Jane Hume (Victoria, Liberal Party, Shadow Minister for the Public Service) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023. The coalition will be supporting this bill. The coalition stands for lower taxes, not higher taxes. We believe it's important to have a tax system that encourages people to get out, invest, take risks, work hard and get rewards for it, and that is absolutely central to our core beliefs. But we also recognise that an effective tax system is a requirement for effective government. Australia, when compared to other advanced economies, already collects an awful lot of tax. In the 2021-22 financial year, the Australian government collected $550 billion in tax receipts. As a percentage of GDP, we collect more income tax than most of the G20 economies and almost all of South-East Asia—more income tax, for instance, than South Korea, Singapore, Malaysia and New Zealand.

For the majority of Australians, tax is the main experience of the coercive power of government in their lives. For this reason, discussions about tax go beyond the technicalities and to the very essence of what our country is and what our democracy is, so it's critical that governments keep their promises on tax. Governments should always keep their promises on tax, but that's something we haven't seen, sadly, from this government. It's critical that governments get their tax settings right, and that means ensuring our tax system is simpler and fairer for all individuals and families; making sure our tax system facilitates rather than blocks economic activity, investment, work and risk taking for small businesses and sole traders, as well as big employers and heavy industry; and making sure that our tax system provides certainty and predictability for our retirees, for investors and for our not-for-profit sector.

Fundamentally, it's critical that governments never lose sight of who pays our taxes. There is no magic money tree that the ATO can shake as it pleases; there are just Australians and the businesses that employ them. Tax is paid by individuals, hardworking families, small businesses, employers, service providers, manufacturers, producers and consumers. But on this side of the chamber we know that we can't tax our way to prosperity. In contrast, when those opposite talk about tax reform, we know what they mean: they mean higher taxes. On this side of the chamber we know that tax reform is not simply increasing taxes. We should talk about how to make the tax system fairer, simpler, to better support aspiration and enterprise in this country for everyday Australians. That's what we need to focus on when we talk about tax.

When it comes to this bill, and this has been brought forward by the government, the good news is that we do see some of the coalition's advice being followed. That should come as no surprise because not one, not two, but every measure in this bill is an initiative of the former coalition government—from double taxation treaties to equalising tax treatment across entities, streamlining charities and administration, and cutting red tape for small business and brewers. This is a bill that extends the coalition's proud record of cutting and lowering the cost of doing business and streamlining our tax system. This is something we haven't seen enough of yet, from those opposite, but we are very pleased that this has come forward. In fact, the last bill of this nature sat in limbo for over six months and just passed only this morning.

Small businesses have been forced to wait, by this government, for certainty around tax incentives that they were promised back in May last year. This is despite the fact that the government is expediting all sorts of interventions in our economy or cultural priorities. The DGR status, for instance, for the Voice was rushed through. Unprecedented market intervention in our gas market was rushed through. Re-regulation of the labour market was rushed through. But the tax incentives for small businesses?—delay, delay and more delay. So we see where the priorities of those opposite lie. They are very clear. But at least this bill is something we can get behind and support.

Sadly, while this bill has many measures we can support, it doesn't make up for Labor's broken promises on franking credits, on superannuation taxes and on taxing unrealised capital gains. That's really opening up a whole new area of taxation—a can of worms, a Pandora's box—which, I am sure, Labor are looking forward to getting themselves stuck into.

Many small businesses will be captured by Labor's superannuation changes and their attack on unrealised capital gains. Many retirees will lose out on Labor's broken promise on franking credits. It's a full-blown assault on franking credits—something they promised they wouldn't do, prior to entering government, but now they're there, it's clear that it's happening.

Labor's broken promise on superannuation taxes mean that, with soaring cost-of-living pressures, Australians will be worse off as they look forward to their retirements. This is not just a broken promise but it undermines the confidence that we have in our superannuation system, our superannuation system that relies so heavily on certainty of regulatory settings, of taxation settings.

Australians have placed an enormous trust in politicians, in this place, that they are not making changes that would breach the trust of the Australian people on money that is put away for very long periods of time—potentially, for over 40 years. Despite promises of no changes to superannuation, before the election, this government is now proposing to double taxes on superannuation on one in 10 Australians. That's their numbers. By the time people retire it could well easily be more.

The government is stopping companies from offering franking credits to Australian investors, to super funds and to charities. It's important to remember that franking credits are not there for the benefit of the company; they're there to benefit the individual, the investor, the person who takes the risks investing in that company.

This tax bill cannot be debated in isolation from the fact that this government wants to raise taxes on super, on franking credits and, for the first time, it wants to tax unrealised capital gains, and no doubt many other things are on the taxation agenda of this Labor government.

Despite claiming that fewer than 80,000 Australians will be effected by the superannuation tax, independent research has shown that by retirement age more than 500,000 Australians will be hit by this tax. That's not refining tax, that's not improving tax, that's just making our system more complicated and casting a wider net. It's capturing more and more people into the superannuation taxation system.

What's even worse is that the government can't explain how this system will work. The truth is, we haven't had any real explanation of these policies, simply announcements. The Assistant Treasurer has no capacity to explain these policies. They certainly don't refine and improve our tax system. They don't make taxes lower or simpler or fairer. The Prime Minister said they'll only impact one in 200 people, while the Minister for Finance said they will impact one in 10. If the government can't explain it, how can Australians understand it? Australians are right to be wondering what Labor will do next. Small-business owners were shocked to see that this was buried deep in last year's budget, when those opposite were ending the extension of the instant asset write-off. This is a really big deal for small businesses. If that's the government's version of refining the tax system, we should be deeply worried.

The substantive issue at the heart of this bill is to refine and improve our tax system, but it boils down to one key question: how can Australians trust Labor when they say one thing before an election and, the moment they're elected, do exactly the opposite? Labor's promises on tax were very, very clear. There were to be no changes to franking credits. There were to be no changes to superannuation taxes. They've broken those promises alongside promises on cheaper mortgages and $275 off your energy bills. Remember the promise of lower inflation? All those promises have gone. Indeed, I think it was Minister Burke who said prior to the election that Australians would feel the change in government in their bank accounts. Well, they certainly do but for all the wrong reasons.

While the coalition will support this bill, we call on the government to stop breaking its promises on taxes and energy and to support Australian small-business owners with more red tape reduction, more incentives to grow their businesses and more support to resolve labour market shortages before this cost-of-living crisis gets completely out of control.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I want to use my second reading contribution on the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023 to speak about two matters. Firstly, I have some brief remarks on schedule 3 of the bill, regarding the administration of deductible gift recipient registers. I'd just like to place on the record the Greens' appreciation for the minister, Dr Leigh, and his office for their constructive engagement on this bill, particularly in relation to DGR status and the charity sector. My colleague Senator Rice has consistently heard from advocates and community organisations that they have welcomed the minister's approach to this portfolio and, in particular, the changes in leadership at the ACNC. We particularly welcome the minister's willingness to make the technical changes to the bill that were identified during the committee process and understand that they do go a long way towards addressing a specific set of concerns held by charities working overseas.

I also want to speak to schedule 2 of this bill and the amendment that has been circulated on sheet 1925 in my name, and I do foreshadow that amendment. This amendment would require the minister to make regulations that require the Future Fund to, on a six-monthly basis, publish details of where it has invested $250 billion of money that is actually money that belongs to the Australian people. Australians have a right to know how the Future Fund is investing their money, and $250 billion is obviously a significant sum of money that belongs to the Australian people. For too long, the Future Fund has been operating behind closed doors and making investments that have, frankly, had calamitous environmental and human rights impacts. Organisations had to resort to FOIs to reveal some investments of the Future Fund in weapons manufacturers. We also had to dig into Senate estimates to reveal that the Future Fund was investing in fossil fuel corporations that are complicit in cooking the planet. Those FOI requests revealed that the Future Fund had invested in arms companies with links to the Myanmar military. We found out through estimates that the Future Fund had $3.4 billion of Australian taxpayers' money invested into the 50 biggest fossil fuel companies in the world. Australians' money was being used to fund arms manufacturers with links to the junta in Myanmar, and Australians' money was being used literally to cook the planet. It is completely unacceptable that the Future Fund invests in those things, and it's also unacceptable that the only way the Australian people found out about how their money was being invested was through FOI work and through the work of Greens at estimates committees.

Mandatory disclosure, which this amendment would establish, will reveal whether the Future Fund is still investing in weapons manufacturers and fossil fuel corporations, as it has regularly done in the past. It shouldn't be as hard as it is today to hold the Future Fund to account, and it shouldn't be as hard as it is today for the Australian people to find out how their money is being invested by the Future Fund. These amendments will shine the disinfectant of sunlight on the operations of the Future Fund, and they will ultimately bring about a change in the Future Fund's investments and hopefully force them, finally, to become an ethical investment fund. As it stands, there is no requirement for the Future Fund to proactively report on what it's doing. Proactive disclosure would increase the pressure on the Future Fund to make investment decisions in line with the values of the Australian people, and that is not too much to ask from a fund that is the steward of $250 billion-plus that actually belongs to the Australian people.

The reporting rules will be a legislative instrument that is subject to disallowance by the parliament. I refer the Senate to the supplementary explanatory memorandum issued by the then Minister for Finance, Senator Birmingham, to the Investment Funds Legislation Amendment Bill 2021 in respect of the proposed amendments to that bill on sheet ZC133 for a more detailed explanation of the clauses in this amendment. I look forward to the Senate's support.

Andrew Bragg (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise to make some brief remarks about the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023. In doing so, I would like to draw the chamber's attention to schedule 2, which deals with the Future Fund. The Future Fund is one of the most significant achievements of Australian Liberalism. It has set up a structure which allows for Commonwealth governments to offset the liabilities of public servants' superannuation schemes, which are a significant liability on the Commonwealth. That sort of long-sighted policy is rare in our national life, and it has been well managed over the time.

Of course, one of the quirks of the Future Fund's management is that it's a sovereign wealth fund, and the convention is that sovereign wealth funds don't pay tax. So effectively these changes clarify that, when the fund is investing into certain investments, its subsidiaries also do not pay taxation. Effectively, it puts a level of certainty on the Future Fund's operations, which I think is highly desirable, given the fund's mandate has been expanded by successive governments. It has been expanded, I think, by governments of both persuasions because it has a track record of success and its governance is sound, so it has been entrusted to do more and more things. It has not been afraid to invest into different asset classes, as to which, perhaps, in another time and place, a government agency may not have been so bold.

So providing the certainty on the tax treatment is desirable. That's what this bill does.

I note the long-standing bipartisan support we now have for the Future Fund, and, of course, we hope that, in future, the liabilities are reduced and that there are efforts made to try and improve the long-run budget position, because the Future Fund, of course, can only do so much here. It can only do so much in carrying the burden of our long-term fiscal position.

Now, that is something that has taken the Labor Party some time to arrive at. At various times, I think there have been threats that the Future Fund could be opened up. But my sense is that now there is a political consensus that the idea is sound. So we welcome the government's intervention here to provide this tax certainty for the Future Fund, and we look forward to supporting this bill.

Carol Brown (Tasmania, Australian Labor Party, Assistant Minister for Infrastructure and Transport) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill, the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023. Firstly, I would like to thank those senators who have contributed to this debate.

Schedule 1 to the bill amends the International Tax Agreements Act 1953, giving effect to the new tax treaty between Australia and Iceland. This treaty—the first between Australia and Iceland—is in our national interest. It will provide Australian individuals and businesses with increased opportunities to access capital and technology from Iceland by reducing tax on cross-border income and will provide greater tax certainty. It will also facilitate labour mobility, to strengthen our cultural ties with Iceland. The treaty builds on Australia's existing tax integrity measures designed to combat international tax evasion and avoidance, ensuring multinationals pay their fair share of tax.

Schedule 2 to the bill amends the law to exempt wholly-owned Australian incorporated subsidiaries of the Future Fund Board of Guardians—the Future Fund board—from corporate income tax. Currently, the Future Fund board is exempt from income taxes, but this exemption does not extend to its wholly-owned subsidiaries. Extending this exemption will remove the administrative burden associated with the payment of tax by these subsidiaries and the subsequent claiming of a refund by the Future Fund board. The legislation will not change the net position of either the Commonwealth or the Future Fund—that is, no income tax is collected by the Commonwealth from the Future Fund board.

Schedule 3 to the bill transfers administration of four unique deductible gift recipient, or DGR, categories to the Australian Taxation Office, the ATO, and repeals current provisions relating to the maintenance of departmental registers. These changes will streamline application and reporting requirements across the 52 DGR categories and reduce DGR approvals for the four unique categories from up to two years to around one month. Eligibility for DGR status is not intended to change as a result of this bill. Transitional provisions will apply so that organisations that are currently endorsed as DGRs under these categories will continue to be endorsed, so long as they continue to meet the existing eligibility criteria.

The government is proposing to make amendments to this bill to ensure that the transitional provisions operate as intended for overseas aid organisations. These amendments are consistent with the report of the Senate Economics Legislation Committee and recommendation 2 from the additional comments from the Australian Greens. The government has also noted recommendation 1 from the Australian Greens around the role of the Australian Charities and Not-for-profits Commission, the ACNC. The ACNC will continue its important role as a national regulator of charities. The ACNC has responsibility for registering organisations as charities, which continues to be part of the eligibility criteria for each of these four DGR categories.

Schedule 4 to the bill provides deregulatory benefits to small and medium businesses that engage with the fuel or alcohol excise system or import excise equivalent goods. Instead of the existing ability to apply for weekly or monthly reporting and payment, such businesses can also apply for permission to lodge and pay their duty quarterly. This measure will reduce administrative burdens and help small and medium-sized businesses with cash flow. The proposed amendment will commence on 1 July 2023. Eligible businesses with less than $50 million in aggregated turnover in an income year who pay fuel and alcohol excise or customs duty on excise equivalent goods will then be able to apply to the Commissioner of Taxation or the Inspector-General of Taxation to move to the new reporting schedule.

Currently, businesses are required to lodge and pay excise and customs duty on excise equivalent goods when goods enter home consumption unless they have permission to defer lodgement and payment. This permission can only be given for lodgement and payment weekly or, for certain eligible businesses, monthly. This new quarterly schedule will better align fuel and alcohol excise and customs duty on excise equivalent goods with other indirect taxes like GST on the business activity statement, or BAS.

Schedule 5 to the bill provides deregulatory benefits to retail and hospitality venues who repackage beer from bulk quantities into small containers for immediate retail sale. From 1 July 2023 this measure introduces a targeted exemption from alcohol excise licensing requirements for the repackaging of the first 10,000 litres of beer from kegs into non-pressurised containers of no more than two litres capacity for immediate retail sales at a particular premises in a financial year. Currently, businesses that package duty paid beer into these containers are required to hold a manufacturing licence for excise purposes and pay duty again, in effect paying double duty. These licences carry significant obligations which are more appropriate to entities fermenting, brewing and/or repackaging beer on a commercial basis in order to protect the lower alcohol excise rate of a keg beer; however, filling specified containers in retail settings does not pose this integrity risk. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.