House debates

Wednesday, 8 March 2023


Treasury Laws Amendment (2023 Measures No. 1) Bill 2023; Second Reading

5:09 pm

Photo of Jerome LaxaleJerome Laxale (Bennelong, Australian Labor Party) Share this | | Hansard source

I stand to express my support for the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. This bill is a crucial piece of legislation that will help ensure that our economy remains strong and resilient in the face of economic challenges that we may face in the future. This bill will create several changes to the Australian taxation system to improve its integrity, sustainability and fairness.

I am one of those MPs who just love it when the Assistant Treasurer brings these TLABs to parliament. I look forward to them every sitting session and I'm happy that this is the first time I've had the opportunity to speak on one. I like TLABs. I've said it. There you go! These bills, by and large, contain sensible measures to help our economy and ensure the very best practice of our complex taxation system and are sometimes even vehicles for great reform.

Last year we saw a TLAB bring forward changes to the tax system which will help small businesses right across the country and, of course, in Bennelong. The Small Business Technology Investment Boost was in a bill just like this one. That program is a great incentive for small businesses to invest in technology capability and allows businesses with a turnover of less than $50 million to deduct an additional 20 per cent of the expenditure incurred for the purposes of business digital operations or digitising their operations on business expenses and depreciating assets such as portable payment devices, cybersecurity systems or subscriptions to cloud based services. As we move out of COVID and as we are seeing further digitisation of our economy, this boost, embedded in a past TLAB, will help small businesses.

The same TLAB also brought forward the Small Business Skills and Training Boost. The former government left us in a skills crisis. TAFE was underfunded and undervalued, and our skilled migration program was in tatters. This government recognised those failures of the former government, and the Small Business Skills and Training Boost helps address those failures. Businesses with an aggregated annual turnover of less than $50 million will be able to deduct an additional 20 per cent of expenditure that is incurred for the provision of eligible external training courses to their employees by registered training providers.

Now to this TLAB, which is another incredibly important one to support, this time for some very important environmental reasons. Schedule 2 of this bill will improve the sustainability of investments in Australia and, importantly, will provide standards on how investors will now need to consider the long-term impact of their investments on the environment. Importantly, it will create standards which will shine a light on greenwashing within our economy. Greenwashing is bad for our planet, bad for our society and bad for our economy. Greenwashing is a term used to describe the practice of making false or misleading claims about the environmental benefits of a product, service or policy. As we know, right now Australian companies are greenwashing.

A sweep of 247 businesses and brands across various sectors recently by the Australian Competition and Consumer Commission, released only a few days ago, shows that 57 per cent of companies have promoted concerning claims about their environmental credentials. The ACCC's analysis focused on identifying the industries or sectors that are most commonly using environmental and sustainability claims and assessing whether these claims were misleading to consumers. It looked at these environmental claims through the eyes of ordinary consumers and whether they would understand and accept what the claim means. Most commonly the analysis found that companies right now are using vague and unclear environmental claims.

We've all experienced standing in the aisle of our local supermarket or shopping online and seeing terms like 'green', 'kind to the planet', 'eco-friendly', 'responsible' or 'sustainable' jumping out at us. But how do we know what these claims actually mean or whether they're backed up with genuine environmental action or qualifications? Then we have all the certification claims. We've all looked at the little logos on products that give us a claim that this product or that company are certified. It gives you a sense of trust in a product, when you see a little logo claiming something environmental—that somebody has looked at this product and decided it meets the environmental and sustainability requirements to be provided with certification. But we know that's not always the case.

The ACCC sweep found several instances where the use of certification trademarks, also known as CTMs, could, potentially, mislead consumers. Several companies did not clearly describe the nature of the certification scheme or whether it applied to the entire business, the product range or only certain products. There are even companies creating certification schemes for their own products. How open to misuse is that? They get to put their own tick or logo on their own product without meeting any higher regulatory requirements. In that case, certification just becomes meaningless. Those companies undermine the companies that are making the right decisions and doing the right things and correctly certifying their products, particularly on environmental grounds.

These claims and qualifications are very important to consumers, and there is rarely information provided to back up these claims. Where a company is using vague environmental claims, not providing important information about their claims or, at worst, making misleading or false comparisons between products or exaggerating environmental benefits, it's known as greenwashing. In a time when there is community and consumer support for a transition to a net zero economy and for solving problems relating to climate change, emission reductions and product durability and recyclability, all these themes are at an all-time high for consumers. We need to make sure that, when a company makes claims, those claims are robust and that they stack up. We need to make sure that the bad eggs are not using positive consumer sentiment to make false claims and taking advantage of what is now an open and relatively unregulated system.

More and more consumers are becoming increasingly interested in purchasing sustainable and environmentally friendly products, and more customers than ever are using sustainability claims to make their decisions. Greenwashing is a major problem because it undermines the efforts of genuine environmentalists and companies that are truly committed to reducing their emissions and protecting our planet. It creates confusion and makes it difficult for consumers to make informed decisions about the products and services they purchase. When businesses make misleading, meaningless or unclear claims of sustainability and environmentalism, it ruins the trust that our communities have. Not only can this lead to a false sense of security and prevent consumers from making sustainable choices; it could ultimately cause consumers to lose trust in both the claims of the product and sustainability claims in general. Greenwashing also undermines the efforts of companies who are genuinely committed to protecting the environment.

We know that there are a lot of companies out there doing the right thing. They are genuinely pursuing more sustainable practices, products and services, and, for some, that incurs a higher cost. When businesses publish false or misleading information, it disadvantages those who are doing the real work and doing the right thing. Greenwashing can also be detrimental to our economy. Companies that engage in greenwashing are not investing in genuine environmental initiatives and are harming the growth of industries that are truly committed to protecting our environment. One way to increase transparency in this sector is to require companies to disclose detailed information about their environmental practices. This will enable consumers to make an informed choice and hold companies accountable for their environmental claims. This TLAB will form an important part of implementing these changes.

Schedule 2 of this bill will improve the sustainability of investments in Australia by introducing much-needed sustainability standards for certain types of investments. The proposed changes would require certain institutional investors, including superannuation funds, to consider the long-term impact of their investments on the environment, social issues and corporate governance. It will introduce sustainability standards to make the regulation of environmental claims easier. It will ensure that there is standardised, internationally aligned reporting by large businesses of climate related plans, risks and opportunities.

The proposed sustainability standards will require institutional investors to consider environmental, social and governance factors when making those decisions. It will ensure that investments are made in a way that promotes sustainable growth and contributes to the long-term welfare of Australians. The proposed changes will also require investors to disclose how they have considered these sustainability factors when making decisions. This would also improve transparency and enable investors to make more informed decisions about where to invest their money.

We also need to strengthen regulations to prevent companies from making false or misleading claims about their environmental practices. This can be done by imposing penalties for greenwashing and requiring companies to provide evidence of those claims. We know that imposing penalties and legislating a requirement for companies to substantiate their environmental claims is what consumers need right now. There are some extraordinary examples around the world of greenwashing that we simply don't want to happen here in Australia.

One example is in the Netherlands, where gas giant Shell has been reprimanded twice for greenwashing. In 2021, a group of young Dutch law students made a complaint that Shell advertisements claiming to be 'CO2 neutral' were misleading. The students argued that Shell's claim did not account for the full scope of the company's emissions and that it relied heavily on carbon offsets, which do not address the underlying emissions. The Dutch regulator agreed with the students and ruled that the advertising campaign was deceptive. They found that Shell's advertising campaign was misleading because it suggested that Shell was reducing its CO2 emissions to zero while in reality the company continued to emit large amounts of greenhouse gases.

There are also some great examples happening overseas where other countries are leading the way. We can look at France's innovative legislation that requires companies to provide more transparency about their carbon offsetting activities. Under their law, companies must now disclose how they plan to reduce their own emissions before resorting to offsetting. Companies must also report their offsetting activities in a clear and detailed manner. French carmaker Renault has recently announced that they are going to spend one billion euros over the next five years to reduce their own emissions before relying upon offsets.

That's best practice, and the laws being proposed in this TLAB are an important first step to provide improved conditions for investors and consumers here in Australia but also to provide certainty to businesses. They will create much-needed and long-overdue standards to ensure that the regulation of environmental claims is easier and more transparent. These laws, put short, will help stop greenwashing.

I would like to acknowledge the recent work of our regulators and in particular of the ACCC and ASIC. They are now stepping up to hold greenwashers to account. In response to their own survey, referenced earlier in this speech, the ACCC will soon produce updated economy-wide guidance material and target guidance for specific sectors, such as cosmetics, personal care, and food and beverages, where greenwashing is most pervasive. They will also look at concerns that have been identified with specific businesses and begin a more targeted assessment of their conduct to determine the appropriate compliance or enforcement approach. This will result in companies being required to amend their claims to ensure that they are not misleading, to pay infringement notices or to face legal proceedings. We know that only a few weeks ago ASIC launched their first-ever legal proceedings alleging greenwashing. This is a good thing, and it must be encouraged.

Greenwashing needs to stop, and this bill is a significant step towards that. The proposed changes in the bill will improve transparency, sustainability and fairness of the Australian taxation system and enhance outcomes for taxpayers and consumers. I commend the minister for his hard work in ensuring our system is equitable and the government for its commitment to this matter.

5:23 pm

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

I will just make sure I am speaking on the right bill here, because I thought the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 was the one that was introducing changes to the franking tax credit system, part of the roller-coaster ride of broken promises we have seen from the government since the solemn vow they made, after the results of the 2019 election loss, that they would not be making changes to our superannuation system. The previous speaker just made me double-take on whether that was in this bill, because he didn't mention it at all. Mind you, it doesn't surprise me that the government don't want to talk about schedule 4 or schedule 5 of this bill, which are, as I say, the beginning of a really frightening raid on the retirement savings of the people of this country.

The member for Maribyrnong will be kicking himself. He's probably looking at what the Albanese government are doing and saying: 'Why didn't I do it that way? Why was I honest? Why did I come out and say before an election that I was going to make all these significant changes to the tax treatment of the hard-earned retirement savings of the Australian people and face the quite reasonable wrath of those that would have been significantly affected, who had planned for their retirement and made decisions based on what they believed to be a reliable taxation structure and treatment of those retirement savings? Why did I come clean and say I had these plans to do it when I could have been like the Albanese government and said nothing whatsoever in an election campaign and waited until after the election to start rolling out all of these raids—these smash and grabs—on the hard-earned retirement savings of the people of this country?'

I suppose we shouldn't be surprised, because we members of the coalition always expect the Labor Party want to get their grubby hands on the savings of retired and soon-to-be retired Australians. Regrettably, probably a lot of Australians thought that they could take Prime Minister Albanese and the government at their word. During the election campaign, when journalists quite reasonably kept putting questions to senior members of the then opposition about what they might do if they became the government in terms of superannuation policy, the solemn vow was given time after time, 'If the Labor Party become the government, we will not make changes—none whatsoever.' It was not, 'We won't make any significant changes,' or, 'We'll do some things, but don't worry about it.' They said that, if they formed government, they would not be making changes to the way in which superannuation is treated.

I suspect a lot of people believed that, because I suspect a lot of people would think that no-one could commit such a colossal outrage as to give a firm, solemn vow on something as significant as the retirement future of the people of this nation and then go back on that word after the election. I think most Australians thought, 'We haven't seen anything like this in Australian politics for many decades and maybe we can trust the Labor Party, given that they were honest in the 2019 election about what they were going to do and outlined all of the outrageous policy positions around undermining the retirement, sustainability and security of Australians.' No doubt people thought, 'Because they said in 2019 that they were going to do all those things and they were rightly defeated because of those dangerous policies maybe (a) they learnt a lesson about that and (b) they have given this very clear commitment.' The people of this country are reasonable and expect that people in high office, or aspiring to be in high office, can be, generally speaking, relied upon if they give such an explicit commitment—and there were so many times and they were so very clear in their answer—and they would have assumed that they could take that party, the now government, at face value.

How broken-hearted the people who fell for that conjuring trick feel now, as we have now seen week after week more and more—it's death by a thousand cuts—people's retirement security being undermined before their eyes. The two measures in schedules 4 and 5 of this bill—the first TLAB of 2023—are the first two broken promises when it comes to superannuation and franking credits. Let's remember and understand what franking credits are and what the principle is. A franking credit is where a company has paid tax on a profit that they then distribute as a dividend. Tax was paid at the corporate tax rate of 30 per cent. If you own shares through your superannuation fund, the tax rate inside your superannuation fund is at a concessional rate lower than that corporate tax rate, so obviously there is a credit for people where the tax rate that they should be paying is less than the tax that has already been paid on that money—that 30 per cent tax rate.

This was looked upon with a great deal of greed by the Labor Party in the 2019 campaign. They thought, 'Let's take that away from the superannuation savings of the people of this country, because that is money that we can use for all the things we want to do and all the extra spending that we want that's outside the ability of a government that lives within its means. So we'll just raise taxes on people that we think probably don't really vote for us, and we think we can probably get away with this.' They didn't in 2019, but they're seeking to do it right now. As I say, this is the commencement of what is clearly an agenda to pursue the policy positions of 2019 slice by slice. We have these two measures in this bill. We now have the government saying they want to lift the concessional tax rate from 15 per cent to 30 per cent on superannuation balances that are of a value over $3 million. We were told that that was 0.5 per cent of accounts. Now we find that, if you're my age or a bit younger, you've got a one in 10 chance of being slugged by that double taxation of your superannuation once you get to retirement age.

One wonders what those projections are based on when it comes to the inflation outlook, because, regrettably, many of the inflators that have been applied through a lot of the models used, including by Treasury, have not been able to predict the significant and aggressive inflation rate that we've got going on in our economy right now. We hope that that has peaked, but we will only find that out in the weeks and months ahead. It could be well more than one in 10 people my age or younger that are affected by that double taxation. Where will this end? As I say, I predict it will end once the government have got their greedy little hands on as much of the retirement savings of the people of Australia as they possibly can by fully implementing the Shorten agenda from 2019, just surreptitiously, by stealth, slice by slice—and the first two slices are in schedule 4 and schedule 5 of this bill.

I've got more than 10,000 self-funded retirees in my electorate, and there are just as many who are approaching retirement in the decade or so to come. It is a very big decision to make, to retire. Once you've left the workforce, it is not so easy to re-enter the workforce. If you make decisions to provision for your retirement, and you assume you can rely on a certain set of rules and tax treatments being in place, and then those goalposts are moved on you, for many people it is far too late for them to re-enter the workforce or change the way in which they've structured their finances in order to provision for their retirement when the rules keep changing. If the changes to those rules are continuously ramping up taxes on superannuation, then all that means is that the sort of retirement that people thought they were going to have is going to be greatly diminished.

That's really nasty, really unfair. When these changes are built off the breaking of a fundamental election commitment to explicitly not do any of these things, which is what schedules 4 and 5 do, then we've really got to ask ourselves some questions regarding the moral compass of a government that wants to go to an election, give those solemn vows and then break them at the first opportunity. What will be next? We don't know, but no doubt we'll find out as more of these ideas are ventilated through the press and/or other essays that are written by treasurers and others. All we know is that we're now seeing the slow and steady march of continuous attempts to increase taxation on people who have made decisions to provision for their retirement on the basis they thought they could take the Prime Minister at his word when he said he wouldn't change the taxation treatment on them.

It is quite heartbreaking for people who are approaching retirement and starting to get nervous about whether or not they have provisioned the right amount of money in their superannuation, because they don't know how the rules are going to change on them and they don't know whether or not the amount of money that they have calculated they needed to have provisioned before making the decision to retire will be enough if at any point in time suddenly all sorts of new tax treatments might come into play. We saw this, of course, just last week, with the announcement on the $3 million balances. That was accompanied by a whole range of other confusing thought bubbles and doublespeak and contradictions from the senior members of the government's economic team around the tax treatment of the family home—whether or not unrealised capital gains may attract taxation treatment. In question time today, we even saw the Assistant Treasurer effectively confirm that that's what they're about. That's what's next. It seems that, with each week that goes by, there's another little slice taken from the hardworking Australians who have done the right thing and saved to provision for their own retirement in order to be as limited a burden on the taxpayer as they can. The punishment for them doing so is to have that money constantly eroded away by decision after decision that this government is taking week after week to figure out how it can get its hands on more of these people's hard-earned savings.

This is money that people have worked hard to earn to provision for their retirement. We heard some of the examples that came up in question time today. We're talking about primary production businesses. We're talking about a circumstance where, by the mere change in the valuation of your property—not through selling it but just through its valuation—you might be liable for a very significant capital gains tax bill.

Then we got a lecture on the need for people who have structured themselves that way to have the liquidity to pay that tax bill. Apparently they're meant to be clairvoyant and assume and know that it will be the intention of a Labor government to always look for more ways to tax superannuation and that they should make sure they're provisioning for that. They got a warning letter saying: 'Make sure you've got enough liquidity in your superannuation because we're coming after you. We're on the way.' Each week we're going to see more examples, like schedules 4 and 5 in this bill, of the government looking for ways—as a death by a thousand cuts—to implement the Shorten agenda that was taken to the 2019 election.

For constituents of mine who are self-funded retirees or who are planning to retire soon, this is a very frightening revelation, especially in an environment where interest rates are going up, electricity prices are going up, the cost of living is growing exponentially and inflation is at its highest rate in my adult lifetime. There are self-funded retirees who were hoping to maybe help their kids get into a housing market that is ever more difficult because the policies of this government are driving interest rates up and making it more difficult than ever to buy a home. There are self-funded retirees, or soon-to-be self-funded retirees, who were looking forward to enjoying their retirement because it would be, in many cases, the first time in their lives that they'd be able to have certain experiences. They've been working hard to save their own money so that they can use their own money to enjoy their own retirement, only to find that maybe that's not going to be possible to the extent that they had planned, because these changes have happened.

We will fight all and any attempts of this government to raid what they derogatorily describe as a 'honey pot'. This is like some kind of a socialist exercise of redistributing the wealth of self-funded retirees and the superannuation balances of hardworking Australians for the purposes of government policies that the government aren't prepared to properly cost and they can't afford. As we say: when this government run out of their own money, they come after yours. We in the coalition will stand up for people and protect their money. We will fight against broken promises—solemn commitments that this government took to an election that they're already breaking. The self-funded retirees of this country know that they can always count on the coalition to stand up for them against this sort of recklessness.

5:38 pm

Photo of Bert Van ManenBert Van Manen (Forde, Liberal Party) Share this | | Hansard source

It's a pleasure to rise and follow my good friend the member for Sturt and his sterling contribution to this debate on the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. It is disappointing that, once again, we are standing in this chamber debating a bill that is going to make the circumstances of everyday Australian people worse. This is just the latest in a long line of government promises that have been broken. It is making life for the Australian people worse, when Labor promised at the last election that they would make it better. As I often say: don't listen to what Labor say; look at what they do.

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

Order! A quorum has been called for in the House of Representatives. Because the member has left, we no longer have a quorum. We will suspend until a quorum is present.

Sitting suspended from 17 : 40 to 17 : 44

(Quorum formed)

Photo of Bert Van ManenBert Van Manen (Forde, Liberal Party) Share this | | Hansard source

As I was saying before I was interrupted, whether it's to do with franking credits or superannuation, you can't trust the Labor Party on tax. Before the election, both the Prime Minister and the Treasurer ruled out changes to franking credits, yet we have a piece of legislation before us that actually does exactly the opposite of what they ruled out. Before the election, both the Prime Minister and the Treasurer ruled out changes to superannuation. But what have we seen in the last week? We've seen changes to superannuation, and we've seen, this afternoon, the hapless Assistant Treasurer not even able to confirm what their policy is. I doubt he actually even understood the question that was asked by my colleague on our side of the House. Less than a year in, this government is just adding to the list of broken promises.

In speaking about this piece of legislation, I particularly want to focus on the part about franking credits. Franking credits, I think, are one of the great creations of the Australian taxation system. We hear frequently from the Treasurer that he wants to emulate Paul Keating and Bob Hawke. Well, this was one of Paul Keating's great creations: a system in which our companies pay tax, and, out of their after-tax profits, they pay a dividend to the shareholders, but that comes with a tax credit attached so that the shareholders aren't taxed twice. That system has been of enormous value and benefit to the Australian economy over the last, nearly, 30 years. It has created the environment in which people wish to invest in our listed companies, knowing that, by investing in those companies and assisting them to grow, they are going to get a return on that, which is from after-tax revenue. In particular, if their situation is such that they're a retiree or a super fund, they are going to get a tax refund. Even somebody on the highest marginal tax rate is still going to pay an effective rate of 15 per cent over and above the 30c credit.

I think it's been a tremendous system. Given that we have a government that purports, in another piece of legislation elsewhere in this building for the National Reconstruction Fund, to want to see the development of manufacturing and a whole bunch of other industries across this country—and I don't disagree with the notion of that, but I think the model proposed by the government has more holes in it than Swiss cheese—why on earth would that government then want to tie businesses' hands behind their back?

The cheapest way for business to accumulate or to access capital to grow their business is through retained profits. If you have $1 of after-tax profit and you distribute 70c of that to your shareholders, you then retain 30c of that for reinvesting and growing your business. The franking credit that goes with that 30c sits on your balance sheet in a franking account for distribution at some later point. How that's distributed is up to the board of the company, as it rightly should be. Companies should be free to make the capital allocation and distribution decisions that they believe are in the best interests of the company and the shareholders, whether in the short, medium or long term.

The government's proposed changes fly directly in the face of that, because they say to companies, 'If we think you've done a capital raising and you're going to distribute some of your raised funds as a dividend to your shareholders, we don't like that idea.' That's none of the government's business. Business should be free to distribute those franking credits as they see fit. That's the way the system was designed. So these changes will do two things: they'll make it more expensive and difficult for a business to raise capital, and, if a business doesn't raise capital and wants to grow, there's a strong likelihood that the business is going to have to use debt to fund that capital expansion. We all know that interest rates are going up under this government's watch, so debt is becoming more expensive. So each and every way you look at this, this is a bad outcome for listed businesses.

As I said on the National Reconstruction Fund Corporation Bill earlier today, this is, in my view, just the thin end of the wedge. This is looking only at listed companies. What are they going to do with the myriad of unlisted companies that operate in all of our electorates? They're small family companies that probably don't even distribute 70 per cent of their after-tax profit as a dividend to their owners. They probably reinvest all of that money back into their business, to grow it. In each and every way this is put together, it is a bad piece of legislation for the Australian economy—at the very time when we want to be encouraging businesses to invest and grow. The best way they can invest and grow is through the retention of capital earned on their activities today.

But this is just an addition to a range of other things we are now seeing. We saw today in question time the Assistant Treasurer asked a very straightforward question. Any of us here who have had anything to do with business understood the question very well. Say you own a piece of property in a self-managed super fund—and many small to medium businesses do; they own their business premises in their self-managed super fund, they run their business out of it and they pay a lease payment to their self-managed super fund. Now this is what the government is proposing to do: if that building is valued at $100,000 at the start of the financial year and at the end of the financial year it's valued at $120,000, you will be taxed on that $20,000 as an unrealised capital gain. Well, I can tell you: there is nowhere else in the world that is proposing to have that sort of system and apply that sort of taxation arrangement. It is a complete and utter disgrace. It is a betrayal of the Australian people by this government, for the government to propose to do that with those changes. And these proposed changes to franking credits will achieve exactly the same thing.

As I said earlier, look at what this government does, not at what they say, because nine times out of 10 they are two very different things. The government, on the one hand, is wanting businesses to grow, develop and invest, and yet, on the other hand, is doing everything it can to make that increasingly difficult for Australian businesses to do. That is in addition to the IR changes last year and a range of other things that they are doing, including doubling taxes on superannuation.

They argue that that's going to affect 0.5 of a per cent. Well, I read today that actuaries have come out and said, 'What are you going to do with defined benefit funds?' Again, it's a thought bubble. They are raising a whole range of legal and other issues with regard to defined benefit funds. Again, it has not been thought through, as this has not been thought through. It's just a tax grab.

In the National Reconstruction Fund, we see the government wanting to have equity in your business. Rest assured that, when I was in business, I didn't want the government having any equity in it, and I'm sure my colleagues here don't want the government having equity in their businesses either. The government want to have equity in your home. They want to have equity in your super fund, because, as the member for Sturt said, the Assistant Treasurer just uses it as a honeypot to reallocate it to whatever their pet project is at the time.

What else do they want to have their hand in? Now we're seeing they want to get their hand into your super fund or your franking credits and your entitlement to a tax refund from the tax that the company you've invested in has already paid. It is a complete and utter disgrace and a betrayal of the Australian people.

I am quite proud to stand here, on this side of the House, along with my colleagues, and oppose this bill tooth and nail, because it will have a negative impact on the ability of companies to raise, manage and access capital, to do the very things the government says it wants them to do. This bill should die an honourable death. I oppose this bill, as do my colleagues.

5:54 pm

Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

I acknowledge the excellent contribution from the member for Forde, my electorate neighbour. I think some insights there are certainly things the government should be listening to, particularly given the member's extensive experience in the financial and banking sector. I think he is hitting the nail on the head on a number of fronts, and I'm going to cover off on many of the same themes in my remarks over the next little while.

This omnibus Treasury bill, the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, combines reasonable measures that the coalition supports with quite controversial measures which the coalition absolutely do not support. Unfortunately, the Labor government is sacrificing good policy in favour of ideological recklessness. We support schedules 1 through 3. They progress reasonable things and we cannot object to those, despite several flaws. It is important to note that the Australian accounting academics, the Australian Council of Superannuation Investors and the Institute of Public Accountants, took issue with a number of provisions within schedule 2. The coalition are willing to work with the government to advance useful policy in these areas, and to outline some of these areas of concern and to work through them.

But, unfortunately, the bill does not end there. It goes to include schedules 4 and 5, which we cannot support. These schedules attack franking credits—a policy that no stakeholder that I could find seems to support. It's a policy that was largely taken to the 2019 election by the now government, the then opposition, and was roundly rejected by the voters. Unfortunately, the government wasn't honest enough at the last election to say that they were going to be taking a similar approach when in government, and, unfortunately, we're now seeing this brought in quite stealthily through the first Treasury amendment bill of this year.

The Australian Shareholders Association asserts that the amendments will have a negative impact on retirees. I certainly agree with that assessment. The association also notes that the changes are retrospective in nature and likely to create uncertainty amongst investors. If there's one thing we don't need in this country at this point in time, it's uncertainty for investors. We saw the latest national accounts come out last week—

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

Order! Quorum is not present. The Federation Chamber stands suspended until quorum is returned.

Sitting suspended from 17:57 to 18:02

( Quorum formed)

Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

I was outlining the current economic conditions in Australia that make it particularly perilous for the government to be taking actions at the moment that will impact on investors. We've got much higher interest rates than when the government first came in; we have inflation continuing to go up and we have employment going down. These are the classic stagflation circumstances. Certainly, this is a point when we should be encouraging business to make big investments, to be moving the economy forward and creating jobs.

Unfortunately, as the Australian Shareholders' Association have asserted in their comments around this bill, this will certainly have a negative impact on retirees and increase the level of uncertainty for investors. The ASA takes issue with schedule 5, legislating the removal of franking credits, as a policy that's too restrictive, with a capacity to operate retrospectively, as far back as December 2016. It also notes that the test is too subjective in nature and would struggle in its application to companies that did not pay regular dividends. Finally, the ASA warned of unintended consequences, particularly concerning companies with large cash reserves that could become takeover targets. Moreover, the 2006 coalition-led Board of Taxation found off-market share buybacks should be retained as they: 'provide a mechanism for companies to generate positive returns through distributing excess cash where investment opportunities are declining'.

Unlike this government, the coalition respects stakeholder opinion; therefore, we cannot support these schedules within the bill. The coalition would support this bill if these offending schedules were discarded from the legislation. We will put forward amendments in relation to this. If the Albanese Labor government do withdraw them, I'm sure they'll find open support from the coalition for this bill.

These schedules are not just substantively objectionable but stand for something far worse: a government that doesn't care about keeping its word. It's not even a year into this term, and the broken promises are piling up. Before the election, the Prime Minister and the Treasurer made a whole series of promises. None of them, unfortunately, have been kept. How many times did the Prime Minister promise to cut electricity bills by $275 during the election?

Photo of Aaron VioliAaron Violi (Casey, Liberal Party) Share this | | Hansard source


Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

It was 97 times. The member for Casey is quite correct in that interjection. How many times has that promise been uttered by a Prime Minister since the election?

Photo of Aaron VioliAaron Violi (Casey, Liberal Party) Share this | | Hansard source


Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

That's right. It's a nice round number of zero, as the member for Casey points out—not once. Of course, he's had many opportunities, through the questioning of the opposition throughout all of the question times we've had over—what has it been now?—10 months of this term of government. Did the Prime Minister promise cheaper mortgages? Yes, of course he did. Did the Prime Minister deliver cheaper mortgages? No, he hasn't to date. Did the Prime Minister promise lower inflation? In fact he did. Has he delivered lower inflation? No, of course; inflation has only gone up. Did the Prime Minister promise to lower the cost of living? Yes, he did, and, unfortunately, the cost of living is going higher every day and is a major concern of my constituents when I go door-to-door in my electorate of Bowman.

The Prime Minister promised to increase real wages, but unfortunately the statistics show that real wages have been going down. And super? They promised they wouldn't touch it. The PM of course said that he wouldn't touch it, and here we are this week and last week with announcements being made about changing the super. This is where this bill comes in. Interestingly, the Prime Minister promised that he wouldn't be touching franking credits, but here we are with this bill, only a few short years since the then Labor opposition spectacularly lost an election over this and many other issues.

Keeping promises is not something that this Prime Minister cares much about. After all, the Labor Party believes that we're all worker bees in a hive and our money is just one big honey pot to be dipped into whenever they feel like it simply to further the ambitions and objectives of this Labor government. This is a government whose principal currency is false platitudes. We see it every day. For reasons of time, I won't even come close to naming all the instances where this government has failed to walk the walk despite how often they talk the talk. For a government elected on a mantra of improving the lives of everyday working Australians and on integrity, they are consistently failing to live up to their word.

It is worthwhile to go through the commitments the government made before the election regarding this bill. On 1 January 2021, the now Prime Minister stated, 'We will not be taking any changes to franking credits to the next election.' On 30 March 2021, the now Prime Minister stated, 'We won't have any changes to franking credits and negative gearing. We won't be taking those policies to the next election.' Well, they certainly didn't take it to the next election, but now they're elected it's suddenly right back on the agenda. On 4 March 2022, also on franking credits, the now Prime Minister stated, 'We're not touching them.' The Prime Minister was absolutely consistent before the election. It's only since the election and since he became Prime Minister that he has changed his tune. On 15 December 2021, the now Prime Minister stated, 'We've made it clear that, on areas like franking credits and negative gearing, we won't be taking these policies to the next election.'

If the Prime Minister wasn't clear enough, then what about the Treasurer? What did the Treasurer say before the election, before he was Treasurer? On 17 January 2022, as Shadow Treasurer, he stated, 'We won't be doing franking credits. I couldn't be clearer.' It seems that even this wasn't clear enough for the Treasurer, for the Prime Minister or for this Labor government because, less than 10 months on, this is precisely what this bill is aiming to do.

My question is: what else are they aiming to do? This is, of course, the thin edge of the wedge. I think we're going to see even lower thresholds for their extra taxes on superannuation. I think we're going to see CGT changes; of course, the Treasurer—

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

Yes, please. Bring it on!

Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

I note the member for Griffith's strong support for that, and I'm sure the Treasurer will listen to the member for Griffith's calls and to the public for that. I'm sure we will see CGT changes, and I'm certainly sure we're going to see negative gearing changes as well, something that they took to the 2019 election and were defeated on. Of course, my question is—and the member for Griffith will be happy about this—what is the future for stage 3 tax cuts?

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

Get rid of them.

Photo of Henry PikeHenry Pike (Bowman, Liberal National Party) Share this | | Hansard source

We're having a bit of fun this evening, but I certainly think that's going to be next on the chopping block as we approach the May budget. In a worsening cost-of-living crisis, all this Labor government seems to care about is making everything more expensive and then coming after your money. We know older Australians, not-for-profits and the Australian super funds will be hit hardest by these changes. The Treasurer and the Treasury have both said this. But don't misunderstand this bill. The removal of franking credits is a tax. Labor's budget is clear on this. This is only one in a long line of policies that will increase taxes on Australians and make this cost-of-living crisis even more painful and more of a crisis than it would otherwise have been.

Despite promising no changes to superannuation before the election, this Prime Minister is now proposing doubling super taxes on 10 per cent of Australians by the time they retire. Despite promising no changes to franking credits before the election, this Prime Minister is now proposing to prevent companies from offering franking credits to investors, super funds and charities. Despite promising no changes to capital gains tax before the election, this Prime Minister is now promising taxing unrealised capital gains on super, meaning Australian retirees will pay tax on money that they haven't yet realised. That was an important point made by the member for Forde just before I spoke here tonight, and it was also a point that the Assistant Treasurer unsuccessfully attempted to tackle today in question time.

Beyond being blind to their own promises, as if it wasn't bad enough, this Labor government is also blind to cold hard facts and the opinion of experts. Despite Labor's claim that fewer than 80,000 Australians would be affected by their super tax, independent research now reveals that by retirement age more than half a million Australians will be hit—not that this government cares too much, because, for some perverse reason, this government argues that a broken promise doesn't count if it only affects rich people. That's not too different from the view that theft isn't really theft if you only steal from rich people—because, after all, they have plenty.

This perfectly sums up the twisted logic of this Labor government, which is deeply rooted in the false narrative and flawed economics of class warfare. The broader flow-on economic impacts of taxes like this are never considered by the Labor Party, because, when it comes to issues like superannuation, as far as Labor's concerned, it's not Australians' money; it's theirs.

The Prime Minister says it will impact one in 200 people. Then the finance minister says it's one in 10. That is not a small discrepancy. How can the Australian people trust a Labor government that doesn't know the details of its own policy? I think the Assistant Treasurer made a very good point of underscoring that in question time this afternoon.

Even ignoring slip-ups on the specifics, this government makes errors. In fact, they sometimes forget their policies exist at all. During Senate estimates on 8 November 2022, the finance minister denied 10 times that this franking credit policy was even in the budget that she helped create. How does a minister, particularly a minister in a closely linked portfolio, fail to remember her own policies? This is symbolic of a failing Labor government that's incapable of controlling its own caucus. As Margaret Thatcher famously quipped, 'The problem with socialism is that you eventually run out of other people's money.' This observation is more or less true of every Labor government, and this bill is clear evidence that it is certainly true of this government.

The coalition is opposed to the schedules in this bill related to franking credits. We think the government is taking yet another step away from the promises it made ahead of the election, and I think the Australian people are awake to the fact now that this is a government that says one thing before the election and a very different thing after the election.

6:13 pm

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

The Greens will support the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 in the House, and, contrary to the member for Bowman, we would certainly welcome phasing out the stage 3 tax cuts and capital gains tax concessions, which, it's worth noting on International Women's Day, overwhelmingly go to wealthy men. However, we reserve, on this bill, the right to seek to take a different position in the other place, pending a Senate inquiry into this bill. In particular, we are keen to understand how schedule 5 would work. Unlike schedule 4, schedule 5 wasn't included in the government's October budget. In fact, schedule 5 picks up a proposal first made by the former prime minister when he was Treasurer. The proposal to curb the distribution of franking credits funded by particular capital-raising activities was included in the 2016-17 MYEFO but obviously not proceeded with by the previous government. We want to understand whether businesses with a greater capacity to take on more debt—that is, big established businesses—might be able to circumvent the intent of schedule 5 and gain a competitive advantage as a result. We also want to understand whether the ATO can actually make a reasonable conclusion that a company's capital raising is linked to a company's distribution. We look forward to raising these issues and seeing them get an airing in the Senate inquiry.

6:14 pm

Photo of Aaron VioliAaron Violi (Casey, Liberal Party) Share this | | Hansard source

I rise to discuss the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. While this bill sounds quite innocent and mundane, the reality is that it is not. True to form with this government, this bill contains yet another broken promise. Before the election, the Prime Minister and the Treasurer made many promises. We remember the promise to cut electricity bills by $275—broken. We remember the promise of cheaper mortgages—broken. How about the promise to lower inflation? Also broken. And there was the promise of no changes to super—broken. This bill contains yet another broken promise, this time on franking credits.

Let's be clear. The bill introduces two changes to the franking credits regime, through schedule 4 and 5, that the government estimate will raise more than half a billion dollars. It's a change to franking credits. But what did the Prime Minister and the Treasurer say about franking credits during the campaign? Before the election, Anthony Albanese and Jim Chalmers said that Labor wouldn't touch franking credits. On 30 March 2021 the then opposition leader, now Prime Minister, said on ABC radio, 'We won't have any changes to the franking credits regime which is there.' On 17 January 2022, the then shadow Treasurer, now Treasurer, said, 'We won't be doing franking credits,' and also, 'I couldn't be clearer than that'—once again, further proof that this Prime Minister and Treasurer will say one thing to get elected and do another thing when in government. That's the reality. The Australian people cannot trust this government to honour its word.

It leads to the question of what will be next. The Treasurer has spoken often about the challenges the budget faces. We know the budget faces structural deficits of around $50 billion a year. This is before we include the $45 billion in off-budget spending that this government has already committed to. So, when this Treasurer talks about improving the budget bottom line, Australians know what that means: higher taxes. This is not the end but the very start of the Treasurer's tax grab.

Now, I'm not a big believer in coincidences, particularly in politics. In the same week that we have had the Treasurer and the Prime Minister breaking their promise on superannuation and franking credits, the Treasurer has also released the Tax expenditures and insights statement, a fascinating document. The statement showed modelling on revenue forgone from tax deductions. Let's have a quick look at some of the top items on that list: capital gains tax on your main residence, $48 billion; capital gains tax for individuals and trusts, $24.4 billion; and super concessions, the honeypot, $44 billion. That's $116.4 billion in tax deductions and concessions. This is the question for the Australian people. Given the Prime Minister and the Treasurer are willing to break their promise to the Australian people for a $2 billion increase in revenue on super and to make this move on franking credits for $500 million, be in no doubt: more changes are coming, and they are going to cost all Australians.

We are seeing this play out already. This is the standard playbook. The Treasurer refused to rule out changing concessions on capital gains tax for the family home when he was asked a simple yes-or-no question on national television. We saw him dance around it three or four times and refuse to answer it. Hours later, the Prime Minister had to come and rule it out, and the Treasurer was then wheeled out a few hours later to change his tune, but we know that this is the start of another broken promise by the Treasurer and the Prime Minister. As I said, given they were willing to break their promise for $500 million to increase franking credit taxes, we know they won't hesitate when they're looking at the $48 billion in revenue forgone on capital gains tax on the family home.

So what are Labor doing to franking credits? Currently, companies that undertake off-market share buybacks and capital raisings can offer franking credits to investors. Under Labor's law, they won't be able to. Labor's budget is clear that this is a tax that will raise half a billion dollars. We know from Treasury's tax expenditure and income statement that this disproportionally hits Australians over 75, not-for-profits and Australian super funds, who will no longer be able to access these credits. King & Wood Mallesons, in describing these measures, said:

The Federal Government is seeking to prevent entities from providing franking credits to shareholders in what it considers are inappropriate circumstances.

As I already outlined through quotes, before the election, both the Prime Minister and the Treasurer ruled out changes to franking credits. It's clearly and unequivocally another broken promise by this government, and, nine months in, the broken promises are piling up. It makes me more concerned about Labor's broken promise on superannuation taxes. It means that, with soaring cost-of-living pressures, Australians will be even worse off—because this is not just a broken promise; it undermines confidence in our superannuation system. Superannuation is Australians' money, not the government's. It is Australians' money to deliver quality of life in retirement—not a honey pot for governments to tax and spend.

Australians need confidence in the system, because we have a social contract in which we agree to lock away our own money for 40-plus years. In question time this week, we saw that this government just doesn't get that. When it was mentioned that some of these changes wouldn't impact people for 30 years, the Treasurer laughed and said, 'It's 30 years away.' They don't understand that that's the point. Superannuation isn't about today; it's about the 20-year-olds, the 30-year-olds and the 40-year-olds who, during a cost-of-living crisis, are locking away their money for their future retirement, not as a honey pot for the government to spend as they will.

Despite promising no changes to superannuation before the election, Anthony Albanese and this government are now proposing to double super taxes on one in 10 Australians by the time they retire, and they're stopping companies from offering franking credits to Australian investors, super funds and charities. They're taxing unrealised capital gains in super, meaning that Australian retirees will pay tax on money they haven't even earned yet.

We've seen both the Deputy Prime Minister and, just today, the Assistant Treasurer unable to explain on TV and in question time how this is fair or even workable. Labor has been dishonest about changing super and dishonest about how many Australians will be affected. Despite claiming that fewer than 80,000 Australians will be affected, independent research has shown that, by retirement age, more than 500,000 Australians will be hit by this tax, and it's potentially more, depending on inflation and where that goes into the future. The government can't explain how these changes will work. They can't explain how many people will be affected. The Prime Minister says that it will impact one in 200 people. The finance minister says it will impact one in 10 people. If the government can't explain it, how can Australians understand it?

Now, it's really important for the Australian people to understand this: you've always got to listen to what the Assistant Treasurer says. He's not quite as disciplined as the Treasurer. I'll give the Treasurer that; he's very disciplined. The PM? He can go off on a frolic. The Assistant Treasurer? He generally has—well, what we'd consider an in-your-head voice. Last month, the Assistant Treasurer compared superannuation to honey, saying it should be managed 'in the best interests of the hive'. Then he went on to say, 'In the self-managed sector, there are over 600,000 funds holding around $870 billion in retirement savings—that's a lot of honey.' There we go, people! 'That's a lot of honey' for the 'hive', which, as we know, is government spending. It is clear the government is coming for Australians' super.

Already, in my electorate of Casey, I have constituents contacting me to discuss their fears and outrage about these changes to franking credits and to super. They are not just afraid but angry. They feel betrayed.

Treasury has warned that there were significant concerns raised by the public. Over 2,000 submissions were received during consultation. Treasury says: 'Concerns were raised over retrospectivity, policy objective and potential for the legislation as drafted to capture legitimate commercial practices.' Even the October budget acknowledged that a substantial portion of the revenue from this measure will fall on Australians' superannuation. This franking credits measure reduces the ability for companies to offer franking credits on new capital raising activities. There is genuine concern that the measure will have unforeseen impacts and wider application than Treasury claims.

Before the election, this Prime Minister and the Treasurer made many promises. They broke their promise to cut electricity bills by $275. They broke their promise of cheaper mortgages. They broke their promise of lower inflation. They broke their promise of 'no changes to super'. They broke their promise, with this bill, of not touching franking credits. The Australian people know that this is not the end of this government's new taxes and broken promises. It's just the beginning. When Labor runs out of money, they come after yours.

6:27 pm

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

It is quite extraordinary that the coalition has decided that they are going to go to the wall for the 0.5 per cent of Australian superannuants who have more than $3 million in their accounts. We know that the measure that was announced last week was a carefully calibrated one which ensures that those who have more than $3 million in their superannuation accounts still get to enjoy a concessional rate of tax, but just not as concessional a rate as they would have enjoyed previously. Indeed, the shadow Treasurer has previously said that he believes that it's appropriate to consider the tax arrangements for those with multimillion-dollar superannuation accounts. Yet we have a situation in which we have 17 Australians with more than $100 million in their superannuation accounts. These are the 'forgotten people' that the Liberal Party of Australia has decided to go into bat for.

In the context of the current measure, it is more extraordinary still to discover the coalition now arguing against a measure that was originally announced by then treasurer Scott Morrison in the 2016-17 MYEFO but never legislated by the coalition. That measure will prevent companies from making franked dividends funded by capital raising for no commercial purpose at a cost to the budget. It will help improve the integrity of the tax system, and it will save around $10 million per year. The activity covered by the proposal largely stopped when the previous government announced it, and so legislating it now would have a minimal impact on the market.

We have also announced, as part of this bill, the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, a measure which aligns the tax treatment of off-market share buybacks with the tax treatment for on-market share buybacks for listed public companies. It makes tax sense that we should align those two arrangements, that off-market and on-market share buybacks should receive the same tax treatment. But, currently, listed public companies offering an off-market share buyback can use tax rules to buy back their shares at below market prices by attaching franking credits to those trades. That is impossible with regular on-market trades. The benefits go predominantly to large businesses, who can use them and save money on their share buybacks. This will not affect the overwhelming majority of shareholders, who will continue to receive franked dividends. Off-market share buybacks represent less than two per cent of total franked distributions. The measure will save some $550 million.

Let's look at some of the firms that have undertaken notable off-market share buybacks. Westpac last year did an off-market share buyback of $3.5 billion, garnering $1.6 billion in franking credits. JB Hi-Fi did a $250 million off-market share buyback, garnering $94 million of franking credits. Commonwealth Bank in 2021 did a $6 billion off-market share buyback, garnering nearly $2 billion of franking credits. So, again, the coalition are choosing to go to the wall for the few, not for the many, choosing to fight for the rights of some of Australia's largest firms to continue to conduct off-market share buybacks and receive concessional tax treatment that would not be available if they were to do an on-market share buyback.

We on this side of the House are concerned with ensuring that Australia has a more dynamic economy. We are committed to action on climate change, as embodied in schedule 2 to the bill, which enacts sustainability standards, implementing the Australian government's election commitment to ensure a standardised, internationally aligned reporting of climate related plans, risks and opportunities by large businesses.

We're committed to ensuring that Australia has a more dynamic economy. Over recent decades, we've seen an increase in market concentration and an increase in mark-ups, the gap between costs and prices. We've seen a fall in the startup rate and a decline in the share of Australians starting a new job. It's very clear that the Australian economy is becoming less dynamic. After the lousiest decade of productivity growth in Australia's postwar history, it is vital that we look at the benefits that could be garnered from competition reform. In the 1990s Australia saw a productivity surge, and a good part of that had to do with the reforms to competition initiated by Fred Hilmer and Paul Keating at the beginning of that decade. Those Hilmer-Keating competition reforms garnered some $5,000 a year in benefits for the typical Australian household.

We need to consider today whether competition reform can help deliver a more dynamic economy. Since coming to government, the Albanese government has increased the penalties for anticompetitive conduct. We have banned unfair contract terms. We've received an important report from the Australian Competition and Consumer Commission into digital platform services. And we are currently consulting on platform-specific regulation and a ban on unfair trading practices. Around the world, we can see the thinking on competition shifting. The Biden White House has quite a different approach to competition issues than the Obama White House did. There is a greater awareness that big is not necessarily beautiful and that large firms can affect the entire ecosystem. The impact of monopsony power, the way in which large firms can squeeze their suppliers, is coming into sharp focus. Take Apple, for example. Apple is able to occupy a dominant position in the smartphone market, charging more to consumers than it would be able to do if it had a smaller market share.

But Apple can also squeeze its suppliers. There's only one way of getting an app onto the Apple app store, and that is by going through Apple. That's why the typical cost of an in-app purchase is 30 per cent. So monopsony power can hurt suppliers, just as monopoly power hurts consumers.

One of the groups that potentially stand to lose from monopsony power is workers. If workers have fewer choices as to where to work then their wages will tend to be lower than the productivity gains they're delivering for the firm. You can see this most starkly in the examples of company towns where there's just a single employer and workers are unable to bargain effectively.

In Australia, work by Jonathan Hambur has shown that monopsony power is growing in the Australian labour market, at the very time when union membership is shrinking—it's now at 12 per cent, at the lowest level it has been since 1901. We used to talk about workers united will never be defeated, but increasingly now it's employer power that is growing and worker power that's shrinking. This may be a key factor in explaining why wage growth has been so lousy in recent decades.

We on this side of the House believe in the benefits of competition and are concerned at the way in which large platforms are occupying increasingly powerful roles in the economy. Cory Doctorow and Rebecca Giblin's book Chokepoint Capitalism highlights some of the ways this can operate in the digital space. It has examples from Spotify to Amazon to Live Nation and looks at large entities that occupy chokepoints and potentially use technology not to drive down prices and to democratise capitalism but to concentrate power in too few hands.

We on this side of the House are watching closely developments in the United States and moves by Lina Khan, who heads up the Federal Trade Commission, to ban non-compete clauses across the US economy. Non-compete clauses now exist in one-fifth of American employment agreements. That proposed ban would have significant impacts on the ability of American workers to shift firms and—I should say on International Women's Day—on reducing the gender pay gap. The FTC's estimate is that banning non-compete clauses could narrow the gender pay gap by up to nine per cent and deliver some US$300 billion into the pockets of American workers.

We're alive in Australia to the dangers that can arise in having too few startups in the economy. That's why we're moving towards encouraging a startup culture across Australian universities. Our move towards a startup year—and here I acknowledge the work of the Minister for Industry and Science and the Minister for Education—will create more opportunities for young Australians to be part of a startup and, hopefully, will turn around the drop in the startup rate that we've seen over recent years. But that only works if those businesses are being started in an environment in which new firms have ready access to capital and young entrepreneurs have access to mentors.

I've been too concerned in recent years about trends that have seen young firms starved of the capital they need to grow. The collapse of a number of neobanks is potentially a move that could ripple across other sectors of the economy. We need to ensure that, if you want to start a business that takes on an established firm, you have the competitive ecosystem that you need to survive and thrive. We want the ambition of young entrepreneurs not to be to make a firm that's big enough to be bought up by a behemoth but to actually challenge the establishment insiders themselves.

If you look at the top five firms in the Australian share market now, four of those five were in the top five in the mid-1980s. If you look at the top 10 firms in the Australian stock market in 1917, five of those firms are still in the top 10 today. That's not true in the United States, which has turned over its largest firms to a much greater degree and which on some dimensions enjoys a healthier competitive ecosystem than does Australia.

Competition reform is fundamental to engendering the productivity surge which will ultimately drive living standards. In the long run, productivity is the key to ensuring that Australians enjoy better living standards at home and are able to be more generous to the vulnerable here and overseas. Productivity growth ensures that we can build the physical infrastructure and invest in the human capital we need, and the drop in productivity which occurred under the former coalition government may be tightly related to the drop in competitive dynamics that we saw in the Australian economy during the period of the former coalition government.

I want to acknowledge the important work that's being done in Treasury and the Reserve Bank on these issues. This is an issue which needs to be heavily scrutinised. At a time when economists overseas are taking a fresh look at the so-called Chicago school approach to competition and acknowledging that greater competitive dynamics may be an important part of building growth in the future, Australia needs more research and more policy heft focused on that area of competition.

We want to build a more dynamic economy. We want an economy that allows businesses to survive and thrive. We recognise that that productivity growth will drive the profits that will ultimately allow long-term wage growth in Australia. That's the vision of this government and that's the vision that is very much embodied by the bill, which I commend to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.