Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This Bill proposes a straightforward solution to a growing problem affecting millions of Australians, across the breadth of the country and its many different communities.

It does exactly what its title suggests: incentivising companies to donate surplus food to food relief charities by providing them with a tax offset in relation to the expenses they incur.

We know too well that the nation is grappling with a protracted cost-of-living crisis, driven largely by inflation, which has seen a sharp rise in household expenses—from rising rents and mortgages to energy and groceries.

Food is, of course, among the most pressing of these issues for Australian families struggling to manage their financial commitments.

As a result, Australians who have never before experienced food stress are joining what is now a deeply concerning statistic.

The most recent Foodbank Australia Hunger Report found that in the 12 months to July 2023, 3.7 million households in Australia experienced moderate to severe levels of food insecurity.

Many Australians are experiencing this significant challenge for the first time, with Foodbank reporting in 2022 that 59% of those presenting to the charity for food assistance had a job, and nearly a quarter had a mortgage—neither had previously been a characteristic of their clients.

This spike in food insecurity is, unfortunately, taking place amid a culture of widespread food dumping and wastage.

Australia domestically produces enough food to feed the country three times over, yet it is reported that 7.6 million tonnes of food are being wasted each year.

This both costs the economy an estimated $36.6 million annually and deprives those in need of what is largely edible food.

In fact, about 70% of discarded food is fit for consumption, but is generally being thrown away because it is cheaper than finding other alternatives—including donating it to food relief charities.

That is precisely why this Bill, which makes relatively minor amendments to the Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997, is being introduced.

The model was initially developed by Foodbank Australia and its partners and was subsequently modelled for its economic impact by KMPG, whose recommendations were published in reports from 2020 and 2023.

It has subsequently been built upon in close consultation with Australian charities and other impacted sectors, but still closely resembles the original model with a view to efficiency and simplicity.

To be eligible for a tax benefit, companies must be constitutional corporations engaged in donating or selling food to registered charities, or providing services to charities in relation to food donation, and have a receipt from the charities concerned.

Where payment is received by a company for its food donation activities, only the shortfall between the payment and costs incurred is claimable.

The tax offset covers the costs incurred by the company in its food donation activities in an income year.

The tax offset is capped at the lower of $5 million or a percentage of the food donation costs.

The percentage is based on the company's aggregated turnover.

For those with a turnover of less than $20 million, it is a refundable offset of 45% of costs incurred.

Companies with a turnover of $20 million or more but less than $50 million are eligible for a non-refundable offset of 40% of costs incurred, while those with a turnover of $50 million or more are eligible for a non-refundable offset of 30% of their costs.

The Bill is specific about what can be claimed regarding food donation-related expenses, including food production, storage and transport costs—and what cannot, including business overheads, insurance, visas or work permits, and marketing for the food donation activities.

It also contains a suite of integrity measures, among them limiting the claimable amount for goods and services purchased from entities not at arm's length from a company to their market value.

Importantly, this is a temporary measure, capable of being extended if needed based on both economic circumstances and efficacy.

It contains a sunset clause at three years, at which time an independent review of the benefit of an extension or not must be ordered by the relevant Minister and tabled in Parliament.

There is a genuine need for an incentive of this type that presents suppliers with a viable option to donate food, rather than disposing of it.

Unsurprisingly, it enjoys wide support across all relevant sectors.

Foodbank Australia has received endorsements from the other major Australian food relief services and 58 other prominent food and grocery producers, sector groups, charities and companies—among them the National Farmers Federation, Australian Food and Grocery Council, National Retailers Association, Anglicare and Catholic Social Services Australia.

This is a simple, proactive policy, introduced on behalf of Australian households struggling with food insecurity and the food relief charities working to support them through the cost-of-living crisis.

It is a Bill for our times and circumstances, representing a practical solution to a crisis presenting very real challenges for many Australians.

I commend the Bill to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.