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

I move the amendment circulated in my name:

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

"the House notes that:

(1) the former Government consistently delivered lower taxes for small business and families;

(2) the Coalition's plan for the Instant Asset Write-Off will deliver a bigger tax cut for small businesses and boost investment in productive assets;

(3) there have been more than 27,000 business insolvencies under this Government; and

(4) Australians cannot afford another three years of Labor.".

I rise to speak on the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024. This bill, I believe, is another attack on small businesses by the Albanese government. This is an antibusiness government, and the bill highlights how the government is failing small businesses across Australia who are struggling. We saw today in question time how little the front bench of the government knows about small business, when we were talking about tax deductible meetings over lunch. They just don't understand it. They don't get it.

These businesses are facing record insolvencies under the Albanese government. Can you believe that, in less than one term, 27,000 businesses have gone bust in Australia under the Albanese government?

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

How many?

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

Twenty-seven thousand businesses. Yes, you've heard it right, if you're listening. The December 2024 quarter was the worst quarter for business insolvencies on record, with 3,852 businesses going to the wall. The private sector in Australia is in decline, and the majority of jobs created by the Albanese government are being funded by public spending. Rather than taking this issue seriously or taking this issue on, or having any sort of plan and picking small businesses up with the support that they desperately need, the Albanese government is pushing them down with brazen cash grabs in this bill. They're taxing them more with cash grabs.

We saw the government double down on their attack on small businesses today, as I said before, with their bizarre response to the coalition's food and entertainment tax deductibility for money that businesses spend. It's their money. We're talking about small businesses spending their own money on meetings with staff. They might have had a good month—they achieved budget—and they have a staff meeting over lunch. The business spends the money, not the government. All they're doing is giving the tax deduction if you've got a business turnover of under $10 million, like lots of little businesses. The government want to attack that as well, and that's because none of them have run a business. None of them have. I'd love to hear about the businesses that those opposite have run!

This morning the Treasurer was quoting figures that were high and absolutely incorrect. This policy has a modest cost but a big impact for those small businesses, who can have the confidence to reward their staff or clients with a coffee or a meal without attracting further tax liabilities.

The government has made it clear that they don't support meaningful tax relief for Australia's small businesses. The Treasurer has never run a business, and now he seems set on ensuring no other Australian wants to run one either. To come back to this bill, these are not serious reforms. This is a government running out of ideas and reverting to its usual form: to tax more.

Schedule 1 of the bill relates to the luxury car tax that was brought in by the Labor government and the former treasurer, Wayne Swan, back in 2007. What it will do is it'll alter the luxury car tax by restricting the definition of a fuel efficient vehicle. Right now, every car that's over $80,567 has a luxury car tax on it, but if it's an electric vehicle or if it's a vehicle that uses seven litres per 100 kilometres—some sort of hybrid vehicle—the luxury car tax kicks in at $91,387. That's the way it's been; it's raising $1½ billion or something a year. So what does this government want to do? They want to change the definition of a fuel efficient car and make it so that, 'Oh, no, seven litres per 100 is not good enough. We're going to bring it down to 3½ litres per 100.' That's their plan, when we've seen 27,000 small businesses go broke so far.

These amendments will reduce consumer choice and apply the luxury car tax to more vehicles. And why? Because they're spending some $350 billion extra over the forward estimates compared to the last budget that Josh Frydenberg delivered in the Morrison government. They're spending everything that Josh budgeted plus another $350 billion, so they're grabbing taxes where they can. The new definition of fuel efficiency will effectively limit the threshold to just EVs. It compounds Labor's existing ute and family car tax policy via new fuel efficiency standards. And although the government eventually watered down that proposal, it is now imposing a new tax by dramatically limiting what is considered fuel efficient for the luxury car tax. It is a tax grab.

As I said before, the luxury car tax already brought in over a billion dollars a year in the 2023-24 financial year. But, not content with that, they want more—more to spend, to fund dud policies like free TAFE, which has a 13 per cent completion rate. I went to TAFE, mate. A 13 per cent completion rate? That's not how to spend taxpayers' money. University students pay HECS, but, no, if you go to TAFE, you can't contribute anything. That policy is a dud policy. When I'm dead and buried, 100 years from now, Labor will still be going on about free TAFE. They recycle these dud policies over and over again. I've been involved with politics for some time, and Labor have been saving TAFE for 20 years.

You know what else they've been saving for 20 years? Medicare. I saw the member for Lilley had a campaign launch the other day on social media: 'Save Medicare.' Give me a break! Bulk-billing has never been lower than what it is under the Albanese government. We should be saving Medicare from you lot, the Albanese government, not from a future coalition government.

The coalition supports a fuel-efficient and low-emissions transport sector in Australia, but it must be based on the principle of choice. Maximising the choice of vehicles available to Australians—that's what we should be doing. Originally, 15 or so years ago, when Labor brought in this new tax—the luxury car tax—it was there because, 'Oh, well, we have Australian cars. We've got to save the industry.' But now we don't have Australian cars. Why? Mainly because unions keep pushing up the price of wages.

What has the Minister for Climate Change and Energy over here done to energy prices for businesses? In fewer than three years, he's doubled the price of energy for every business in Australia. I challenge a member opposite—a member of the Labor Party—to go out and talk to a business in their electorate and find me a business that hasn't had their energy double. Most businesses have had a 100 per cent increase in their energy prices in fewer than three years. That's the legacy. That's what you're approaching the next election with in the next 12 weeks. That's what you'll have to defend—the doubling of energy prices for small businesses, tens of thousands of businesses closing and, now, additional tax. And not only that—consumer electricity has gone up.

The other thing is no disadvantage. That's what the coalition supports. The poor, the vulnerable and regional Australians should not be worse off, but they are under this government. The overall financial affordability of cars currently available should not be diminished. It's a low-emissions policy, not just EVs. Hybrids, hydrogen and biofuels all have a role to play. Hybrids are exceptional. If you look at the COMCARs that they run down here, those Camrys, they've got remarkable fuel efficiency. They wouldn't be classed. They would be hit with this new tax under this bill. I don't know where your electorate is, but it's a couple of thousand kilometres from here?

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

No, no, it's only 250 kilometres.

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

Righto. You're a poor example. I can't use the Deputy Speaker because—

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

I'm not a thousand either, mate!

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

Alright. I'll leave that one alone. Sorry about that, Deputy Speaker. But small businesses and other taxpayers are under financial distress because of this government. Recent research from CommBank found that more than half of Australian small and medium-sized businesses are feeling the stress of navigating the cost-of-living crisis, with 57 per cent of business owners reporting feeling stressed due to financial pressures. This is the harsh reality facing businesses under the Albanese government.

The policy intent of these existing interest charges is to neutralise the loan benefit that a taxpayer gets due to the late payment of tax. The point of it is to put a taxpayer who is late paying tax in the same position as a taxpayer who has paid tax on time, but making these interest charges non-deductible goes beyond neutralising this loan benefit. It effectively now is an immediate penalty regardless of the debt levels of culpability of the late taxpayer. The interest charges are already calculated using an uplift to the 90-day bank bill rate. This uplift is seven per cent plus for the GIC, and this is to discourage the use of tax debts as a source of finance. Denying deductibility to every small business across Australia goes well beyond discouraging. It's punitive. It is a penalty.

A revised tax assessment can occur for many reasons. These reasons can vary from honest mistake to uncertainty about a complex tax issue. On this point, the Corporate Tax Association has raised concerns that the proposed amendments may result in unintended behavioural consequences around how taxpayers and the ATO constructively engage to resolve long-running disputes. The association notes that Australian tax laws are complex and that in most instances a taxpayer would self-assess a position to comply with the law, and this would often include receiving advice from their accountants. Don't get me started on accountants and what the Assistant Treasurer has done to them in this last term. The current arrangements which allow for deductibility take into account the uncertainty of the tax environment and that filed positions can be reviewed well after a tax return is lodged.

The Tax Institute has said that the availability of the deduction for the GIC and SIC has been integral to the tax system for an extended period, and this is a significant change for taxpayers to navigate. The Council of Small Business Organisations Australia has raised concerns that small businesses are already struggling with cash flow issues, higher energy bills, higher insurance bills, higher wages bills and less income because all Australians have got higher rents and higher mortgages, and they will be disproportionately affected. For these small businesses already struggling to make ends meet, they say this proposal will result in more complexity and a higher chance that the ATO's tax debt holdings may increase because businesses will continue to struggle to pay the higher cost of their outstanding liabilities. This comes as a recent study from MYOB found that one-third of small business owners cannot pay themselves due to cash flow challenges, and a quarter have resorted to using their personal savings to keep businesses running.

The government's proposal will also require small businesses to consider and invest funds into a more sophisticated cash flow management strategy and will require them to spend more money on accountants and on advisers to assist with their financial and tax planning. This will cost small businesses more, family businesses more and medium-sized businesses more, and it compounds their struggles further, often resulting in higher prices, which adds to inflation and higher costs for all the people that we represent.

The accounting professional bodies have been particularly critical of this measure. Chartered Accountants Australia and New Zealand, the Institute of Public Accountants, the National Tax and Accountants Association and the Self Managed Super Fund Association made a joint submission calling for schedule 2 to be removed from the bill entirely. Their submission found that it is unlikely that increasing the cost of SIC will impact an entity's ability to correctly self-assess their tax liability, and the current cost of the GIC means that many taxpayers already have a strong incentive to pay tax on time. It found that making this non-deductible will inappropriately increase compliance costs of honest taxpayers, and that there are already a wide range of targeted measures that the Australian Taxation Office can undertake to improve the collection of tax debt. The latest annual report indicates that such measures are beginning to make an impact.

CPA Australia made a similar submission, urging the government to reconsider this proposal. CPA Australia say denying these deductions, 'will create undue financial hardship for small businesses and individuals', making the 'existing challenges in the current economic environment' worse. This is an indiscriminate measure that fails to address situations where taxpayers have historically done the right thing or, through no fault of their own, accrue these charges due to legitimate tax disputes, through administrative delays.

In their explanatory memorandum, the government points to the ability for a taxpayer to apply for remission of an interest charge—that is, to ask for it to be waived. But stakeholders report that the measure comes at a time of long delays in the ATO service delivery and inconsistent outcomes on remission requests. Disputing decisions is already time-consuming and costly, and this will become costlier with the risks of non-deductibility if a remission request is denied.

These delays from the ATO will now cost taxpayers even more. The government's decision to introduce this measure, despite widespread criticism, shows that the business community should have no confidence that the Albanese government can consult, and no confidence that the Albanese government listens. If the government were serious about achieving the policy objectives here, it would have at least listened to the sensitive, alternate policies put forward by stakeholders. These include: introducing more targeted measures that focus on high-debt accounts, rather than penalising all small- and family businesses—including those which are generally compliant; reducing the percentage rates for the GIC and SIC if deductions are to be denied, currently seven per cent—three per cent uplifts; maintaining deductibility of the GIC for a reasonable period, to provide time to secure financing; and retaining deductibility for the SIC as its adjustment-related charge not a late payment penalty; creating a transitional rule to prevent retrospective application—currently an amended assessment for the 2022 tax year could accrue SIC and become non-deductible. Aligning tax treatment for interest for tax overpayments make these non-assessable.

This government is clearly blinded by the revenue that this measure brings in. It is a brazen cash grab. If this measure ultimately passes, I can assure the small- and family business communities that the coalition would urgently review its impact on small businesses, when in government and given that opportunity.

Extending the period to retain a BAS refund, schedule 3, is something that the opposition does support of this bill. It extends the period with which the tax commissioner must notify a taxpayer of a decision to retain a refund from a BAS. It would extend from 14 days to 30 days this period, to allow the ATO more time to verify information. The purpose of extending this period is to combat fraud and to reduce the number of fraudulent refunds issued by giving the ATO more time to assess and verify potentially fraudulent BASs. This is particularly important after the proliferation of high-value, large-scale GST fraud promoted through social media in recent years. The ATO's Operation Protego has estimated that there were 57,000 individual participants in a major GST fraud which ran from April 2022 to June 2023, costing at least $2 billion.

I do note the measure could raise concerns about delays to BAS refunds paid by the ATO and its impact on small business cash flow; however, this measure does address this issue in part by providing that interest is payable to an entity where there is a delay in a refund of more than 14 days and where there is ultimately no reduction in the refund. This will reduce the impact on compliant taxpayers affected by a longer mandatory notification period. In addition, the ATO should be judicious with its use of the extended period. It should also continue to develop its risk models and work with banks, law enforcement agencies and other organisations to share information and detect fraud.

The government's proposed schedule 4 of this bill continues Labor's attempt to decimate the instant asset tax write-off and deprive 26,500 medium-sized businesses of access to accelerated depreciation. The Treasurer today, when talking about small business in question time, kept saying, 'We're already doing generous things for small business.' A $20,000 instant asset tax write-off is not generous. It's pathetic, quite frankly. When they came to government, the instant asset tax write-off was unlimited. That meant that a manufacturing business wanting to invest in a new machine that was worth $300,000 could buy that machine and write it off against profits that financial year.

This mob, the Albanese government, think they're generous giving small business $20,000. Give me a break! Again, it goes to show that no-one on that frontbench really has run a small business with staff for an extended period of time. That's what it shows. Not only that; a lot of them don't even have workers anymore amongst their ranks. Basically, they come from a limited scope, when it comes to developing policy, which is detrimental to Australian manufacturers. This policy that they've got—what is it called? Manufacturing Australia or Future Made in Australia? It's not even now; it's the future made in Australia.

Constituents are a wake-up to this stuff. I have never seen the Labor Party go to an election with so many flawed policies. On my estimate, they've already seen a 16 per cent drop in manufacturing since they've come to office. I know that, because Minister Husic gets up in question time and rabbits on. He says, 'Oh, we've got 950,000 manufacturing jobs.' Recently they said, 'We've got 860,000 manufacturing jobs.' During COVID, under the former coalition government, we had a million manufacturing jobs, so just do the maths. There were one million manufacturing jobs during COVID, under the former coalition government—

and now the member for Solomon and others here have delivered 860,000 manufacturing jobs. So, when the people in Darwin go to vote, they need to know that they've seen a 14 per cent reduction in manufacturing under the Albanese government.

And now, with the Future Made in Australia Bill, they want to con Australians like they did on infrastructure with the Bruce Highway, which also impacts people. The Prime Minister came up to Queensland and announced, 'We're going to fix the Bruce,' and then his finance minister said, 'Oh, that won't start for four years.' That's beyond not just this election; that's beyond the 2028 election. Do they really think Australians are stupid?

This is their line-up: free TAFE and Future Made in Australia. Meanwhile, we've got a 13 per cent completion rate and we can't get any tradies because the government has completely abandoned the private VET sector, the vocational education and training sector. If it's a private sector business, they don't want to know anything about it, because they only want to support their union donors and TAFE has public sector employees, who are more likely to unionise. If I did that, I'd end up in jail.

How the Labor Party has gotten away with this for decades is beyond me. I'm telling you: Australians are waking up to it because their mortgages are up, their rents are up, their electricity costs are up and their manufacturing jobs have dropped by 14 per cent. It's a disgrace. The Treasurer in the MPI today was absolutely right. We've never seen the Australian standard of living fall this much in one term ever.

You can keep your $20,000 instant asset tax write-off because it's pretty well worthless. Whilst we'll support it, because it's better than nothing, you shouldn't be proud of it. Under your watch, we've had tens of thousands of small businesses close and now you want to give them a $20,000 instant asset write-off. You won't be able to buy any car for 20 grand let alone one of the electric ones you want, which have a tax-free threshold of over 90 grand. It just goes to show how out of touch the Albanese Labor government—their ministers and backbenchers—are. That is the reality.

We will move an amendment to increase the instant asset tax write-off and to make it permanent, not just for 12 months. It gets worse: they're offering 20 grand and they want to do it for a year, not four years. They want to do free TAFE forever, but they can't even give small businesses a $20,000 instant asset tax write-off forever. They are giving them one year. That's it. That's all they want to do. Well, the coalition are friends of small business. Do you why? Because they employ people and they're hurting under you mob. So we will support the instant asset tax write-off and support the BAS refund, but I can tell you that this government is not doing Australians any favours. Australians listening know how much they're hurting.

According to the Australian Bureau of Statistics, there are over 2½ million small businesses across the country. Millions of small and family businesses are impacted by Labor's bad decisions, including through the 100 per cent increase in electricity costs which we've seen with many small businesses. Labor has consistently been slow to provide certainty on the instant asset tax write-off, and it leaves small businesses in limbo and scrambling at the end of the financial year, going, 'What can I maybe get?' rather than planning, and facing uncertainty when they invest in their businesses.

In contrast, the Liberal-National coalition's, the federal opposition's, position would simplify depreciation for millions of small businesses by cutting red tape, boosting investment in productive assets and lowering business costs and prices. Unlike the government's piecemeal approach, we would deliver substantive reform for the 98 per cent of Australian businesses who would benefit from the instant asset tax write-off being permanent. The coalition is committed to lower, simpler and fairer taxes for Australia's 2½ million small businesses, which employ millions of Australians.

Labor has opposed cutting the small business tax rate, opposed our instant asset tax write-off plan in the past and clawed back business tax incentives since coming into power. Australia's private sector growth has tanked under this government. Small businesses need a lifeline to drive investment and boost productivity. The coalition is serious in supporting my amendment.

This is a government rushing to lock in a few more cash grabs through higher taxes before an election is called. This is an anti-business government which is doing the bare minimum for small businesses before time runs out when an election is called. Under this Albanese Labor government, the majority of jobs created are being funded by public spending. That is not sustainable and risks higher inflation. We've already seen an increase in homelessness. Rents are up by 20 per cent almost, and, for some people, there has been a $30,000 increase in interest repayments for mortgages. That's $600 a week. That's a lot of money.

In this bill, the government is giving with one hand to small and family business and taking with the other. Labor inherited an economy with low unemployment, strong growth and government finances that were recovering, and they've wasted it. They've absolutely wasted it. Labor has lost control of inflation, lost control of the economy and lost sight of small businesses and families struggling under its cost-of-living crisis.

I was on the Central Coast last Friday with Lucy Wicks, and we went to a small business up there. Do you know what the owner said? They said: 'I'm begging you to do all that is possible to win and form government at the next election. My livelihood depends on it. Businesses are doing it tough, and things are very stressful for me as a small-business owner. Costs have skyrocketed; margins are thinner; account customers are not paying—most are on 120 days—and we've got staff shortages. The ATO are bleep—I won't use the word—ruthless and have no empathy.' That's what a business owner in the electorate of Robertson, on the Central Coast of New South Wales, said. They said: 'Australia needs you. Australia needs Peter Dutton.'

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

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

I second the amendment and reserve my right to speak.

Debate adjourned.