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

In the earlier part of the committee stage of this bill, I was using the opportunity to put on the record the themes which not just explain but justify the coalition's opposition to this legislation. We touched briefly on an explanation of the burdensome bureaucracy and inefficient spending. We talked briefly about the risks of permanent corporate welfare. I was also talking to the theme of the unclear and politicised community benefit principles, and it's this third point which I think is the most alarming. As I said in my second reading contribution, I hope that industry, in their enthusiasm for this initiative, pay very, very close attention to the real-time and practical application of these principles.

Fourthly, and importantly, we believe that this is selective tax relief and market distortion. The bill does not apply equally to all businesses. We argue that only select industries with strong political lobbies will benefit. It also excludes major sectors such as carbon capture, gas, blue hydrogen, uranium and nuclear power, despite their strategic importance to Australia's energy future and, importantly, it is absent of any of those coalition business initiatives that we have talked about. Our opposition also goes to the lack of transparency and economic viability. We argue that key decisions will bypass the National Interest Framework, raising concerns about lack of accountability in major funding allocations. We argue that it is the Treasurer and bureaucrats, not industry experts, who decide which sectors receive funding, leading to political interference.

Finally, the Productivity Commission and the Treasury themselves have not endorsed major elements of the plan, warning that it could divert resources from more productive sectors. On that point, I think it is very important that I share with the chamber this quote from the Productivity Commissioner herself. Danielle Wood has warned that this policy risks 'creating a class of businesses that is reliant on government subsidies', not an industry sector able to stand on its own two feet.

To re-emphasise what I think is the most critical point in this, I say that, in wanting to support industry, the government has chosen the wrong path. This is demonstrated by comments made by the Minerals Council of Australia. As early as April last year it talked about Australia's investment pipeline and the significant tens of billions of dollars that is being lost to Australia every year. In its statement at that time, the Minerals Council of Australia highlighted this fact:

The problem facing the industry is not a shortage of potential projects, but rather the challenging investment environment that has been created by poor policy settings.

It also said:

Australia's mining sector is grappling with unprecedented cost pressures, burdened by restrictive policies that are impacting the global competitiveness of our current operations, and thwarting investment in new projects.

It went on to say:

… the biggest bang for taxpayers' bucks is simply creating an operating environment that is conducive to growth, and attractive for investment; by lowering the cost of doing business in Australia.

That's the key point. The key measure of success for this legislation will be: does it lower the cost of doing business in Australia? We would argue that it leaves all of the most significant cost pressures—a rigid industrial relations system, duplicative environmental processes and poor access to land—unchanged. We think that this particular initiative is not only poorly designed but will not have the anticipated benefit.

I might just use this opportunity to formally move the amendment that is standing in my name, which is on sheet 3275, and to speak to that amendment. I seek leave to move the coalition's amendment.

Leave granted.

I move:

(1) Schedule 1, item 3, page 14 (after line 33), after subsection 421-45(1), insert:

(1A) However, the HPTO community benefit rules must not:

(a) specify the condition that, for a company to be entitled to a *hydrogen production tax offset for the income year:

(i) an enterprise agreement (within the meaning of the Fair Work Act 2009) must apply to both the employees of the company and an employee organisation (within the meaning of that Act); or

(ii) the company must establish and maintain a reconciliation action plan; or

(iii) the company must conduct consultation relating to the environmental impact of the company's activities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(iv) the company must conduct consultation with First Nations communities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(b) specify that the amount of a company's hydrogen production tax offset for the income year will be reduced in the circumstance where the company does not comply with any of the conditions mentioned in subparagraphs (a)(i) to (iv).

(2) Schedule 2, item 1, page 61 (after line 13), after subsection 419-145(1), insert:

(1A) However, the CMPTI community benefit rules must not:

(a) specify the condition that, for a company to be entitled to a *CMPTI production tax offset for the income year:

(i) an enterprise agreement (within the meaning of the Fair Work Act 2009) must apply to both the employees of the company and an employee organisation (within the meaning of that Act); or

(ii) the company must establish and maintain a reconciliation action plan; or

(iii) the company must conduct consultation relating to the environmental impact of the company's activities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(iv) the company must conduct consultation with First Nations communities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(b) specify that the amount of a company's CMPTI production tax offset for the income year will be reduced in the circumstance where the company does not comply with any of the conditions mentioned in subparagraphs (a)(i) to (iv).

The amendment seeks to establish much-needed clarity and structure around the community benefit principles and to mitigate what we argue are very obvious risks—risks that were identified at the Senate committee stage, risks that we believe have not yet been mitigated. This amendment amends the bill to ensure that the community benefit rules made in relation to both the hydrogen production tax offset and the critical minerals tax offset cannot specify (1) that an enterprise agreement within the meaning of the Fair Work Act 2009 must apply to both the employees of the company seeking a tax credit and an employee organisation; (2) that a company seeking a tax credit must establish a reconciliation action plan; (3) that the company must consult on the environmental impact of its activities, unless that consultation is already required by Commonwealth, state or territory law; and (4) that the company must consult with First Nations communities, unless, again, that consultation is already required by Commonwealth, state or territory law. To avoid any doubt, the amendment also provides that a company's share of the production tax credits cannot be reduced where these conditions are not complied with.

This amendment is aimed at mitigating against key concerns raised by the coalition in the second reading debate and coalition senators' dissenting report following the Senate Economics Legislation Committee's inquiry into the bill. As the bill stands, the community benefit principles are unclear, leaving companies to comply with vaguely defined criteria if they are to receive a tax credit. This uncertainty threatens confidence in this sector of the Australian economy, which is absolutely contrary to what the government says this bill does.

The community benefit principles are also liable to politicisation. The Treasurer has sole discretion over these community benefit principle requirements to be determined by regulation. There are genuine concerns that businesses may be forced into union agreements to qualify—that, in short, no union agreement means no tax credit. On that particular point, I invite the minister to clearly, categorically state that a company without a union agreement will not be penalised and will be in full receipt of this tax benefit. Further, businesses seeking to access these credits cannot be held hostage to the same principles that are embedded in Labor's entire Future Made in Australia plan.

Finally, the community benefit principles risk unnecessary and harmful duplication on environmental and Indigenous regulations and consultation. Although this applies nationally, it was raised as a particular concern for Western Australia, given the already significant regulatory standards in place in my home state, with the result being unwelcome delays and decreased competitiveness. Failure to comply with the community benefit principles will lead to a penalty in the form of a reduction in the tax credits available. To assist the minister, I think this goes to point 151 in the government's documents, but we'll come to that further in the committee stage.

At this point I think it's worth reiterating stakeholder views, primarily those of the Minerals Council of Australia and the Australian Chamber of Commerce and Industry. The Minerals Council of Australia made it very clear and noted concerns over duplication and regulatory burden in its inquiry submission. It said:

The Australian minerals industry produces critical minerals utilising world leading sustainability standards, including best practice environmental management and community engagement.

…   …   …

We understand that the requirement to comply with 'community benefit principles' is an overarching requirement of the Future Made in Australia Act. However, there are already extensive and rigorous approvals process that mining and mineral processing projects must adhere to makes this an unnecessary and duplicative feature of the CMPTI.

This view was echoed by the Australian Chamber of Commerce and Industry, which submitted:

The additional engagement processes required by the community benefit principles parallel existing requirements of the planning and approval process. This is simply adding a further layer of administration and compliance, without any clear benefit.

The risk here is abundantly clear, and the government and officials know the risk. It is that, in enforcing the community benefit principles, they are, in fact, obviously, creating and adding layers of bureaucracy in areas where regulation may currently already exist. We would argue that, rather than duplicating those regulatory requirements, those existing requirements should be repealed, and it is worth noting that, in asking the Treasury: 'Will the stock of regulation that sits around mining and resources projects be reduced as a result of the introduction of the community benefits principles?' no-one could give me a clear answer, and when an official can't give you a clear answer, the answer to that question is a no.

I also look forward to raising some questions that have been provided to me by the shadow minister for resources, Senator McDonald, if time allows. (Time expired)