I rise to speak on the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023. To begin, I want to draw attention to the illogical and cynical way the government has constructed this bill. I say ‘illogical and cynical’ because in this bill the government bundles two fundamentally separate yet extremely important issues into a single piece of legislation. The first part is to close the regulatory tax loopholes that led to the PwC tax leak scandal. The second part includes important changes to the fossil fuel tax. This government, especially in the last couple of sitting weeks of this year, has demonstrated a continued pattern of rushing legislation, tacking important reforms onto totally unrelated bills and attempting to wedge members of parliament on nationally important issues.
I know it is not unusual for Treasury laws amendment bills to often have many schedules, sometimes on widely disparate matters, but in this particular case it’s clear the government is trying to wedge members, particularly the crossbench, who want to see improvements on integrity and whistleblower matters but who also see this poor excuse for a petroleum resource rent tax for what it truly is. This is not good legislating. This is playing political games, and members of the Australian public deserve much better from their government and from their elected representatives. I will be opposing this bill on its content, but I will also be opposing it on the principle of poor governance. I call on the government to separate this bill so that the parliament can scrutinise the two issues carefully on their individual merits. This is what conscientious legislators do, and, right now, this bill falls significantly short.
I’ll now address the four schedules of the bill that implement the government’s response to the PwC tax leak scandal. This scandal was an outrageous breach of confidentiality by a government hired consultancy. PwC used their privileged access to confidential tax law reforms to help corporations avoid a law that they were consulted on. It was a breach of trust, and PwC showed a deep lack of integrity. The reforms in this bill are a step towards ensuring that tax advisers and their professional associations do not engage in this corrupt behaviour ever again. This bill does so by increasing the maximum penalties for those found guilty of promoting tax exploitation schemes and making sure the right people can be captured by these laws when they engage in misconduct. The bill improves the powers of the Tax Practitioners Board to investigate and regulate any wrongdoing. The reforms also ensure information about misconduct and breaches of confidence can be shared with Treasury so they can be responded to. The gaps in sharing information are a big reason why it took so long to identify the PwC breaches.
Most importantly, this bill extends protections for tax whistleblowers. If someone wants to disclose information to the Tax Practitioners Board about misconduct and breaches of confidence, they will be protected. Whistleblowers will be able to seek professional assistance—for example, for psychologists—in making a disclosure, and we know this is important because of the personal and professional toll that disclosing wrongdoing can take. Getting help should not be criminalised. These amendments also protect whistleblowers from detrimental conduct relating to their disclosure of misconduct, like job loss.
These amendments are all important steps in the right direction to make much-needed reforms to our whistleblower protection laws, but they do not go anywhere near far enough. This law introduces protections only for tax whistleblowers. Major gaps still remain for all other types of whistleblowers, in both the public sector and the private sector. In 2017 a parliamentary joint committee issued a report on whistleblower protections. They clearly recommended the following:
Commonwealth public sector whistleblowing legislation remain in a single updated Act, redrafted in parallel with the private sector Act;
Commonwealth private sector whistleblowing legislation (including tax) be brought together into a single Act; …
This recommendation was clear and concise, and yet more than five years later the government is continuing this trend of promising strong whistleblower protection reforms but, in reality, just tinkering around the edges. They introduce some tax whistleblower protections while ignoring other gaping holes. The result is what the Human Rights Law Centre, Griffith University and Transparency International describe as ‘a fragmented, duplicatory and inconsistent landscape of federal whistleblower protections’.
The government, and by that I mean the Attorney-General, the Treasurer, the Minister for Financial Services and everyone whose portfolio deals with whistleblowers, must get on with it and introduce legislation that is comprehensive, consistent and holistic. They must also introduce legislation for a whistleblower protection authority—and I acknowledge that the Attorney-General has issued a discussion paper that’s open for comment right now. Such an authority is imperative to ensure that whistleblowers can receive the right advice and support. These reforms are essential to restoring public trust across the private and public sectors, and I’m here to work with government on these comprehensive reforms. I sincerely hope that they take up this invitation.
Now, with a slight feeling of whiplash, I must say, I want to address the other part of this bill. Schedule 5 of this bill amends the Petroleum Resource Rent Tax Act. The petroleum resource rent tax, or the PRRT, is a tax on the superprofits of offshore gas and oil projects. This bill places a cap on the use of deductible expenditure to reduce tax obligations under the Petroleum Resource Rent Tax Act. Reform of this tax is sorely needed, as most offshore gas projects are yet to pay any—yet to pay any!—petroleum resource rent tax. The objective of this tax is to return a share of the profits generated from our natural resources to all Australian citizens. To date, the PRRT has failed resolutely to deliver on this objective.
Projects can reduce their PRRT obligations by deducting all expenses incurred in developing a project, such as the exploration expenses. These deductions can be carried forward indefinitely, and are indexed each year at extremely generous uplift rates. For the first 10 years of many projects, exploration expenses were able to be increased by the long-term bond rate plus 15 per cent. This means that over the first 10 years of a project, deduction credits could compound to five times the initial exploration expense. In total, projects have amassed around $280 billion in credits. These credits are currently being used to offset almost all PRRT obligations. In simple terms, the design of the current scheme means that billions of dollars worth of Australia’s natural resources are being shipped overseas with next to no benefit to the Australian taxpayer. Even the Treasury review of the PRRT notes the absurdity of this situation, stating:
… the accumulation of a large stock of carry forward deductions, compounded by uplifting, can defer the payment of PRRT indefinitely.
This process of carrying forward and generously indexing initial capital expenditure contrasts steeply with the typical process for business deductions. There’s no indexation of the initial capital costs for businesses. There are almost 15,700 small businesses across my electorate of Indi and not one of them—none of them!—benefit from such generous tax treatment, so why should LNG projects be treated so differently?
With this bill, deductible expenditure is limited to the value of 90 per cent of PRRT-assessable receipts. This means that at least 10 per cent of a company’s PRRT-assessable receipts in each financial year will be subject to the PRRT. This change would bring forward tax paid by projects subject to the PRRT. I welcome reforms that will increase the returns that Australians receive for the exploitation and export of our finite resources.
But I will not be supporting this reform because it simply does not go anywhere near far enough. The government states that this reform will increase government revenue in the short term by around $2.4 billion. Now, $2.4 billion shouldn’t be sneezed at; no it shouldn’t. But over the lifetime of these projects the government’s proposed changes scarcely raise any additional revenue for Australians. Yes, you heard me right: these changes will hardly have any impact on the total tax revenue Australia receives from these projects. The deductions companies can’t use in a given years due to the 90 per cent cap will just be rolled over to the next year and indexed and rolled over again and again until they can be used. This bill fails to reduce the generous compounded deductions projects can use to reduce or avoid PRRT, and it fails to deliver a better return for everyday Australians.
These offshore gas resources we’re talking about belong to all Australians, and we only get one opportunity to sell them. At the moment, we’re giving away these resources for a fraction of their real value, and with this bill that’s exactly what we’re going to continue to do. It’s not good enough. We need a fair return on our resources. We need more ambitious changes to the PRRT, especially so in the context of a cost-of-living crisis and a commitment to a transition in our energy system to achieve net zero emissions. More offshore gas projects won’t help Australians suffering under higher bills. No, they won’t. We have the most LNG export capacity in the world, yet this isn’t helping Australian consumers at all. In fact, the ACCC clearly states that LNG projects have increased the cost of east coast gas prices. Despite record-high international and domestic gas prices we are still getting minimal return from the export of our finite natural resources.
The super profits from gas exports should be funding hospitals, roads and schools right across the country. Imagine the public good we could do if we got this right. They should be supporting households and businesses to improve their energy efficiency and use renewables, instead, though, they are funding dividends for shareholders all over the world. This bill fails to reform the PRRT in the best interests of Australians. What a massive let-down. What a massive disappointment. Generally, I am not one to let the perfect be the enemy of the good; I’m not, but I’m not going to just settle for this one. These measures show a complete lack of vision and ambition for our country. They really do, and they let-down everyday Australians right now.