Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026
Dr RYAN (Kooyong) (11:58): The Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026 is an omnibus bill containing a number of unrelated measures. My remarks today will focus on schedules 2 and 3, which amend Australia's foreign resident capital gains tax regime and establish a concessional framework for renewable energy investments.
First, I acknowledge that the government is trying to address a genuine problem. Australia's foreign resident capital gains tax regime has become overly complex and difficult to administer. Key concepts have relied on ordinary meanings and differing interpretations across jurisdictions.
In particular, the absence of a statutory definition of 'real property' has created uncertainty regarding the application of capital gains tax to assets with a close economic connection to Australian land and natural resources. It's appropriate that the government addresses this inconsistency such that the introduction of a clear statutory definition of real property is a worthwhile reform.
The bill recognises that modern infrastructure and commercial arrangements often derive substantial value from their connection with Australian land. The new definition appropriately encompasses interests in land, rights over land, contractual rights, licences and certain assets which are fixed or installed on land. The expansion of Australian taxable real property is also a positive step in this legislation.
The government's bill clarifies that taxable Australian real property includes land situated in Australia, assets fixed or installed on Australian land, water entitlements and options to acquire taxable Australian property. These changes will provide greater certainty, will improve consistency and will ensure that assets are deriving substantial value for foreign investors from Australian land are appropriately brought within Australia's tax base.
Australians expect investors to contribute appropriately to our tax system, holding mature discussions about capital gains tax reform, as has taken place already on the application of CGT to property assets. It's encouraging, albeit long overdue. For much too long we've allowed distortions in our tax system to compound inequality across generations.
Young Australians in particular have borne the brunt of that inequity. They have been locked out of housing, forced to stump up ever more income on their rising rent and power bills, and are inheriting the increasing costs of living on a warming planet. This is a conversation that we have to have.
My electorate in Kooyong has participated very enthusiastically in two recent surveys, which have elicited almost 2,000 responses from community members who have expressed overwhelming support for changes that limit CGT concessions applied to property investment. I'm also really pleased to see the Albanese government now adopt the substance of an amendment that I put forward recently to increase eligibility for CGT exemptions to businesses with an annual turnover of more than $10 million.
This is a commonsense change which will make a real difference to 2.7 million small businesses. However, while it's right to frame tax reform as a real opportunity to address intergenerational inequity and to establish more consistent settings across our economy, there are some lines that we shouldn't cross. Imposing reforms retrospectively, I believe, is one of those lines.
Forcing foreign investors who've made decisions in good faith based on one set of rules to suffer financial consequences when those rules are later rewritten will inevitably distort investment decisions and will inevitably send global capital elsewhere. Earlier iterations of the legislation now before the House caused significant concern to industry groups, institutional investors and clean energy advocates in that regard.
It was really positive news to see them removed from the bill before it came before the House today. But while the government has responded appropriately on retrospectivity, schedule 3 still contains significant flaws. Foremost among them are changes which may threaten Australia's clean energy transition.
At issue is not whether foreign investors should contribute to Australia's taxation base. Of course they should. The central issue is whether the design of the renewable energy concession properly reflects the realities of clean energy investment and the scale of the transition that we have to undertake.
Australia is embarking upon the largest energy transformation in our history. We're undertaking this colossal challenge to overhaul the foundation of our economy because renewable energy is cheaper, more efficient and more reliable for households, for businesses and for industry. It gives future generations the best shot possible as at a safer future as our climate warms.
Delivering this transformation requires enormous quantities of capital—new wind farms, new solar farms, more batteries and associated infrastructure to move energy from where it's generated to where it's consumed. It's going to require significant investment over several decades. Much of that investment currently comes from international investors who are already providing the finance and expertise that is powering our energy transformation.
Global investors comprise 75 per cent of Australia's renewable energy capital. Much more of that capital is going to be needed for us to meet our climate and clean energy targets. The government's bill concedes the importance of this investment by issuing a 50 per cent CGT discount for investors who are disposing of eligible renewable energy assets such as renewable energy generation and battery storage assets.
At this stage, however, the sunset date for this concession is 30 June 2030—less than four years from today—for investment horizons that are typically set at least two decades into the future. A tax concession that expires in 2030 cannot possibly provide meaningful certainty for investors making decisions today about projects expected to operate into the 2030s and beyond.
The arc of Australia's energy transition brings this disconnect into sharper focus. Our 2030 renewable energy target is 82 per cent. It is a target that the Climate Change Authority has warned we are not on track to meet, even if the pace of clean energy deployment doubles for the rest of this decade.
We're pursuing an even steeper rate of emissions decline to reach our 2035 climate target of 62 to 70 per cent emissions reduction on the 2005 baseline. The biggest challenge of all is reaching our legislated net zero emissions goal by 2050. A key concession supporting investment in the very technology required to meet these goals is currently slated to end before most of that work has been completed and before those assets have delivered returns to investors.
So I and many of my crossbench colleagues have been asking the government to reconsider this expiry date. The Clean Energy Investor Group and the Investor Group on Climate Change have argued that the transition period does not adequately reflect the long-term nature of renewable energy investment. They've recommended extending the concession such that it will better align with Australia's clean energy objectives and the expected retirement time line for Australia's coal fired power stations, most of which take place in the second half of the next decade.
They're right: the clean energy CGT discount has to be aligned with Australia's decarbonisation pathways and the reality of investment decisions for clean energy assets. It shouldn't be aligned to the end of the forward estimates. As the Clean Energy Council has noted, there is a direct precedent in Australian tax reform for a longer transition period linked to the life of infrastructure assets.
The 2018 Stapled Structures integrity reforms package introduced a 15-year transition period for existing economic infrastructure staples. Renewable energy assets have operational lives of 20 to 30 years, and the policy rationale for a transitional period of these assets is at least as strong. It makes perfect sense to align the transition period for clean energy infrastructure with a federal emissions reduction target of 62 to 70 per cent by 2035 as an intermediate milestone and ultimately with the 2050 net zero objective.
We should ensure that the concession remains in place for as long as the capital that is required to attract it is needed. Another concern with the government's four-year concessional CGT window is that the projects that are reaching financial close in 2027 or 2028 are unlikely to be disposed of before 30 June 2030. As a consequence, the practical beneficiaries of the concession are much more likely to be investors involved in secondary market transactions involving operating renewable energy assets than those who are actually financing the next wave of generational capacity.
Australia's energy transition does not need tax policies that will facilitate ownership changes just between existing assets. We need new additional investment in generation, in storage assets and in enabling infrastructure. Recently at the National Press Club the Minister for Climate Change and Energy rightly celebrated some of the Albanese government's successes, such as the Cheaper Home Batteries Program and the EV rollout.
He announced new initiatives that lean into Australia's traditional cleaner energy strengths, like the Missing Middle scheme for midcscale rooftop solar. In the same speech he also acknowledged that there remain significant challenges—headwinds, roadblocks to progress. A short concessional period is an unnecessary additional roadblock to progress.
It would be an own goal, of the government's own making. So I make the point again that the concessional CGT period must be extended well beyond 2030. Investable assets are narrowly defined in this bill.
Explicit reference to renewable energy generation and storage are positive inclusions. However, the transition to a low-emissions economy depends on a much broader suite of infrastructure. Critical minerals processing, electrification infrastructure, sustainable fuels and other supporting assets all form part of Australia's long-term energy transformation, but they're not mentioned or defined in this legislation.
Does this mean that investors who back these mission-critical low-carbon assets and infrastructure are ineligible to receive the CGT discount? Australia's clean energy future can't be understood solely through the lens of generation assets. In this legislation the government has taken a broad and contemporary approach to defining real property and taxable Australian real property.
It should apply the same forward thinking when it's considering the infrastructure that is required to support decarbonisation throughout the economy. I commend the Albanese government's substantial focus on tightening Australia's capital gains tax regime. I support strengthening Australia's foreign capital gains tax regime, the introduction of a statutory definition of real property, and the expansion of taxable Australian real property to ensure that assets connected to Australian land are properly captured within our tax base.
I also support the government's decision to remove retrospectivity from these reforms following stakeholder feedback, including feedback from the crossbench. However, it's also the case that Australia needs to build renewable energy infrastructure as fast as we ever have in order to meet established renewable energy and climate targets. We are not currently on track to meet those targets.
For this reason, schedule 3 of this legislation needs further improvement. The renewable energy concession should be extended well beyond 2030, and it must be aligned much more closely with our established decarbonisation goals. The current sunset date is too short, too narrow and too poorly aligned with investment horizons that underpin large-scale renewable energy projects.
Australia needs more clean energy investment as we electrify the foundations of our economy, not less. Our tax system should support that objective. A strong tax regime and certainty for foreign investors are complementary goals.
While the government has made good progress on the former, as it stands, there's still significant room for movement on the latter. I urge this parliament to ensure that these reforms strengthen Australia's tax base without weakening the flow of the capital required to build the clean energy systems that will underpin the safety and prosperity of future generations.
Australians expect a fair return of tax from the profits made by global investment into assets built on our shores, just as we expect local businesses and investments—not to mention multinational gas corporations—to pay their fair share of tax. But we have to be careful that we don't tax away the clean energy transition in the process. I commend the legislation to the House.