

and she is unsure how to charge her clients for all this added work.

Rod, a chartered accountant in North Lakes, told me:

Local accountants are under siege.

Rod works 50 hours a week for his clients, and these new rules make him feel like he's been set up to fail by the Albanese government and the Assistant Treasurer. These tax agents do not want this red tape in any form and do not accept the government's attempt to fix this fundamentally flawed regulation. This is bad government and not a standard we should accept. It's also more costly red tape for small businesses which will be passed onto consumers at a time they can least afford it.

During a cost-of-living crisis and a cost-of-doing-business crisis, the government should be doing everything to get costs down and reduce red tape. Instead, for tax practitioners, it's making even more red tape at their busiest time of the year.

I'm glad that schedule 2 has one small, very minor adjustment that might help accountants after everything they've been dealt with by the Albanese government. There are minor issues with schedule 3. Schedule 3 allows small and medium businesses to self-amend their tax assessments up to four years, extending the current two-year limit. That sounds sensible. This is a sensible and welcome reform which will reduce the volume of objections lodged with the ATO.

However, I note two concerns regarding the proposed application date and the scope of eligible business structures. Firstly, the application date currently applies to the amendment of the 2024-25 year and later assessments, meaning that it may not have any practical benefit to any Australian until around 2028, when the existing two-year review period would first expire. Secondly, partnerships and self-managed superannuation funds that carry on a small or medium business are not included. The new four-year assessment period is only available to an individual company or person in the capacity of a trustee of a trust estate of a small or medium business entity.

In schedule 4 of this TLAB, the bill extends the circumstances in which the Commissioner of Taxation may retain a business's tax refund rather than processing it as soon as practicable. I understand the purpose of this is to encourage electronic payments of tax refunds rather than the use of cheques. This is a sensible change. In saying that, I note the possible risks associated with outbound ATO communication to obtain bank details from taxpayers in terms of ATO impersonation fraud and scams. But I know addressing these issues is a priority for the Assistant Treasurer, and I hope he will work closely with the ATO during implementation to mitigate those risks.

Schedule 1 of the bill—I've left this to last—deals with the foreign capital gains tax withholding compliance burden. Schedule 1 will modify the existing foreign resident capital gains withholding regime. It makes two changes: it increases the withholding rate from 12½ per cent to 15 per cent; and it removes the threshold, which is currently $750,000, before the withholding obligation applies. The regime imposes a non-final withholding obligation on the purchaser of certain Australian real property and related interests where the property is acquired from a foreign resident vendor. The purpose of the regime is to assist with the collection of CGT liabilities owed by foreign residents. The foreign resident capital gains withholding regime was originally established by the former coalition government in 2016, first with a $2 million threshold and then down to $750,000. The government will now remove the threshold entirely and impose the burden of compliance on everyone.

Schedule 1 is described by the government as complementary to housing affordability measures. This is a little bit bizarre and misleading because it will have the opposite effect, in that schedule 1 will impose a broad compliance cost by expanding the requirement to obtain and provide a capital gains withholding clearance certificate to all Australian resident vendors disposing of taxable Australian real property. If you're selling a house or a unit or a townhouse, everyone will require their solicitor to do a little bit of extra red tape, which will cost a little bit more when selling. Vendors for lower-value sales who were previously exempt under $750,000 will now have to go through this additional compliance process and be subjected to a new regulatory burden. There will also be a compliance burden for more resident purchasers and their conveyancers, who will now have to withhold and pay the ATO where the vendor is foreign. The withholding obligation is borne by the resident purchaser where it is a foreign vendor.

These compliance costs are broad based and potentially significant overall, particularly with all vendors now being required to request and provide a withholding clearance certificate from the ATO prior to settlement. I don't know the actual percentage of foreign buyers, but I imagine it would be less than five per cent. It means that you've got this extra regulation for 95 per cent of Australians. It would be good if the minister and the government could look at a way to try to reduce that red tape because it will mean that everyone in our electorates that sells a property will then have to have a lawyer spend another 15 minutes doing this—and if they're charging 500 bucks an hour, that's another $125. The proportion of these properties being foreign owned is also likely much lower than properties above the existing $750,000 threshold, with the average purchase price currently $914,000. I fear it will probably represent more in regional or lower-income areas, where house prices are a bit lower.

I also note there are existing issues with the timeliness of the ATO providing clearance certificates. It is likely the increase in requests because of this measure the Albanese government is putting in will compound the problem or create more of a backlog. Under current service levels, the ATO provides clearance certificates within 28 days, which can make a short settlement period impossible. This regime was originally designed to be targeted at higher value sales, and stretching it to cover the entire market will have an adverse impact. The burden of compliance should not be on Australian resident vendors and purchasers. Under this system, everyone must declare their status to weed out the few foreign resident tax avoiders. It is a bit back to front. That is my concern. The ATO should be stronger with its monitoring and enforcement, or we should place greater compliance obligations or restrictions on foreign resident investors.

Labor dressing this measure up as improving housing affordability is an example of how it has failed and completely missed the point when it comes to housing and homelessness policy. As I said to the Minister for Homelessness today during the MPI, the coalition has a good record when it comes to homelessness because we reduced acute homelessness in the last census in 2021. From 2016, rough sleepers reduced under the coalition government, couch surfers reduced under the coalition government and severe overcrowding reduced under the coalition government. In the last 2½ years under the Albanese government, with 12 interest rate rises, we've seen these go through the roof in my electorate. I fear for the 2026 census that, if things aren't turned around quickly, we will see a big increase in homelessness.

Under Labor, rental prices continue to surge. From August 2023 to August 2024, according to the ABS, rents rose by 6.8 per cent on average nationally. I've seen it in my own electorate of Petrie. When you drive from Brisbane City Council into the City of Moreton Bay over the Houghton Highway, the first thing that welcomes you is a tent city and campers everywhere. It's right at the site of the old Hornibrook Esplanade. This has only happened in the last two years. It was not there at the last election. I don't know where to lay the blame except on the Albanese government because of the 12 interest rate rises, although the state government has also done a really poor job there, and I'd ask that in two weeks time voters throw them out at the 26 October election and put in David Crisafulli and the Liberal National Party.

The national median rental price is now exceeding $620 per week, with the regions experiencing the steepest increases. In my electorate of Petrie, some suburbs have had advertised rents increase by almost 20 per cent annually. It's not always the owner's fault, because their mortgages have gone up by $30,000 on a $750,000 loan. That's $600 a week in interest repayments alone that have gone up under the Albanese government. If you look at the former coalition government, there was one interest rate rise in nine years. This government has had 12 interest rate rises in two years. Labor continues to prioritise corporate homeownership over individual ownership. Its policies will mean more of the housing supply is owned and rented out by super funds and foreign investors, and it will make homeownership more difficult for individual Australians. All of this is at a time when we've got record-low new builds happening. They're also bringing in over 600,000 people a year, whereas pre-COVID, under the coalition, it was about 170,000. If the maths aren't adding up, you understand why. It's because the Albanese government has failed in the last 2½ years.

Now the 2.4 million Australians claiming rental deductions are next in Labor's tax hit list. We know they're plotting changes to the capital gains tax and negative gearing. The Treasurer admitted that he's had the Treasury looking at the cost on this. If you were dead against it, if you said, 'My word is my bond. I'm rock solid. I'm not going to do that,' then why would you get the Treasury to do it? People aren't silly. I can tell you now that, if negative gearing were gone, rents would go up even further. We know that. If you can't negatively gear, you've got to try to put the rent up to cover the 12 interest rate rises that have happened. They say they're not going to do it, but it was policy in 2019. They said they weren't going to change stage 3 tax cuts as well—my word is my bond—but then they completely changed it, so forgive me if I'm not 100 per cent trusting in what the government is saying, when we've got a cost-of-living crisis and a housing crisis in my electorate and right around the country.

The coalition remains steadfast in our commitment to continue to be the party of home ownership and first homebuyers. We were the party that brought in the First Home Super Saver scheme, which those members opposite who were in the parliament at the time voted against. We also did HomeBuilder, which had record investment of new homes, and we also brought in the First Home Guarantee. So we've done a lot in this space, and we did a lot through NHFIC.

The current shadow minister for housing, the member for Deakin, did NHFIC, and there was a lot of investment particularly in New South Wales in community housing, unlike in my state of Queensland, where the state Labor government up there was pathetic and didn't back community housing at all. What happened in the census? New South Wales, at the last census, was the only state to reduce homelessness. They actually reduced homelessness probably because of their investment in community housing through the coalition government's NHFIC, which the Labor Party has now changed. What's it called now? I've forgotten the name of the fund. It was NHFIC, but they've changed it to something else. The coalition has a proven track record to back this up. We want Australians owning more homes, and the policies currently supporting first homebuyers are the ones Labor inherited from the former coalition government.

Finding somewhere to live is getting harder under this Albanese government, and I see it every day in my area, as I said before. In conclusion, this is a government rushing to deliver the bare minimum before time runs out when an election is due in May next year. The minor changes in this bill won't hide Labor's broken promises on tax and its mismanagement of the economy. Labor inherited an economy with low unemployment, strong growth and recovering government finances. We are in the sixth consecutive quarter of negative GDP per person, and this is the longest per capita recession in 50 years.

Under the Albanese Labor government, the majority of jobs created are being funded by public spending. It's not sustainable and risks higher inflation. It means that the 12 interest rate rises that we have seen under this Prime Minister and this government will be there longer, and the shadow Treasurer has said regularly that other countries in the OECD and around the world are reducing interest rates on a much more regular basis. Here, though, we are still stuck with those 12 interest rate hikes since the last election. Labor should be backing small businesses to get private sector jobs back on track. Instead, they've dished up a few modest amendments which will barely scratch the surface for small business.

Australians have lost confidence in the Albanese government, and it's failing to stop surging rental prices and stagnating building approvals. It's failing to provide meaningful tax reform and red tape reduction for small and medium businesses, and it is failing to keep its promises on tax.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Rick Wilson (O'Connor, Liberal Party, Shadow Assistant Minister for Trade) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Debate adjourned.