Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023 will assist in refining and improving our tax system going forward. There are five schedules in this bill, and I will go through them.

Schedule 1 amends the International Tax Agreements Act 1953 to give the force of law to the tax treaty between Australia and Iceland, signed in October last year. The Icelandic people are not the most vocal group in my electorate, but good policy comes around to all eventually, and obviously double taxation never makes sense. The Albanese government plans to expand Australia's tax treaty network by negotiating 12 new tax treaties. This Icelandic tax treaty is the first in that line. It further strengthens the relationship between Australia and Iceland at people-to-people level and, obviously, at the level of sovereign state to sovereign state. Iceland, incidentally, is one of the world's richest countries on a per capita GDP basis.

We want to reduce the taxation barriers to trade and investment between Australia and Iceland by lowering withholding tax rates on dividend, interest and royalty payments. This will make it cheaper for Australians to access capital and technology from Iceland and makes Australia a more attractive investment destination for Icelandic people. Iceland has many shared values with Australia, and this tax treaty provides more certainty and reduces compliance costs for individuals with cross-border dealings to facilitate labour mobility and strengthen our cultural ties.

Lastly, this treaty will also support the government's plan to make multinationals pay their fair share of tax. We will do this through added integrity measures and mechanisms to facilitate greater cooperation and information sharing between tax authorities to detect and combat tax evasion.

Schedule 2 also deals with income tax exemption and franking credit refunds for certain subsidiaries of the Future Fund board. This schedule amends the law to exempt wholly-owned Australian-incorporated subsidiaries of the Future Fund Board of Guardians from corporate income tax. Extending this exemption will remove unnecessary administrative and compliance burdens associated with the payment of tax by the subsidiaries and subsequent claiming of refunds. To make it clear, this legislation does not change the net position for either the Commonwealth and the Future Fund—that is that no income tax is collected by the Commonwealth from the Future Fund board.

Schedule 3 changes the status of some deductible gift recipients. There are currently 52 general categories in which an organisation may be eligible for endorsement as a DGR. Currently, four of those DGR categories—environmental organisations, harm prevention charities, cultural organisations and overseas aid organisations—are administered by government departments other than the ATO. The respective government departments are responsible for assessing and advising their ministers on the eligibility of such organisations. That minister and the relevant Treasury minister may then direct the departmental secretary to add the eligible organisation to the register. This proposed change transfers practical responsibility for assessing DGRs from ministers to the Commissioner of Taxation. This will deliver a more consistent national approach, reflective of the other DGR categories.

The amendments generally preserve the existing eligibility criteria and rules for entities seeking endorsement as a DGR. Obviously, current DGRs will continue to be endorsed as long as they meet the existing eligibility criteria. There are some transitional provisions to ensure that the Australian Taxation Office can assess applications currently on hand—good news for entities who are seeking a DGR for these four categories. It will deliver a more streamlined application process that is expected to reduce the time frame for DGR approvals from up to two years to, hopefully, around one month—quite ambitious. In anyone's language, that's a huge improvement and will mean so much to organisations that do that public benefit.

The reform will also repeal provisions relating to maintenance of departmental registers and streamline reporting requirements for organisations with existing DGR endorsement, reducing red tape. Once upon a time, that would have been worthy of notice in a former parliament on red tape day. They were the good old days, when we had red tape day, weren't they?

Schedule 4 deals with the alignment of excise reporting concerning indirect tax. This bill provides deregulatory benefits to small and medium businesses that engage with the fuel or alcohol excise system or import excise equivalent goods. Eligibility will be for those who pay fuel and alcohol excise or excise equivalent customs duty that have less than $50 million annual aggregated turnover in an income year. If the legislation is passed, from 1 July this year these businesses will have the opportunity to apply for permission to lodge and pay their duty quarterly, a benefit for most businesses. They can do this by applying to the Commissioner of Taxation or Comptroller-General of Customs to move to the new reporting schedule. Where additional ad valorem customs duties are payable on imported spirits—normally five per cent of customs value—this will also be moved onto the new reporting schedule. This new quarterly schedule will better align fuel and alcohol excise and customs duty with other indirect taxes, like the GST, on business activity statements. This will reduce admin burdens and help small and medium businesses with their cash flow.

The last schedule deals with small-scale repackaging of beer into small containers—something that I've done much research on in my local electorate. This change will provide deregulatory benefits to retail and hospitality venues who repackage beer from bulk quantities into small containers for immediate retail sale—for those people who have Growlers and other containers on their property. From 1 July, this measure introduces a targeted exemption from alcohol excise licensing requirements. It will apply to the repackaging of the first 10,000 litres of beer from kegs into non-pressurised containers of no more than two litres capacity.

This amendment will remove the disproportionate regulatory requirements on this practice created by the alcohol excise system. Currently businesses, such as breweries in my electorate—Slipstream and the like—who package duty-paid beer into these containers are required to hold a manufacturing licence for excise purposes and pay duty again—in effect, paying double duty. These licences carry significant obligations that are more appropriate to entities that are fermenting, brewing and repackaging beer on a commercial basis in order to protect the lower alcohol excise rate of keg beer. However, filling specified containers in retail settings does not pose an integrity risk. This will ensure larger businesses engaged in this practice in more significant commercial quantities remain appropriately regulated. The sale of takeaway alcohol in retail settings will remain the regulatory responsibility of the states and territories in terms of hours, checking ID and the like.

These five changes include building a better and stronger relationship with Iceland, further reducing red tape for small businesses, streamlining processes for entities doing work in our communities and internationally, and helping the Australian economy. I recommend the bill to the House.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

The member for Moreton was right when he said that the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023 would have been part of a red tape day in a previous iteration of this place. Indeed, red tape day did get through a lot of good things. I appreciate that at the time there might have been some things that seemed a little strange to those opposite, but indeed we all want to reduce red tape and we all want to make sure that businesses can flow and function as smoothly as possible.

Having run a small business from the start for a number of years prior to entering parliament, I know that for small business owners it's so confronting, confusing and annoying when they are faced with so much red tape and bureaucracy. They just want to get on and produce things—goods and services. To be overburdened with red tape is something that they don't need. To have that pressure lifted from their shoulders is most desirable.

Whilst the bill has measures the coalition can support, it does not make up for Labor's failure in other areas which are aligned with this portfolio area. Labor stands condemned for its broken promises on franking credits, on superannuation taxes and on taxing unrealised capital gains. I'll speak about more of that in a short while. This bill reintroduces measures progressed by the coalition. Quite frankly, these should have been introduced earlier. I appreciate that Labor has been in government for 10 months, but these things should have been implemented sooner by this government.

The bill contains changes across five schedules. I'll just go through them. Schedule 1 amends the International Tax Agreements Act 1953 to give force of law to the tax treaty signed by Australia and Iceland on 12 October last year. This is important. Schedule 1 of the bill amends the agreements act to give force of law to the convention that we signed with Iceland. It's part of Australia's domestic procedures for implementing its tax treaties.

Schedule 2 makes amendments to exempt wholly owned Australian incorporated subsidiaries of the Future Fund Board of Guardians from corporate income taxation. This fully implements the 'Future Fund—extending the income tax exemption to wholly owned Australian incorporated subsidiaries' measure announced in the 2022-23 March budget. On 14 December last year it was announced that the government would proceed with the measure. It amends the ITAA 1997 to extend the income tax treatment applying to the Future Fund Board to its 100 per cent subsidiaries incorporated in Australia. That means that the amendments exempt these subsidiaries from income tax and include them as entities eligible for the refund of a tax offset relating to a franked distribution.

Schedule 3 partially implements the deductible gift recipient reform, and of course we all know how important DGR status is right across the board in the economy. It strengthens governance and integrity. It's a complexity-reducing measure from the 2017-18 MYEFO. This is vital—and schedule 3 mentions overseas aid DGRs—because I know the important part that overseas agencies play in getting humanitarian aid where it is most needed. If I could just single out the Save the Children fund, what an organisation that is. I travelled with Sarah Carter and Mat Tinkler to Kenya. I know the important work that they do that sometimes government agencies cannot do, and the places that they can go, the doors that they can open, and if we can in any way, shape or form assist them further—because they get to the nub of the problem; they get to the coalface, if you will, of the issue; and they are able to provide aid through ways and means and in forms that governments sometimes cannot.

Schedule 4 allows small and medium businesses that engage in the fuel or alcohol excise system or that import excise-equivalent goods to apply for permission to lodge and pay their duty quarterly, boosting cash flow and reducing red tape. Again, if we can make it easier and more efficient for businesses and for industry by reducing red tape, then that has to be seen as a good thing. Schedule 4 to the bill, in part, puts across the Commonwealth's deregulation measure in the 2022-23 budget of the former government—and a good government we were. We worked hard for nine years to reduce red tape, because, if ever there were parties for small business in this place, it is the Liberal and National parties. They are the parties of business, and we understand—

I hear the member for Flynn say 'correct'. He knows what it's like to run a small business. He knows what it's like to take that risk to employ people, to open a business and to not know where the next contract is coming from, where the next amount of money is going to come from, to keep that small business running. But he knows, like I know, that you pay your workers first. You put your workers ahead of yourself. So many businesspeople throughout Australia pay their workers, put themselves out and actually take home less money when times get tough than do the workers. But they keep the doors open for business. I give a shout-out to all of those small businesses across Australia for keeping the doors open for business. Yes, they were helped through JobKeeper and other measures, but they did a power of good, a power of work, during COVID-19, the global pandemic, and they helped us in part to be ranked No. 2 on the John Hopkins research institute index for the way we handled and dealt with the global pandemic.

Schedule 5 introduces a target exemption to alcohol excise for retail and hospitality venues which repackage beer from bulk quantities into smaller containers for immediate retail sale. I know this is going to be important to Stephen Ferguson and other industry advocates. I know that making sure that we get these sorts of measures through is important for that vital sector of the economy.

On the one hand, the coalition supports this bill, which implements a number of measures of the former coalition government to streamline our tax system, reduces tax—and we're all for that—and decreases red tape on small businesses and charities, which we're also very much in favour of. However, whilst they are worthy initiatives, we do not see enough from this government on reducing tax and easing the burden on small business. Sadly, this bill is just another stark reminder that, whether it is working with franking credits or superannuation, you cannot trust Labor when it comes to tax. Labor has never seen a tax it wouldn't want to impose or increase, and the public is aware of that.

Before the election, the Prime Minister and the Treasurer both ruled out changes to franking credits. That's what they said then, and unfortunately, what they do now is the complete opposite. They have been in government less than a year in government, and there are more broken promises. Don't believe what Labor says it's going to do; just observe and watch what Labor does. All of the big fixes that Labor talked about and all of the measures that Labor said that were going to implement to improve Australia are now on their head. Shore to shore on mainland Australia, it is red. It is Labor, so it is Labor who are required to fix all of the problems and issues that they say are wrong with the country. Fixing things doesn't mean saying, 'Oh, yes, but we inherited this problem or that problem.' Labor inherited a very good national economy. The books that Labor inherited for economic growth, development and a low unemployment rate were very, very strong and very, very solid. Don't shake your head, member for Hawke. It is true. Our economy, despite the global pandemic, was going very nicely and very strongly under the coalition government. It's always hard to win a fourth term. We found that out. New South Wales found that out on Saturday, and congratulations and good luck to Labor, because they now have the great privilege and honour of leading this nation at state and territory level right across mainland Australia and, indeed, here in Canberra.

Labor haven't done themselves great favour or credit with Australian people with the changes that they've already flagged on franking credits. I can well remember the 2019 election campaign. I was in the Northern Rivers area, and I had pensioners walking across the road to talk to me. I was campaigning at the time in the Tweed and the Northern Rivers with some very good coalition and Nationals candidates, and people were coming across the road to talk to me about their concerns about the franking credits. That was one of the decisive factors in that particular election because pensioners were worried about what Labor was going to do. I know that the member for Maribyrnong went to the election with a very large agenda, and at least he was upfront and honest enough to put that agenda out there. The Australian public didn't accept it. This time, Labor went to the election and said that they weren't going to change franking credits and, in fact, they have. So I give the member for Maribyrnong some credit in that regard.

Many small businesses will be captured by Labor's super changes and unrealised capital gains taxes. When I say 'small businesses' here, I'm particularly referring to farmers. How can Labor and the member for Whitlam, who is the Assistant Treasurer, possibly think that a farmer should receive a bill because his or her property has increased in price due to economic fluctuations? If it increases in price, they're going to get a bill. It is, quite frankly, beyond me. I have two brothers-in-law who are on farms. My father owned a farm. The price of land goes up and down according to seasons. It goes up and down according to the economic fluctuations of the time. At the moment, the price of land is very high. It's almost unrealistically high. Why should a farmer go to his or her mailbox, open it up and then get a surprising adjustment of their capital gains, their superannuation, their landholdings, that they're now going to have to pay somehow?

Whilst they sit on a huge asset, the price of that asset can go up or down depending on the seasons. If the price of land is high and they're copping a bill, yet the rain isn't falling out of the sky, it makes it so difficult for farmers. Already they can't produce the food and fibre they otherwise would, and yet here, through yet another Labor broken promise, they're going to cop it in the neck for something that they can't control or determine. All they're doing is trying their best, for and on behalf of Australians, for and on behalf of our exports, and they're copping a whack from Labor because Labor's keen on taxing unrealised capital gains. It just doesn't make sense.

But don't just take my word for it, and don't just take the farmers' word for it; ask any accountant. They are scratching their heads and wondering, too, how this is going to work. The member for Whitlam couldn't explain it in question time, day after day—nor would he be able to; nor should he be able to. The member for Rankin, the Treasurer, should explain why this change has to take place and explain why this broken promise has occurred.

Of course, many charities will lose out through Labor's broken promise on franking credits. I mentioned them before. Charities do wonderful things for our people, and not only our people here in Australia but people in so many countries overseas who are doing it tough at the moment. The war in Ukraine is not helping. We support this bill. We just don't support Labor's broken promises.

James Stevens (Sturt, Liberal Party) Share this | Link to this | Hansard source

As the previous speaker indicated, we in the coalition support the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023, with its five measures within the standard, regular TLAB process that we go through in this chamber to continually update a variety of legislative measures, as is necessary.

I would like to focus my comments on the element of this which relates to alcohol excise. It is an opportunity to highlight a broad issue that I have with the alcohol tax regime we have in this country. The history is important and interesting. We tax alcohol in different ways, depending on what type it is and what its attributes are. That really goes back to the protectionist days of having higher taxes on the types of alcohol that were more likely to be imported into the country, rather than produced here. Whilst I'm a very passionate free trade supporter, I understand why, in a different era, that was government policy. Frankly, it was the reality of global markets. Before the World Trade Organization frameworks provided pathways to lowering tariffs and non-tariff barriers to trade, all nations engaged in that sort of protectionism. We have an alcohol excise tax regime in this country that was very much designed in a different era, for fundamentally different purposes to today.

The reason I'm very engaged and passionate about this is that I represent an electorate that is very proudly engaged in the production and manufacture of all the various significant categories of alcohol. I've got the Penfolds Magill Estate winery, the most famous winery in Australia, at least, which very regularly wins significant international competitions. Of course, it is the home of Grange Cottage, where the most famous Australian wine—now Grange Shiraz but formerly known as Grange Hermitage—is produced, originally by the great Max Schubert.

My electorate is also home to Coopers Brewery. Coopers now manufacture just outside of my electorate, but the Coopers Brewery was very much an institution of the eastern suburbs of Adelaide, located in Leabrook, until about 20 years ago. They have relocated to Regency Park, but Coopers as a business and the Cooper family are very much ingrained, still, in my electorate of Sturt.

I now also have a very exciting and growing distillery community. A number of producers are engaged in the distillation of gins and vodkas and even whiskies.

So it is a different era now in the Australian alcohol industry. My electorate has been engaged in all of them and many other members will have at least one producer but probably multiple producers of alcohol in their electorates.

I'll use this opportunity, in talking on this bill, the Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023, which does have a measure related to alcohol excise, to call for a complete re-engineering of the way in which we undertake the taxation of alcohol. As I say, as to the way certain types of alcohol—particularly spirits that weren't produced in large proportions in this nation—were taxed, and are still taxed effectively that same way, they pay a much higher amount of alcohol excise than other types of alcohol.

Now, as a free market capitalist, I very much believe in fairness in our tax system. Let tax be as broad as possible and as low as possible.

Of course we want to live in a society where alcohol consumption is responsible. I'm not advocating that we encourage excessive consumption of alcohol. But consumption of alcohol, in a responsible way, is very much part of our society. It's also an enormous economic contributor to this nation. So, in the days of alcohol taxation favouring beer and wine and brandy in particular, I don't want to see those rates go up at all; I'd like to see those rates come down. But I would also very much like to see us recognise that the taxation of spirits is disproportionate and not fair. In this bill, we have a particular reduction in the excise levied on a type of sale of beer. We welcome that. We're supporting the bill, including that reduction.

But I think this is an opportunity to reinforce to the government that we need a broader review looking at the way in which we are taxing this industry and asking: Is it equitable? Is it fair? And do we want to look at it in a holistic way?

I was very pleased that, in the last term, we looked at this and undertook a reduction in excise for small breweries, those in small production, by introducing something that had some elements of the wine equalisation tax principle to it, which is that the first portion of your production is taxed at a lower rate. I really like the fact that we give, for the initial quantity of certain alcohol manufacture, a lower rate than we give at higher quantities, which allows small producers to have that little bit of an extra opportunity in the market.

There's been an explosion of small producers and small breweries. I've got Little Bang Brewing in my electorate, which I'm really proud of. I've had Little Juniper Distilling, who are producing fantastic gins; I visited them a few months ago. Regrettably, they are moving out of my electorate into the member for Mayo's electorate. She has a blossoming array of spirits distillation businesses and also smaller wine producers. Being a South Australian, I'm very passionate about those small producers.

There's the wine equalisation tax framework. We have those measures in place. But I really want to see all elements of the alcohol industry have the same opportunity to continue to grow and thrive.

What we're seeing in my home state of South Australia right now is also that, in this sector, it's not just about production and sale. It's also about destination, and we've had that for a very long time in the great wine regions of South Australia. My electorate goes into the foothills of the Adelaide Hills region. Of course, the most famous winery, Penfolds, is in my electorate. Most of their activity, I concede, is in the other wineries that they operate—particularly in the Barossa and, frankly, all across South Australia—but their home is in my electorate. There's the broader Adelaide Hills region, which is in the member for Mayo's electorate. There's the Barossa and McLaren Vale and the Clare Valley. There's the Coonawarra region and the Limestone Coast. And we've got newer regions that are coming online on a regular basis. There's wine now being produced over in Port Lincoln on the Eyre Peninsula.

These businesses are not only producing; they're also being established as destinations, and they're contributing to the tourism economy in a very significant way. For decades now that's been the case in the wine industry. But what's now happening is we're also seeing that in the brewing sector; we are seeing small brewers established who are not only producing for packaged liquor sale but also operating as a destination in their own right. The Little Bang brewery I've got in my electorate—not only can you buy their product in all good liquor distribution outlets; you can actually go to the brewery itself. You can have a few of their lovely craft beers and get some food as well, and have that as a hospitality experience in and of itself.

That's now also happening with distillation. We are seeing, interestingly and helpfully, it's very complementary to a lot of the wine regions. Down in McLaren Vale, up in the Adelaide Hills, in all the wine regions, we're seeing distilleries being established. At times they are in partnership with existing wineries. Never Never is a good example in McLaren Vale; they are established with Chalk Hill, a very significant winery in McLaren Vale. Many other distilleries are establishing themselves in these wine regions and supplementing and enhancing the tourism offer, which is in and of itself contributing an enormous amount to those regions. I should have mentioned the Riverland; I regret omitting them. They're another great example as a wine region that has had distillation come on board, again enhancing that tourism offer. That is creating amazing economies of scale for further tourism infrastructure investment. It means you're seeing a lot of really good accommodation offerings being developed and being invested in, in those regions, and you're seeing the general food and beverage offer expanding greatly.

All these destinations are within very close proximity to Adelaide, so Adelaide as a city gets the benefit from the tourism outcome of the satellite wine regions that are all very easy to access from Adelaide, as a day trip or a weekend stay or whatever. As locals in Adelaide we love the opportunity ourselves to enjoy these businesses and what they're offering, but we particularly appreciate the fact it is contributing in such a substantial way to the tourism economy in South Australia.

So that's what's already happening, but I very firmly believe that we need reform in the excise regime for alcohol because there are some ridiculous circumstances that particularly the spirits producers face. It shouldn't be the case that there are certain spirits produced in Australia that are cheaper to purchase at a liquor store in the United States than they are at a liquor store down the road from where the distillery is located. That is absolutely ridiculous. It is the case that some of the ways in which we levy taxation in that area—which, as I've indicated, is from a previous era where a lot of these spirits categories were exclusively imported from somewhere else; it was an economic decision, in a different protectionist time, to advantage locally produced alcohol against imported alcohol. I don't criticise that era and that approach to government policy, but, as I've just outlined, that is simply not the case anymore. If you go into any liquor store in the nation now you'll see a lot of fantastic, locally produced spirits, and those businesses deserve to have an excise regime that is fair and equitable.

We don't want to see this become something that's competitive between the different categories of alcohol and spirits—as I've outlined, the beer manufacturers in my electorate, the wine manufacturers and the spirits manufacturers. The broader amount of domestic manufacturing, the better. I think it's the case that, when it comes to responsible purchasing and consumption of alcohol, you can have any taste met by a locally produced product. I think the export opportunity is only going to be enhanced for those producers as well. They're doing an excellent job and winning awards all over the place. I've got a business in my electorate which started out making Adelaide gin with distillation in my electorate in Stepney. That business has also been distilling gins and vodkas in the other capital cities and, in fact, in Geelong. The owner of that business is a very passionate Geelong Cats fan, and he has a Geelong gin. He is winning awards all around the world for a fantastic product that has established itself, from my electorate.

This is a sector I think and hope we all want to back. I think we've got to review the way in which spirits taxation has worked historically, which was very much from a different era regarding local manufacturing and local production. I don't want to see taxes increase on any alcohol excise, but I would like to see us look at ways in which the whole industry can be supported. I don't think the industry is competing with itself. Like I indicate, a lot of wine producers are also going into spirit distillation, and there are a lot of companies that own business across all the different components of alcohol manufacture and production.

So I use my speech on this bill to outline that desire. I hope there's some consideration of some bipartisanship around it. I think it could benefit from an inquiry being undertaken by a parliamentary committee, with an open-minded approach to reviewing how we can get that right so that we're backing these businesses and these manufacturers to be able to grow and be as big as they possibly can be. With those comments, I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.