Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

COMPETITION AND CONSUMER AMENDMENT (PAYMENT SURCHARGES) BILL 2015

Mr Speaker, today I introduce this Bill to ban excessive and unfair payment surcharging by merchants.

This Bill forms an integral component of the Government's response to the Financial System Inquiry, and is delivering on our commitment to implement fairer outcomes for Australian consumers.

There is significant community concern around the abusive practice of excessive surcharging. Of the 6,500 submissions received by the Financial System Inquiry, more than 5,000 related to the opportunistic practice engaged in by some merchants to drive profits through card acceptances.

Mr Speaker, this Government has listened to the community concern; and this Government has chosen to take action.

We are committed to stamping out rapacious behaviour by a select number of merchants who choose to take advantage of Australian card users.

Where a merchant charges a customer a card surcharge, that carries with it an irrefutable representation that the merchant is seeking to recover his or her costs. Whilst many merchants do pass on costs fairly, some merchants intentionally charge many times more than the true cost of accepting a card payment.

The Coalition Government believes consumers are entitled to a fair deal, which limits surcharging to genuine cost recovery. Consequently the Government is taking action to ensure customers are charged no more than that amount that reflects the true amount of the merchant's costs in accepting that payment.

The Government will not stop merchants from recovering their own costs of accepting cards.

That is reasonable and also helps to send a price signal to the community about the cost of competing kinds of payment facilities. However, profiteering by merchants under the guise of cost recovery will not be allowed by this Government.

Mr Speaker, each month around $45 billion of purchases are processed through more than half a billion card transactions. Given the widespread problem of excessive surcharging, this measure will therefore provide considerable savings overall to Australian consumers.

This Bill will amend the Competition and Consumer Act 2010 and ban merchants from engaging in excessive surcharging of customers for use of a particular payment method. A surcharge will be excessive where it exceeds the costs that merchants are charged by their payment provider for using that payment method.

We will put in place a flexible framework that Government and regulators can adjust to changing circumstances. The Bill allows for a broad range of payments to be covered by the surcharging restriction either by the Payments System Board making a surcharging standard in relation to a payment system; or by a regulation made under the Competition and Consumer Act.

For most payment types, the Reserve Bank will be responsible for setting the boundaries of the application of the scheme and the permitted surcharge that applies for each payment type. However, provision is made for these matters to be determined by regulation if necessary for any reason in future.

With technological innovation bringing new types of payment methods into the market, maintaining flexibility in the application of this regulatory regime is important.

The Reserve Bank will begin public consultation this week on standards that may be made for this purpose.

Mr Speaker, this measure, apart from establishing a framework for protecting consumers, will also empower the Australian Competition and Consumer Commission to enforce the ban on surcharging. The ACCC shall be given new powers to gather information from those involved in the payments process and the authority to issue infringement notices against those engaging in excessive surcharging.

The ACCC will be able to require merchants and other payment system participants to provide documents or information to help it assess the costs incurred against any surcharges imposed by a merchant. It will be an offence to fail to provide the documents or information requested by the ACCC.

If the ACCC forms the view that a merchant has engaged in excessive surcharging, the ACCC may issue an infringement notice including a penalty for listed corporations of up to 600 penalty units, currently $108,000, for each alleged contravention.

So, Mr Speaker, these new rules do not merely establish a 'best practice' framework, but contain real teeth to achieve targeted and meaningful behavioural change.

These are real protections for consumers.

This reform is both good for consumers and good for the overall efficiency of retail and wholesale markets – as it will allow for a fairer reflection of the costs of different payment systems.

As new, smart and innovative methods of payment are developed and rolled out, this Government wants to ensure that Australia has a system in place where they can compete on a level playing field with other payment systems, rather than being subjected to inaccurate overstatements to consumers of their actual costs through excessive surcharging.

We want to remove any disincentives or discouragements for commercial activity.

Of course, if a merchant faces a high cost for accepting a certain type of payment, they are still entitled to pass that cost on. Otherwise, consumers using lower cost methods of payment will effectively subsidise those using higher cost payment methods like premium cards.

A merchant should however never be able to give a false impression that certain payment methods cost more than they actually do and profit as a result. We never want consumer behaviour to be distorted by these practices.

This legislation will ensure that they cannot legally do so, and will put the ACCC on the beat to ensure that they do not.

I commend the Bill to the House.

TAX AND SUPERANNUATION LAWS AMENDMENT (2015 MEASURES NO 6) BILL 2015

This Bill introduces amendments to Australia's taxation laws to improve the operation of Australia's capital gains tax regime. The measures in this Bill are two of the 92 announced but unenacted measures left by the previous government.

Schedule 1 to this Bill clarifies the treatment of earnout arrangements by making any financial benefits payable under such rights part of the original value of the business or business asset for capital gains tax purposes.

An earnout arrangement is a sale or purchase of an asset where the consideration includes a right to future financial benefits linked to the performance of the asset. For example, a 'standard' earnout may involve an upfront payment for the sale, with the seller having a right to future payments that are contingent on the business's performance.

Earnout arrangements are a legitimate and efficient way of structuring the sale of a business (or business assets) to deal with uncertainty about its value.

Under the Australian Taxation Office's current administration of the law, each earnout right is a separate and distinct asset from the underlying business and must have its market value estimated for capital gains tax purposes. The complexity involved in this system affects the ability of businesses to efficiently price their business assets.

This Bill will result in any payments made under the earnout right being added to the capital proceeds or the cost base of the original sale, through amendments to the taxpayer's tax return at that time.

This Bill will not only help provide certainty for businesses entering into earnout arrangements, but will also protect any entitlement they have to small business capital gains tax concessions.

This Bill will apply to all earnout arrangements entered into after the draft legislation for this measure was made public on 23 April 2015.

In addition, to protect taxpayers who have reasonably and in good faith anticipated changes to the tax law in this area as a result of the May 2010 announcement by the Labor Government, the Bill also includes protections to preserve their current tax outcomes, without requiring amendments.

Schedule 2 to this Bill introduces a new collection mechanism to support the operation of Australia's foreign resident capital gains tax regime.

Foreign residents are liable to pay tax on capital gains when they dispose of certain Australian assets – broadly direct and indirect interests in real property. The Australian Taxation Office has indicated that voluntary compliance with Australia's foreign resident capital gains tax regime is poor. In addition, there are difficulties in the Australian Taxation Office undertaking effective compliance activity after a transaction takes place, given the funds would likely be offshore and the foreign resident may otherwise have little connection to Australia.

The Australian public rightly expects that foreign investors into Australian property comply with their Australian legal obligations. This is why the Government recently enacted reforms to Australia's foreign investment framework to increase scrutiny and transparency over foreign investments into Australian residential property. It is also why the Government is implementing this measure.

Under this measure, from 1 July 2016, where the seller of certain Australian assets is a foreign resident, the buyer will be required to withhold and pay to the Australian Taxation Office 10 per cent of the purchase price. The amount collected is an estimate of the vendor's final income tax liability. The vendor is still required to lodge an income tax return and pay any outstanding debt. They may claim a credit for the amount of tax withheld in the income tax return at this time. In this way, the withholding measure also encourages participation and engagement by foreign residents with the Australian Taxation Office.

To ensure that this measure is appropriately targeted at those areas where revenue is at greatest risk, and minimises the impact on other property transactions, the measure does not apply to direct real property transactions below $2 million.

Other design features of this measure have been developed following extensive consultation with stakeholders.

Full details of both measures are contained in the explanatory memorandum.

Debate adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.