Allegra Spender (Wentworth, Independent) Share this | Hansard source

The Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023, before the House today, deals with two very important issues. The first is the government's response to the PwC tax scandal, where a private company used government secrets to enrich itself and its clients. The second is important changes to gas taxation arrangements—legislation intended to ensure Australians get a fair share of the profits when their resources are sold overseas. These are both critical issues, and they are both completely unrelated.

How we tax resource companies and how we ensure accounting firms play by the rules are completely different issues. There is no reason they should be combined into a single bill, and yet, inexplicably, this is what the government has done. The government has not done this with other legislation before the House this week. The expansion of paid parental leave was not combined with legislating the superannuation objective. The Small Business Energy Incentive was not combined with improving animal welfare protections. Legislating the Economic Inclusion Advisory Committee was not combined with changes to the Australian Human Rights Commission, and rightly so.

These bills cover very different issues. It is therefore hard to understand the rationale behind combining the response to the PwC crisis and reforms to the PRRT. There is no clear justification for this, and indeed the minister has been unable to provide such justification when questioned on this issue. It is exactly the kind of wedge politics that people in my community are sick and tired of. They were sick and tired of it under the coalition, and they are sick and tired of it from a government that promised to do better. I support the second reading amendment moved by the member for Warringah, which calls this out for what it is.

On the substance of the bill, I want to start by talking to schedule 5 and the government's changes to the petroleum resources rent tax. With the baby-boomer generation heading into retirement, our tax system is increasingly dependent on taxing the incomes of younger working people. It's these same younger people who are feeling weighed down by the cost of housing, renting and education and the growing cost of climate change. Our current system just isn't fair to them. Between 2004 and 2016, the average wealth of a household headed by someone over the age of 65 increased by over 50 per cent, while the wealth of a household headed by someone under 35 barely moved.

Tax policy has been a major driver of this intergenerational inequality. It is one of the reasons why I've been leading an independent tax reform process, bringing together economists, business leaders, unions, social sector organisations and environmental groups in a series of roundtables. These stakeholders don't agree on everything, but there is clear consensus about the need to do better on resource taxation, in relation to our current resource exports as well as those we're likely to develop in future as we shift to a low-carbon economy. Against this backdrop, changes to the PRRT are welcome, and I'm pleased the government has heeded calls for reform from the crossbench.

The PRRT is supposed to ensure that Australians get a fair return when their oil and gas resources are sold overseas, but it doesn't work well. In the past couple of years, Australian LNG exports have boomed, increasing from $71 billion to $93 billion in the last financial year alone, as gas prices skyrocketed following Russia's invasion of Ukraine. Climate Energy Finance estimate that the gross profits of LNG exporters exceeded $63.5 billion last year. Despite these record profits and despite gas exporters being able to extract these resources for free, the Australian people have seen little return. In the 2020-21 financial year, there were 33 projects eligible for the PRRT yet only six paid any tax. Even more shockingly, despite Australia being the second-largest LNG exporter in the world, the most recent set of budget papers noted that not a single LNG project has paid any PRRT and many are not expected to pay significant amounts of PRRT until the 2030s. It is clear the Australian people are not getting their fair share, and the system is ripe for reform.

Sadly, I believe that the government has missed an opportunity for significant reform with this bill. Whilst a few projects that would never have paid the PRRT will now do so, the main impact of this legislation is to bring forward some of the revenue a few years earlier, giving the budget bottom line a boost today at the cost, potentially, of taxpayers tomorrow. And it's not that much revenue. The reforms will bring in just $600 million a year over the forward estimates, despite gas companies bringing in an additional $20 billion in revenue in the last financial year alone. That doesn't sound like a fair return for taxpayers.

And it's a missed opportunity for significant reform, because more substantial changes were possible and had broad support. The government have rejected a proposal from the crossbench in the Senate to lower the deductions cap further to 80 per cent—a move that was backed by Treasury officials. This would have brought in a further $2.6 billion over the forward estimates. They have rejected a proposal to raise the PRRT rate from 40 to 50 per cent, which would divide the profits from selling Australian resources equally between the Australian people and gas exporters. Even before the introduction of the deductions cap, this would have brought in a further $660 million over the forward estimates.

They have rejected several proposals from Senator Pocock which would close the loopholes in the current regime by ending the carve-out given to Woodside, shortening the seven-year grace period before the deduction cap applies and no longer allowing expenses incurred many years in the past to be brought forward at a massively inflated rate. They have rejected more substantial changes to the structure of the tax that were put forward by the Callaghan and Treasury reviews, such as changing transfer pricing arrangements so that PRRT is calculated based on the real value of the resource, rather than the discounted rate that is currently used. All of these sensible approaches have been rejected, and, whilst this change is better than nothing, it is a missed opportunity for more significant reform.

Before I conclude, I want to speak briefly to the remaining schedules of this bill, which deal with the government's response to the PwC tax information scandal. People in Wentworth and across the country are rightly outraged at the conduct of PwC and the complete lack of professional ethics that has been revealed through the course of the Senate inquiry. The inquiry exposed a culture where profit was prioritised above the ethical behaviour that anyone in this country would expect. When the firm was trusted with highly confidential information and was asked for assistance in cracking down on multinational tax avoidance, they betrayed that trust and put their own financial interest ahead of the Australian people. So it is absolutely right for the parliament of Australia to respond by increasing penalties for those who promote tax-dodging schemes, by improving transparency around cases of misconduct and by expanding whistleblower protection so that we can uncover this unlawful behaviour in the first place.

There is one further reform that the government should pursue in its response to the PwC scandal, and that is to ban political donations from substantial government contractors and current bidders, as is done in the majority of OECD countries. The big four accountancy firms, including PwC, have donated $4.3 million to the Labor party and the coalition over the past decade. During that time, the value of the big four's contracts from the government has increased by 400 per cent. People will make their own judgements about that relationship and about the return on investment of those political donations, but there is no doubt that it creates a perception of a cash-for-contracts arrangement. If the government is serious about cleaning up politics, this is a response to the PwC scandal that they should implement without delay.

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