I don't want to elongate the time between Senator Duniam and a drink, but, as he walks out the door, I, too, would like to wish him all the best for whatever exciting thing comes next outside of this place. The last hour and a half have been a lovely departure from the combat that has been mentioned and that takes place so often in here. It was a nice little lovefest for us to celebrate some of the good things about being a senator and the contributions that we can make.

Indeed! And on that note—

Back to the combat! Let's get into it. In considering the motion that we have before us that Senator McGrath kicked off before the farewell, you would be forgiven for thinking that every corner shop, every family business and every farmer in the country is about to be hit with a new 30 per cent tax. But what this government is actually doing is ambitious and serious reform. Serious reform, particularly around tax, means being prepared to tackle difficult issues. Reforming the status quo can be difficult, but getting our tax system right is also very important.

It's important also to tackle fairness in the system. Simply leaving things as they are and not achieving these objectives is not an option. Where our tax system provides advantages that aren't available to most working Australians, we have a responsibility to restore the balance, no matter how difficult that might be. That is what this tax reform agenda is about. Reforming discretionary trusts is a very important part of that. We know that there are legitimate reasons to use trusts, including succession planning and asset protection, but we also know that the flexibility provided by discretionary trusts allows some people to arrange their tax affairs in ways that simply aren't available to most workers and families.

The number of discretionary trusts has more than doubled over the past 20 years, to more than 800,000. At the same time, the vast majority of Australians do not have a trust. More than 95 per cent of individual tax filers do not receive trust income, and more than 90 per cent of small businesses will not be affected by these changes in any given year. The benefits of the current arrangements are heavily concentrated. The majority of trust income flows to the top-earning 10 per cent of households, and around 90 per cent of total trust wealth is held by the wealthiest 10 per cent of households. Treasury analysis shows that, in 2022-23, families with discretionary trusts faced an average tax rate around four percentage points lower than families with similar incomes who did not use a trust. That is the issue that this reform seeks to address.

The 30 per cent minimum tax will reduce the tax planning advantages available through discretionary trusts and better align their tax treatment with the tax paid by working Australians. Thirty per cent is the same marginal tax rate that applies to workers earning between $45,000 and $135,000. This is fundamentally about fairness, bringing these tax arrangements more closely into line with tax paid by working Australians. Through these reforms, we've also been deliberate in recognising legitimate circumstances and giving existing trusts practical options. The legislation protects superannuation trustees investing through trusts—I know Senator Bragg has some concerns about that—but it also provides exclusions for genuine testamentary trusts, deceased estates, special disability trusts and the income of minor beneficiaries. Importantly, we have also expanded the options available to small businesses and others using discretionary trusts to limit or eliminate restructuring costs.

Finally, on small business, we back small business. We are delivering more than $3.8 billion in tax relief and rolling out tax cuts for working Australians, including 1.5 million sole traders. We've seen an average of 900 companies created every day on our watch, and we are the only government to have recorded more than 40,000 businesses registered in a single month—something that has happened twice this year. These reforms are about improving the sustainability and integrity of the tax system while making our economy more productive by ensuring investment decisions are made for economic reasons, not simply tax management reasons. That is what serious tax reform looks like. We are not interested in defending the status quo for its own sake; we are interested in building a fairer, stronger tax system for the future.

The assault on small business continues under a Labor government that seems determined to punish anyone who dares to get ahead. The budget handed down in May was one of the worst ever for small businesses. Now another hammer is about to fall, with Labor's attack on family trusts. Discretionary trusts are used extensively by small businesses across Australia. Around 350,000 businesses use them, and 210,000 are expected to pay additional tax under these changes. Thanks to Labor's greed and its refusal to tighten its own belt, business could face more than $13 billion in restructuring costs.

It is clear that very few on the Labor side understand what it means to run a small business. They've never had to navigate Australian tax law, pay thousands of dollars for expert advice or make difficult decisions to keep a business afloat. Let's consider a sparky who has built a business from the ground up and employs a couple of apprentices, a labourer and a receptionist. His family trust allows him to share the business income with his wife, who manages the books part time while raising their children. Now Labor forces him to restructure. The professional advice alone could cost thousands of dollars, with the loss of income splitting adding thousands more in tax every year. That means less money to invest in the business. Perhaps they can no longer afford a labourer. Maybe they have to let the apprentice go. Worse still, it might become all too hard, so they shut up shop and retire earlier than planned. Jobs disappear, the family loses its livelihood and another Australian business dream is destroyed. That is the real cost of Labor's tax grab. Behind every struggling or closed business are real people who have worked hard, taken risks and sacrificed to build something for their families.

One Nation believes in small business. We believe in Australians having a go and building better lives without constantly worrying that the government will change the rules and undermine everything they have worked for. We also understand why families use trusts. A sparky or plumber might work 60 hours a week while their partner stays at home to raise their young children. That decision may be essential to making family life and the business work. Does Labor believe that contribution counts for nothing? One Nation believes that parents who contribute in different ways to a family business should be able to share its income fairly. That is why One Nation supports income splitting for all families with children.

Labor's approach ignores and undermines families who choose to have a parent at home raising their kids. This is about more than tax; it's about freedom, fairness and respect for the people who keep Australia moving. One Nation wants a government that supports small businesses, respects families and rewards hard work, not one that punishes independence to fill a budget black hole. We will keep fighting for Australians who take risks, create jobs and build this country one business, one family and one job at a time.

After 4½ years of government, the Labor Party seem confused and bewildered that their model of housing has not worked well. We have seen over this 4½ years more taxes, more red tape and more regulation, which has resulted in fewer houses. Under the Australian Bureau of Statistics data, you can see that we are getting at least 25,000 to 30,000 fewer houses a year under this government compared to the prior government. After having spent billions of dollars and wasting billions of dollars of taxpayer funds on housing, and bragging about it with their silly social media posts, we are getting fewer houses.

That is because the government has made home building uneconomic, and the way that we hear the government talk about small business—the way that they talk about the construction and building sector shows a fundamental misunderstanding that, in fact, in this sector of home building, there are many, many thousands of small businesses. In fact, almost all the businesses that do business in the construction and building sector are small businesses. Three out of five businesses, on average, will be using a trust for the ongoing management of their building company, and so these changes to trusts will cascade through a sector which has already been smashed by taxes and regulation over these 4½ years.

As I say, the government seem confused that their economic model for housing where you have more taxes and more regulation has delivered fewer houses, but that's actually the orthodoxy working as it should, because, if you tax something more and you regulate it more, you are likely to get less output. That is what we are seeing with housing. The issue with this new trust tax is, yes, it is imposing a higher tax burden on something that the nation needs more of. The government is saying we need to have more taxes on housing to get more houses, and that shows you really how bad and stupid the government is. The restructuring now that is going to be required might cost up to $13 billion in the building and construction sector, and that's all these small businesses. The tradies, the subcontractors, whatever, who are home builders are now going to have to consider restructuring. What for? Just to pay higher taxes.

The industry is on its knees. It's on its knees. Look at the data. We're getting fewer and fewer houses. Building companies are leading the nation in insolvencies, and so what's the government's solution? We should have a complicated, convoluted trust taxation that's going to apply to three in five businesses in the building and construction sector. That will solve the problem. That will fix it. It'll be all sweet. That's their solution. The proposal put forward the excluded election trust, which is a rigid approach which will fix the rules of trust, will mean that the trusts that have been used by building companies will no longer operate as intended, and so it introduces an arbitrage where, in fact, you might get a different outcome if you're in a trust compared to running as a sole tradership.

At the end of the day, why would the government want to impose restructuring costs on small building companies that are trying to build houses for Australians? It just seems bizarre to me. But they want to impose legal costs, accounting costs, valuation costs, licensing costs, insurance costs and, of course, stamp duty costs on these small businesses that are trying to build houses. This is another ridiculous tax on the people who are trying to build Australia out of Labor's housing crisis. It shows a fundamental misunderstanding. The government doesn't understand that the bulk of the businesses in the housing system are using trusts. They're using trusts because that is how they've been advised to set up for efficient operation, and they've already been underwater with 16 interest rate rises, new taxes, more red tape, more regulation and national construction codes which are designed for the unions not designed for the people. This is going to be the last straw, and people are just going to give up.

When the government say, 'We can't get enough houses built,' that's because—the government's been in office for almost five years. They've collapsed housing supply because they're stupid. They actually are stupid. If they wanted to build houses then they would be honest and say: 'Yes, we did read the book Abundance. Jim Chalmers did read the book Abundance where we understand that the central thesis is less regulation and fewer taxes will promote construction and supply.'

Senator McGrath has brought on an urgency motion about a problem that was actually examined 50 years ago. Apparently, the urgency is to make sure we still do nothing about it. In 1972, Liberal treasurer Billy Snedden commissioned the Asprey review. Its 1975 report asked a basic question: how do we build a tax system that is fair, efficient and simple? One problem it identified was income splitting through trusts. Asprey did not design the legislation we're looking at today, but it did recognise the underlying concern. People on similar incomes can face very different tax outcomes because of how their income is structured.

And history did not stop there. In 1998, the Howard government itself recognised that the same investment could face different tax treatment depending on whether it was held through trust or through a company, and it indeed proposed reforms to trust taxation—not the same model we are debating today but the same principle about how income is dealt with through trusts and other forms that are generated. The Henry review also raised concerns again in 2009, and, just as recently as 2015, the coalition's own Re:think discussion paper acknowledged that discretionary trusts can deliver tax advantages when beneficiaries have different incomes. So let's not pretend this problem was suddenly invented in the last budget. This debate and this concern have been going on for 50 years. Rather, this budget finally took on the challenge 50 years after it was first flagged.

Let's consider a very simple example that illustrates the principle. There are two families with similar incomes. One earns wages. The other receives income through a discretionary trust. The first cannot divide a pay packet among relatives to reduce the tax bill. The second can have scope to allocate trust income to beneficiaries on lower tax brackets. The economic contribution of both families is probably equally valuable, yet their tax bills can be very different. Treasury analysis found that families using discretionary trusts face an average tax rate of around four percentage points lower than families on similar incomes without them. That is the fairness question that this motion avoids entirely. Economists deal with it as 'horizontal equity'—people in similar circumstances should be treated similarly by the tax system. A good tax system should reward productive activity, not the ability to choose the most favourable structure for receiving income.

Nobody disputes that trusts have legitimate purposes, including succession planning, asset protection and the operation of family businesses. Not everyone using a trust is trying to avoid a tax, but recognising those legitimate purposes does not require preserving every tax advantage. Tasmanian economist Saul Eslake supports reforming discretionary trusts even though he operates his own business through one and expects to be affected. He called it the right thing to do. He also raised concerns about the treatment of startups, and that is a serious contribution—support the objective but then seek to improve the design.

The reforms would introduce a minimum 30 per cent tax on discretionary trust income from July 2028 with important exclusions. Primary production income is excluded, meaning a fixed trust, charitable trust, special disability trust or superannuation fund. This motion invokes farmers while neglecting to mention the exclusion of primary production income, a significant omission. And what about the headline figure of $13 billion in restructuring costs? It's a large number and deserves scrutiny, and it doesn't become inevitable just because Senator McGrath puts it in a motion. Trusts can elect to make fixed distributions and be exempt from the minimum tax without restructuring. Expanded rollover relief will also be available for those who choose to restructure.

Advice costs matter and so does getting the transition right. We should listen to small business, test the details and fix practical problems. But we can refine the edges of this legislation without hollowing out its core. The opposition says the reforms punish the people who take risks and create jobs, but genuine enterprise deserves better than being confused with the ability to arrange a smaller tax bill. Australians who earn their living from wages also work hard, take risks and contribute to our prosperity. They deserve a tax system that treats them fairly.

The Howard government recognised distortions. The Asprey review did. The coalition's own 2015 paper acknowledged it. The government is acting. I oppose this motion.

Well, we can all try to be convinced by the government's high-spending, high-taxing, demonising-small-business agenda, but the truth is Australian small businesses are fed up. They're fed up with the constant unnecessary stress caused by this Albanese Labor government. There is no better example of Labor's complete and utter disregard for small business and their complete and utter lack of understanding of the realities of small business than Labor's harebrained 30 per cent trust tax. Around 350,000 Australian small businesses are using discretionary trusts. These are not wealthy investors; they are builders, tradies, retailers, hospitality operators and family businesses across our regions—businesses often built over generations. They are the businesses that employ Australians. They train our apprentices. They are those who take the risks that keep our economy moving. Now, Labor wants to change the rules under which they operate.

The independent estimates suggest restructuring and advisory costs could reach $13.3 billion, and Labor expects our small businesses to foot that bill. That is $13.3 billion not spent on new employees, upgrading equipment and training apprentices. Industry stakeholders like the Housing Industry Association have rightly condemned this tradies tax. At a time when Australia desperately needs more homes built, why is this Albanese Labor government so hellbent on making it more difficult for businesses to try and build them—higher costs, more regulation and Labor's toxic taxes have put thousands of small businesses across the country on the brink of collapse. This latest thought bubble is no different. Labor doesn't seem to care, though, what we are seeing when we're seeing record insolvencies across Australia.

A third of Australian small-business owners have considered closing their business in the past 12 months. That's one-third. It is simply not good enough that small businesses are treated as an afterthought by the Albanese Labor government. Yesterday, when questioned in this chamber about the realities of Labor's latest tax, Senator Wong pointed to the number of small businesses supposedly operating under Labor. But a business registration tells us nothing about whether that business is profitable, can afford another worker or is barely keeping its doors open. If Labor actually bothered to listen to our small businesses, they would know that they are hurting. It has been one thing after another thanks to this government—higher taxes, higher power bills and Labor's botched credit card ban. It is telling when even the MIA minister for small business, Anne Aly, is forced to acknowledge that, under this Labor government, Australian businesses are hurting.

As shadow minister for small business, I hear from employers who are angry. They are worried and exhausted by mounting costs and uncertainty. They want to get on with running their small business, not spending their savings adapting to yet another Labor tax. Australia should be the country where people are encouraged to take a risk, start a business, employ Australians and build something to pass on to their children. We need a tax system that is fair, predictable and workable, not one that punishes small businesses with picking up Labor's tab. Small and family businesses deserve certainty, not another bill. They deserve a government that backs them, not one that keeps moving the goalposts. The Labor prime minister and treasurer and the missing-in-action small business minister need to stop and actually listen to small businesses. Start backing our small businesses instead of breaking them.

The question before the chair is that the motion moved by Senator McGrath be agreed to. A division having been called and it being after 6.30, consideration will be a matter for tomorrow's program.