House debates

Wednesday, 28 September 2022


Treasury Laws Amendment (2022 Measures No. 3) Bill 2022, Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2022, Income Tax Amendment (Labour Mobility Program) Bill 2022; Second Reading

4:34 pm

Photo of Andrew LeighAndrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | | Hansard source

In 1951, Frank McEncroe, a boilermaker from Bendigo, invented the Chiko Roll. He'd been impressed by chicken rolls that were sold at Richmond games, but he decided that it wasn't an item that you could hold in one hand. And the genius of the Chiko Roll, Deputy Speaker Chesters, as you'll know so well, is that it is an item which is so deep fried that you can hold it in one hand without it collapsing. It doesn't, in fact, contain any chicken, so his initial name of the 'chicken roll' was changed to the 'Chiko Roll'. It's largely cabbage, barley and a little bit of beef, but it is also the genesis of the foreign investment scheme in Australia.

The remarkable story told by David Uren in his book Takeover, on foreign investment, goes to 1972, when some 40 million Chiko Rolls were being sold annually in Australia and the US conglomerate IT&T made a bid to buy the company. The notion of an iconic Aussie product such as the Chiko Roll being sold to the Americans caused a backlash in the press and in parliament. As one commentator noted:

The cabinet meeting over the Chiko Roll … was the beginning of the regulation of foreign investment in Australia.

Foreign investment remains critical to Australia's prosperity. Our sugar production industry was kickstarted in 1855 by Colonial Sugar Refinery, now known as CSR. When Schweppes opened a bottling facility in 1877, that was a spur to Australian manufacturing. When Kodak set up its first film plant in 1908, when Heinz began canning baked beans in 1935 and when 3M started producing in 1951, those foreign investments provided not only capital but know-how to the Australian economy. Australia benefits from defence firms such as Lockheed Martin, from investments in quantum computing and from investments in important infrastructure projects. Indeed, infrastructure expenditure in Australia would be smaller if it were not for foreign investment.

This bill deals with both immigration and foreign investment, and it's apt that it does so, because there's a tie between the two. To the extent that migration impacts on wages, it does so as a result of lowering the ratio of capital to labour. Conversely, when we take in foreign investment, we increase the ratio of capital to labour. The capital-to-labour ratio really matters. It's one of the reasons why wages in Australia, at the end of the 1800s, were among the highest in the world. So, for those of us who care about sustaining well-paid jobs in Australia, foreign investment plays a part in that. And foreign investment and migration can go together, ensuring that the ratio of capital to labour remains unchanged. If we didn't have foreign investments, then production, employment and household income in Australia would all be lower.

Australia recorded some $37 billion in foreign direct investment inflows in 2021, and the total stock of FDI in Australia at the end of last year was $1.1 trillion. In the first quarter of this year, there was the largest inflow of foreign direct investment on record—some $59 billion. Quarters go up and down, and so we shouldn't expect this to be sustained, but it is a marker of the scale of foreign investment in Australia and the attractiveness of Australia as a foreign investment destination.

By stock, the largest investors in Australia are, in order, the United States, Japan, the United Kingdom, Canada, the Netherlands and China. It is a reflection of our stable democracy, rule of law, highly skilled workforce, proximity to fast-growing markets, abundant natural resources and the historic strength of our economy that we've remained an attractive destination for foreign investment. But it's important we maintain that balance and we maintain community confidence in foreign investment while protecting Australia's interests.

This bill delivers on the government's 2022 election commitment in doubling foreign investment fees and the financial penalties that relate to foreign ownership of residential property in Australia. It does so in order to ensure that there is strong public support in our foreign investment approach. Increases to penalties will contribute to funding the government's housing affordability policies, an issue which I know is of importance to members on both sides of the House. The previous debate dealt extensively with homeownership. The debate on the matter of public importance raised today in the House by the crossbench went to homeownership. So using these increased penalties to boost housing affordability policies will be a measure that will be warmly welcomed by many members and the community. The indexation of fee amounts needs to remain consistent and coherent and will do so as a result of this measure. The government expects the measure to remove ambiguity about the operation of the fee caps and otherwise to have minimal impact on the amount of fees payable by foreign investments.

I commend the work that the Treasurer and the Assistant Treasurer have done in bringing these measures forward. They are important, and they sit hand in glove with the strong commitment of this side of the House to ongoing foreign investment and to the benefits that foreign investment can bring to the Australian economy.

I'd also make brief remarks about the Pacific Australia Labour Mobility scheme, which helps both to meet workforce shortages in Australia and to provide skills to countries in our region. That program has been evaluated and been noted to be highly successful in helping to give back to our local community. Work done by Stephen Howes and others at the Australian National University has highlighted the important role of its predecessors, the Seasonal Worker Program and the Pacific Labour Scheme, in ensuring that we provide good, well-paying jobs to people from the Pacific Islands and that those jobs allow them to remit money back to their home communities but also, importantly, that they go home with additional skills and expertise, able to start new businesses or be even more productive employees in their home countries. The current funding for program delivery supports around 27,000 workers to enter Australia under the scheme. It is a good scheme, and I'm pleased to see this measure supporting it in the bill. I commend the bill to the House.

Photo of Lisa ChestersLisa Chesters (Bendigo, Australian Labor Party) Share this | | Hansard source

I thank the assistant minister for his contribution. I was not aware of that history in relation to the Chiko Roll. I'll have a little bit of work to do there.

4:42 pm

Photo of James StevensJames Stevens (Sturt, Liberal Party) Share this | | Hansard source

I too thank the previous speaker for giving us that valuable information on the history of foreign investment in this country. I rise to speak broadly in favour of the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022, but the coalition has foreshadowed an amendment to this in the lead speaker's speech in the House. That relates to schedule 5 of this bill, which is creating an exemption or a lower standard for faith based superannuation funds so that they do not need to meet the same performance test that is currently in place across the entire superannuation sector. We in the coalition take exception to this policy point.

Let's just think about the principle first. We established these performance tests and the requirement for all funds that receive compulsory superannuation contributions, regulated through APRA, that they get measured and that people understand how the fund that their retirement savings are being invested in is performing. We simply expect—I think it's quite reasonable—that there be some performance standards for funds and that every single person with a superannuation account isn't expected to do an unnecessary amount of analysis of the fund that they are contributing into to properly understand whether it is meeting those kinds of performance benchmarks. I don't pretend to have a deep understanding, but my loose understanding is that these performance metrics would be across listed equities and listed debt. I'm sure it's slightly more complicated with unlisted asset classes. But ultimately you look at the benchmark for those various asset classes and expect the superannuation funds to meet those performance standards, which is the case for every superannuation fund in our system at the moment.

Schedule 5 of this bill proposes that a certain category of superannuation funds, suggested to be faith based funds, can get an exemption from the requirement of meeting that performance standard. I can't for the life of me understand why people of faith, who contribute their superannuation into a faith based superannuation fund, shouldn't deserve the same standard of protection as anyone else who contributes to superannuation. As someone of faith, I think it's a particularly important principle that we don't introduce something that I see to be quite discriminatory. As an aside, I look forward to supporting a bill to protect people from discrimination on religious grounds hopefully very, very soon in this parliament.

The principle shouldn't be different if you contribute your superannuation into a fund with faith-based objectives. I have no objection to faith based superannuation funds whatsoever. There are lots of other different forms of superannuation funds out there that people choose to contribute into, and I think there should be just as much flexibility around that. But it shouldn't be the case that any superannuation fund doesn't have to meet standards that are put in place to make sure that people have significant security over their retirement savings. If this exemption is necessary, it clearly suggests that some of these funds don't see themselves meeting those tests into the future, and, if these funds are not meeting those tests, it means that the people whose superannuation is held by those funds are not going to have as significant retirement savings when they need it than people in any other scheme in the superannuation system. Why would we think that is something we should allow? Why would we think that anyone's retirement savings shouldn't meet the exact same standard as everyone else's? That is what schedule 5 in this bill is seeking to do. We have significant concerns about that.

It's quite clear that if this goes through it could be the beginning of a whole range of other potential exemptions that are put forward into the future, and then the whole principle of having performance standards for superannuation funds will become completely pointless. We should all cherish the requirement we've created to have that framework in place. We all know and have all had experiences of constituents and people that we know and love who have sometimes had bad experiences with superannuation funds. It's a huge sector.

In March, APRA valued superannuation savings at $3.4 trillion, which is an enormous amount of money. We want to make sure that we have a robust framework in place to ensure that people don't have to stress whatsoever about their retirement savings and don't have undue burden upon them individually. Some people are in a wide variety of circumstances and have the capacity to look closely at what's happening with their superannuation fund. They should expect that their government and the framework in place are largely doing that job for them, which is the case with these performance standards. The coalition and I have great concern about us starting to create exemptions for anyone when it comes to meeting those important standards that are in place to protect the retirement savings of the members of those funds.

We're very pleased to see schedule 4, which brings in a 15 per cent flat income tax rate on people participating in the Pacific Australia Labour Mobility scheme. We're all aware of the very significant challenges around labour and seasonal labour, in particular. We also recognise how important it is to our friends in Pacific nations to have this source of remittances going back into those economies from workers that can travel to Australia within the schemes and earn income, particularly in the agricultural sector. The agricultural sector is probably under the most pressure of any sector when it comes to labour shortages, particularly seasonal labour shortages right now, and it has been for the last few years, first through COVID and border closures et cetera and now, of course, with such an extremely tight labour market, and the simple lack of supply of labour. There are the terrible stories you hear about businesses that, because they haven't got access to labour, have forgone production and, in some cases, people's regular, reliable livelihood, particularly where you're talking about produce et cetera and the inability to pick it, pack it and ship it.

If it weren't for this change, people would be paying 32½ per cent tax on the income that they would earn under the current system. That is clearly a disincentive, no doubt, in certain circumstances for more people to participate in the scheme. I think we're going to really need this scheme more than ever going forward, and so we welcome this measure, which would reduce that tax rate from 32½ per cent from their first dollar earned down to 15 per cent, 15c in the dollar, throughout what they earn through that scheme. That does bring that tax rate into line with other similar schemes that are in place.

Other elements of the bill are not overly controversial at all. I note schedule 2—I think it is—extends some of the measures we put in place under COVID regarding requirements for companies to hold meetings and to deal with documents in certain ways. There were lots of challenges, because of COVID restrictions, for corporations to meet some of their requirements, and some of those requirements were put in a more electronic, non-physical form. This sees some of those elements extended through.

I can't possibly elaborate any more eloquently than the previous speaker on the history of foreign investment and some of the exciting changes that have been put in place there, with penalties around not complying with foreign investment rules to do with residential land. So, on the particularly exciting Treasury Laws Amendment (2022 Measures No. 3) Bill 2022, I urge the chamber to consider very strongly the amendment that we are moving regarding schedule 5 and I commend the other elements of the bill to the House.

4:52 pm

Photo of Andrew WallaceAndrew Wallace (Fisher, Liberal National Party) Share this | | Hansard source

I rise to speak on the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022, the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2022 and the Income Tax Amendment (Labour Mobility Program) Bill 2022. Once again, a large proportion of these measures were supported, or in fact initiated, while the coalition were in government. For example, the income tax amendment reduces the tax rate on certain income earned by eligible foreign resident workers participating in the Pacific Australia Labour Mobility scheme. The Pacific Australia Labour Mobility scheme helps to meet workforce shortages in Australia as well as providing official development assistance to Pacific nations and Timor-Leste. The Pacific Australia Labour Mobility scheme allows eligible businesses to recruit workers to help fill workforce shortages in any sector where no suitable Australians are available. This is a really important scheme that enables Australian businesses, particularly agricultural businesses, to utilise Pacific labour in instances where so many young Australians show a reluctance to want to work. I think of a number of strawberry farms in my electorate. The Twist brothers farm had so much trouble finding workers to pick strawberries that the Twist brothers eventually gave up and stopped farming strawberries and turned it into a turf farm. There are many stories around my electorate and across the country about crops being ploughed in simply because we haven't been able to get the labour that we need. That, whilst regrettable, was somewhat understandable during the COVID pandemic. But now that things are returning to normal it is very, very difficult for many agricultural growers to find appropriate labour to be able to have their crops picked.

This is a very sensible scheme. Eligible businesses can recruit workers for short-term seasonal jobs for up to nine months, or in longer-term roles for between one and four years, to help fill unskilled, low-skilled and semiskilled workforce shortages. The change will reduce the rate of tax from a marginal 32½ per cent to a flat rate of 15 per cent.

While I agree in principle with a number of the measures contained in this bill, I do have a number of reservations, particularly in relation to schedule 5. Schedule 5 of this bill implements a Labor election promise to exempt faith-based superannuation products from the Your Future, Your Super performance test. We should always be striving for the best when it comes to Australians' hard-earned money, and we need to remember that superannuation is compulsory. The concept of superannuation is a good thing. The concept of super requires workers to have a percentage of their wage—I think it's 10½ per cent at the moment—quarantined for when they retire. It's designed to take the pressure off the public purse and the pension scheme, and to reward people for their own self-reliance. That's a good thing. But because we are making it compulsory, because government says you must do this, then there's a certain obligation on government to ensure that to the maximum extent possible the superannuation scheme is transparent.

The Australian superannuation scheme, as the member for Sturt earlier said, is the fourth-largest such scheme in the world. For a country of 25 million people, that is no small feat. Some $3.4 trillion are invested in superannuation. That is a very significant nest egg, and it places a very significant responsibility upon government to ensure that there are appropriate amounts of transparency. When we're talking about the hard-earned money of everyday Australians, in my view and in view of many of my colleagues in the opposition—if not all of them—we simply do not have the right to be imposing ideological restrictions on what they can and can't do with their money. Let's be very clear on this. Superannuation is the worker's money. It's not the government's money. It's not Labor's money. It's not the opposition's money. It's the workers' money. Those mums and dads run their own small businesses, they are employed, they work hard, they're our doctors, they're our nurses and they're the people who work in our grocery stores. This is their money, and they have the right to expect that their government will assess super products based on performance and integrity, not on ideology or faith.

I am a person of faith. I'm a practising Catholic. I think it's very important. My faith is very important to me. But I do not believe that a faith based superannuation fund should be treated any differently to any other fund. I do not believe that the threshold for transparency or, in fact, performance should be lower for a faith based superannuation fund than for any other superannuation fund. It is absolutely imperative that, as legislators, we measure, we legislate and we adjudicate super products in light of three main things: whose money it is, what the performance of the fund is, and the transparency and integrity of the fund. These principles are the foundation of our historic Your Future, Your Super reforms. They are the most significant reforms in the 30 years since compulsory super was adopted.

In case members of the government have forgotten, let me remind those opposite why we implemented the Your Future, Your Super reforms. We took these steps to protect the financial interests of all Australians by removing unnecessary waste, increasing accountability and transparency, and providing more flexibility for families and individuals, as well as their businesses. It was about doing something tangible to increase transparency and accountability. We strengthened the obligations on trustees to act in their members' interests—not those of their political or corporate patrons. It was about enhancing the information readily available to members. This would allow them the chance to engage and contribute to the way their funds were invested. But, as is Labor's wont, Labor have opted to side with the big end of town once again. Hitched to the unions and industry super funds, they've now dismantled some of those essential transparency and accountability reforms for super. It is vital that we reintroduce that transparency and accountability and enshrine it in law.

The Your Future, Your Super reforms hold funds to account for underperformance, lower fees and protect members from poor outcomes. We required superannuation products to meet an annual objective performance test. For those that fail, funds are required to inform members, and persistently underperforming products will be prevented from taking on new members. This is about protecting the interests of everyday Australians. You wouldn't think that that was objectionable. You wouldn't think that anybody would quibble with those changes. It's about ensuring that those who have worked hard, and maybe even broken a generational welfare dependency, for example, can rely on the quality and surety of their superannuation fund. Our reforms under Your Future, Your Super have seen 13 underperforming funds fold or take necessary action. That's a good thing. Those underperforming funds that not only underperform but also usually charge very excessive fees and charges need to be held to account. They should be held to account. This performance needs to hold for all funds and all Australians, regardless of the individual's age, their sex or their faith. Equally, it needs to hold true to whether the fund is a for-profit fund, whether it's a not-for-profit fund, whether it's an industry fund or whether, in fact, it's a faith based fund.

It is this exemption from transparency measures with regard to faith based super products which concerns me. Transparency, accountability and integrity are not optional. Members opposite talk the big talk about integrity. We're seeing that today in terms of the introduction of integrity. They talk the big talk about integrity when it comes to all manner of things, but they seem to go quiet when it refers to superannuation, particularly in relation to industry super funds. They go deathly quiet when conversation about unions like the CFMMEU—and the $10 million they've received in political donations—comes up.

Transparency, accountability, and integrity are not optional. It doesn't matter what your religion, your political persuasion, your background or your agenda is. Integrity is not an extra; it is an essential element. It's about time Labor walked the talk in relation to integrity. Allowing faith based funds to deliver inferior returns is not in the best interests of Australians. Why should Australians of faith retire with a lower balance than Australians of no faith? Why should Australians who work in faith based employment—such as someone who might be employed by the Australian Catholic University, or someone who might be a teacher in a Muslim school, or a nurse who might work for an Anglican hospital—ultimately end up with less super than someone who works for the state? It's just not right. It's not fair. Why shouldn't those faith based superannuation funds be granted the same assurance?

I'm not beating up on organisations of faith. As I said earlier, I'm a committed Catholic. But fair is fair. Alongside many others on this side, I am concerned that there is a slippery slope here. If the Labor government carves out special treatment for faith based funds, what is next? No fund should have special treatment effectively allowing them to underperform. All funds should be treated as equal in the same way that all Australians should be treated as equal.

I do support a great deal of this bill. It's going to introduce sensible reforms, particularly in relation to labour mobility. It's great to see the Leader of the House in the chamber—this is the Federation Chamber, you might be lost! But we do want to work with the government to get this right. It is the very least that we can do for those 16 million hardworking Australians who rely upon their super. I encourage members of the government to look at our amendments. They are sensible amendments. They are good for Australians, they are good for super, and they are right and fair.

5:07 pm

Photo of Russell BroadbentRussell Broadbent (Monash, Liberal Party) Share this | | Hansard source

I thank the Acting Deputy Speaker for offering me the invitation to speak on the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022. I'm not going to take up a lot of time of the Federation Chamber. One of the important things in this bill for me is that it addresses employment of Pacific Islanders in Australia, their labour mobility clauses and the tax effects on them. Normally, international workers would begin to pay 32½ per cent tax on everything they earn immediately they arrive here. This is unfair to them compared to other workers who happen to be Australian nationals. What the government has done in this case is to say: 'All right. We'll start with you with a 15 per cent flat rate.' It's a massive change for them, but for their benefit.

Why is this so important to me? It is because these workers actually work in my district. They are spread all around my electorate. They are especially useful in the asparagus season and other seasons of import. The system that the government has in place for international workers—especially workers from the Pacific Islands—has made a marked difference to the viability of many of the farms around where I was born and where I live—that's no longer in my electorate, but it's still very important to me. There are even a number of Pacific Islanders now working within the Warragul area that I represent. The treatment of the labour mobility program, otherwise known as the Seasonal Worker Progam, is of vital importance to me. I just want to make the point, on behalf of my constituency, of how important this legislation is. It is basic tax legislation, but it makes a very good point about the Seasonal Worker Program. I thank you, Deputy Speaker, for your indulgence in allowing me to speak on the matter.

Debate adjourned.