Senate debates

Tuesday, 14 November 2023


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

5:11 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | | Hansard source

As I was saying earlier today in the debate on this bill, we effectively have a situation where the government is pursuing a reform of the tax system which puts the whole franking system at risk. It is doing that on the basis of data from 2016, when there were market conditions which the ATO at the time believed were going to give rise to some integrity issues. Those issues, in the Treasury's own evidence to the committee, have now been addressed. So you have to ask yourself: why would you pursue a reform—and I use the term 'reform' very loosely—of the tax system, and why would you pursue this particular amendment, if the market issue you were concerned about no longer exists? Secondly, why would you pursue this issue if it were going to put the franking system at risk, which has incentivised investment in Australian companies? That is a key point. Dividend imputation and franking have incentivised Australians to invest in companies here. They have incentivised companies to use equity rather than debt and encouraged the payment of taxation. It seems very strange that the government would seek to raise $10 million a year based on a costing from five or six years ago, when that market activity no longer exists, therefore putting at risk the ability of companies to raise capital and pay a franked dividend. That is the key point here.

We did do a good report in the Senate committee that set out these issues in detail.

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

It was a very good report.

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | | Hansard source

Thank you very much. I note here that the law firm King & Wood Mallesons have looked at the government's amendments, which were designed, of course, to address the government's admission, in their own report, that the bill was pretty ordinary. King & Wood Mallesons have said that the current hurdle of the operation of the provision, which I referred to before is in relation to the established practice test, is based on any variance from the existing dividend policy, irrespective of its materiality. King & Wood Mallesons go on to say that the government's amendments are meaningless and worthless, because the established practice test remains intact under this particular suite of amendments from the government.

So, you have to ask yourself: why would the government be pursuing amendments that are not going to be effective? Of course, the proposition that was accepted by the government and by us in the report—I thought—was that imputation should not be disturbed if it is going to massively disrupt the ability of companies to raise capital and then pay a franked dividend. If these amendments are only going to be effectively window dressing so the government can say, 'Yes, we responded to the Senate's report with some sort of amendments', but they have no market impact, and the capacity of a company to pay a franked dividend remains imperilled, then what is the point of these amendments?

I know that some people will have a view on whether these amendments improve the position in relation to dividend reinvestment programs. If that is the case then that may be worth looking at closely. But the substantive point here is that these amendments, according to all the legal advice we've been able to obtain in the past few days, are rubbish—these are rubbish amendments on a rubbish bill designed to a fix a problem that was solved six years ago. The reality is that the government wouldn't be doing this—wouldn't be rustling around down in the Treasury trying to find a few bucks here and a few bucks there—if they weren't running a fiscally irresponsible budget stance.

That is what this is all about. It's about going around and accumulating a few bucks here and a few bucks there because they've got to pay for their big spending, which the Reserve Bank itself is telling the government to stop doing, because the government's major problem is that it is not running a contractionary fiscal problem when it should be running that, to complement the Reserve Bank. As a result, the Reserve Bank is ratcheting up interest rates on Australian families because the government is not doing its job, which is to run a sensible, prudent fiscal policy.

5:16 pm

Photo of David PocockDavid Pocock (ACT, Independent) Share this | | Hansard source

It's always a tough act to follow Senator Bragg on franking credits—or superannuation, for that matter—with his keen interest and knowledge. But I rise to speak on schedule 5 of the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, in relation to small business. This is another bill that, when introduced, presented potential unintended consequences for small businesses—consequences that small-business owners weren't made aware of. Thankfully, key accounting and tax bodies noticed the risks and raised them with my office. I want to thank Chartered Accountants Australia and New Zealand, Certified Practising Accountant Australia, the Tax Institute and the Institute of Public Accountants for their engagement on these matters. I also want to thank the government for revising the explanatory memorandum to address the concerns raised on behalf of small businesses.

It's common practice for small businesses to use capital raisings and franked dividends to facilitate the departure of one or more shareholders from a company—for example, when a new generation of family members invests in the family business and a franked dividend is paid to the departing generation of shareholders. Those are franked credits that the departing shareholders have legitimately earned, and they deserve to be treated as legitimate. The government has offered assurances that such practices are not intended to be captured by this measure and has amended the explanatory memorandum to clarify this point as well as making substantive amendments to refine the scope of the measure. Given these changes, I am now in a position to support the amended bill.

I'll also be moving a second reading amendment on the small and family business concerns related to this bill. I hope that, moving forward, my parliamentary colleagues will commit to consulting the small business community on legislative changes that have the potential to negatively impact them. Too often legislation is introduced and passed without small businesses being made aware of how they might be affected. We know that most small-business owners are flat out running their small businesses and not necessarily checking in on what the parliament is discussing. We can and must do a better job in this place of consulting directly with the people impacted by our decisions, and I'd argue that we need to do so early in the process rather than at the last moment or, worse, after legislation has passed.

This was one of the clearest messages we heard from small-business owners at a breakfast I hosted with Senator Maria Kovacic and Allegra Spender MP here at Parliament House. Over 120 people came along at 7.30 on a Monday morning to discuss the challenges small businesses are facing and how policy can be better designed to support them rather than hindering them and the work that they are doing. Many of those in attendance were Canberra small-business owners who've never been invited into this building. They drive past it all the time, but they've never actually been invited in here to voice their concerns and opinions or to learn how proposed government policies might change their lives for better or worse. We heard firsthand how small businesses are struggling post-COVID to make things work and are struggling to try and increase wages to ensure that staff can pay for the things they need and to be able to retain staff. As small-business owners in a competitive environment with the challenges we're facing, that often means that they have to pick up extra shifts. They have to do nights where they're doing payroll or spend a Saturday or a Sunday working on their business. This is one of the things that often isn't acknowledged when we impose additional requirements on them when it comes to legislation—often well-meaning requirements, and even changes that small-business owners would agree with. We need to understand and consider the impact that that has on them and their ability to run their small businesses.

We heard at our small-business event that when costs rise small-business owners are hit twice. Their power bills go up at the office and at home. Their supplies go up in cost, as do their groceries. Their margins shrink as the pressure grows to make ends meet. Interest rates rise and their mortgage repayments climb, as do their business loans. Then they're forced to refinance to bring capital into the business and cover the squeeze on revenue. A Treasury report released last December found that one in five small-business owners had been diagnosed with a mental health condition in recent months. These people and the businesses they run are the lifeblood of our economy. They're vital to the prosperity of our communities and to addressing Australia's productivity slump. Most small-business owners are inherently optimistic, but we know that behind the scenes many are burning themselves out, sometimes wondering why they went into business in the first place and asking themselves if they'd be better off just shutting up shop.

This has to change, and that starts with involving small-business owners in the policy development process, consulting them every step of the way. Instead of making their lives harder, we should be looking for opportunities to support the great work they do. The decisions we make here should remind people who start their own businesses that they are right to be optimistic and that we in this place want them to bet on themselves, to back themselves to start that business, to create new things, to take calculated risks and to play their part in shaping the future of our economy and our country.

5:23 pm

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party) Share this | | Hansard source

I rise to make a contribution on the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. This bill aligns with the Albanese government's measured and careful improvements to the Australian financial and taxation system to ensure that it works as intended for all Australians. The bill also advances the interests of ordinary Australians and helps ensure that their retirements are secure. Schedule 1 makes a technical alteration to enable ASIC to approve applications to register the same relevant provider when the relevant provider has an existing registration in force. This tidies up the existing legislation that resulted in accidental compliance breaches by financial advisers. It also allows the corporations regulator, ASIC, to use assisted decision-making processes when processing and considering applications for financial advisers to be registered. The use of assisted decision-making processes, including computer automated and computer assisted decision-making, must be carefully monitored. This particular part of the bill will enable ASIC to deliver a high standard of service in an effective and efficient manner.

Schedule 2 creates the building blocks for the implementation of sustainability reporting standards in Australia. This reflects the reality of our changing climate and our altering financial industry towards environmental sustainability governance priorities, looking more broadly than at mere profit to see the impacts of investment on the sustainability of the planet. This movement is already underway. However, there remains an issue in that there is no definition of what sustainable investment looks like, leaving some investors scratching their heads when trying to decide how best to invest their superannuation. The schedule will partially implement the 'Restoring Treasury's capability on climate risk and opportunities—modelling and reporting standards' measures from the October 2022-23 budget. As sustainability reporting in Australia is currently undertaken on a voluntary basis, the proposed sustainability standards would provide general guidance, assisting relevant industries to prepare systems and processes for eventual transitions to mandatory climate-related financial disclosures. The objective of this is to ensure entities provide Australians and investors with greater transparency and accountability in relation to their climate related plans, financial risks and opportunities.

Schedule 3 of this bill, which is of particular importance to me, increases the independence and effectiveness of the Tax Practitioners Board to ensure high standards of ethics and competency in the tax profession and streamline the regulation of tax practitioners. Schedule 3 of the bill amends the Tax Agent Services Act 2008 to increase the independence of the TPB via a special account. This will provide the Tax Practitioners Board with the ability to control its own budget and manage its regulatory functions. It recognises that the TPB has distinct functions and powers, separate from the ATO. It will support tax practitioner and community confidence in the TPB's regulation of the profession. These changes will implement recommendations from the final report of the Tax Practitioners Board review and ensure high standards in the tax profession, enhancing community confidence in the regulation of tax practitioners and the integrity of the system as a whole.

The chamber will be well aware of my ongoing investigation with colleagues in this Senate into the government audit and consulting sector. It was the TPB that finally investigated and took action against Mr Peter-John Collins of PwC Australia and rightfully brought the spotlight to the murky affairs of PwC both in this nation and overseas. While the ATO and the AFP were hamstrung by limited legislation, the TPB actually did the hard yards. I personally, as an Australian, want to thank them for that work. As I speak, the Australian Federal Police are continuing their investigation into PwC and the actions of Mr Peter-John Collins. But it was the Tax Practitioners Board that did the hard work. It is the TPB's insistence and constant pursuit—as evidenced in the recent ATO time line provided in response to my questions on notice—that has led us here today. I welcome the increased financial independence of the TPB from the ATO. A strong and independent TPB is in Australia's national interest.

The amendments seek to address an identified gap in the regulation of tax services. The introduction of the proposed new obligations under the TPB Code of Professional Conduct for tax practitioners would regulate and, importantly, prevent disqualified entities from providing tax agent services, providing a further barrier to those nefarious actors who outwardly attempt to be credible while simultaneously providing dodgy services to clients.

This comes alongside the recent announcement by the Treasurer, Dr Jim Chalmers, to raise the penalty for firms promoting tax exploitation schemes to $780 million. This changes the calculus for those who would engage in disreputable behaviour and tax exploitation schemes: from a slap on the wrist to, suddenly, a business-ending punishment. It's crucial that when government seeks to engage external experts with vast industry knowledge for support in crafting legislation, such individuals will not betray that trust, nor will they use the information against the Commonwealth of the country to which they owe service simply as citizens.

Taxation collection and dispensation is crucial for Australia to pay its bills, to fund hospitals, to fund our schools and to strengthen our military. When actors limit this possibility, national security is at risk. When Peter-John Collins and PwC partners advertised tax exploitation to multinational firms all over the globe, our national security was at risk. Tax and audit are so important to how the Australian financial system operates. Without proper and measured advice on the financial facts of a firm, trust in the system falters, with negative consequences for everyone, especially workers whose future is tied up in superannuation. This stuff—about tax and about these financial matters—actually really matters to Australian people.

We know that the big four companies—PwC, Deloitte, KPMG and EY—audit 96.5 per cent of the top 200 companies in Australia, or 193 out of 200. Their impact is significant. Their reach is large. Hardworking Australians who see parts of their pay cheques going towards their retirement deserve the very best information for operating in the financial market in which their retirement savings are being invested, either directly by them through an SMSF or indirectly through a retail or industry fund.

The market is responding to the challenges that are now a matter of public record with regard to the big four auditing companies. Westpac Group recently announced that it is no longer appointing PwC, a firm who, through its previous iterations and under the banner of PwC, has audited Westpac since 1968. That's an extraordinary period of time for one audit company to be with a particular company of the scale of Westpac. Previous iterations of the Parliamentary Joint Committee on Corporations and Financial Services—on which I serve with Senator Scarr and Senator Barbara Pocock, who are both in the chamber and who know how important the work of those parliamentary committees are—recommended a review of how long these large audit companies should stay as the external auditor for any of the companies that they are engaged with.

PwC and other consulting firms, we've seen, treat the taxpayer funds that they are receiving in great volume with contempt. KPMG, a firm that is at pains now to point out how it's not PwC, has itself been caught directly misleading the Senate. They claimed on notice not to be mapping public servants by their power ratio or how likely they were to select KPMG as a consultant. However, recently an org chart of Transport NSW which categorised senior public officials scoped out by KPMG staff, who described them as 'sponsors' of KPMG work, suddenly appeared in a hearing. 'Sponsors'—that's how KPMG sees some members of the public service and taxpayers' funds, as a bank to be tapped for their personal profit. It's contemptuous and it's just wrong.

Recently I also heard very concerning testimony from Mr Luke Sayers, the well-connected former CEO of PwC. He was the CEO when the Project North America scam and the legal professional privilege cover-up took place. Mr Sayers is certainly well connected. He counts the former Treasurer Josh Frydenberg as a good friend. According to his evidence before us, his new firm, humbly known as Sayers Group, counted the former finance minister Mathias Cormann as an investor. But it has come to the attention of the committee in recent hours that Mr Cormann no longer has shares in Sayers Group, and the documentation to clarify that is available on the F&PA committee website. Apparently, he was potentially going to be a partner, but, since Mr Sayers gave us evidence, the status of Mr Cormann's investment seems to have changed. Sayers—the company and the man—has already amassed millions of dollars in government contracts. Sayers is the same man who Mr Ziggy Switkowski, in his review of PwC, stated had tolerated 'aberrant behaviour' from those who brought in large revenues. Mr Sayers did that in his role as the CEO of PwC Australia over nearly a decade. I'm very concerned—and I put that on the record here in this chamber—that Sayers Group is considered a trusted adviser to government, given Mr Sayers's long association with PwC during the period that is of sufficient concern to warrant an ongoing Australian Federal Police inquiry.

Through my work as the Chair of the Parliamentary Joint Committee on Corporations and Financial Services and as a substitute member of the Senate Finance and Public Administration References Committee, I pursued every lead and scrutinised every aspect of these secretive firms, and I have taken very seriously the evidence provided to me by whistleblowers who have said, in so many of the submissions to me in confidence, that they ended up leaving the audit sector because they had witnessed practices that they simply couldn't live with anymore. 'I had to leave because my conscience wouldn't allow me to continue in this firm,' was one of the most common sentences. What I fear I am finding, with my colleagues, is a system that not only is rife with conflicts of interest but has built its business model on conflicts of interest. Audit and consulting firms infect firms and spread to every vessel. Indeed, just yesterday, concerns that I raised some time ago about information being used with regard to the Honda dealerships were the subject of an article by Jessica Sier in the AFR. The conflict-of-interest concern lingers over so many of these entities.

In the language of Mazzucato and Collington, we see these large companies employing a model known as 'land and expand'. What many whistleblowers have reported to me is that these large audit firms will start with their very best staff and soon swap those staff out for inexperienced members, thus undermining the quality of the work that can be done. It's a classic bait-and-switch move. Even worse, in some cases the best absolutely never show up. Instead, the firms choose to churn through an endless supply of graduates who are overworked and underpaid. One only needs to read the ghastly accounts that are embedded in the Broderick report into EY to know the suffering that these companies impose on their staff. There is much, much more to do in this investigation.

This corporatocratic style of government that relies on profiteering firms to do our core functions is coming to an end. I commend the Minister for Finance for her recent announcement that all external consultancies will be removed from core Public Service work, and I look forward to continuing this work with my colleagues in the government.

5:39 pm

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

At the outset I'd like to acknowledge the important work that Senator O'Neill has been doing, along with Senator Barbara Pocock, in relation to the matters arising from the terribly disappointing lapses by PwC. I want to pick up, and perhaps emphasise and buttress, one point Senator O'Neill made, and that is with respect to the important role of whistleblowers. I passionately believe that doing our best to empower whistleblowers, both in the public sector and in the private sector—in particular, in relation to matters at a federal level that touch on compliance with federal laws—is of crucial importance. Those whistleblowers who have reached out to Senator O'Neill and to Senator Barbara Pocock are courageous individuals, and there should be somewhere they can go to get support and guidance as to how to navigate the very complicated maze of their duties and obligations as employees, as partners and as professionals and be given the assistance to navigate those important issues and the support needed.

No doubt those whistleblowers who've reached out to Senator Barbara Pocock and to Senator O'Neill were under—and perhaps are still under—immense personal strain, dealing with all the mental pressures associated with arriving at a decision, such that they were left with no option but to reach out to parliamentarians, people outside of the firm, to bring their attentions into the public domain. They have to deal with the issue of whether they're going to continue to have a job. They've got to deal with the issue of whether they'll be able to fine another job after they've potentially been exposed as whistleblowers. It's a very complicated thing.

It is in the best interests of our civic society that support is provided to those people who are considering being whistleblowers and those who become whistleblowers. Not only is it important for the whistleblowers themselves; it is also important that both the public sector and the private sector know that those whistleblowers will have support, will have someone in their corner who can enforce the statutory obligations on their employers not to intimidate or harass them. That is vitally important, because the protections for whistleblowers on the legislative books at the moment are simply paper protections. What hope does an individual whistleblower have in exercising those protections on the face of the statute when they don't have the resources that their employer has and they're trying to deal with all those other pressures?

I know the Joint Standing Committee on Corporations Law and Financial Services—on which I serve and am very happy to serve, under the chairing of Senator O'Neill, and Senator Barbara Pocock is also a member of that committee—has in the past recommended the establishment of a whistleblower protection agency that covers not just the public sector but also the private sector. And the area of domain in relation to the private sector, if it wanted to be limited, could be limited to matters touching upon federal law. That includes the Corporations Act. That includes financial services. That includes aged care. That includes many other areas of law, such as the disability sector, where issues continually arise, and I think that would be a very welcome step forward. So, I just wanted to make those preliminary comments—which went for nearly five minutes; as senators can forgive me, it's a matter I'm extremely passionate about, because I think it would be a wonderful thing if this Senate could progress laws of that nature to set up an agency in that regard.

I want to talk about schedule 5 of the TLAB. It is a schedule that causes me considerable concern as someone who used to be a company secretary and general counsel of an ASX 200 company and who's been involved in my fair share of capital raisings over that time. I think I did about six capital raisings in the middle of the last global financial crisis, in quick order. So I do bring to this discussion some immediate relevant experience.

The first point I want to make is that Senator Walsh, in her contribution, talked about integrity and raised the integrity of the opposition with respect to its contributions in relation to this bill. Whilst I respect Senator Walsh, the integrity we on this side of the chamber are focused on is the integrity of the then opposition leader, now Prime Minister Albanese, in promising in January 2021 not to make any changes to franking credits, when now we have these changes in TLAB schedules 4 and 5. What about the integrity of the Prime Minister saying on ABC Radio on 30 March 2021 that Labor wouldn't have any changes to the franking credit regime? What are schedules 4 and 5 other than changes to the franking credit regime? What about the integrity of the then shadow Treasurer, Jim Chalmers, saying on 17 January 2022, when it came to tax changes:

We won't be doing franking credits … I couldn't be clearer than that.

Well, he couldn't be clearer than that, and it couldn't be more clear that schedules 4 and 5 depart from those commitments of both the Prime Minister and the Treasurer not to interfere with the franking credit regime. What do we have now in this TLAB? Interference with the franking credit regime.

I want to commend my colleague Senator Bragg in relation to the coalition senators' dissenting report, which I found incredibly useful in preparing this speech. I want to quote from the report on some of the organisations, stakeholders, who have registered their deep concern with the amendments that have been proposed in TLAB schedule 5:

The Corporate Tax Association suggested that there would be great uncertainty for companies 'who have no history of payment of dividends, such as where a company is recently listed'.

Shaw and Partners referred to data that had been generated in the United Kingdom following the abolition of a similar system in the UK:

It was called the advance corporate tax. It was abandoned in '99 after 26 years in operation. From the stats that I've read, in 2000, the UK pension funds and insurance companies owned 39 per cent share of total UK stock market. Fast-forward to 2020 and that figure had fallen drastically to just four per cent.

When you fiddle with things such as the franking credit regime, when you interfere with prior practices regarding the raising of capital and the paying of dividends by listed public companies, they will consider whether or not it is worth their while, especially if they have options, to shift somewhere else, like Singapore. I can remember that, during my period as a company secretary, we were repeatedly approached by the Singaporean government to shift our headquarters and listing from Australia to Singapore. That's what's happening. It's a competitive market in terms of capital, and changing policies like this has consequences.

I note in the report's paragraph 1.23 this statement from Wilson Asset Management: 'Large Australian companies with mature franking account balances are put at an advantage over small to medium-sized entities.' This is one of my particular concerns about this legislation. When you look at the relevant section in the bill—207-159, 'Distributions funded by capital raising'—there's a latent bias towards large companies which have a history of paying franked dividends. It is going to be very hard for new companies, small and mid-sized companies, that do not have a long history of paying franked dividends. Why? Because when you read the test it says:

(1) This subsection applies to a distribution (the relevant distribution) of a kind made by an entity if all of the following conditions are satisfied:

(a) either:

(i) the entity has a practice of making distributions of that kind on a regular basis and the relevant distribution is not made in accordance with that practice; or

(ii) the entity does not have a practice of making distributions of that kind on a regular basis;

The necessary meaning of those two subsections, when you read them together, is that if you're a company that has, say, just recently been listed and you've been going through a development phase in building a commercial enterprise—it could be an IT company, it could be a mining company, it could be any new venture—you are simply not going to have a practice of making particular types of distributions. And when do you actually achieve this threshold of 'a practice'? Is it after two distributions or three distributions? Do four distributions mean a practice? What happens if, say, it's a mining company and we go through something like the GFC? It makes a half-year distribution and an end-of-year distribution, and then it suspends distributions for two years because the market falls out of the relevant commodities, and then it recommences paying distributions. Is that a practice? I wouldn't have thought so. Compare that with the situation of a large bank which typically makes regular distributions and has done so over a number of years.

So, almost by definition, under this section it is going to be much, much harder for a small or medium-sized company to meet that test than it is for a large company that is in the ASX 50 or ASX 20. We're actually setting up a disincentive. This is a disincentive to a company to list on the ASX. This is a disincentive.

There will be people making a decision about where to list their company—on the NASDAQ, on AIM in London, in Singapore, on the DAX in Germany—and they will be considering their options. They will look at this test when they're doing their due diligence, and it is going to be very hard for any startup or new venture to meet this test—impossible. Therefore, when they make a dividend payment, when they engage in a capital raising in close proximity to the dividend payment, they're going to come under the scrutiny of this section. The smaller and mid-sized companies that have newly listed are the ones who are going to fall within the province of this section—not the big ASX 50 companies who have got a regulatory practice but companies who don't have that history. And they're exactly the sorts of companies we should want to attract to our financial markets. They're exactly the sorts of companies we want to list on the ASX or any other market that is operating in Australia. We want to attract their investment. Yet this is a disincentive—another disincentive. We've seen barrier to investment after barrier to investment erected by this government since its election in 2022. You can add this one to the list.

All the expert stakeholders—the brokers, the Corporate Tax Association, professors, the Tax Institute, the SMSF Association, the lawyers advising big companies—all raise exactly the same point. This is going to be a disincentive to investment, and there will be people making decisions in boardrooms around this country who will look at this piece of legislation, once it's introduced, and say this is just another reason not to invest in Australia or another reason not to list in Australia. You are sending exactly the opposite of the message we should be sending to people.

Too often, senators sitting on the other side of the chamber forget that companies have options. They don't have to do business here. They can invest their capital somewhere else. They can list somewhere else. They have options. Capital has options. It can go across borders. It can find a home somewhere else. It's the employees who don't have options. The employees of those companies don't have those options.

So, essentially, because you're hurting, you're providing a disincentive to companies to set up in Australia and to list in Australia, and eventually you're going to hurt the whole Australian economy. Most of all, you're going to hurt the potential and current employees of those companies—Australian employees of companies that decide it's all too hard to invest in Australia and invest their capital overseas.

5:53 pm

Photo of Maria KovacicMaria Kovacic (NSW, Liberal Party) Share this | | Hansard source

I also rise today to speak on the Treasury Laws Amendment (2022-23 Measures No. 1) Bill. Whether it's franking credits or superannuation—or your salary—it appears that the Albanese government is after what little money people currently have left. We heard time and time again before the election from Anthony Albanese, the Prime Minister, that there would be no changes to franking credits and no changes to superannuation under his government. Let me repeat that. We heard time and time again that there would be no changes to franking credits and no changes to superannuation.

Well, then what is this? This is the bill that we're talking about today. I'm sorry to disappoint everybody, but this bill represents sweeping changes to superannuation and franking credits, changes that will impact hardworking ordinary Australians the hardest. The bill is five schedules of changes to super and franking credits in 48 pages. This bill also has a 220-page explanatory memorandum on changes to super and franking credits. This bill is over half a billion dollars in changes to super and franking credits. Let's have a think about that: that is half a billion dollars being taken out of the retirements, the savings and the superannuation accounts of Australians. All this is in the middle of a cost-of-living crisis where Australians don't have very much money left, costs are going up all around them, yet their wages are not going up. And now the government is consciously deciding to make things worse. They are taking a sledgehammer to the savings of Australians. They are taking this money to fund their mismanagement of our economy.

During Senate estimates on Wednesday 8 November, the Minister for Finance, Katy Gallagher, appeared not to realise a change to the franking credit policy was in her budget, denying 10 times that there was a change to franking credits in the budget. The minister later had to correct the record. When asked about the measure in question time on 6 March, the Prime Minister couldn't give a straight answer. The finance minister doesn't know what's in the bill, does the Treasurer know, or are they turning away as they let Stephen Jones pursue his vanity project of raiding the savings of hardworking Australians? Who does know? On 1 January 2021 the West Australian reported that our now Prime Minister said, 'We will not be taking any changes to franking credits to the next election.' On 30 March he then said on ABC Radio, 'We won't have any changes to the franking credits regime which is there.' That's exhibit A of the changes that we're not having. On 15 December 2021 our now Prime Minister told Tasmania Talks, 'We've made it clear that, on areas like franking credits and negative gearing, we won't be taking those policies to the next election.' On 4 March 2022 he said in relation to franking credits, 'We are not touching them.' On 17 January 2022 the Treasurer said, 'We won't be doing franking credits, and I couldn't be clearer than that.' And yet here we are.

Labor's broken promise on superannuation taxes just means that, with the soaring cost-of-living pressures, Australians will be worse off. This is not just another broken promise; this undermines our superannuation system. It undermines the confidence in our superannuation system. Superannuation is your money; it is our money; it doesn't belong to any government. It is your money to deliver quality of life in retirement; it is not a piggybank for governments to leverage tax and spend. How many times does this government want to tax this money earnt by ordinary Australians? Despite promising no changes to superannuation before the election, Prime Minister Albanese is proposing to double super taxes on one in 10 Australians by the time they retire; to stop companies from offering franking credits to Australian investors, super funds and charities; and to tax unrealised capital gains in super, meaning Australian retirees will pay tax on money they haven't even made yet. Let's think about that—paying tax on money that you have not even made or earnt. That's extraordinary.

It is obvious that this government was dishonest about changing super and about franking credits, and it's been dishonest about how many Australians will be affected by these changes. Despite the claim 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. Australians are right to be wondering what will be taxed next. How can we trust this government when it says one thing before an election, over and over again, and then does something completely different? The government is unable to explain how these changes will work. They can't explain how many people will be affected. The Prime Minister says 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 be expected to understand it?

The two measures which limit the ability for companies to offer franking credits to shareholders are estimated to raise at least $600 million over the next five years. The tax will fall overwhelmingly on older Australians and superannuation funds. The Tax Expenditures and Insights Statement released last week found that the biggest beneficiaries of franking credits are older Australians, Australian companies—who, as outlined very clearly by Senator Scarr, are employers of everyday Australians—Australian super funds and Australian charities. The budget acknowledged that a substantial portion of the revenue from this measure will fall on Australians' superannuation:

New tax policy measures announced since PEFO also increase superannuation fund tax receipts by $1 million in 2022-23 and $467 million over the 4 years to 2025-26. This includes the impact of the Improving the integrity of off-market share buy-backs measure, which is not expected to significantly impact tax receipts in 2022-23, but is expected to increase tax receipts by $400 million over the 4 years to 2025-26.

That's from Budget Paper No. 1 for the October 2022 budget, page 159.

Page 49 of the explanatory memorandum for the bill makes it pretty clear: the bill ensures that arrangements can't be put in place to release franking credits. That's what it states:

…the Bill … ensures that arrangements cannot be put in place to release franking credits …

The tax increase is despite the Prime Minister ruling out changes to the franking credit regime before the election, over and over again. The Treasury's own talking points, obtained under FOI, confirm that there were significant concerns raised by the public. Over 2,000 submissions were received during consultation. Treasury also says:

Concerns were raised over retrospectivity, policy objective and potential for the legislation as drafted to capture legitimate commercial practices.

Treasury's own document says:

Shareholders … may argue the policy is effectively a tax increase or a winding back of dividend imputation.

Let me repeat that. Treasury's own document states:

Shareholders … may argue the policy is effectively a tax increase or a winding back of dividend imputation.

Schedule 1 amends the Corporations Act to close a loophole in the post-royal-commission requirement for financial advisers to register with ASIC's Financial Advisers Register. The amendments close a loophole to minimise the risk of inadvertent breaches of the law when offence provisions on providing unregistered financial advice commence. The amendments allow ASIC to streamline applications where a provider is authorised by more than one licensee to provide financial advice. Schedule 2 gives the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council the power to develop climate and sustainability standards. Schedule 3 implements five recommendations from the 2020 Tax Practitioners Board review. This bill also introduces two changes to the franking credits regime that the government estimate will raise more than the half a billion dollars that I outlined earlier. They are contained in schedules 4 and 5 to the bill.

Schedule 4 amends the Income Tax Assessment Act to limit the ability of listed companies to offer franking credits on off-market share buybacks, raising $200 million a year in tax clawbacks. Schedule 5 amends the Income Tax Assessment Act to limit the ability of listed companies to offer franking credits on capital raisings, raising some $50 million over five years. These two measures will limit the ability for companies to offer franking credits to shareholders. The tax will fall overwhelmingly on older Australians and superannuation funds. The tax expenditure and insight statement released by the government in March found the biggest beneficiaries of franking credits are older Australians, Australian companies, Australian super funds and Australian charities, and yet these are the people who are going to be impacted by the changes contained in this bill. Even the October budget acknowledged that a substantial portion of the revenue from this measure will fall on Australians' superannuation. New tax policy measures announced since PEFO also increased super fund tax receipts during that same period. This includes the impact of improving the integrity of the off-market share buyback measure.

Franking credits are granted against company tax already paid by restricting the offering of franking credits. The increase on tax is not from the company issuing the credits but from the individual shareholders who benefit and receive corresponding reductions on their tax. King & Wood Mallesons have described the measures as, 'The federal government is seeking to prevent entities from providing franking credits to shareholders' in what it considers are 'inappropriate circumstances'. The 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. This tax increase is despite the Prime Minister ruling out changes to the franking credit regime before the election.

As Senator Scarr noted, the coalition senators' dissenting report in relation to this bill is an impressive document, and it is something that should be read and should be considered before any changes are made. One section that I want to read in particular from that report is something that comes from evidence given by Professor Robert Nichol talking about flow-on effects from tax, profitability and shareholder returns as a result of this measure. He states:

If implemented, I expect off-market buy-backs will be discontinued and some companies will choose not to take the on-market option, resulting in some instances of less than optimal capital management, reduced profitability, less tax paid and reduced shareholder returns.

6:09 pm

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

I'm not sure Labor learned its lesson from the 2019 election. They were so confident of winning under Bill Shorten. Their $11 billion attack on Australia's franking system was one of the issues which cost them that election. They conveniently ignored that it was their own Paul Keating who, in the 1980s, introduced the current system to prevent Australian investors from effectively being taxed twice, the system we have worked with to encourage investments by Australian individuals and investment or superannuation funds in Australian companies. It reduces the cost of capital-raising for Australian companies and stimulates job creation. It encourages Australian companies to fund their operations by using equity instead of debt. It provides incomes that offset the need for more government welfare in the form of pensions, so it needs to be left alone.

Why does Labor hate Australians who work hard and save and invest their money in additional income? Why does Labor hate aspiration and individual enterprise? Why does Labor feel the need to micromanage the way private companies raise capital? Labor insists on imposing increased red tape on the private sector that not only costs and harms our economy but wastes so much more of our own money in profligate, useless spending. Government spending under Labor has risen $188 billion, increasing federal debt and driving inflation and interest rates higher. Our priority should be ensuring accountability for this spending, not double-taxing investors who are supporting Australian jobs.

Labor needs to abandon its obsession with attacking Australian mum-and-dad investors who dare to seek financial independence just because they mostly don't vote Labor. If Labor needs more revenue, it only needs to implement reforms that ensure that foreign owned multinationals operating in Australia pay their fair share of tax. It would raise a lot more money than this latest attack on Australian investors. Labor never puts Australia and Australians first. Labor policies are hurting Australians, not helping them, as evidenced by the 13th straight interest rate rise since the election last year.

One Nation will be supporting amendments regarding schedule 4 and schedule 5 of this legislation. Schedule 4 relates to off-market share buybacks. Labor keeps saying that it's big business which does this, but in reality it's mostly retirees and low-tax investors like charities. The only large investors are super funds, and any benefits they gain go to their members—the same mum-and-dad investors. Labor's change means that companies which may use an off-market share buyback for a restructure or recapitalisation will lose part of their franking account balance or be forced to pay a franking deficit tax. They would permanently lose the amount of franking that would have gone to their shareholders. So I'm going to support the proposed amendment to schedule 4.

Schedule 5 relates to franked distributions funded by capital-raising. There is substantial concern that this change will have a major impact on Australian jobs and Australian investors and will encourage big companies to increase tax avoidance, deferment or minimisation. There is also concern that it will impact the sustainability of smaller Australian companies. The change is likely to discourage the reinvestment of company profits at a time when it is very much needed to arrest the rapid decline of Australian productivity. National productivity has already fallen by more than six per cent since the election of the Albanese government. The last thing we should be doing is making it worse. The committee inquiry into this bill, chaired by a Labor senator, acknowledged that schedule 5 needed clarification in response to almost universal feedback. This part of the bill was flawed—another one of the government's bills that's flawed! You have to wonder, then, whether the government has properly modelled the impact of increased company debt and higher costs of capital-raising.

Schedule 2 of the bill is yet another example of Labor's obsession with international climate change ideology and how this cult has infiltrated the highest levels of unaccountable international bodies seeking to dictate law in Australia. I refer to the so-called International Sustainability Standards Board, or the ISSB, created at the COP26 meeting in Glasgow in 2021. The following year, the ISSB developed standards for companies to disclose sustainability related financial information and climate related disclosures. While most large Australian businesses already do this sort of useless reporting on a voluntary basis, Treasurer Jim Chalmers last year signalled Labor's intention to make it mandatory. He said:

Our initial view is that mandatory reporting requirements should be phased in over time—both in terms of entities covered and the reporting that is required.

He said:

… we think the standards should be mandatory for large firms … they should be aligned as far as possible with global standards.

Labor puts the wishes of unaccountable international bodies before the interests of the Australian people and the Australian economy.

Schedule 2 of the bill inserts a new definition of 'international sustainability standards' into the Australian Securities and Investments Commission Act 2001. These are the ISSB standards. One Nation does not consider that our independent, sovereign country is answerable to these unaccountable international organisations. My colleague Senator Roberts will be moving an amendment to get rid of this change, and I urge the Senate to support it. Indeed, we won't be supporting this legislation unless all the amendments I've mentioned are approved. Government must get out of the way of Australian investors and the companies they support and let them do what they do best: create jobs and prosperity for our nation.

6:15 pm

Photo of Hollie HughesHollie Hughes (NSW, Liberal Party, Shadow Assistant Minister for Climate Change and Energy) Share this | | Hansard source

Whether it's franking credits or superannuation, you just can't trust Labor on tax. Before the election, the current Prime Minister and the current Treasurer both ruled out changes to franking credits. Before the election, the current Prime Minister and the current Treasurer ruled out changes to super. I note that in Senator Hanson's contribution she asked whether the Labor Party had learnt their lesson from the 2019 election. I think that maybe they did learn a lesson. In 2019 they were upfront and said, 'We're going to change franking credits.' The lesson they learnt was: 'Let's not tell them this time. We won't tell them. We'll promise not to change them, we'll wait until they elect us, and then we'll change them.' It is like a flashback to—oh, God! I've got a blank on his name. He sang for Midnight Oil and was a member of the other place. He was caught on camera saying, 'Don't worry; we'll change it all after we get in.' This is exactly what we're seeing yet again. Peter Garrett—there we go. Here we are. They just can't help themselves. It's completely in their DNA to simply tax you more. They can't have their higher-spending agendas without increasing the taxes.

Labor constantly talk to us about the top end of town, but I say to them: look around you. Wake up to yourselves. Your policies to date have only hurt small-business owners and battlers. You've eroded middle Australia. In fact, it's almost worse than that. You have created a class of working poor, and that class of working poor is consistently growing under this government's inability to rein in inflation and cost-of-living pressures. Families who have two working parents on average incomes are being put in a position where they can't afford to keep a roof over their heads and food on the table. Now we know they're going to be hit again with increased taxes. Labor talk to us about the big end of town. We heard Senator Wong or Senator Farrell the other day listing the names of big companies they were trying to support, and we heard during the referendum campaign about all the big companies coming out to support them. We know who is cosying up to the big end of town. This is all happening at a time when the banks are recording record profits—more than $7 billion each for CBA, ANZ and Westpac. The Australian dream of having your own patch to call home has pretty much gone up in smoke. According to the ANZ today, only the wealthy can now afford a mortgage. Talk about the top end of town. This government has done wonders for those people. You can't trust Labor to keep promises and you can't trust Labor to run the economy.

The coalition will move amendments to strike out from the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 the measures that would break these promises. But, if the government doesn't accept these amendments, we will not be supporting this bill, because it is just another broken promise from the Albanese government. I say to the government: you can keep the promise of a referendum, wasting $450 million of taxpayers' money on something that was clearly going to fail, but you can't keep the promises of lower power prices and easing cost-of-living pressures. So enough is enough.

It's a cost-of-living crisis, but Labor's priority seems to be only coming after your money. The Prime Minister and the Treasurer went to the election promising Australians that they wouldn't touch franking credits, and yet in six months they've added two tax grabs on Australian shareholders. This is just another tax on super, another tax on retirement savings and another broken promise on tax. Whether it's franking credits or superannuation, Labor can't control its spending, so it's going to go after the hard-earned dollars of Australians to pay for its pet projects, spending taxpayer money at odds ideologically with two-thirds of the country and only to virtue-signal to its inner city elites, while real Indigenous Australians who need help continue to be ignored. Then, to add insult to injury, you vote down two inquiries—into land councils and into sexual abuse. Then you have the audacity to stand here and act like you care about the plight of innocents in the Middle East. You can't even muster enough energy to care about your own people who you have a duty to serve.

Labor promised retirees and shareholders that, after the 2019 election, franking credit changes were off the table—false promises again. Currently companies that undertake off-market share buybacks and capital-raisings can offer franking credits to investors. But, under Labor's laws, they won't be able to do so. Labor's budget is clear that this is a tax that will raise half a billion dollars. And we know, from Treasury's tax expenditure and income statement, that this disproportionately hits Australians over 75, not-for-profits and Australian super funds, who will no longer be able to access these credits. So work hard all your life, contributing to this country, only to get shafted by this government for all your efforts.

On 1 January 2021 the West Australian reported that the Prime Minister said, 'We will not be taking any changes to franking credits to the next election.' On 30 March 2021 the Prime Minister, on ABC radio, said, 'We won't have any changes to the franking credits regime which is there.' On 15 December 2021 the Prime Minister told Tasmania Talks, 'We've made it clear that, on areas like franking credits and negative gearing, we won't be taking those policies to the next election.' On 4 March 2022 the Prime Minister said, in relation to franking credits, 'We're not touching them.' And on 17 January 2022 the Treasurer said, 'We won't be doing franking credits,' and 'I couldn't be clearer than that.' These were clearly not slips of the tongue from the PM and the Treasurer. It was an agenda of deceit: say what you have to say to disarm the public and then keep on doing what it is that you want to do. Well, I think it's becoming pretty clear that Australians are very much starting to see through it.

Labor's broken promises on superannuation taxes just mean that, on top of soaring cost-of-living pressures, Australians are going to be even worse off than they already are. This government continues to exacerbate cost-of-living pressures and then slugs you again on top of it. Don't worry, because, during their press conferences, they can contort their faces and tell you how much they feel and understand the hurt that Australians are experiencing. Superannuation is your money, not the government's. It's your money to deliver quality of life in retirement, not a piggy bank for government to tax and spend. This government is proposing to double super taxes on one in 10 Australians by the time they retire, stopping companies from offering franking credits to Australian investors, super funds and charities, taxing unrealised capital gains in super, meaning Australian retirees will pay tax on money they haven't even made yet.

Labor were dishonest about changing super, and they've been dishonest about how many Australians will be affected. Despite Labor 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. So Australians are right to be wondering just what this Labor government will tax next. It is just more broken promises. Remember the promise to cut electricity bills by $275? Broken. Remember the promise of cheaper mortgages? Broken. Remember the promise of lower inflation? Broken. And now the promise of no changes to super: broken. What more evidence do we need to know whatever it is this government is doing isn't working? You are flying pilotless, and we need an emergency landing before it all comes crashing down.

6:25 pm

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

There are two components of the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 I want to address. The first is schedule 2, which will give the Australian Accounting Standards Board power to create sustainability standards, and the second is schedule 3, which will implement selected recommendations from the government's review into the Tax Practitioners Board.

Schedule 2, which is effectively the introduction of climate risk reporting, has the capacity to represent a significant step towards driving a change in corporate culture in Australia. Directors and executives of companies will have to turn their minds to how their businesses are changing to respond to a carbon constrained economy. This is about the old business management saying 'if you are not measuring it, you can't improve it'. These changes will start to quantify a company's exposure and therefore, in the case of publicly listed companies, investors' exposure to both climate transition risks, such as being stuck with stranded assets like coal or oil or gas, and physical assets, which are caused, for example, from turbocharged disasters like floods and fires on company assets and things like skyrocketing insurance premiums on company cash flows.

A climate risk framework will focus the minds of companies who are trying to reduce their exposure to coal, oil and gas, and, likewise, it will focus the attention of investors, particularly big investors like super funds, to ensure that they know what they are buying into. And that is critical for them, because a well-informed decision, a decision based on a broader suite of information, is more likely to be a good decision. But, critically, a climate based financial framework will expose companies like Woodside, Santos and Whitehaven for the fact that they actually have no plans to diversify out of coal and gas. Make no mistake: companies like Woodside, Santos and Whitehaven are pure planet cookers. They will be forced to abandon their current market deception that they are on their way to net zero. Let's be really clear about this: if you are a coal or a gas company, you cannot actually be on your way to net zero. That is a nonsensical proposition, and investors and everyone else in this country have a right to have that deception exposed and have a right to understand the truth of the situation, which is that fossil fuel companies like Woodside, like Santos, like Whitehaven are deceiving the market at the moment by claiming they're on their way to net zero. A robust climate risk reporting framework will expose that deception.

The people that are running these companies are driven by greed and the profit motive, driven to engage in activities that they know are massively contributing to global heating, that they know are going to massively contribute to the collapse of the ecological systems that ultimately underpin life on this planet, that they know will result in the likely displacement of billions of people from their homes this century and that they know will massively compromise the opportunities of our children, our grandchildren, their children, their grandchildren to live a good and dignified life. That's what those companies are doing, and at the same time that they're doing that they are deceiving the market and pretending they're on their way to net zero. They are not on their way to net zero, and a properly constructed climate risk reporting framework will expose that deception.

Without a standard definition of 'climate disclosures' being in place so that investors and activists can hold companies to account, corporate disclosure will remain too generalised, too ad hoc, too removed from financial performance indicators and too prone to greenwashing. That is what we are seeing from a range of big companies at the moment: a concerted effort to greenwash, a concerted effort to deceive the market, a concerted effort to deceive investors and a concerted effort to deceive government, through their greenwashing spin. And it needs to end. So we welcome what we believe is a first step on the way to a genuine climate risk disclosure framework in this country.

On schedule 3, earlier this year the Australian people found out that PricewaterhouseCoopers partner Peter Collins shared secret government information with PricewaterhouseCoopers partners to advise PricewaterhouseCoopers clients on how to structure to get around upcoming laws designed to crack down on tax avoidance. PwC made millions of dollars from this. The companies that restructured could have cost the public purse in Australia up to $180 million in forgone tax revenue each year. I well remember when this scandal broke and how horrified many people in this building and, critically, many people out in the community were. The ins and outs of how big consulting works in this country had never—or very rarely—been the subject of discussions in pubs, at barbecues or over the back fence, but suddenly millions of people in Australia were talking about it.

And I well remember asking questions in Senate estimates of departments like the home affairs department. When I asked the then secretary of the department, Mr Pezzullo, what action his department had taken to tighten its frameworks around the risk that not just PwC but other big-four consulting companies—Deloitte, KPMG, EY—were actually monetising confidential information in the way that Mr Collins did for PricewaterhouseCoopers, his answer was: 'Well, I've rung up the CEO of PricewaterhouseCoopers and I've been assured that it's all fine.' I couldn't believe it. Well, of course PricewaterhouseCoopers are telling him it's all fine! What else would they say?

I want to thank and congratulate my friend and colleague Senator Barbara Pocock for the role she has played, for her dogged pursuit of this issue, of Mr Collins and of a range of other issues that have been exposed. And I thank Senator Scarr for the support he's just indicated for that statement. Senator Pocock has been relentless in her pursuit of this and I believe has done the hard yards with the utmost integrity in exposing this and done a massive solid not just for the Australian taxpayers but for all Australians who want to have confidence that government processes are respected and that big corporations are not getting away with metaphorical murder. So I want to place on the record the magnificent job Senator Barbara Pocock has done over many months to chase this matter down and get us here today, through her negotiations with Minister Jones, to a situation where Greens amendments will be accepted and will pass through this place—that we'll actually start to chase the fox out of the henhouse and ensure that the Tax Practitioners Board remains free of the worst kind of influence and the worst kind of effect that big-four consulting firms had on it.

While I have the opportunity, I also want to make a few observations about the business model of big consulting firms. Make no mistake, the business model of big consulting is based on things like conflicts of interest. We've all heard it time after time from the big four consulting firms that they have in place these internal firewalls which mean the work they're doing for the government over here is separated completely from the advice they're providing to clients over there. Don't believe a word of it, because these supposed firewalls are absolutely porous. They are like the old foamies we used to ride in the six-inch-high waves on Blackmans Bay beach when I was growing up. You kept them in the water for an hour and they'd be totally waterlogged and they'd sink underneath you. These firewalls are absolutely porous. The big four consulting firms have made massive bank over the decades by taking confidential information provided to them by government, monetising it and passing it on to their clients.

The issue with PricewaterhouseCoopers is they got busted. They got caught. There's a reason why you've heard nothing out of the other three of the big consulting firms—Deloitte, KPMG and EY—over the last six to nine months. They have been in the middle of the biggest bush they could find, rigid with the most minor tremors of fear, hoping that nobody actually remembers that they exist. They know that's part of the business model of big consulting, and they didn't want to be dragged through the mud like PricewaterhouseCoopers was dragged. This is the sharp end of neoliberalism. The public sector has been hollowed out to the extent that it can't actually provide advice that governments need, and the only way they can get that advice, particularly on complex issues, is by going to the consultancy firms. Senator Scarr's going to come in and defend big consulting. This will be good!

Photo of Andrew McLachlanAndrew McLachlan (SA, Deputy-President) Share this | | Hansard source

Senator Scarr on a point of order?

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

I don't believe it's the 'sharp end' of neoliberalism. I believe it's a distortion of neoliberalism.

Photo of Andrew McLachlanAndrew McLachlan (SA, Deputy-President) Share this | | Hansard source

That's not a point of order, but you may wish to reflect on that part in your debate, Senator McKim.

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

As I was saying, the public sector has been hollowed out by big consulting firms. They hire the brightest and the best, and, in many cases, they make them offers that simply are too good to refuse. They hollow out the public service to such a degree that the only place that the public service can go to get the advice it needs to provide to the government is to the big consulting firms that are actually responsible for hollowing out the public sector in the first place.

The other point I want to make about the business model of big consulting is that it's not just based on conflict of interest; it is actually based on monetising confidential information. That is one of the ways that big consulting has been so massively successful over the years. A year or so ago, I read When McKinsey Comes to Town. I recommend that book to Senator Scarr, who I know likes a good book because he's often waving them around in this place. That is a credit to him. I admire a reader. I do refer When McKinsey Comes to Town to you, Senator Scarr. I can assure you some of the revelations in that particular tome about the unethical behaviour of McKinsey will curl your toenails, and I have no doubt that behaviour is reflected across a number of big consulting firms.

The government has made it very clear that it condemns the actions of PwC, and so it should. At the time the scandal broke, 43 per cent of Tax Practitioner Board members were former partners of the big four consulting firms, including two ex-PwC partners who were receiving ongoing financial payments from PwC at the time. That is the fox in the henhouse, colleagues. The Greens amendment—that will pass with government support today or tomorrow—kicks the foxes out of the henhouse. It fixes the loophole that effectively allowed big consultants to regulate themselves. Never again, thanks to Senator Pocock and the Australian Greens, will we have members of the Tax Practitioner Board financially tied to those same large tax agents that they are regulating. This is the first regulatory step to respond to the PwC scandal. I sincerely hope it won't be the last.

6:40 pm

Photo of Malcolm RobertsMalcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

As a servant to the people of Queensland and Australia, I speak on the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. One Nation supports an efficient, honest and fair tax system. An important aspect of a fair system to is to make sure tax is not double-charged. That's what franking credits do. They make sure a tax is not double-charged. They ensure that Australians don't pay income tax on the parts of dividends on which the government has already collected company tax. That's fair. There's no reason to allow the government to double-dip on Australian profits and then again on Australians' income.

In the 2019 election campaign, Labor proposed changes to the franking credits system. Australia completely rejected those thought bubbles. Labor learnt from that lesson and for the 2022 election, promised there would be no changes made to franked dividends if Australia voted them into government. Yet, now that Labor is in government, schedules 4 and 5 make a number of wholesale changes to how the dividend, share buyback, and franking system currently works. It is a broken promise, yet another to add to Labor's list of broken promises. Just like when they promised to reduce your power bills by $275, Labor's promise that they wouldn't touch franking credits was a lie. As always, the government claims that these are simply modest changes. They're anything but modest, with large implications for companies and for capital markets. The government hasn't been able to articulate the need for these changes, nor quantify how big an impact they will have. They're doing it, and they don't even know what will happen. We cannot legislate on a hope, a vibe or a wish that it will be okay. While that is, according to some in government, Prime Minister Albanese's modus operandi, it's not a responsible way to steer a $1.7 trillion economy. It's highly irresponsible. One Nation will be opposing these changes in schedules 4 and 5 and cannot pass the bill if they remain part of this package.

Schedule 2 lays the groundwork for standards that align money to climate goals. This would presumably be to create alignment with the greatest scam in finance: ESG standards—environment, social and governance. The powers that be call them 'sustainability standards', yet there's nothing sustainable about them. In fact, UN sustainability policies survive only as parasites on subsidies from the real economy—subsidies: that makes them unsustainable. So-called sustainability standards talk about protecting the financial system from risks. Yet they cannot quantify what those risks are. The idea that the government or, worse, a single bureaucratic department can ever predict and quantify risk to the financial system is sheer lunacy. A brief analysis of history shows that. Did the government and regulatory agencies see the risk of the dot com bubble coming in the 2000s? No. They had no idea. Did the American regulators see the risk of subprime mortgages leading to the global financial crisis? No. They arguably participated in and make it far worse. Did any regulator around the world predict the risk of almost every government in the world going certifiably insane in response to COVID, a bad flu? No, they did not. Over the last three years, the Reserve Bank created $500 billion in electronic journal entries, money concocted out of thin air. Did any regulator predict the risks that would lead to the skyrocketing inflation that we're still trying to get under control? No, they did not. Actually, some did, and we were ridiculed by the experts.

The point here is very simple. The government and the regulators cannot quantify the risk of financial system shock. History shows governments are hilariously bad at it. They certainly won't be able to do it for supposed climate risks that are nothing more than fabrications concocted from inherent, natural, cyclical variation. By the way, everything in nature—everything in existence—varies, yet understanding of variation is not taught in schools and rarely taught properly, if at all, at university. That's why Green, Labor, Teal and, sadly, some Liberal-National members and senators spout nonsense in this parliament and in public, concocting and spreading imaginary fears of climate apocalypse, when reality shows simply inherent, natural, cyclical variation.

They cannot even come up with the only sound and essential basis for policy—that is, they've never quantified the specific effect of carbon dioxide from human activity. That means they have no basis for climate and energy policy, no specific quantified goals for climate and energy policy and no means of measuring progress towards those goals. We're flying blind. Australia is flying blind. Energy costs and climate policies are out of control and needlessly imposing huge costs on families, small businesses, our country and our nation's future. Anyway, the only thing we can do to protect against systemic risks is to make sure that financial intermediaries are well capitalised and diversified to survive any risk that comes to fruition. Doing anything else encourages a lack of diversification and actually increases risk.

I don't believe in this climate apocalypse nonsense, this climate fraud, yet even for those who do fall for this illusion there's no serious risk to anything. Let's look at the supposed science around climate risk. When I ask the government why we need to cut human production of carbon dioxide, they point me to the United Nations Intergovernmental Panel on Climate Change, the UN IPCC. They're a dodgy bunch—proven over 40-plus years—yet I don't think anyone in here has actually read the IPCC reports they claim as proof the climate is going to collapse. If you go to the IPCC's assessment report 6, you'll see chapter 12 is the summary of Working Group I, who looked at the actual science around natural disasters. Table 12.12 summarises all of the available evidence on the frequency of extreme weather events. Let me read out the types of natural disasters where even the United Nations has said there has been no detectable increase in the number of natural disasters. I repeat that: no detectable increase in frost, river flood, rain measured in terms of mean precipitation or heavy precipitation, landslide, drought, fire weather, wind speed, windstorm, tropical cyclone, dust storm, heavy snowfall, hail, relative sea level, coastal flood, marine heatwave—and on and on. Although I do not put any trust in the United Nations, government claims it does, and the United Nations says there has been no increase in severe weather events in those categories—none.

Even better, table 12.12 in the IPCC's AR6 says the United Nations doesn't expect to see any detectable increase in those categories in the next 80 years under its worst-case scenario. There's no risk to the financial system from climate change because there's no need to cut human production of carbon dioxide—end of story.

As an aside, I ask: on what basis does Minister Watt get his frequent fanciful, scary claims of increasing extreme weather events? Wild imagination, Senator Watt? From where do the Greens get their dishonest claims? From where does Senator Pocock get his pseudoscience to support his Kermit green fantasy policies? Is it the family money of Simon Holmes a Court, who now relies on the millions of green subsidy dollars that support otherwise unsustainable and failing wind and solar net zero projects—parasitic subsidies from energy users and taxpayers who pay through needlessly higher prices.

Recently in this chamber I heard Senator David Pocock cite scientists who said they have fears for the climate. Significantly, he did not provide any science to back it up, apparently because he seems to just swallow their words because they claim to be scientists. That's what's happened repeatedly in this chamber. People don't produce the science; they say what scientists conclude and don't analyse it. Those scientists are on major grants to push the climate fraud. Real scientists don't peddle unsubstantiated fears. Scientists present science, presenting the empirical scientific data as evidence within logical scientific points, proving cause and effect. Never has anyone done that. Senator David Pocock never presents any such science nor references the specific pages providing such logical scientific points—never. Extreme weather has always been with us. It remains with us and will always be with us. It's natural and often cyclical.

So what's the real reason for implementing so-called sustainability standards and ESG? The Assistant Treasurer, Stephen Jones, said it in his second reading speech to this bill: the purpose is to 'align capital flows towards climate and sustainability goals'. I'll say it again: the purpose is to 'align capital flows towards climate and sustainability goals'—political goals, not scientific. Those are the goals of predatory globalist billionaires and the rent seekers who are flogging wind, solar and battery products, billionaires peddling parasitic mis-investments in solar, wind and batteries and transferring wealth from families, small businesses and employers to billionaires, often overseas.

Despite claims that these solar and wind products are the cheapest, the free market has utterly failed to adopt them, because they simply cannot survive in the wild on their own, without subsidies. In other speeches in recent weeks, I've documented the huge number of failures in wind and solar projects overseas and here in Australia. They're falling over like flies. Billionaires behind the climate push are panicking now that their parasitic investments won't get the return they need. The teals' sugar daddy, Simon Holmes a Court; Andrew 'Twiggy' Forrest; Johnny-come-lately to climate fearmongering Mike Cannon-Brookes; and old stagers Alex Turnbull and Ross Garnaut—having failed with climate scams in the free market, these climate doomsayers now need the government to direct money their way through implementation of 'climate standards'—they're going to standardise the climate!—to, as the Assistant Treasurer said, 'align capital flows'. This is more of the crony capitalism that has ruined Australia. If it weren't so serious, it would be laughable. This is why I've circulated an amendment to strike out schedule 2 of the bill. There's no reason to even start down this path of folly and pretend that, hidden away in the cupboard somewhere, the government have a crystal ball they can use to predict the future. If they do, they clearly haven't used it before.

A final concern I'll raise is with schedule 1, part 2, of the bill. This gives ASIC the power to use 'assisted decision-making' processes. That's their label. This amendment is incredibly broad and vague, and we can assume this will involve some level of automation and, eventually, the implementation of AI, artificial intelligence. It's incredibly concerning that the explanatory memorandum includes, at 1.24: 'ASIC may change a decision made by an assisted decision-making process if it is satisfied the decision is wrong.' Can you believe it? This very heavily implies that a human will not be involved in the decision-making process. An assisted decision-making process should only be in place to assist a human in making a decision. There should not be a robot using artificial intelligence to make the decision itself. The fact that Labor would introduce this blank cheque to the new robot overlords in the wake of a royal commission they called into robodebt is a stunning revelation. If the robots get it wrong, there's no clear avenue of appeal for a person who is subject to the wrong decision. They'll simply have to rely on ASIC deciding to look at it on their own motion and finding out it's wrong. Good luck with that. This change is too broad, and One Nation is raising its concerns now so that these issues can be monitored in future.

To summarise, the government would be better off going back to the drawing board on this con hiding behind the label 'Treasury laws'.

6:53 pm

Photo of Gerard RennickGerard Rennick (Queensland, Liberal Party) Share this | | Hansard source

I rise to speak on the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. I'll first focus on schedule 2 and the sustainability standards. Having spent many hours preparing financial statements, I know the last thing we need to be worried about is trying to measure impacts and sustainability and all those fluffy things that are very hard to actually quantify. As an accountant, I know financial reports should be just that: they should be about the finances of a company rather than having a lot of words. If you read a set of financial reports today, it's more like reading War and Peace, and there is next to no information on the actual internal workings of the company. By that, I mean there's not enough management accounting information in there. I would vote against all of this bill just on the basis of schedule 2.

I will call out the hypocrisy of Labor. I've said this a few times now, but we have 40 different models to calculate net zero, and the CSIRO is not prepared to acknowledge the risks and benefits of the model that we use versus the other 39 models out there and whether or not there's any regulatory arbitrage between countries on that. For example, they don't include phytoplankton. Just last week, we spent the entire week talking about legislation that's going to look at putting carbon dioxide in the bottom of the ocean whilst we completely ignore phytoplankton in our ocean, which absorbs 70 per cent of CO2. But, despite the fact that the bureaucrats don't want to be held to account on the way they measure carbon dioxide, you're talking about bringing in legislation that seeks to hold the private sector to account on their sustainability practices and how they're going to deal with climate change, measure CO2 emissions et cetera. It's a bit rich for the government to be asking the private sector to measure all of their impacts on the environment whilst at the same time not being held to account on how they calculate net zero.

I'll move to the other sections of the bill. Personally, if it wasn't a broken promise, I'd actually probably support schedule 4, but it is a broken promise. The Labor Party said that they weren't going to touch franking, and they are now touching franking. The reason I would actually support schedule 4 is that, for big Australian companies who have large foreign ownership holdings, those franked dividends aren't distributed when they pay dividends offshore. So the franking credits accumulate in the franking accounts, and every five or six years or every decade BHP will do a share buyback or a capital raising and effectively redistribute or stream those dividends out to domestic shareholders.

The problem I have with that is that franking in itself is nothing but one great big paper shuffle. There have been reports over the years—I followed this closely throughout my finance career—that the real net company tax rate is, depending on what you read, somewhere between 13 and 17 per cent. We're seeing over time that the superannuation funds get bigger and have a much larger shareholding of our ASX 200 blue-chip companies. That means that when they pay out dividends to super funds the franking credits then get refunded. So, overall, companies are paying less and less tax, and we're also seeing that with charities and everything like that.

But, in the means of collecting and distributing the dividends, a company will pay its tax in May one year. There's an enormous amount of paperwork in calculating that tax, doing the accounting on all the franking credits and maintaining those franking credit accounts. Then, about eight months later, when the individuals go and lodge their tax returns, they get the money refunded to them. Let's take halfway between 13 and 17 per cent. Let's say it's 15 per cent. That means that half the company tax that gets collected in Australia—I haven't looked at it in a while, but I think it's pushing close to $100 billion, so half of that would be $50 billion—gets refunded or recycled back out. So, if you really wanted to reform the tax system—and I'll qualify all of this by saying that, whatever you do with the tax system, you've always got to cut income tax first and make sure that the rate of income tax for the average wage is always lower than the company tax rate—you should get rid of franking credits altogether and just have a lower, flatter company tax rate.

The reason for that is that we cannot compete with offshore capital. We currently have an onshore tax rate of 30c in the dollar, but, generally speaking, our offshore tax rates with most of our major trading partners, depending on the tax treaty, are between zero and 15c in the dollar. That creates what they call a 'taxation arbitrage', where the rate of tax on onshore profits is 30c in the dollar and the rate of tax on offshore profits is between zero and 15c in the dollar. That encourages companies to shift their profits offshore, and we saw that just recently. I think the tax office has cracked down on this, but for a long time, for most of this century, the three major iron ore companies had marketing hubs for their iron ore in Singapore. As far as I'm aware, Singapore has never produced one tonne of iron ore, yet somehow these people were the experts in selling it on to China. That was nothing but a tax scheme to shift profits offshore to Singapore. It's that profit shifting that we need to stop, and the only way we can do that is, ideally, by lifting the rate of withholding tax.

I noticed earlier today that Senator Walsh was talking about streaming. Let me tell you, there is no greater streaming in this country when it comes to taxation than the streaming of profits offshore for a much lower rate of tax than what a good patriotic company who wants to keep their profits onshore has to pay here. We need to deal with this taxation arbitrage because it is killing the ability of companies who have their domestic equity here in Australia—and that's mainly small business—to compete with offshore businesses. We have to look at fixing that.

I want to give you a couple of examples of how the system's being rorted. I have here a copy of Google's accounts for 2020. Their overall income for the year ending—and you've got to pay for this, by the way; this isn't public. You can get it, but you've got to pay about 50 or 60 bucks for a set of these accounts. In 2019 Google had $1.2 billion in revenue, and they ended up making a paltry $133 million, so their operating margin was about 10 per cent. In other words, for them the cost of doing business here was about 90c in the dollar. I find it very hard to believe that Google would be incurring 90c in every dollar they earn here. What they do is basically boost or increase their above-the-line profits offshore—interest, royalties and rent—because they know that, if it's paid offshore to the US, they don't have to pay 30c in the dollar, because the withholding tax rates for most items in the US are somewhere between zero and 10c.

I've got another one here, from my favourite company, Pfizer! Their 2022 total revenue was almost $1.4 billion, yet they only made $90 million profit that year, so their operating margin was only seven per cent. If you compare that to their worldwide set of accounts, they made $100 billion in revenue and had an operating profit before tax of 34c in the dollar. You have to ask yourself why Pfizer had an operating profit or an operating ratio of 34 per cent on their worldwide income, but here in Australia their operating profit was only seven per cent.

The reason for that is that they shifted their profits or their above-the-line profits—interest, royalties and rent—offshore. Ironically enough, they were shifted offshore to Ireland. If you look at their related-party balances for the year end with Ireland—and that's the trick; you've always got to look at the related-party transactions because what often happens is that they'll shift those profits offshore to a subsidiary, or it might be to a holding. If we look at the related-party transactions for Pfizer, for Pfizer Service Company Ireland it was $1.1 billion. My father-in-law caught COVID, and they gave him a dose of that molnupiravir, and on the box it was $1,000. Pfizer want you to believe that it cost $930 of the $1,000 sale to make that tablet and that they only made a tiny seven per cent profit, or $70 profit, on that $1,000 tablet. I don't think so. That is profit shifting 101. I've already written to the Treasurer about this and I'm looking forward to getting a reply, because that is a breakdown in our transfer pricing.

Those of you who follow tax will know that a few years ago Chevron got busted. It's always very hard to prove transfer pricing, but Chevron got busted because they had intercompany loans charging the Australian business nine per cent interest when the interest rates were two or three per cent. The only reason they got caught was that there was an email from one of their staff talking about a scheme to avoid paying tax by bumping up the interest paid here in Australia and shifting it offshore. They got caught under part IVA of the Income Tax Act.

All of this stuff is very traceable. When you do your tax return, those of you who have a rental property will do a rental property schedule. If you have a capital gain, you'll do a capital gains schedule. If you have transactions with offshore businesses, you have to do what's known as an international dealing schedule. All of that is recorded by the tax office, and they are quite capable of tracing this information. You'll see here on page 3 of the international related party dealing section A it actually asked these questions: did you have any related party dealings involving royalties or licensees? Did you have any related party dealings involving rent or leasing? Did you have any service arrangements with international related parties? You all remember the name of that Irish company, Pfizer Service Company. The reason they like to go through Ireland is that Ireland has a company tax rate of 12½ per cent. Of course, the EU isn't too happy with that either. I think Apple was forced to pay $20 billion or something. What happens because they've got such a low company tax rate is that all the companies set up their head offices in low-taxing jurisdictions. That's one of the reasons I'm adamantly against giving income tax rates back to the states. If that happened, I assure you that head offices would all come back to Canberra and the ACT would charge a very low company tax rate. We do not want a system here in Australia like they've got in the States whereby a lot of company head offices are set up in Delaware. I've offered my services to whoever wants to take me because of my experience in tax and about how to reform the tax system.

We're going to talk about streaming, and I just want to talk about a couple of other sections of the Income Tax Assessment Act that I'd love the Labor Party to look at. Those sections of the tax act are sections 59, 15 and 50 that basically say that land councils don't have to pay tax on royalties and native title payments made to them. Section 50.50 of the 1997 Income Tax Assessment Act says universities don't have to pay income tax on the fees that they collect. It's one thing maybe in terms of Australian students because they shouldn't have to collect fees. But, when it comes to international students, they should be taxed on the profits they make from international students. Then there's subdivision 855, the non-real-asset test. Basically, if you're a foreigner and own less than 10 per cent of the shares in a company, you don't have to pay any capital gains tax. The ATO did a ruling a couple of years ago where they have applied that also to water rights. The name of that title is non-real-assets portfolio test, and if you have a portfolio interest of less than 10 per cent as a foreigner you don't have to pay capital gains tax. That's not right.

Another good one is section 25.90 where you can claim an interest expense against non-assessable non-exempt income. An example is when my old employer, Westfield, built those big shopping centres in London and Westfield in Australia lent the money through Ireland into the UK. The income that those shopping centres made was assessable in the UK, as it should have been, but the interest tax deduction was actually offset against our Australian business here. That meant they paid less tax here in Australia. That's not the right thing to happen either. The last one, of course, is 128b of the 1936 Income Tax Assessment Act, the public offer test. That was the whole reason why, when I was sitting at the University of Sydney Law School doing my masters of tax, I decided I needed to run for politics. That effectively says that if foreign banks lend money into Australia through the primary market—and to be in the primary market you've got to have a financial securities licence and a minimum parcel of $500,000 or $1 million, I think—you don't have to pay withholding tax. I think it's totally wrong that our pensioners or anyone that earns interest income here in Australia has to pay tax on that income, yet we give foreign banks a break. They don't have to pay any tax on the interest we pay them offshore. We need to get rid of that because we don't have a corporate bond market here in Australia. We've got $3 trillion in superannuation. If you want to tap capital, tap domestic equity rather than foreign debt.

7:08 pm

Photo of Malarndirri McCarthyMalarndirri McCarthy (NT, Australian Labor Party, Assistant Minister for Indigenous Australians) Share this | | Hansard source

Firstly, I'd like to thank those senators who've contributed to this debate. Schedule 1 to the bill will reduce the risk of inadvertent breaches of the law if a financial adviser is authorised by more than one licensee. Schedule 1 also allows the Australian Securities and Investments Commission, ASIC, to use assisted decision-making processes to deliver a high standard of service in an effective and efficient manner. Schedule 2 to the bill is an important step towards delivering the government's commitment to ensure that large businesses provide Australians and investors with greater transparency and accountability when it comes to their climate related plans, risks and opportunities. This measure lays the necessary foundations to allow the development and implementation of sustainability reporting standards in Australia to meet this commitment. These amendments will facilitate the development of sustainability standards while longer term governance arrangements for sustainability related financial reporting, including climate disclosure, are developed and implemented.

Schedule 3 to the bill amends the Tax Agent Services Act 2009 to increase the independence and effectiveness of the Tax Practitioners Board, ensure high standards of ethics and competency in the tax profession and streamline the regulation of tax practitioners. I take this opportunity to thank the Australian Greens, and Senator Barbara Pocock in particular, for their constructive engagement on this bill. The government was outraged by the revelations about PwC's misuse of confidential information, and we are glad to be supporting amendments to strengthen the TPB's powers, improve its make-up and place new obligations on tax and BAS agents to report suspected breaches of the Code of Professional Conduct. These changes will uphold confidence and support high standards in the tax profession. The government also proposes minor amendments to schedule 3 to change the commencement date, given the bill has remained before the Senate beyond 1 July 2023.

Schedule 4 to the bill will continue to enhance the integrity of the tax system by aligning the tax treatment of off-market share buybacks undertaken by listed public companies with the tax treatment of on-market share buybacks. Off-market share buybacks will continue to be available to companies as a capital management option, but the tax outcomes will now be the same as for on-market share buybacks. Listed public companies will no longer be able to buy back their own shares at a discount subsidised by Australian taxpayers. In recent years, the incidence of off-market share buybacks has been irregular, but the value of shares purchased has been large. Since announcing this measure, we've been pleased to see that large corporates are choosing to shift to on-market share buybacks, acknowledging that the main rationale for off-market was a tax loophole. The government proposes minor amendments to schedule 4 to change the start date in relation to selective reductions of capital.

Schedule 5 to the bill prevents companies from making franked distributions funded by capital-raising for no commercial purpose. The distributions of concern occur on an ad hoc basis outside established business or industry practice. The government is also proposing to make changes to schedule 5. The government's amendments remove retrospectivity. As a result, the measure will apply from the day after royal assent. Our amendments also add a test for substantiality. A distribution will be considered to have been funded by capital raising if that capital raising funds at least a substantial part of the distribution, rather than any part of the distribution. Furthermore, we're adding a proportionality effect so that only the portion of the distribution that is funded by the capital raising will be unfrankable. We are confirming that responses to regulation aren't affected. So where an equity issue is in response to a regulatory requirement, directive or recommendation, that distribution will not be unfrankable merely because of the amendments in schedule 5.

The government notes the recommendations made by the Senate Economics Legislation Committee and expects that the proposed amendments will ensure that schedules 4 and 5 to the bill appropriately address feedback provided to the committee. The government also thanks Senator David Pocock for his engagement on the bill. We have amended the explanatory memorandum and supported your second reading amendment to confirm that ordinary family or commercial dealings in private companies, such as succession planning and shareholder exits, will not be affected by this measure. We've listened to the views put forward during the Senate inquiry, and we've worked constructively with the crossbench and made amendments to address that feedback. I commend this bill to the Senate.

Photo of Karen GroganKaren Grogan (SA, Australian Labor Party) Share this | | Hansard source

The question now is that the second reading amendment on sheet 1856, in the name of Senator Hume, be agreed to. A division is required, but, given that it is after 6.30, the division will be deferred until the next sitting day.