Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government’s amendments to be moved to National Rental Affordability Scheme (Consequential Amendments) Bill 2008. The memorandum was circulated in the chamber on 13 November 2008. I seek leave to move government amendments (1) and (2) together.

Leave granted.

I move:

(1)    Title, page 1 (line 1), after “amend”, insert “the Extension of Charitable Purpose Act 2004 and”.

(2)    Page 15 (after line 13), at the end of the Bill, add:

Schedule 2—Amendment of the Extension of Charitable Purpose Act 2004

1  Section 3

Insert:

allocation has the same meaning as in the National Rental Affordability Scheme Act 2008.

2  Section 3

Insert:

entity has the same meaning as in the Income Tax Assessment Act 1997.

3  Section 3

Insert:

first 2 NRAS years means:

             (a)    the period referred to in paragraph (a) of the definition of NRAS year in the National Rental Affordability Scheme Act 2008; and

             (b)    the year beginning on 1 May 2009.

4  Section 3

Insert:

incentive period has the same meaning as in the National Rental Affordability Scheme Act 2008.

5  Section 3

Insert:

National Rental Affordability Scheme has the same meaning as in the National Rental Affordability Scheme Act 2008.

6  Section 3

Insert:

rental dwelling has the same meaning as in the National Rental Affordability Scheme Act 2008.

7  Section 3

Insert:

taxation law has the same meaning as in the Income Tax Assessment Act 1997.

8  After section 4

Insert:

4A  Provision of a rental dwelling under National Rental Affordability Scheme is a charitable purpose

        (1)    Without limiting what constitutes a charitable purpose, charitable purpose includes the provision of a rental dwelling if:

             (a)    the rental dwelling is provided by an entity that is:

                   (i)    endorsed as exempt from income tax by the Commissioner of Taxation under section 50-105 of the Income Tax Assessment Act 1997; and

                  (ii)    an approved participant in the National Rental Affordability Scheme; and

             (b)    either:

                   (i)    an allocation in relation to the rental dwelling has been made to the approved participant by the Secretary that specifies a date in the first 2 NRAS years from which the allocation will operate or is taken to have operated; or

                  (ii)    an allocation in relation to the rental dwelling has been reserved and it is genuinely intended by the approved participant that the conditions on which the allocation has been reserved will be fulfilled in the first 2 NRAS years.

        (2)    To avoid doubt, the provision of the rental dwelling by the entity has effect as a charitable purpose only during the incentive period for the allocation.

        (3)    This section applies:

             (a)    for the purposes of a provision of a taxation law or any instrument made, granted or issued under a taxation law; and

             (b)    for the purpose of determining whether an entity that has been endorsed as exempt from income tax by the Commissioner of Taxation under section 50-105 of the Income Tax Assessment Act 1997, remains, for the purposes of a provision of a taxation law or any instrument made, granted or issued under a taxation law, entitled to be so endorsed.

I just wanted to speak very briefly about the government’s amendments to this bill. The scheme is a new opportunity for all levels of government to work together with business and not-for-profit organisations to increase the supply of affordable rental housing for Australian families. We acknowledge that the community housing sector is vital to the success of the National Rental Affordability Scheme, which is why the Australian government is amending the Extension of Charitable Purpose Act 2004 so that participation by charities in the National Rental Affordability Scheme during its establishment phase will not put tax concessions for existing charities at risk. These amendments give effect to a transition safety net to cover not-for-profit community housing providers looking to participate in the scheme. The Rudd government is taking decisive action on the issue of rental affordability, which is why it is acting to make participation in the scheme as broad as possible.

The amendments to the National Rental Affordability Scheme (Consequential Amendments) Bill 2008 extend the definition of ‘charitable purpose’ to include the provision of rental dwellings under the scheme. The amendments will apply to charities endorsed by the Commissioner of Taxation which are approved participants of the National Rental Affordability Scheme in the establishment phase of the scheme for years 2008-09 and 2009-10. The safety net will cover these not-for-profit providers for the 10 years that they receive incentives under the scheme. The government will monitor the scheme and conduct a post-implementation review following the completion of the first two rounds in the establishment phase to ensure that the scheme is meeting its objectives. The scheme and the safety net the government has introduced for community housing providers will bring substantial growth to the community housing sector, whether it is as tenancy managers or as owners and developers in a consortium.

Marise Payne (NSW, Liberal Party, Shadow Parliamentary Secretary for Indigenous Affairs) Share this | Link to this | Hansard source

This aspect of the legislation was a matter of some concern both in the committee inquiry in relation to the legislation and, in advance of that, in discussions over some extended period of time at Senate estimates. In the last sitting weeks the opposition are pleased to see some comment from the Treasurer, Mr Swan, in relation to participation by charities in the National Rental Affordability Scheme. But I must say that in discussions it was a particularly difficult time for those charities seeking to make applications for the NRAS without, it seemed to us, any particular certainty around whether there would be a detrimental impact on their charitable status and tax status as a result, thereby perhaps imperilling their actual operations. As they waited for clarity—which came, I think, the night before the bill came into the Senate—it was a difficult period for some of those organisations. The shadow minister, Mr Morrison, and other senators with an interest in this issue, such as Senator Ludlam, and senators who were part of the inquiry process in this chamber found themselves recipients of a number of approaches from organisations not only keen to participate but also—and not unreasonably—keen for greater clarity around their status if they were to participate in the scheme.

We are concerned that, as it stands, the bill only goes to partly resolving the deep concerns of those charitable organisations in relation to their participation in the NRAS. Given that it is a transitional safety net, as it has in fact been described by the Treasurer, it potentially only provides those organisations with a very temporary reprieve and clarity around their status at this point. I think it highlights the pace at which this legislation was brought together and, as I mentioned in my earlier remarks in the second reading debate, the lack of modelling and the lack of economic foundation to this scheme in and of itself.

The opposition see the doubts around the charitable status of organisations and the potential impact of participating in the NRAS as having had a serious impact on people’s contemplation of take-up in the scheme. As I said, this year we fear a short-term response and we hope that the government can make a much more sure-footed response to the status of charitable organisations in the near future.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I would just like to add to those remarks, because essentially the Australian Greens, as Senator Payne put it, similarly had a great deal of concern. This was a fix that was literally hammered together at five minutes to midnight. I believe that we found out about it the day the bill was finally introduced into parliament. I believe it put the very viability of the scheme at risk. The scheme was designed to encourage the participation of community housing organisations whose very participation was threatened. The largest community housing provider in Western Australia had threatened to pull out of the scheme if this problem was not fixed. I hope that it does not take another two years for this matter to be resolved. I would suggest that it needs to be resolved in the first few months of 2009 so that the viability of the scheme is assured and, in particular, the participation of the community housing sector. The Australian Greens wrote to the Treasurer because this issue was foreshadowed several weeks before the matter came before the Senate. We were pleased that, at least, a resolution was offered, but it is very short term. We hope that before the third round of NRAS, when properties do go out for tender, this issue is resolved once and for all.

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

Can I just respond to the issues that were raised by Senator Payne and Senator Ludlam. In speaking to the amendments, they apply to charities endorsed by the Commissioner of Taxation during the establishment phase of the scheme for 2008-09 and 2009-10, and the safety net will cover those not-for-profit providers for the 10 years they receive incentives under the scheme.

There are already half-a-dozen not-for-profit housing providers across Australia who hold title and who manage significant stock numbers of affordable housing. Several of those, including the Brisbane Housing Company and Community Housing (Victoria) Ltd, have substantial development capacity. We need to remember that the scheme will significantly boost the capacity of not-for-profit providers to work with investors to build NRAS dwellings, remembering that the scheme builds over time. In the first year we are releasing 3½ thousand tax credits and, in 2009-10, 7,500 tax credits, which will allow not-for-profit organisations more time to build increased capacity.

On the issue of long-term sustainability of those organisations, it is important to keep in mind the other work that the government is doing in relation to the not-for-profit sector. A great deal of work is being done to build capacity, including the work of the economics committee, which will be reporting next week on the issue of regulatory reform and transparency of charities in the not-for-profit sector. Some work is to be done next year by the Productivity Commission around those issues and also around issues that will be part and parcel of the Henry taxation review next year. The government is very mindful of the way in which the not-for-profit sector intersects with the taxation system and how unintended consequences of legislation can actually disadvantage them. Can I, again, express my appreciation for the good work of the committee because, when you get good committee work, you can actually identify and resolve those issues before the actual bill hits the House or the Senate for debate. Thank you very much for your contributions.

Question agreed to.

Bills reported with amendments; report adopted.