Senate Economics Legislation Committee, , 7:14:53 to 9:02:25
The final session covers tobacco excise, resource rent tax, ATO integrity, and legal division oversight.
Topics: Fossil fuels, Integrity, Whistleblower protections, Freedom of information
Speakers: Rob Heferen, Diane Brown, Hon Richard Colbeck, Andrew Bragg, Hon Matthew Canavan, Barbara Pocock, Dave Sharma, David Hertzberg, David Pocock, Dr Shane Johnson, Fatima Payman, Hon Katy Gallagher, Jeremy Hirschhorn, Lisa Darmanin, Marty Robinson, Nick McKim, Speaker 34, Speaker 35, Speaker 39, Sue Woodward, Susan McDonald
>> Uh we've we have uh resumed proceedings and Senator Colbeck has the first block
>> Thanks, J. >> I I just want to go to um some questions around tobacco excise. Myo downgrades the revenues for tobacco in 2526 by $1.6 billion and in 26 27 by $2 billion. Um the Australian industry group released some modeling recently that suggested elillicit tobacco now accounts for approximately half. It's probably more than that I think with and estimated revenue or excise loss of about $10 billion per year. What is Treasury's modeling saying in respect of that? Where where do you think it's at
now? Uh so senator we do um we do give a an estimate or a forecast of taper excise each economic forecast. So the last one was in myo uh and again we we did revise it down uh you might have cited that number but by 8.2 billion over the forward estimates in the 202526 myo our next forecast will be in the um in the budget in May.
not quite my question. AIG has released some modeling suggesting that it's costing 10 billion per year. Where does your modeling sit?
>> So, Senator, we revise our estimates at uh the times of economic statements. So, in my EFO and budget,
>> I understand that. I've read read my EFO is saying for this current financial year, it's 1.6. Next year it's two billion from so from uh so this year from 7.05 down to 5.45 1.6 billion 22.7% down next year 6.8 to 4.8 8 billion down 29% $2 billion drop. that's not the total loss. That's what you're expecting to downgrade your revenues by. So what is what what are we losing? AIG estimate it's 10 billion a year. What what is Treasury's estimate of what we're losing from illicit tobacco?
>> Uh so we forecast legal tobacco. Uh but Mr. Dr. Johnson's just come to the tape. He might be able to add a little bit more context.
>> Shane Johnson, first assistant secretary textile division. I think as um as Mr. Brown was saying um we focus we we look at the legal tobacco market do our estimates to be able to do what you're asking which is a counterfactual we need to have information on the uh on the illicit market and we don't monitor the elicit market that comes to more of a tax cap type of analysis.
>> Yes. But I mean by very nature of the fact that it's an illicit market, there's not a lot of data about it >> So I'm I'm trying to get a sense of how Treasury's modeling thinks we're losing on an annual basis. ARIG says it's 10 billion a year. Um are they too high, too low? surely Treasury has some modeling of what we're losing on an annual basis through the sale of illicit tobacco, which is out of control. It's more than of tobacco sales in Australia right now.
Um, Senator, if I could help, the um uh the the gap that you're referring to, the um the commissioner for um illegal tobacco uh which sits in the
>> health department
>> uh in the board and home affairs, I think um they actually uh look at this quite closely and do the calculations because I've just I'm I'm sure you're aware of it, but when in the budget papers when it talks about the excise is actually excis and customs duty and the bulk of this is customs duty foregone cuz most of the illicit market um as I understand it comes in over the border not produced in Australia. So the strictly speaking the excise is the duty foregone loss of excise is what's foregone on domestic manufacturer the imported which is the bulk um as they assess of the illicit market um uh is the in the realm border force and the um the uh legal tobacco commissioner uh and so that I think they would have that broader assessment of the overall costs
>> so you don't do any modeling at all as to what this illicit market is costing the Australian economy.
>> So in the uh in the tax office when we work through the tax I'll get Mr. um S commissioner Hershorn to talk a bit more detail about it. We we used to do a broader calculation around the broad um uh tobacco duty that is part of that gap um because of the setup of the um the illegal tobacco um I don't have the itch illegal tobacco
>> elicit tobac
>> and ecigarette commissioner because that function being set up then our best uh place to do that. So in the last annual report, we sort of made it clear that what we would then continue to do is do the reporting on uh foregone excise, but the excise is a much smaller part cuz that's just the uh the illegal stuff that's grown domestically um but not imported. And so they would have that
look where
>> annual report is published.
>> Where is where is tobacco grown annual um man um in Australia? Y hasn't been a tobacco industry in Australia for 20 years.
>> Yes. So uh Senator if if I might uh commend so I would commend you the report of the illicit tobacco and ecigarette commissioner uh their report >> um does estimate the amount of illicit tobacco consumed in Australia. Uh their methodology is based on wastewater analysis of alka alkenoids. Y >> in the past the tax office had attempted to do a wastewater analysis but was unable to isolate from other plants in the nicotenoid family but um I do commend the ITC commissioner on their wastewater analysis uh to answer your first question their estimate is that elillicit tobacco is around 50 to 60% of the tobacco consumed in Australia at ass at 2425 and Uh in terms of your your com comments around uh domestic crops which is our concern in the tax office we estimate we have in the past estimated that's about 10% of illicit tobacco is domestically grown. 90% imported uh you are absolutely correct. There have been no licenses to grow tobacco in Australia for I think around 20 years. >> So there is no there is no legal tobacco grown in Australia. >> Correct. Um, illegal tobacco is grown uh from where we have successful raids, it's pretty much grown all around Um, anywhere where, as I understand it, uh, tomatoes and other crops, similar crops can be grown, tobacco can be
>> I'm aware of some of the roads in Victoria where um, because it grows pretty quickly. Um there's been significant rains raids of 10 1525 million worth of crop. I I'm aware that there is some of that occurring.
>> I think we've done we've done about a hundred raids over the last decade of
>> Um so you are well there is wastewater intelligence um uh modeling being done.
>> I would commend that report. It also estimates um nicotine use in the illegal
has Treasury done any modeling on resetting the excise levels to assist with combating the illicit market? I mean the so so the argument goes the high price of cigarettes which where you're paying 50 bucks a packet versus 13 to 20 bucks a packet through the illicit market um is is what's actually driving this. There's money to be made here clearly. I've spoken to a particular small small retailer supermarket at home who's losing a million dollars a year in sales because it's all going through the elicit market. Um, their October to October figures for the last cycle was $150,000 down in the month. So, the last two or three years, it's just taken off out of control. in the Australia Post admit that they're probably the biggest tra I won't say trafficker um couer of elicit tobacco in the country. I mean any of the websites you go on to get your Australia Post tracking number. Are you a shareholder minister for Australia Post? >> is has there been any modeling done on changing the rate to as a as part of an overall mechanism to combat this trade that is basically feeding
>> in terms of illegal tobacco. Um, the government keeps all of these matters under review. Obviously the Minister for Home Affairs has a huge role to play here and we take advice from a number of agencies across government. Um we have as you know um put in extra investments in the last two budgets to deal with some you know providing extra resources uh to combat the illiss tobacco uh trade in Australia and you know the government will keep monitoring it and taking it appropriate advice from agencies.
>> Yeah. and and and I acknowledge the additional seizures, but the market's growing at six times the rate of the seizures are growing. So surely there has to be some common sense conversation about the driver of the market, which is the high excise rate. I mean, I get stop wanting to stop people from smoking. I've never smoked in my life and I'm on the program with that. But it's clear that the excise rate is driving the market and there seems to be a complete head in the sand approach to reconsidering what the market the illicit market driver is. So I'm asking if there's any
>> there isn't a head in the sand approach.
>> Has there been any modeling done on reccalibrating the excise rate as one of the tools to
an that that is a uh an issue that's been raised with the government and is seen as the single solution to this.
>> It's not a single solution, Minister, and I'm not suggesting that. So, don't
>> Well, no, I'm just I'm not necessarily saying that's what you said. I'm saying that there are advocates who see it as the single solution. Um it's not. And um the government has been working including with states and territories that have significant responsibilities here to look at how we continue to respond uh to uh this you know this market essentially and we will keep it under review um as we have done in the last two budgets. The big increases in excise actually happened in the 2016 budget and beyond where they were hiked by 12 1.5% a year. I think um the the the increases in recent times have not not been anywhere near that big. So you know these are matters that we look at and we will keep under review.
>> Minister, the change in the market has happened over the last 2 and 1/2 years. That's where you're linking it to the
excise and I'm saying the big increase the excise happened in 2016 and going forward that where it was raised 12.5% a
year. you can try and deflect this order.
>> I'm not deflecting it. I'm just saying that that's not the only thing that we're looking at. We're looking across the board
>> and and I know that that's occurring. I mean, the Tasmanian government's got new legislation that was introduced in the last couple of weeks. So, I know there's a whole range of things are happening. >> Um, but this is taking a huge chunk out of revenue estimated by AIG to be at 10 billion a year. Um, one of the arguments against doing anything is that there's going to be a revenue hit. Well, we've already suffered that and I'm trying to get a sense of a what the total number is on an annual basis. Um, you're reluctant to indicate that to me, but reduced revenues projections for this year by 1.6 billion by 2 billion for next year. So, it's not small amounts of money.
>> Well, and
>> and that's just these two years. I'd
refer you to the elicit tobacco and ecigarette commissioners report that goes through all of the issues that you're interested in and raising. Um it's got quite detailed um analysis around um you know costs and impacts and that is a publicly available document.
>> so has the treasury done any modeling on on reducing the rate?
Well, Treasury, I am answering that these are matters that the government keeps under consideration. Treasury is one of the agencies that would provide advice around uh our response to elicit tobacco, but not the only one. Um, you know, the health department has views, strong advice, home affairs does, state and territory governments do.
>> Yeah. But I'm asking questions about the revenues that the government is or isn't collecting. And I'm just asking a simple question. Has there been any modeling
>> so the department obviously as as the minister indicated is involved in interdep departmental um conversations, discussions across the agencies. the minister referred to health home affairs to keep the uh issue under under watch. Um in terms of modeling, we're responsible for modeling the the excise on legal tobacco. We have done some work around the um elasticity of demand for tobacco to see whether that's changed. So there is um modeling of that type that's going on. But otherwise uh as the minister said wearing it's it's an issue that's um complex cuts across a range of issues. Treasury is involved in those discussions across government.
>> Senator I'm going to have to rotate the call if you want to try and wind it up and then
>> Yeah. Yeah. I I will. So is is there a uh price point where that elasticity that you've mentioned particularly changes?
>> Uh I'd have to take that on notice.
>> Okay. Thank you. Can I just one question I want to go to um Mr. de Cure who's sitting quietly out there on the wing trying to avoid attention. have do [clears throat] you have any further investigations in relation to PWC on foot?
>> Uh we have some matters ongoing with
PWC. Yes. Do they relate to matters that um have been discussed with you before or are they new matters?
As I said in previous evidence, Senator, um the nine partner related matters that were related to the um Peter Collins leaks inquiry have been concluded from us with one matter outstanding due to that uh former PWC partner using their appeal rights. Um there are a range of matters uh and one in particular with PWC that's an ongoing investigation. Uh it it's been ongoing for some time now and I said I think in previous evidence that uh I hope that it will be concluded in the middle of this year.
>> Do you have a is there a statutory time frame around that?
>> Uh there is the normal statutory time frame but we're not not feeling constrained by that in terms of getting the matter concluded.
>> Can I can you say how many matters you
>> Uh one.
>> Okay. Thank you, Senator McDonald.
some questions with regard to uh Treasury's modeling for future um taxation streams. Um the Australia's net zero transformation treasury modeling and analysis document shows on page 34 a crossover of green commodity exports and fossil fuel exports. Um it looks to be about 2032. What I'm interested in asking is in what year does Treasury project that taxation revenue from renewable industries will surpass taxation revenue from fossil fuel industries?
>> I think we heard that discussion this morning with our colleagues in a macroeconomic group and so Dr. Johnson has been giving it some thought in the >> Um might [clears throat] be able to make a few a few comments.
>> Thank you. So um the analysis that's in >> What proportion of Australia's revenue uh is made up from royalties and corporate taxes, paw taxes from uh the mining sector. results before. I guess my best estimates is around half. >> Uh I wouldn't really check. >> So you can see where I'm going though. If our biggest income stream is from um coal, gas, iron ore, uh and not just the royalties and corporate taxes, but the associated um high salaries and whatnot, P A taxes um and when I look at this document, uh it's projecting that we will no longer be in receipt of those items. And whilst the um whilst this is a fairly significant upward line, uh it's my understanding that the amount of critical minerals and the hydrogen and the amount of ammonia, the amount of renewable energy that we would have to export would be truly huge in order to come close to the sort of income stream that we're receiving from fossil fuels at the moment and I I felt sure that revenue group would have some views on this given that it's you know like any business your income streams are the top line's important
>> and so our focus will be on what our projections for GDP and because that's where we're going to get the that's the one of the primary drivers or relationship between tax revenue and GDP and so uh as you in that report as it shows the GDP continues to grow and so our our estimates will be based on that but you is right that the structure and compositional changes to the economy will have an impact on revenue but they often balance out where we have uh a certain firm may exit other firms will come in um but what we focus on is the aggregates and we look at GDP and how GDP is tracking and that gives us a good sense on where where revenues are likely
>> okay then uh I I'm surprised that you think that those uh incomes streams will match what we're receiving uh from those three big earners currently. So can you provide uh what modeling you have done then based on GDP and how you see those the GDP projections for renewable energies for critical minerals I think uranium was in it when we had this discussion last estimates um how you'd see those
>> so like we don't >> those growth >> we don't we don't decompose to that fine level but if you would like uh some information on the how we see corporate revenues going uh over the longer term. The the 2023 intergenerational report highlights those things and also goes
>> Uh I'm I'm fascinated that you don't um when we're talking about a replacement. the mo the government's modeling is a replacement of three really huge sectors and uh and the modeling is it's just going to I mean I see here that the growth of hydrogen we have no hydrogen industry or yes I think no would be a reasonable thing and ammonia industry that
so senator as uh Dr. Johnson said the intergenerational report from 2023 actually outlined the very challenges that you described um the impacts on revenue sources from um climate change and also the opportunities from climate change. It's the type of analysis that you're talking about is something that we do think about from time to time and usually quite commonly in the context of the intergenerational report. We do have another one coming out in um 2026. Um but as uh Dr. Johnson said, it is it is um forecasts are very hard and forecasting more particular things just gets harder and harder. Um so we do forecast at a higher level than particular sectors. that doesn't mean that we don't look at the sustainability of revenue sources and have regard to whether there are new revenue sources uh that need to be considered. Uh for example, the road user charge um on electric vehicles might be one example of recognizing how um consumption patterns have changed and how that is affecting in this case fuel excise and uh how that might give rise to a different or a new uh a taxing arrangement being necessary. So it is it is something we keep under under watch. Uh but that level of specity that you're looking for is just not really possible in forecasting.
All right. So,
>> Mr. de Cure, were you indicating you had something to add there?
>> I need to correct a previous answer if I
>> Oh, okay. Sorry. Um maybe we'll do that once. Is it related to this matter? No. Okay. I'll I'll just hold that thought. >> You're at um 8 minutes. Senator
>> Thank you. All right. So, the intergenerational report um which is going to be updated this year.
>> It is due to be updated this year. Um
and and that is going to have a fully fleshed out model for me to test.
>> I I I can't promise that. We're still working out what it what it will cover. But it is those are the kind of um publications where we do give thought to what is the long-term trends uh both in spending and revenue. It's looking at the long-term trends in fiscal policy.
can I ask then on notice the annual taxation revenue to the commonwealth of the fossil fuel sector coal gas and then add iron ore as well
please if you like what I can give you is um mining company tax payable in 22 23 was
>> well the only problem with that is it's going to include critical minerals I
>> I will I will decompose if you like um a little bit I'll decompose them as well as we go through if you like. >> Um it was 54 billion in 22 23 it's about two fifths >> um in that year coal so sub sub element of coal oil and gas for 23 billion or and that information is available in the taxation statistics
>> and uh is that just corporate taxes?
>> That was for corporate tax.
>> So it doesn't include royalties or p income? And do you go through to analyze the impact on um on businesses within the communities that they that those businesses are operating in?
>> Uh so that's probably a question for our climate change modeling colleagues. We'd look more at the revenue and the revenue
think it is because it's about existing like would you do you have do you uh examine if you have um the coal industry in Australia the associated industries which wouldn't be reporting that they're coal miners or they're coal suppliers they'll be transport and tire suppliers
>> the revenue that comes through supporting businesses.
I I'll need to check to see how that's class that would depend on how the entity itself classifies uh in their tax return because they're they're um their class how they classify themselves will be picked up in the taxation statistics. The information I gave you was from a from ATO publication taxation
statistics. Now I understand I guess given that Australia has relied on uh mining uh income streams for you know most of its history or a significant part of its history that uh these are things that we've not had to consider before what is the impact for those industries the associated industries also being impacted and the regional communities that they're part of.
>> Yeah. So in terms of the economic impact on those industries, that type of analysis is picked up in the cl in that climate report. They use a a computer a generic uh a computable general equilibrium model that does pick up um the effects on related sectors or inputs into into that sector.
>> So not in this report in another report
>> should be in that one
>> the net zero transformation.
>> Yeah, it should they they should be picked up in that in the analysis only
in a very broad way. If it is,
>> it's best to best to refer those questions to to to uh to macro groups.
>> No. Well, that would be of no use at all because I've spoken to macro group and they say impacts of tax impacts on taxation.
>> Impacts on taxation sits with us.
>> Yes. And not just tax for the mining companies, but taxes for the associated.
>> Yeah. Okay. So, if it's impacts on taxes, that does sit with us. Um, sorry, I thought you were interested in economic impacts. Like I said, we haven't extrapolated those to uh to particular uh to particular revenue impacts.
>> Okay. When you do the analysis for me on the tax revenue to the Commonwealth for mining and specifically coal and gas and iron ore, would you also provide that for the forwards, please?
>> Uh so we won't have it for the forwards. We can only provide you with historical estimates because we don't we don't forecast we don't forecast at that fine level. We will forecast
>> you forecast a price a commodity price.
>> We forecast commodity prices but um we forecast m the mining sector but we don't look at those particular we don't do every single particular commodity. No
>> Okay. I mean, biggest business in Australia and and it's a bit of a guess. Just wait till the commodity prices come.
>> It's certainly not a guess. There's a lot [clears throat] there's a lot of um a lot of thought goes into it. The modeling is um quite detailed. Um but we don't go through and not look at each individual commodity. um we can get very very accurate uh estimates of the revenue by looking at certain certain group sectors across the economy.
>> Oh then if you could provide them with that information.
>> What we do what we do is we um uh what we do is we we look at um uh collections data and other things to try and inform those but we don't actually um we don't forecast based on in fact the details of our forecasts are in the budget.
>> Senator I'm going to have to rotate
[clears throat] the call. Um could I just finish off on this line of thought then? So if you could provide the the very finely modeled data that doesn't break it down by sector for the forwards uh for me please.
>> So that would be company tax collections in the end.
>> I'm going to need to rotate. We can come back if we need to. >> Sure. Thank you. Uh Senator Payman.
>> Thank you, Chair. Good afternoon. Um my questions are in similar vein to Senator Colbeex. Um relating to the decline uh declining take from the tobacco excise. Um by how much were tobacco excise revenue projections decreased over the forward estimates in myo?
>> Uh I think I indicated earlier it was 8.2, two, but I'm just going to check my notes to make sure I've got that number Mr. Dr. Johnson may find it quicker. Yes, tobacco excise receipts were revised down by 8.2 billion over the forward estimates than 2526 Mayifo. that's compared with the 2526 budget forecasts.
>> Um and the pro the projection for this financial year is 5.45 billion. Um it was reported that this was the lowest take for the tobacco excise in 20 years. Is that assessment accurate?
>> We might need to check that one.
>> That's okay.
>> Sorry. Can you just repeat the number?
Um it so the projection is $5.45 billion. Um and it was reported that it's the lowest take in the tobacco excise in 20 years.
>> Yes. So that's so 5.45 billion is the estimate the wifer estimate for 2526. I need to check if it's the lowest one but that is the that is the estimate for
>> If you could come back to us yeah um whether it's the lowest in 20 years. Um so the $5.45 45 billion 20 years ago is worth around [music] $9.4 billion today. Could you take it on notice whether adjusted for inflation there has been a lower take on tobacco excise in a financial year since the tobacco excise was introduced?
>> Yeah, we can take that on notice.
>> Beautiful. Thank you. Um I'm curious to understand whether the government will invest further in compliance in the next budget. Is there any indication or
>> that would be a matter for government to announce doing so?
>> Uh Senator P, we answered this in or I answered this in respect to uh Senator Colbeck's question. We keep this under uh constant review. Um we've put in 350 million in the last two budgets. Um and the extra investments have delivered um or made a real difference uh in the numbers of seizures at the border. Um but you know we accept that there is more to be done here including working with states and territories on the criminal activity side of things. Thank
you. So on the other things that could be done, are there any other particular um policy levers the government's
considering? Uh well I think it covers a range of portfols um which we work with the states and territories on. There's border control issues which fall within our responsibility. there's definitely you know health um advice around the this you know problem uh and then you know also the work that treasury does in in looking at uh how much revenue we collect. So you know across there there's there's a whole range of activity happening really um I'm not in a position to expand on
that today. Um the receipt projections for the tobacco excise were downgraded uh at the 202526 budget by 1.35 billion uh upgraded at the 2025 pre-election economic and fiscal outlook by 400 million and downgraded at the 202526 myo by 1.6 billion. I'm curious to understand will the 2026 27 budget see an upgrade or a downgrade or will Australians just have to wait
forecasts in the budget. So we do update them twice a year routinely through the myo and um budget and so they'll be done they were done for myo and you know the work will be done over the next little while to update that for budget. We don't release it before budget,
>> but are you anticipating it to for there to be an upgrade or a downgrade?
>> That's something that will be disclosed in the budget.
because yeah, as as Senator Colbeck also alluded to earlier, we're seeing excise going up and revenue going down. So either people are miraculously, you know, quitting smoking on mass um or the black market seems to be eating up the government's lunch. Um just curious to understand like are things going to be turning around? If so, when?
>> Uh so the government's working on a range of measures to address the illicit tobacco market that the minister went through a number of those higher enforcement. um you know another 345 million spent around improving um on that on that work. Um the compliance work has also been picked up by states and territories. I think um there's been a number of raids in states to close tobacco shops in just in recent times. All those effects will have um you know we'll have to see what those effects do to the illicit tobacco market, but they're all directed at trying to reduce the illicit market.
>> Well, we'll look forward to the budget then. Thank you. Thank you, chair.
>> Thank you. I'll go to Senator PCO >> and then I've got Sharma >> and then I'll go to you after that.
>> Um, thank you, Chair. Senator Kick, I said one. There's currently two investigations involving PWC.
>> Twice as bad.
>> Yeah, I I was half right.
>> Senator PCO will have an interest, I'm
>> So, thank you. You did ask my questions. Thank you, Senator Colbeck. But two ongoing investments in relation to PWC. Are both of them expected to be completed around the middle of the year? >> Are they both related to legal professional privilege pro?
>> Well, Senator, I we really to preserve the procedural fairness of the investigations. I don't want to comment on the the the subject matter of the investigations or the details of those
>> Okay. Look forward to their completion. So, some questions for the commissioner [clears throat] uh in relation to the employment of Michael O'Neal. Um, in response to a question on notice uh two number 398 and 400 regarding his employment, Michael's employment at the TPB, the ATO refused to answer my questions on the grounds of privacy, making reference to the Privacy Act 1998 and the Public Service Act 1999. Am I right that the ATO and the TPB have previously supplied many hundreds of pages of just such information in relation to Mr. O'Neil's employment in May 2024 and numbers this table uh certainly reviewed that materials questions on notice number uh 022 023 031 and 032.
started and there was uh a lot of material that was provided to the Senate I think my recollection they were quite um uh they're unusual circumstances. Um and um uh as Curtis's come to the table might want to talk through that a bit fundamental proposition is as an that employees take on. I'll have conversations with employees um obviously take that into account and then make the moves that I think are appropriate for the organization uh both for the individual and for the broader organization. Uh and I think breaching
>> Thank you, Commissioner. That answers my question. It is true therefore that many hundreds of pages regardless of what the way you want to talk now and talked in our previous conversation about not wanting to do it has been provided. Have
>> Senator So I I did say I might get Miss Curtis to talk to that because I I assume it's true because you've said it in such a way it sounds true but I I Miss Curtis to confirm that that was the
>> thank you. Have the relevant legislation and policies, including the APS SCES Performance and Leadership Framework, the Public Service Act 1999, and the Privacy Act 1988 changed between then and now?
issue. They may have changed for other
>> not material. Thank you. Did you ask Mr. O'Neil if he agreed with your prior release of information? Is that why you previously provided the information but declined to do so this time? >> And did you ask Mr. O'Neil if he agreed to the release of this more recent >> So why did you ask him once and then not the second time?
>> I can only speak for the second time. I just I think the there are a range of issues that I need to take into account in deciding what to
member and me. So you made a dec that that the ATO at one moment makes a decision to reveal information and then at another moment decides it won't and uses a confidentiality breach. It is publicly well known that Mr. O'Neil led the probe into PWC into the scandals and that he faced very significant pressure from the ATO and other places uh to back down on his investigations into the consulting firm and its behavior. We set out that material very clearly, pages 143 to 146 in our FPA inquiry report where we we go through bully and bullying and inquiry dismissed, prolonged processes led out of Minister Sukar's office, uh a workplace assessment, and finally a fraud investigation, none of which stood up to uh any scrutiny. No charges were laid. there were nothing was nothing uh that in relation to Mr. O'Neil's performance. So this is a very political discussion about their employment and now you so I I think you can understand that the decision to move him to another position which you did um is a real concern. I am worried that you're covering something up. Uh, and I want to know whether you moved him into a new position as a reprisal as a consequence of the work he did in exposing PWC for their tax le scandal.
>> Um, Senator, I'd reject comprehensively where they work and the movements they should make for their benefit and for the organization's benefit. Um, Mr. O'Neil had been in that role for over for his own benefit, not just the organization. I had a role where he's in charge of uh leading around uh 200 of uh of my other staff. Um, and it's important for our staff to make sure um a good spread of different leadership traits and management capability to model their own behavior on and so and this is common across organizations. I think there's a consensus particularly the public service around 5 years in a role particular senior role is about enough. Six starts to get too long. Seven is definitely the time where uh people should move. Now having said that you might come back and say my appointment seven years which uh uh you know at that time I'll certainly be uh moving out and uh and hopefully not moving to another role but uh doing something else.
>> Well that's an unexpected admission Mr. Hein. looking at a bunch of people who who start with a six-year term and many
think >> not not David D. um the difference with um all due where you're in charge and directly in the the idea of um people in leadership roles casting shadows intentionally or
>> So can I just I know my time is short. Mr. a cure. I want to come to you. In the December estimates, I asked Mr. Hefron who made the decision to move Mr. O'Neil and he said it was him. I'm now interested in the origin of the idea to move Mr. O'Neil. Uh who in the TPB initiated this discussion of changing CEO? Was it you? Was it a consensus of the board or the tax commissioner?
Senator PCO, the the the appointment of a of a member of the commissioner staff to the role at the end of the day is a decision for the commissioner. Um the I on behalf of the board have a regular interaction with the commissioner and we discuss the the staffing needs from time to time uh of the board. Um and I I think that to say more than that would be inappropriate in the circumstances. We have regular dialogue uh about the needs of the of the TPP.
>> When was it specifically raised?
>> As I said, I I I have a I have a regular dialogue with the with the commission.
>> Can I ask you to take that on notice then, Mr. de Cure? Um I'd like to know when that dis first discussion uh occurred. Was there a reason given as to why Mr. O'Neil would be moved?
>> I think the commissioner has explained why Mr. O'Neil was moved.
>> I want to be clear and I would like to come back to you, Commissioner. There is public interest in this because this was an officer who who played a significant role in an event that had a long shadow and and certainly surfaced important issues of corruption, poor behavior, ethical breakdowns and so on. Can you see why the public would be interested in a move uh of Mr. O'Neil out of the position he was in when he did that important investigative work uh after the preceding five attempts to move him from the position?
Senator with uh I think I I want to choose my words carefully with appropriate respect. I can imagine how someone if they just uh read reporting might come to that conclusion but we have to remember there's a secretary of the board Mr. O'Neil reported to the board itself and it was the board that make decisions particularly disciplinary decisions um and Mr. O'Neil is also one of 200 200 staff from the tax office which Mr. O'Neil has won and that 200 would work to make sure the right information is brought to bear for the board to make their consideration. Um Mr. O'Neil is effectively a division head uh as a band did a did a good job. Um as you say he was uh his persistence and his tenacity uh meant that things would be brought underestimate the activity of the other 199 there who would be Yeah. And so the I think there's a risk when um uh when people look at an organization particularly large organizations or teams and large teams and there can be that um uh maybe the fallacy of attributing the success or the work of a team to a particular person and and and so I think when you look when we look closely at what happened uh what was brought to bear what the board finally decided Mr. O'Neil had a very important part in that. No question about that. But not on his own as one of a team of rant.
>> I'm not suggesting a significant uh investigation of the kind that we undertook 22 days of inquiry around and which estimates has seen repetitive questioning on and we have heard from Mr. Hershorn and and uh from Mr. de Cure about the attributes and leadership and significant role that Mr. O'Neil played and there are in these kind of significant cases as a considerable media discussion of this has pointed it to there are often heroes at the center who do create momentum and I I I think the evidence we have heard says Mr. was significant of course always in a team but I will move on. Um
>> you're at 10 minutes.
>> I'm at 10 minutes. Okay. I won't be moving on.
>> Okay. [snorts] Thank you, Senator
>> Thank you. Sorry I wasn't expecting that. Um I just had a brief question for you, Miss Woodward, if I could please. Um, I read a media report in the AFR in January that's uh indicated that the commission wrote to Minister Le in June seeking more resources to allow the Commission to engage charities at risk of terrorist exploitation. Is that media report correct?
>> Sue Woodward, Commissioner, Australian Charities Not for Profits Commission. Uh, yes, Senator, there was the AFR article. It referred to actually information contained in the incoming government brief.
>> Okay. So that's on your because it it refers to a the article references a letter but understand I had a look on your FOI log. So it's in the incoming government brief. >> Would you just from mind because I I've not been able to pull it up right now just what that recommendation
made in the brief was that uh in order to conduct stakeholder engagement with charities who that might be at higher risk of being misused for terrorism financing purposes that if we were to receive additional resources we could do more engagement. So it wasn't that we wouldn't do any. Uh it was that if we had additional resources, we could potentially do more.
>> Okay. Have you received those additional resources?
>> Uh not not separately. Okay. >> Uh since that uh incoming government brief and the work that we're doing across as part of our role in a whole of government response to the financial action task force uh mutual evaluation that will occur this year. uh we are resourced to play our part. Uh it was obviously highlighting turn incoming minister um a key thing coming up in the in the coming year also in terms of that evaluation.
>> Have you got a sense of the number of charities that are identified as at risk of being exploited by terrorist groups or the subset or the size of that? Um
it's obviously a hard thing to estimate. It's out of the 65,000 registered charities, it's typically a small number. Uh we do get the data on um the number of charities working overseas. So you might expect that they are more likely. Uh it is about 6% of registered charities. So that would be about 3,000 charities that work overseas. uh within that of course it's not to say that all of them are are at risk and there can certainly even be other charities that may not formally work overseas that could be at risk. So it's not so much concern that individual charities are um involved in the terrorism financing themselves but it's it's that they can
be misused. >> Okay. And I mean, so this of the 6% of registered charities working overseas, I presume you've sort of triaged their level of risk depending on where they're working. I mean, it's probably a pretty low risk if they're working in Fiji, for instance, or the Southwest Pacific or >> New Zealand. Yeah. Yeah. But it's a high risk.
>> It is triaged on a risk basis,
>> if they're in Iran or Afghanistan or something like that.
>> Yes. And we would um there are risk assessments done, national risk assessments, and we uh would get that information to help us do our work.
>> Okay. And is it true that 22 charities had their registrations revoked in the last calendar year 2025?
>> That's correct. Uh sorry, I should just clarify because um they were 22 were revoked for what we would call uh compliance activity. So sort of where we've conducted investigations. A larger number would uh voluntarily revoke. Yeah. And a larger number again would be ones that we do revoke >> under the compliance head of non-reporting. So where we have a particular program we call it uh double defaulters. So where they persistently don't report. That's a much larger number. But you're right about the the smaller um group in terms of investigations.
>> Okay. And so of those 22 because that's quite a high it's the highest number ever I read. Is that right? Well, out of
as I say, the number of charities on our register is going I think out of 20 uh 65,022 is not a big number and it may just have been that the year before which was 11. So it does sound like a percentage a much higher um you know a doubling but it's a doubling of a a very small number.
>> Okay. And how many of those were because concerns you had about the potential exploitation by terrorist groups?
Uh I would have to take that on notice to be sure. Sometimes it might not be that category. Okay. Uh charities have obligations to comply with external conduct standards and governance standards. So the concern we might have had might have been couched more on the terms of them not complying with those obligations satisfactorily rather than absolutely specifically saying that it was because they were involved in terrorism.
I understand um that one that was lost it status last year was I don't know the name sorry um it was run by uh Sydney spiritual leader whistad and it was followed an investigation by ABC's four corners episode is that correct that that charity lost its
>> uh I think you're referring to a charity and I might not get the name correct but I'm pretty sure it was called the Daravan uh
That's right to me. Yeah.
>> Uh and that as the register indicates that charity was uh revoked.
>> Okay. And was it because of the concerns revealed in the four corners episode that this charity was radicalizing young Australians?
>> Um we don't under the my secrecy provisions even with the changes because it's a a previous investigation. I'm not I'm not able to disclose the grounds for uh disclosure but as the register indicates it was uh what we would call for compliance uh as opposed to say voluntary revocation.
>> Okay. When was the last um compliance revocation done? Have you got the most recent one?
>> Uh I think uh I was told about one that was done just yesterday for example.
>> Okay. Okay. And you're not able to say though um because of the secrecy
>> I can't talk about the circumstances of why that particular charity was revoked.
I can't understand. Are you able to say of those 22? >> I mean not not the names but the subset is it 25% 20% >> uh that were revoked because of concerns about exploitation by terrorist groups.
>> Ah well I can take that on notice. I'd be pretty surprised if it was more than one or two, but I I can um I could give you the general categories of a lot of the concerns might fall more into the category of uh private benefit mismanagement.
>> Understood. Yeah.
>> So, we don't sort of categorize them specifically mostly because fortunately it's not a large category, but I'm I'm happy to take on notice and disclose what what I can.
>> Okay, that would be helpful
>> to to cover off your point.
>> Okay. Thanks, Miss Woodward. Thank you chair.
>> Thank you Senator B.
>> Thank you chair. I've got some questions about the resource rent tax. Um the in the last myo uh it had PR estimates for 2526 down by 23 compared with the estimates in the 2025 PIO. And why is that? That's a that's a
>> I might ask if um oh Dr. Johnson's going to come to the table again. I wasn't quite sure which one uh to explain that change in the I believe it was to do with um around when uh something came into production but I'll leave that to Dr. Johnson to be more precise. >> Uh Shane Johnson, first assistant secretary tax analysis division. Um sorry I think just going to make sure I
between my EO between 2025 PIO and then my EFO at 23% um downgrade of the projections for PT.
2526 Mifo we had a $450 million revision down um in 2526 and I think 1.5 billion over the four years. Um that's largely price assumption went went to or was barrel. So it reduced profitability of
>> I know the government went for the weakest option that Treasury proposed to reform the PRT but the government told us that petroleum resource rent tax would go up and yet we're seeing it go down. So when when does Treasury think that PRT will actually go up?
the um with the oil price and and
>> Would it be accurate to say that the the the tax on offshore gas exports um PRT is still giving us less revenue than the tax on beer?
the 20 in 25 26 in my info taxes on beer
than how how do we live in a country that exports one of the biggest gas exporters in the world And we're getting more tax from beer >> Maybe it's one for the minister. This is a political. >> It's a political decision.
>> An opinion. Well, we've made changes to the PRT that we got through the parliament. Um other areas of tax reform for us. Right now the priority is delivering on our election commitments and on the including the bill that the treasurer introduced today.
>> But minister like at a time when the budget's under pressure just this this I know I turn up every estimate to ask these questions but it just it makes no sense to me and I think many many Australians. Um I want to revisit questions around um PRT and um receipts from from offshore LNG projects um specifically um and as you might recall at the last estimates I was asking questions um about a question on notice that I put during the estimates before and I wanted to know who's paying PRT and how much PRT is being paid on just offshore LNG exports. And at the last estimates you told me that you don't have that data. Um I was interested if you have that if you have
we don't break so the data that's
>> Okay. So on on page 180 of budget paper one in the 2023 budget, it clearly says and and I'll quote, "To date, not a single LG project has paid any PRT, and many are not expected to pay significant amounts of PRT until the 2030s. So what's changed in the last two and a half years? How did you know that um back in the 2023 budget? Uh and how do you not know that now?
Robertson come to the desk maybe Sue if you wouldn't mind. Sorry just do a bit of shuffling of shares chairs here. meant that they were not in a position where where they were paying PRRT and I uh that will bring forward the uh expenditure um or will bring forward payment of PRRT. Uh I think as we mentioned uh as I mentioned at the last um estimates um update uh there was uh information reported by the ATO in their annual um entity um tax information uh that indicated the number of entities paying PRRT had increased from 11 to 16 and the entities that were um paying PWRT for the first time um as a result of the introduction of the deductions cap. So
>> Is that so that's for offshore LNG?
>> That's correct.
>> But Treasury can't tell me how much that
level and I think we had this discussion last time um uh entities uh related to >> Sure. But I wonder if the ATO wants to um add anything further on.
>> Well, can I can I maybe ask then like looking through the budget papers you've you know when it comes to beer excise or spirit excise that's millions of Australians paying to different entities that's collected and your treasury can say this is how much we're getting for beer excise which is far more than we get for PR. This is what spirits is which I think is two and a half times PR. when it comes to one of our biggest um we're one of the biggest leg gas exporters in the world and the Treasury says well don't know can't tell you how much we're getting like surely like this could be solved well Senator I
think as uh Dr. Johnson mentioned there uh we do uh collect and publish quite um extensive information on PRRT collections but I think your question just to use go back to the beer analogy is a bit like asking well what's the breakdown of beer excise on draft beer versus um Pilsner or something like that and I think it's getting down down to that sort of level.
>> How is it that granular though? Cuz PRT is what oil and gas.
>> Senator you're at 9 minutes. It's a bit
>> Well, uh, as I mentioned, Senator, the information that the ATO is reporting is at an entity level and so that doesn't, uh, that that doesn't report on whether it's gas or LG.
>> Senator, I think that the AT may have
>> Senator, I might maybe if I talk a little bit about our disclosures. So we disclose each year as part of our corporate tax transparency the PRRT um that we collect that is broken up by the legal entity um and we publish the name of the legal entity.
>> Thank you.
>> Um um also in the public domain so if you took our information and you went to comp uh ASICH lodgements those ASICH lodgements will often talk about which project what sort of project that entity is doing.
>> But I mean why should Aussies have to do this? Why should we have to play this game to figure out how much we're getting from our gas exports, which we know half of it is just being given away for free to multinationals? But surely there's a way of actually collating it and say, "Right, Australians, this is your gas. We're exporting a lot of it and this is what we're getting back." like this seems like such a
>> so senator I'm not going to comment on a policy decision but I would say that it is um part of the exceptions to general taxpayer secrecy that we are mandated to publish each year. So it is uh more transparency than of any other industry that we publish the name of every company which pays any PWR.
>> Can I ask about Thank you for that. That's that's useful.
>> I'm going to have to rotate the call in a minute if you could um wind it up. two >> two more questions and then we'll move on. Yeah.
>> Um there's a widespread view amongst analysts including the International Energy Agency. Um and even some gas companies are admitting that that there's a looming LG glut globally. Um and prices may uh soon fall substantially um much below uh Treasury's current projections um with some facilities possibly even operating at a at a loss. Um are you aware of these and is that also your expectation?
>> So I I don't think we comment on our forecast for oil prices, but I can indicate that um when the department did the review of the PRT, we were very clear in that document and Mr. Robertson might be able to remind me what that document was called. Um we did indicate that PRT is very sensitive to the oil price um and that the um revenue expected could move up and down depending on the on the oil price. It is well known that PRT is sensitive to the oil price and that risk was highlighted in the report that Treasury did.
>> And so facilities, if that does happen and facilities start running at a loss, can they then deduct and compound those losses against future PR paid?
Well, Senator, the PWRT um does operate on um on taxing the uh the profits that are made after deductibility of um of those expenses. And so, uh if um you know, if there are smaller profits, then one might anticipate that the PRRT collections might go down. But uh as Ms. Brown said, that's all very sensitive to, you know, uh future commodity prices, future oil prices.
>> Okay. It seems like this whole PR thing, we should just have maybe I think the ACTU minister, the ACT is probably right. We should have a 25% um flat 25% tax on gas exports and solve >> ACTU.
>> Oh, ACU.
Is that something that the government would consider actually moving to a model that's really clear? This is our gas. You can export it. You can make a really good profit, but we're going to slug you a 25% export tax.
>> Well, I just referred to my previous
have the commitments we took to the last election as our priority in relation to >> Thank you, Senator P. Senator
>> Canavan. Can I speak quickly where Senator Fel um I believe the um uh the tax office publishes a report of entity tax information. Is that correct?
>> Yes, Senator.
>> Looking at that report, um I think well I've got one 2324. Is that the last you've published? Couldn't find one.
>> So Senator Corpor transparency 2324 would be the last year that's published.
In that report, I've got Woodside um paying $1.7 billion in uh well, it says tax payable. I presume that's probably corporate tax. Is that
>> Yes. So, Senator, that um disclosure has uh two effectively two sections. >> One is for corporate tax. So, that would be the corporate tax number. Okay. >> There'll be a separate tab which has the
>> I've got the Woodsiz PR at just under 800 million, 2.5 billion. That seems to be equal to the beer size we were just talking about from one company. Is that those number? They're the number. If they're the numbers, that's what it is,
>> Senator. They are the numbers.
>> That's just from one gas company. See, Exxon Mobile's tax payable 770 billion. I I do know there's a number of gas companies that have no tax payable though. Uh Santos. Uh well, well, what does it mean when there's a blank cell in that report?
>> Yes, Senator. A blank blank cell in that report means that they that in that particular field they either have no taxable income or no tax payable.
>> Right. Okay. Um I think they've got well they've got income. Hang on let me
>> So Senator we just that is it's a quite a limited data set that we are mandated to publish.
>> Yep.
>> Um as an exception to secrecy it is gross income. So that's gross sales >> taxable income which is a profit concept and tax payable which
>> I presume well well you tell me if I'm wrong but if someone's got has got positive taxable income as Santos does but a blank cell and tax payable is that largely due to carry forward losses often
>> oh uh so senator carry forward losses would go against the taxable income the the reason for a zero there would ordinarily be things like uh tax uh refund tax rebates like say research and development, >> right, >> or franking credit refunds,
>> okay,
>> would be how you might have a taxable income with no tax payable.
>> I thought it might be due to the large losses they and others made in the Queensland LNG experience, but uh I mean I don't know how much you can tell me about this, but is that have the tax losses associated with that been being
been exhausted? So Senator, I can't talk about individual taxpayers, but generally if a company on that schedule has a taxable income, it will mean that they have recouped their prior year losses and are now heading into tax profitability.
>> Okay. All right. Well, I just want to make sure you're on the record that the gas industry does pay uh quite a lot of tax through corporate tax. The PRT is on top of that. And of course, none of this includes the state-based royalties that uh the Queensland producers would be uh paying as well. Um, okay. Uh, I actually had some questions on, uh, our favorite topic in this section, uh, uh, elicit tobacco. Uh, I just want to go through where we're at. I just, um, and where we've got to, as others have mentioned as well. Uh, do you know what the, uh, excise rate per uh, cigarette was in the 201920 financial year? Just
>> I might have that information. I have got a table. Uh what was the year you were interested in?
>> Uh 2019 20
>> 2019 20. Uh the excise race per stick was uh 0.94.
>> Right. Uh what's it today?
>> Today it's one uh sorry it's $150.
>> Right. Uh how much revenue did we raise in 201920 from tobacco excise?
>> Uh so in 201920 we raised uh 16.2
billion. Right. Um, and how much are we raising to the this financial year
>> uh 5.45 billion. I just check that's right against the number.
>> Well, I just wanted to get those that that's sort of roughly what I've got in front of me. Some rounding perhaps, but uh yeah, I just wanted to confirm that we've effectively increased the excise rate by uh by 50% or so, a little bit more than that. uh and and revenue has dropped uh by uh well by over half as well. Quite extraordinary. I was interested in your answers before to Senator Colbeck that you're calculating elasticities. I mean are you are you calculating an elasticity for the legal tobacco market or for tobacco smoking more generally?
>> Um we do forecast the excise for the legal tobacco. So the elasticity is
>> so elasticity will also be based on legal tobacco.
>> Sorry, I just missed that. Legal
>> legal tobacco.
>> Legal tobacco.
>> Based on collections. Yeah.
>> So the elasticity there would expect to be higher than it would be for the tobacco market overall because of the potential for substitution to elicit
>> Yeah. So the elasticity would be would be high. That's right. Yes. I I mean I
suppose one assumption we always had around taxing sins or things like tobacco was the elasticity would be quite low because people are addicted to it. But uh is it right to say that given the emergence and prominence of the elicit market that assumption is perhaps fallen away?
>> That's probably something that we're looking at. It's leasticities rely on a long >> a long-term data set and we haven't um necessarily got sufficient data to be
>> done uh micro microeconomics 101 but from memory uh when the elasticity gets quite high uh the dead weight losses associated with taxing that product also increase. Is that correct?
Um so so a higher elasticity will typically generate a high dead weight loss. But in this case what you would want to look at is also the cost of smoking as well. And so you know it's maybe more complicated than just the straight dead weight
>> or if they're just substituting to smoking. [laughter] >> If the high elasticity is a substit because of a substitution to smoking elicit products that obviously that benefit is not there either. >> Uh okay. So what what is the elasticity? What what have you measured the elasticity in the uh uh in the legal tobacco market to be?
>> I need to take that on notice. Sorry.
>> Okay. But you do have a figure.
>> Uh I don't know if we've actually got a figure. I know we've been working on it. Um I know we provided some some material to a question on notice before, but I can't remember if we've got an actual number yet.
>> It's based on real world data. That's what you're using to estimate.
>> That's it. It's work that we're we're try we're developing
>> a methodology. Okay. I know these things can be difficult to do sometimes to isolate. Okay. Um uh uh so I just wanted to uh I mean is it is it your position now that the this this quite significant increase in excise uh has uh contributed to the uh expansion of the elicit market.
>> I think Senator that's that's asking for an opinion on policy
>> I suppose. Do you see? Well, not really. I mean, no, it's not really, chair. I mean, I'm >> asking for a I'm asking for a what's happened in the real world. >> I mean, do you think the effect of we've just been through in the real world there's a 50% increase in excise has that it's not really an opinion about a policy or anything. It's just has has it led to if you don't know it that's a different question but I'm not sure it's quite an opinion um to understand whether or not your work your analysis has shown that such a large increase in excise has increased the size of the elicit market.
>> I think I provided numbers on excise in our earlier conversation. That's probably as far as I'm
FOI document uh 3812 um which does contain um I believe uh some uh questions and answers like a Q&A from the treasury. I'm not exactly sure who's has been prepared for uh but on page I'll just try and make sure I've got whether I'm quoting electronic um page numbers or not all the documents ones
>> you're at 9 minutes
right so I'm on page yeah it is page 20 of the electronic version of of this FOI 3812 two from Treasury and I believe here Treasury does state uh under risks and sensitivities elicit tobacco risks dot point states and I quote further increases the tobacco excise and excise equivalent custom duties will however strengthen incentives to trade in elicit tobacco. So is that is that the position of of treasury that further increases in excise will incre at this point
>> FOI in front of me? I don't have that FOI in front of me. I did check >> my folder of FOI. It must be a bit dated that FOI. So I'd want to read it.
>> I think it might be it's it's under the the website address is 202502. So about a year ago, February last year. I might well we might table that when I when the call rotates and if I can come back to it. Um sorry uh I also just want to ask also in uh that document um I think this advice might have been from a bit earlier on. Uh there's there's a number of different briefs in this document but uh Treasury say reduce and I quote reducing the affordability of t tobacco through taxation remains the most effective way to reduce smoking. Is that still Treasury's position? [clears throat]
Again, Senator, I think I'd if you don't mind, I'd read the document, understand it in its context.
>> Okay. All right. Okay. All right. Well, we might table it and and then we can all have it in front of us and see um because I am just maybe it is going to an opinion, but I'm asking about a document that Treasury has prepared so we have to explain it. Okay. Thank you, Chair.
>> Thank you, Senator McKim.
>> Thanks, J. Is this the right to ask the secretary said this morning one of the tangible things governments can do to improve productivity is to remove uh the barriers or the disincentives to invest into productive nation building infrastructure like for example
affordable housing. So the the treasurer has announced that uh we are reviewing the performance test. It will be important that it remains a uh um continues to exert accountability on trustees for the performance but it is being reviewed so that it does um to check that it doesn't create any unnecessary barriers to investment. >> It's not creating an unnecessary barrier to investment.
um Treasury whether Treasury is working
investment into things like um nation building infrastructure, renewable energy and affordable housing uh rather than the current framework which herds superanuation funds into investing into the emissions intensive ASX.
>> More might want to say more but the the view is looking at making sure that um it's not creating those barriers to alternate investment classes but
>> Ruth Moore assistant secretary member outcomes and governance branch. Uh so uh through the review we are hearing from some stakeholders that that is an issue uh in their mind. Yes.
>> Okay. So you're hearing from some the the treasurer issued a media release last week um saying that the future funds returns have increased after changing their investment v mandate to get more money into some of the areas that I'm speaking about here. Um are you aware of that major statement by the treasur?
>> Not okay. I think it was a joint one >> him and I was a joint media statement outcome. Yeah. >> Well, perhaps >> and the future fund appeared last night. Um
>> I'm I'm aware of that. I'm I'm not seeking to ask about the future fund >> a leadin to my question which I'll put to you in fairness, Minister, rather
have increased after changing their
more confidence to remove any disincentives for super funds to invest those to invest in similar areas the disincentives that exist because of the current performance test settings.
well we've been pleased of course with the results of the future fund um and they have been outperforming um you know their um targets uh and that's a good outcome for all of us uh and has coincided with uh change to their mandate which they spoke about yesterday about some of the investments uh they've made uh in relation to the second part of your question. I'll take uh that on notice, but I'm not aware of any further changes in that area.
>> All right. Thanks. Um so I just want to move to the ATO now, if I might. I've just got a couple of topics to cover and um hopefully that'll be me done for this output. Um firstly in relation to um the corporate tax transparency data there are there are 79 companies that haven't paid any tax for all 11 years of that data being released by the ATO. I mean they are spread through the economy but there are clusters around coal and gas exporters uh infrastructure and sort of property and construction businesses. I mean News Corp, Dowo Chemicals, Ford, Brookfield, um Mitsubishi, Sumamoto. How is it plausible that a company can make no profit or no taxable profit and continue operating for 11 continuous years? Is there some flaw in our tax settings that allows these companies to get away with this? And has the tax avoidance task force investigated any of those 79 companies for tax avoidance?
>> Thank you, Senator. And I might ask if maybe Deputy Commissioner Michelle Sams comes up to join me for this section. Um the first thing I'll absolutely assure you Senator is we uh put very close scrutiny on companies with sustained losses and uh those 79 companies uh will certainly have had our attention. So um I'll just assure you that first. Um the second thing is I would uh say that the corporate tax transparency report reports entities and some of those entities on the 79 not all but some are parts of groups where other entities in that group have been paying tax. So the there's in a sense internal profit shifting within the group and other entities are paying tax. So not all 79 are part of economics groups which have paid no tax. Um the other thing I would say is that there is a pattern and quite a few of the 79 would fall in this pattern which is if you have made very big losses in and your company limps on afterwards that company may never earn enough profits to recoup its past losses
>> because it's riding off its
>> because it's because its prior year losses will shelter its profit in perpetuity. Um and maybe the last point I'd make is that there are some industries um and some entities on that list where frankly they just have not been if you compare that to their ASICH reports they have just been lossmaking you know um
>> how how do you make a loss for 11 years and remain a viable company?
>> Well Senator that's um that's a very good question for one for smarter people than I but it does seem at the moment that it is possible to raise capital from the markets for many companies even when they are in sustained loss making but uh if I might ask if deputy commissioner Sams might want to add anything
>> Michelle Sams acting deputy commissioner of public groups I think you've covered the main points um there's a variety of reasons just because um a company's not paying tax you know there may be legitimate reasons um losses that they're making losses that they're carrying forward tax losses from prior periods or they're offsetting rebates and such things against profits.
>> All right, thanks. Um I wouldn't mind digging into that but maybe in a future estimates because time is going to prevent me. Um Mr. I wanted to ask I read the um this is a different topic. I read the Queensland Supreme Court judgment in the matter of Clark and it's in relation to an ATO investigator Mr. Reigns. Um, they were scathing findings against Mr. Reignsman. I can go through them at length if you like. I assume you're aware of the case.
>> I'm aware of the case. I've read the
judge. >> You've read the judgment.
>> I've read the judgment.
>> Um, what's the ATO done in response to that? Has Mr. Reigns been disciplined? Has there been any internal integrity investigations? There been a code of conduct process. Can you just talk us through the ATO's response to that very scathing judgment against Mr. Um
certainly so first step is that uh not about ours but the um uh the DPP has um sought to appeal that uh I'm not sure if that's been heard or not but certainly sought to appeal the uh the judgment um in relation to activity that we've done um because uh as you say if you read the judgment the judge was um unusually uh and of of course um our investigator wasn't the one on trial and so the idea of actually being given the right opportunity to um defend themselves wasn't really afforded. Um so and we need to be very careful about uh to the extent we might or might not take action um making sure we afford procedural fairness to all those involved um we need to be careful about what we put on the public record. So you can you can be sure that as a prudent tax administrator, which we are, um we're making sure the processes that we have uh in our uh fraud and criminal behavior area are as good as can be. Uh where action is taken, not not necessarily about this case, but in general where action is taken and um uh issues are pointed out we could do better. We certainly learn from that and change processes to make sure we do do better. But in relation to this specific um I won't call them accusate but specific observations about um our officer I think I have to um defer any comment on that until such time as it um it can be appropriate to have that in the public domain for for reasons of privacy and also making sure that uh all parties involved um have a uh you know that natural justice will apply. I I just might um miss Curtis might have something to add.
>> Yes, thank you. Um I just wanted to add I mean as you'd expect an institution like ourselves would be taking this very very seriously. So um in addition to what the commissioner has just said, we have actually um an internal review now to provide us with assurance over the mechanisms that are in place to investigate these types of tax crimes, the decision-making processes, the quality assurance over the decisions. um and making sure that we are operating effectively and if we're not then actually trying to address those gaps at the system and process level whilst this is under appeal and when we're in a position to actually um with procedural fairness proceed with any any type of action that we would take with the employee.
>> All right. Well, um I understand you're doing that review, but that's a I think you said it's like a review at a systems and process level, not specifically in relation to Mr. Reigns. That That's right, isn't it?
>> Not specifically in relation to him, but certainly in relation to the workforce that conducts these types of investigations to see if there is anything there that we need to address. Um and obviously, um once the appeal has taken place, we will look further at any further action that may or may not take
questions in on notice on this, but but my last question because time time is just about to expire >> is whether Mr. Reigns is continuing to operate in the same areas that he was uh when he was subject to this scathing uh judgment from uh the Queensland Supreme Court which um you know included the fact that he'd um omitted uh critical documents from a brief of evidence um failed to include evidence in search warrant affidavit and statements to the court. um a joint agency agreement prepared upon or relied upon by Mr. Reigns was a misleading document. I mean these are extraordinary findings from a Supreme Court judge. Is Mr. Reigns still operating at all within has he been suspended from from operating in these areas or any areas for the ATO?
>> Just to the U Mr. Reigns no longer works in that area. um and those um those elements you read out. I mean I think it the officer involved never had the opportunity to actually address those. So um the judgment um obviously the Supreme Court judge uh we need to take that uh the judgment very seriously of course and and we are as Miss Curtis is saying we're going through that process but but it is um uh until someone has been afforded the right to respond I think it would be imprudent to um rely on those propositions too much but but to answer the substantive question uh Mr. Range is no longer working in that investigations area.
>> Thank you. Um, we have a 6:00 p.m. dinner break, so I'm going to go to Senator Bragg now. And um, I'm I'd hoped we would finish with this group, but I don't think we will. >> Senator Bragg,
>> sorry. Yeah. Um, okay. So, hello. There's so many people here. Um, I I'm not sure. Well, I've been trying to ask questions all day, but I've been frustrated by the bureaucracy. I don't want to cast any aspersions. I guess it's probably my own idiocy. Um, >> That's probably the most plausible uh diagnosis, isn't it? Yeah. So, who's here from the legal area?
>> So, um, Senator, we do have representatives from the legal area here.
>> Let's get the legal eagles here.
>> From January 12, um, the department did restructure groups.
>> Yeah, we heard all about this. And so
revenue this group that I'm now the dep for is revenue small business and law division. So you can ask questions of law division and I'm here and I've got staff.
>> Is this part of your great anti- red tape endeavor? Is it?
>> Uh we reduce the number of deputy secretaries.
hopefully it's a more efficient machine for you Miss Brown. >> Well I want to ask the legal eagle some >> Can we get the Mr. legal man. >> Yep. Mr. Hertzberg, how are you? Nice to see you again. all right. So, do you deal with the FOIs?
>> I do, Senator David Hertzberg, acting general counsel at the Treasury.
>> You get and you get a few there at Treasury, do you?
>> Uh, we get a few. I think we got about 260 around 260 this financial year. 260.
Well, that's not too bad. I mean, if you were um silly enough to have to listen to the Senate, you'd hear Minister Gallagher and Minister Ayres complain about thousands of OPDS. So, 270 is >> Yeah, but that's good. You >> OPD you're complaining about, you know,
>> industrial scale >> as are the questions on notice as are
thing the Australian people want is politicians who work hard. >> That's what they want.
>> I There's certainly politicians that work hard in this building. >> It's not consistent across the building,
>> Well, I think this is a good time for some truth and transparency.
>> Not on your side, of course.
>> So, okay. Well, let's let's I I want to ask you um about so you do the do you do the OPDS as well or just the FOIs?
>> Uh so if an order for production comes in, we we do provide advice to the relevant area that might have the documents and ultimately the the office.
>> Yeah. Now you do understand that those are separate processes, don't you? >> Absolutely. If a senator moves an OPD and is fortunate enough to have that approved by the Senate, that's quite separate from a citizen coming along and seeking documents and freedom of information. >> Even if those two persons are the same person. about how that act works and OPDs So, did you deal with the FOI 4142 which was to do with the Freedom of Information request for the letter received from the Minister for Housing seeking the Treasury Commission an independent review into the governance issues at Housing Australia. >> So, I'm aware of that for my request, Senator. Yes. >> So, the decision was were you the decision maker on that? >> Okay. The decision maker was someone else. Hang on. >> So if >> it was Jessica Robinson, >> Uh she was in law law division. Um >> she's gone. >> She has. >> Okay. How what's happening with the turnover there at Treasury? A lot of people turning over at the moment. >> every time we have you here, I ask about that person. You're like, "Oh, that person's not here anymore." >> No, I don't >> feel like it's, you know, in an episode of Borat or something.
>> Our turnover rates are are quite low. and Miss Robinson without revealing too much information had been a long-term employee of Treasury.
>> Just Mrs. Robinson. Okay. Anyways, but she's gone. So, the decision was to grant access to this letter part in right? Do you know about that? So this letter was a ministerial submission um to the former minister for housing and it was on the 18th of December 2023 to allow for urgent procurement of an external independent reviewer. Okay. So, there's handwriting here on the document, I think. Is that from the minister, the former minister?
>> Uh, well, Senator, I'm I have the document in front of me. I can see handwriting on the bottom of that page. Uh, often uh on ministerial briefs,
>> Yeah. So, was this in the legal division, this business of commissioning >> I guess what I'm asking is I understand that you deal with FOIS and OPDS but was the matter >> also yours in this part of your treasury or not?
restructures of the department um housing corporate and law division used to sit together uh in the not too distant past. Uh these questions may now be probably better directed towards housing division who are appearing tomorrow. Uh they can go to the substance of the matter. Uh law division can take you through the the legal
>> Okay. So you can't answer those questions for me. >> Senator, move to the next thing. This is the third time it's happened today.
>> Can I can I just mention importantly I I understand this matter is now as of this morning subject to information commissioner review. received a
>> Did you write to me? information commissioner review of this decision can be released to you. But that you're saying, M. Brown, I should talk to housing about that
>> on the substance of the FOI.
>> I'm doing my best to navigate the
bureaucracy. >> Yeah.
>> That given what Mr. Hertzberg just indicated, it might be inappropriate to comment too much further given that it's now in front of the
>> I'm sure
>> information commissioner. You should
have had a chat to your very efficient office. We've obviously cut enough red tape. They're firing that off without you knowing.
>> Okay. Well, let's No, no. Let's go to let's not cast aspersions.
>> Senator Bragg, >> two minutes to six.
>> Let's go to Okay. Is that bad?
>> We're going to finish at 6, but you can come back. Um, we're going to come back after.
>> All right. Well, let's let's I want to um So, there's another FOI where I want to ask you some technical legal questions. Am I allowed to ask you those? >> Okay, great. This is a victory for humanity. So >> FOI 4065. Now I can tell you what it's about if you want to know. It's about the 5% deposit scheme. Yeah. And I'd like to table that I think. Yeah. If I Yes. So, just while that's being tabled, I think that's okay with you. Is it chair? This is we're just tableabling the FOI. So, you've got the latest piece of the paper. So, I guess to cut to the the you've you've used a I mean, just for anyone who's watching this, the millions of people who are watching the FOI seeking to get to the bottom of the government has commissioned modeling about the 5% deposit scheme, what the modeling said, and what some of the assumptions and other factors were when the treasury did the modeling, right? And we can have this discussion with the modeler again tomorrow when he comes from the housing division. The reason I wanted to ask you about it is because you've used a section 22 exemption all throughout this FOI all the redactions. So effectively almost all the redactions here you're using a section 22 uh exclusion which is to do with kind of personal privacy and sort of other personal particulars >> but it's right throughout the document including section four where it says factoring in the supply response where I imagine I mean I'm not an you know super duper expert here but I imagine that's where the treasury would have said look there's actually some factors here that might affect our modeling and and the numbers there. There are some sensitivities, there are some variables, but that's been given in section 22 exemption by you, the treasury. Um, which you deem is irrelevant. The whole of factoring in the supply response you deem irrelevant. Um and so just look given that we have had a bit of a rocky history of Treasury filing FOI exemptions which aren't quite in line with the law or the conventions. I'm a bit worried that you might have used the wrong exemption here and you're blocking access to information that should be in the public domain that actually has nothing to do with personal particulars or personal privacy. >> So can you enlighten me please? Senator.
Um, so I understand this this decision is also subject to information commissioner review. Um, I can say that section section 22 is a provision that allows a decision maker to delete irrelevant material where that information is not in scope of the request. So, um, here the decisions been made and I've got the the decision in front of me that email addresses and phone numbers isn't in scope of what what the applicant asked for, which is information about modeling and and price impact. So, that that information isn't directly relevant to that modeling. The decision makers made that decision. Whether the information commissioner agrees with that um is a matter for the information commissioner.
>> Let's just this I think this is the key point, right?
>> Can we make this your last question and then we'll go to the break and you can continue after the dinner break.
>> Okay.
>> We can come back.
>> Would you want me to stop now?
>> Uh yes, if that's a good place for you. >> Um we we can come back. We we we will have to come back, but we also need to stop for dinner.
>> Yeah. You know, I always like to help people out.
>> All right. Great. Well, let's suspend there then and we will come back um and resume with Senator Bragg um at 7 p.m.