Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

by leave—I move:

(1) Schedule 1, item 1, page 9 (lines 10 to 25), omit paragraph 360-40(1)(e), substitute:

(e) at the test time:

(i) the company has at least 100 points under section 360-45; or

(ii) all of the following apply to the company:

(A) the company is genuinely focussed on developing for commercialisation one or more new, or significantly improved, products, processes, services or marketing or organisational methods;

(B) the business relating to those products, processes, services or methods has a high growth potential;

(C) the company can demonstrate that it has the potential to be able to successfully scale that business;

(D) the company can demonstrate that it has the potential to be able to address a broader than local market, including global markets, through that business;

(E) the company can demonstrate that it has the potential to be able to have competitive advantages for that business; or

(iii) all of the following apply to the company:

(A) the company can demonstrate that it has an economic, social, cultural or environmental mission that is consistent with a public or community benefit;

(B) the company reinvests the majority of the profit it makes to fulfil that mission.

(2) Schedule 1, item 1, page 9 (line 29), omit "Subparagraphs (1)(e)(i) to (v)", substitute "Sub-subparagraphs (1)(e)(ii)(A) to (E)".

I will give a very brief explanation. As I indicated and as the minister has indicated in the second reading, the bill currently proposes two limbs of tests, the early-stage limb and the innovation limb. We are proposing a third limb, the social innovation limb. Just for clarity, this would mean that should this amendment be accepted a company would still need to satisfy the early-stage limb, but it could qualify for the tax incentives contained in this legislation if it satisfied the early-stage limb and the social innovation limb.

The social innovation limb the Greens are proposing makes it clear that if the company can demonstrate it has a social, economic, cultural or environmental mission that is consistent with a public or community benefit and that the company can demonstrate that it will reinvest the majority of the profit it makes to fulfil that mission, the company would qualify for the Greens proposed social innovation limb. I do commend the amendments to the chamber.

Mitch Fifield (Victoria, Liberal Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I should indicate to Senator McKim that the government will not be supporting his amendment. I will briefly indicate why.

The proposed amendments are attempting to make two systems overlap when they were never designed to work in combination. The tax incentives in the bill are aimed at investors who are seeking a commercial return from innovation. The proposed amendments refer to entities that are carrying out projects for public benefit with no expectation of financial return and no element of innovation involved.

The proposed amendments, in our view, duplicate and could put at risk not-for-profit regimes that are already in place to support people carrying out activities with a community and public benefit. Our pre-existing regimes and government support in this area has the benefit of registration, reporting and requirements for endorsement from the ATO. The proposed amendments could encourage companies to operate outside the not-for-profit framework and open up the possibility of abuse through tax-planning schemes.

For these reasons, the proposed amendments are seen as unattractive to potential stakeholders and unworkable. The extensive support for social, cultural and environmental activities, under entirely separate tax exemption regimes, will remain the focus of the government in providing support to people who do work, tirelessly, for public and community benefit.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The opposition is not able to support these amendments. We note that the core aims of this bill are to encourage innovation and collaboration and provide access to capital for entrepreneurs. We note the concerns that have been raised that the proposed amendments are contrary to the core purpose of the bill. In addition, as noted in our speech on the second reading, consultation has been an important element of developing Labor's policy in this area. We would be concerned that agreeing to amendments that have not had the benefit of wider discussion and scrutiny would derail the bill, which would bring about a number of negative consequences.

However, as we have indicated, it would be our intention to review some of these elements of the bill if we win government. This may provide an opportunity to revisit the issues that Senator McKim has raised, in a more considered way. The opposition believes that all parties can work together constructively to benefit the start-up community. This includes on-review of the operation of this legislation. However, because we want to see support flow through to our early-stage innovators as quickly as possible, and considering the time remaining in this parliamentary term, the opposition will support this bill without amendment.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I thank Senator Fifield and Senator Dastyari for their contributions. Just to wrap up on our amendment and respond to a couple of issues that were raised by the two previous speakers: firstly, we do not believe that these amendments place at risk the intent of this legislation, because the framework that this legislation creates would still be able to be accessed by companies that have as their primary reason for existence making a profit. We do not accept the argument that this would in any way risk derailing the legislation.

In relation to comments made about the government's current framework of support for non-government organisations, we certainly accept the important role that non-government organisations play in our social framework, but the disruptive nature of the internet and the opportunities that it provides mean that, over time, our public frameworks, our legislative frameworks, will need to change. There is significant change underway in what is happening on the ground in relation to people who have a desire to deliver social and environmental benefit, and we believe that that change needs to be acknowledged by government and needs to be acknowledged by the parliament. We believe that accepting our amendments would be a first step on the way.

I acknowledge Senator Dastyari's comments that Labor would intend to review some elements of innovation support should it win government. I can indicate to Senator Dastyari that the Greens would be very prepared to work constructively with a future Labor government on those issues.

The CHAIRMAN: The question is that amendments (1) and (2) on sheet 7916 be agreed to.