ADJOURNMENT

Mr VIOLI (Casey) (16:41): At a time when the economy is in trouble and productivity is in freefall, the last thing we needed was the Treasurer taking a sledgehammer to the economy with his disastrous budget that has been nothing but pain for the Australian people. And we now know that it's friendless. The only people that support it now are the Prime Minister and the Treasurer—and we're not sure how long it's going to be before the Prime Minister replaces his Treasurer, because even the Labor backbenchers are backgrounding.

And one said something interesting— Dr Leigh: Name one! Mr VIOLI: I will name—well, they didn't put their name to it, Minister. But let me read a direct quote from that member of the Labor Party.

They are a backbencher who wasn't prepared to put their name on it but were certainly prepared to share their thoughts. They said: People are getting quite worried. Small business is doing it very tough and we aren't doing enough for them.

We've done an instant asset write-off but not much more, and we're making enemies with the CGT changes. That's from a member of the Albanese Labor government backbench. It's their words.

Even with the instant asset write-off, they didn't increase it. They just made it permanent. It doesn't actually help small businesses today.

But when we talk about these changes, trying to fix something that is completely broken will not work. They just need to be scrapped. And to try and fix this disaster of a budget, the government is looking to consult on the innovative business CGT concession.

But I've been engaging with industry since this consultation legislation came out last week, and they are seriously concerned about this so-called fix. It will add significant new administrative and compliance frameworks around what is intended to be an investment incentive. Companies will now need to register, satisfy detailed eligibility tests, report annually and, where necessary, seek rulings and reviews.

Labor's 30-page explanatory memorandum refers to the industry secretary 77 times. It also contains dozens of references to registration rulings and review, reflecting the extent to which eligibility depends on ongoing interaction with the industry department rather than simply being claimed through the tax system. This draft does not provide complete upfront certainty for tech businesses and startups in our country.

Labor's draft explanatory memorandum itself acknowledges that in some circumstances it may be difficult for companies to be certain that they satisfy the innovation requirements. The uncertainty is one of the reasons the legislation gives the industry secretary power to create safe harbours; even registration does not necessarily settle the issue. The draft explanatory memorandum expressly states that registration as an IBCC company is 'not alone determinative' of whether the company actually satisfies the statutory requirements—and, just like Labor likes to do, there are more charges built into the framework.

Labor's explanatory memorandum states that private rulings may be subject to a fee and explains that the power exists so that the industry secretary can recover the cost of providing those rulings. Industry has told me that an early-stage company could face up to around $15,000 initially in obtaining advice and documenting whether it satisfies the IBCC the concession requirements.

Tax experts have also indicated that there may be ongoing annual compliance costs associated with reviewing activities and maintaining evidence of eligibility, and that a new capital raise could require up to roughly $25,000 of additional tax and legal work to provide investors with confidence that the relevant investment qualifies. As an example, for a three-year-old start-up that seeks advice on the IBCC eligibility and subsequently undertakes one capital raising, it is estimated that the company could incur around $40,000 in costs.

That's before allowing for thousands of dollars of ongoing annual reporting costs. The company must report annually. Failure to do so results in automatic suspension of registration and, while suspended, investors' interests can become disqualified assets for purposes of the concession.

I guess when the Treasurer and the Assistant Treasurer read Abundance, they clearly didn't pay attention. These changes are adding more red tape and more costs to Australian start-ups and to tech businesses at a time when we need these businesses to drive productivity and to create new products. It shows that this Treasurer has failed.

He is completely out of touch with Australian business, he is completely out of touch with Australian start-ups and this Prime Minister needs to sack him.