Monique Ryan (Kooyong, Independent) Share this | Hansard source

I'd like to thank the member for Curtin for bringing this important matter to the House. It's clear that our tax system needs reform. It is not fit for purpose. Taxation is not just about revenue raising; it's an important social policy. If it's done well, it can have the heft to deliver equity and the agility to reduce harms and to enhance public good.

But right now our tax system is not doing well. It's too complex. It includes historical measures, concessions and exemptions—and concessions on exemptions on measures—which are simply not achieving their aims. For example, amateur sports clubs were given tax-free charitable status in the 1950s to promote participation in sport. We didn't anticipate then that, one day, billion-dollar professional sports codes would be paying their executives million-dollar salaries with profits made from gambling on those sports—while using those concessions to pay no tax. When a tax concession is no longer fit for purpose, we should change it.

To encourage investment in housing, to boost the supply of rental accommodation, landlords were given capital gains tax concessions in 2000. We did not expect then that that would turn Australian homes into wealth creation schemes. When tax concessions deliver unintended consequences, we should abolish them.

When we introduced the petroleum resource rent tax in the 1980s to ensure Australians received a fair return from our non-renewable petroleum resources, we didn't foresee then how our energy landscape would evolve, with liquified natural gas now dominating our offshore petroleum sector. Despite Australia being the second-largest exporter of LNG globally, we have collected virtually no PRRT revenue for decades. Under the current PRRT framework, many LNG projects won't pay significant tax until the 2030s. The International Energy Agency predicts that, by the mid-2030s, the global demand for gas will drop off precipitously, so there'll be no tax revenue from these massive LNG exports.

The PRRT is designed to tax profits only when projects become cash flow positive. This allows for upfront investment while capturing windfall gains. But LNG projects have high upfront costs, and LNG producers structure their businesses to benefit from this concession. So, despite billions of dollars of our LNG being exported from this country, effectively no tax is being collected. The Albanese government's 2023 changes to the scheme were expected to raise more income, but they have fallen short. It's a massive failure of public policy. We're effectively giving our finite gas resources away for free to multinationals, who are making billions of dollars of profit at the expense of our climate and our environment.

There are things that we could do immediately to make our tax system more equitable and more effective. We could ring fence fossil fuel projects to stop companies passing on losses from one project to offset profits on another. We could stop the practice of compounding the value of deductions, a questionable inflation of expenses to offset profits. A simpler and more robust approach would be to simply remove LNG from the PRRT and to apply to it a resource tax that meets the expectations of Australians, pays this country for the resources extracted and delivers revenue that can be used to supercharge the transition away from gas altogether. When a tax measure is failing, we should go back to the drawing board.

Our tax system needs reform. It needs to reflect modern circumstances and deliver equity and social benefit. As a nation, we need to embrace the principles that the tax system should be flexible, it should be responsive and it should be fair. It should allow government to get on with the business of delivering those things for people. If only politicians weren't responsible for our tax system—because rent-seeking corporate lobbyists, mindless fearmongering by oppositions and a media that makes a sport out of forcing politicians to promise no new taxes all make tax reform a poisoned chalice. Tax reform takes political courage, but the need for it is evident. We have to wait to see whether or not this parliament will put public interest ahead of politics and get on with that reform.

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